‘The growth rate of Uganda’s economy will slowdown by 1.2% because of the effects of HIV/AIDS on the country’s labor force and the high cost that families incur to provide therapy to infected people’, indicate a newly released on 20th November 2008 by the Government of Uganda and the Uganda AIDS Commission with support from UNDP and the UN system in Uganda.
The study called ‘Assessing the Macro-Economic impact of HIV/AIDS in Uganda’ adds the economy will be 39% smaller than it would have been by 2025 if efforts to mitigate the effects of the pandemic are not stepped up.
The new report titled: ‘Assessing the Macroeconomic Impact of HIV/AIDS in Uganda,’ was prepared by the Botswana-based economist, Dr. Keith Jeffries, who was the team leader for the Ministry of Finance and Uganda AIDS Commission. The team of researchers included three other national experts on macro-economics, health economics and statisticians with technical support from Uganda Bureau of statistics. The researchers used the current economic growth rate of 6.5% to arrive at their conclusions.
The findings were presented to stakeholders in a workshop in Kampala.
UNDP led the UN system and other development partners for the past year in supporting the Ministry of Finance, Planning and Economic Development (MoFPED) as well as the Uganda AIDS Commission in implementing the macroeconomic assessment of HIV/AIS project, a first for Uganda.
Indeed, although there is awareness of the general economic impacts of HIV and AIDS in Uganda, little work has been done on quantifying these impacts, and particularly on quantifying the impact of alternative policies towards dealing with HIV/AIDS. The lack of quantitative information hindered macroeconomic planning and the formulation of an appropriate HIV/AIDS response.
In particular, while there is awareness of the need to scale-up the response to HIV and AIDS, there is concern that macroeconomic instability could undermine the great strides that Uganda has made in achieving macroeconomic stability over the past 15 years. Hence there has been uncertainty over the level of investment that should be made in responding to HIV and AIDS in Uganda. There has also been a lack of understanding as to whether the benefits of a rapid scale-up of treatment would be primarily economic, or social, or both.
The study shows that Uganda cannot sustain economic growth while at the same time financing the cost of treating people infected with the disease.
If donors pulled out of paying for Anti Retroviral Therapy (ART) programme, the report says, Uganda’s economic growth would drop to below 3% per annum due to the high cost of treatment.
However, the report also notes that provision of anti-retroviral treatment to the affected population would contribute about 0.6% growth to the GDP annually. It further shows that spending on prevention efforts would be more cost effective if Uganda is to sustain current economic growth rate.
Uganda has HIV prevalence of 6.7% and about new 130,000 infections each year—which translates to slightly over 10,000 new cases per month. With about one million living with HIV/AIDS, the pandemic is denying the country a significant contribution of a big labor force. It also has negative effects on the economy because of the high cost of treating opportunistic infections associated with the disease.
The report also said that a drop in labor and investment due to HIV-AIDS deaths will translate into a slower growth in wages, over the next 10 years, fuelling more labor migration out of the economy.
“Our surveys have found that a substantial portion of income that would be used in spurring on investment is used in treating opportunistic symptoms caused by HIV,” Jeffries said. He added that those affected by HIV/AIDS spend heavily on treatment over a long time and ultimately on funerals.
Because it affects the poor more than it hurts the well-to-do, the report says, HIV/AIDS increases poverty rates in the country by about 1.4%.
“When a poor family is affected by HIV/AIDS, the pain of poverty is felt more as it increases poverty by 2% on individual homes across the country,” Dr. Jeffries said while presenting the findings of the study.
He cited the public service as the sector with the highest HIV prevalence at 15%—more than two times higher the national average of 6.7%. It is followed by the hotel industry.
“Those with more wealth are more prone to recreational habits that predispose them to infection,” said Jeffries.
Jeffries further explained that the sectors where the skilled and unskilled people meet also have high HIV prevalence, which is why education is severely hit.
“The high HIV prevalence in this (education) sector (9%), explains the high rates of absenteeism at work,” he said of teachers.
At the recently concluded Education Sector Review workshop, head teachers appealed to the Ministry of Education to provide part-time teachers, who would be called in to help whenever a teacher is sick for a long period.
Most HIV-related deaths occur in the age group 25-54, the most productive age. The cost of this loss of vital human resource on the economy is projected at 8% each year. Yet this does not cover the security services which the survey left out.
According to the survey, it costs about $5,000 (Shs 9 million) each year to provide anti-retroviral treatment per person. Currently, the government contributes only about 15% of the cost of procuring and dispensing ART drugs.
Donors contribute about 85%. Under the 5-year National Strategic Plan, this expenditure is expected to go up from $170 million to $511million by 2012.
But the researchers noted that Uganda’s severe logistical problems and corruption would make it hard to achieve the intended benefits.
Besides, Jeffries pointed out, the bulk of funds directed towards the fight against HIV are disbursed outside the budget—directly from the donors, which presents a problem for the central bank to absorb. If not carefully handled, he said, it could lead to inflationary pressure.
The Commissioner of Planning in the Ministry of Finance, Longino Tisaasirana, said the findings of the study are providing useful information as Uganda is currently developing its 5-year National Development Plan. He congratulated the research team and that UN system in Uganda led by UNDP for supporting the initiative which was the first of its kind in Uganda. He noted that Uganda has been acclaimed as a leader in HIV/AIDS response globally but had never established what would be the impact of this pandemic to its economic growth efforts.
Speaking at the same occasion on behalf of the UN, Ms. Mai Harper, UNAIDS Country Coordinator, noted the UN and other Development partners in Uganda were hopeful, that evidence collected during the implementation of this study will inform key development planning processes such as: development of Nation Development Plan, national budgeting process for 2009/2010 financial year, implementation of the National Strategic Plan (NSP) on HIV/AIDS response 2007-2011, review of sector investment plans, Mainstreaming agenda of HIV/AIDS in sectors and district plans and different development partners and Government cooperation frameworks.
Reacting to these findings, Uganda AIDS Commission Director General, Dr. Kihumuro Apuuli, said that more needs to be done to deal with the effects of HIV.
“The problem is bigger than most people are talking about presently,” he warned. “We need every sector in society to find its own answers to this problem.”
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