The majority of the population that this disease is infecting is the young adults, leaving behind a generation of children who are growing up without the love and care of their parents.
Economies tend to react more dramatically to economic restructuring than to long, slow corrosions as those wrought by AIDS.
However, it is clear that the epidemic has profound implications for economies in affected regions as primary wage earners and caretakers fall sick, require care, and eventually die, usually consisting of individuals of prime working age Lewis, The former refers to the cost of treatment associated with HIV related illness, which has serious implications for health care budgets around the region.
Those segments of the population that are poverty-stricken stand to lose the most as pressures on the health budgets increases resulting in higher medical costs. Indirect costs are more difficult to measure as the refer to loss of value of production, the loss of current wages, the loss of the present value of future earnings, training cost of new staff, high staff turn-over, cost of absenteeism, higher recruitment costs, the drainage of savings, amongst others.
A lower labour force; 2. Lower labour productivity through absenteeism and illness; 3. Cost pressures for companies through benefit payments and replacement costs; 4.
Lower labour income, as employees bear some of the AIDS-related costs; 5. Lower population translating into lower expenditure; 6.
Increased private sector demand for health services; 7. Higher government expenditure on health services. The economic consequences of HIV suggests that that the sector that will be hardest hit will be mining, followed closely by transportation and storage, and that about 27 percent of current mine workers and 22 percent of all transport and storage workers will die of AIDS by ING, This will have an important knock-on implication for the region as a whole as South Africa is the largest and most dynamic economy in the continent.
It should be emphasised that the impact on human and social development will be much more profound than reflected in limited indicators such as GDP or per capita GDP.
These impacts would be felt throughout the economy, from the macro-level to the household, particularly as wage opportunities become scarcer. It is, however, only a small part in some contexts: However, with the decline of the mining and manufacturing industries in a number of southern and east African countries, particularly South Africa and Zimbabwe, significant changes in the rate and extent of labour migration have occurred and hence in the degree of success of such strategies.
This indicates that rural livelihoods are complex and aimed at managing risk, reducing vulnerability and enhancing security and are therefore based upon environmental stability. It is therefore important to have a sense of both the role of land and the broader labour market and macro-economic environment, which often underpin the incomes within the rural economy and the diverse livelihood strategies.
More than two-thirds of the population of the 25 most-affected African countries live in rural areas. Information and health services are less available in rural areas than in cities.A number of studies into the impact of AIDS on the South African economy were completed in These use different methodologies and assumptions but agree on the outcomes.
The South African economy will grow more slowly because of AIDS 20, HIV/AIDS poses to the South African economy, rather than the challenges during the first 10 years of democracy 3.
Section 2 describes the main economic impact channels of the HIV/AIDS epidemic.
Besides the human cost, HIV/AIDS is having profound effects on Africa's economic development and hence its ability to cope with the pandemic .
One review reported that the annual costs. the social and economic impact of AIDS on the individual countries of southern Africa.
HIV/AIDS cuts across all sectors and is a major constraint to development in the region.
In the South African context, at least two macroeconomic modelling exercises have been conducted seeking to illustrate the potential impact of HIV/AIDS on the South African economy (Aliber, ).
In the one, ING Barings identified seven “key impact channels” that link the demographic effects of AIDS to the South African economy (). The economic impact of HIV/AIDS within the labour market subsequently influences Firms and General Industry, thus affecting the overall macro-economic impact of the pandemic.
This will be discussed in the following section.