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Act on HIV/AIDS or face collapse, South Africa told
Quentin Wray. 24 July 2003. Business Report. Republished courtesy of Independent Newspapers (Pty) Ltd.
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HIV/AIDS might have already pushed South Africa to the brink of a progressive economic collapse, a new World Bank study, released internationally yesterday, has shown.
"If nothing is done to combat the epidemic ... a complete economic collapse will occur in three generations," the bank stated.
But it also said that if there was optimal spending on combating the disease and if there was a pooling of family responsibilities to ensure children were raised by other adults when one or both of their parents died, economic growth could be maintained, albeit at a slower rate.
In the report, entitled The Long-run Economic Costs of AIDS: Theory and an Application to South Africa, the World Bank said the pandemic would have a far greater economic impact than previously thought.
Shanta Devarajan, a co-author of the new research findings and the chief economist of the World Bank's Human Development Network, said countries facing an HIV/AIDS epidemic on the same scale as South Africa could face economic collapse within several generations, with family incomes being cut in half, if nothing was done quickly to fight the epidemic.
Debrework Zewdie, the director of the World Bank's Global HIV/AIDS Programme, said that while there was "much economic analysis" to show how costly it was to provide prevention, care and treatment to the millions that were infected and affected, there were far fewer studies that showed how costly it was not to act. "This new study will help fill this gap."
Clive Bell, a visiting World Bank research fellow and professor of economics at Heidelberg University, said the study "confirms how important it is for policymakers to act swiftly and effectively to prevent the spread of HIV/AIDS, and to treat those with the disease".
The bank said that while economic damage might appear to be slight in the early phases of the epidemic, over time and as the economy slowed down it would have several important implications for economic policy.
The first was the threat of worsening inequality. If the children left orphaned were not given the care and education enjoyed by those whose parents remained uninfected, there would be increasing inequality among the next generation of adults and the families they formed.
Secondly, by killing mainly young adults, HIV/AIDS seriously weakened a country's tax base and reduced its ability to finance public expenditures, including those aimed at accumulating human capital, such as education and health services not related to HIV/AIDS. This intensified the damaging impact of HIV/AIDS on economic growth over the long run.
Slower economic growth meant slower growth of the tax base at the same time as governments faced growing demands to treat the sick and to care for orphans.
Over the past few years the World Bank has committed $1.6 billion in grants, loans and credits for HIV/AIDS programmes worldwide, and the US government recently pledged a $15 billion five-year plan to combat HIV/AIDS in Africa and the Caribbean.
According to Alison Hickey, the head of the Institute for Democracy in SA's AIDS and public policy research unit, the South African government would spend R8.5 billion over the next three years on direct and indirect HIV/AIDS interventions. |
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