Microeconomic Impact of AIDS in Africa

The world has been greatly affected by the HIV/AIDS pandemic indiscriminately although some parts have proved to be more vulnerable than others. It has ravaged the people since the 1980’s when it was first discovered. Despite this, it has been established that more than two thirds o those who are infected by the scourge are found in Africa and especially in the sub-Sahara part of Africa.

This is in spite of the fact that this area consists of only 10% of the population in the world. This then means that a very big percentage of those in Africa are suffering from HIV/AIDS. It is sad to realize that the majority of those who are infected and affected by the disease are those in the working age bracket. This then affects all aspects of life including social, cultural, and economic.

In all these aspects, there has been a change towards the negative. Those who are not infected are affected by having someone close to them suffering from the disease. In almost every household, there is someone suffering from it. It affects the economy by reducing the laborer force and at the same time increasing costs. This affects the industries, households and enterprises.

It also affects the government because of reduced taxes yet the expenditure has been increased on those who are in need of health care. In these countries, there was already an economic problem before the advent of the disease and this has been escalated by the impact of the disease. It leads to the inability of these economies to advance since most of the resources are channeled towards efforts of curbing the disease (Chaminuka P., Anim F., Debustus L. K. & Nqangweni S. 2-8).

The mainstay of most of the African countries is agriculture. The majority of people practice small-scale agriculture and it is among the most affected sectors in the continent. This is because resources are withdrawn from farming and directed to the healthcare of the ailing individuals. This occurs in various ways as will be explained in this paper.

First, the labor resource is reduced greatly because those who are working in the farms are the same ones who get sick. This then leads to lack of labor for the farms and hence the productivity of these farms is greatly reduced. Furthermore, the money that can be used to hire laborers is already being used in the healthcare of the sick person (http://www.avert.org).

Secondly, the monetary capital required in the advancement of farming is already being used by the family in the purchasing of drugs and general health care of the sick person. This then means that the implements necessary for the improvement and increase of productivity are not purchased. It is also affected by the loss of income earners either through death or to the ravages of the disease.

If the person who is required to infuse monetary capital to the farming business loses his or her job due to the disease, then it means that the household is by-passed by much technological advancement related to the agricultural field. When unable to purchase these technologies, productivity is low and hence the amount of income that can be earned from the farming is greatly reduced.

Lastly, in order to deal with the situation brought about by the disease, children end up becoming the laborers in the farms. They do this because their parents may both be suffering from the disease, as is the case most of the times, and therefore unable to work in the fields. Since the children cannot be able to work as efficiently and effectively as the adults can, they end up producing for subsistence use only.

This means that food insecurity is on the rise because not enough is being produced to support the countries demand for food. This ends up leading to a very acute shortage of food and the countries end up depending on food aid from other countries. Since agriculture as pointed out earlier is the mainstay of most economies, it means therefore means that even the economy is greatly affected (Chaminuka P., Anim F., Debustus L. K. & Nqangweni S. 2-8).

In Africa, there is a high rate of illiteracy and this affects their ability to compete for work on both the local and the international level. This has always been so since the independence era of most countries such that most of the policies put in place were aimed at reducing the level of illiteracy that was there. Since most of these policies failed it means that the problem was still prevalent even before the onset of the disease. This problem was made even worse, by the presence of HIV/AIDS through the impact it has on the education sector.

When the disease hits a family, there is need to use all the resources available in taking care of the patient and also in the funeral expenses, in case the person dies. The reduction in money for use in the house leads to a reduction in the previously experienced expenses. The most reduced expenses are spending on some of the basic needs that are deemed disposable. These basic needs usually include clothing and education. The money to cater for the school uniform and for school fees is used in health care of the patient and hence leads to low education and in the long run an increase in the rate of illiteracy (http://www.avert.org).

Education is also affected when both parents die of the disease and this is very common. It then means that some or all of the children end up dropping out of school so as to take care of themselves and also the young ones. If the parents are still alive but suffering from the disease, the children, especially the female children, drop out of school so as to take care of the parents.

The lack of education means that the majority of youngsters are only able to get menial manual jobs. They are unable to get technical jobs that need skills because they have not learned them in school. It ends up making the country look for expatriates to do the jobs that could have been done by local people if they had the skills.

This impacts on the economy negatively because the expatriates demand for more money than what would have been paid to the locals if they were the ones employed in the same capacity. This ends up straining the resources available because the amount used in salaries for the expatriates reduces the profits that could have been made. In other words, the profits are not maximized.

The low levels of education also lead to a lot of unemployment because the manual jobs can be done through the technologies introduced. The manual employees end up replaced by the machines increasing unemployment level. The high rate of unemployment leads to lack of consumption of goods and services because the people do not have money to spend (http://www.avert.org).

The decrease in labor also affects the foreign direct investment. This is because the demand for labor becomes higher than the supply. This leads to an increase in wages and the necessity for the use of expatriates. The foreign direct investment is important in the improvement of the economy but the foreign investors can only be attracted if there is a chance of making profits. For the profits to be made, the resources required must be available at the minimum costs possible.

Once labor, which is one of the resources, becomes too expensive to enable the company maximize its profits, the investors tend to shy away from the country. This means that the one of the various avenues through which the country can be able to improve its economy has been affected.

The various companies that have been put up also make a lot of losses leading either to closure due to reduced profits or the company may not close down but the profits being made are affected. This is because of the increased costs caused by the diversion of the productive resources towards health care, funeral benefits and also the pension fund.

This is brought about by the early retirement caused by the incapacitation of the ailing workers due to poor health. The skills are also reduced as an increased number of skilled workers succumb to the disease. This affects the company especially since resources have been used to train the workers and they may not have recovered the cost by the time the person retires or dies.

Businesses are also affected in that there is low productivity by workers. This is because the disease brings about an increase in the rate or absenteeism. Once the workers are constantly absent due to the necessity to seek medical care, it then means that the work is not done well and this affects the amount of profit that the businesses make. Furthermore, with the effect that the disease has on individual households, it leads to a reduction in the demand for the goods and services that are provided. This leads to an increase in dead stock which in turn may lead to the closure of some businesses.

The lack of good profits by businesses and companies affects the economy as a whole in that it affects the taxes that the government gets from the business sector. This leads to reduced revenue thus affecting the services that the government is able to provide to the citizens. This is combined with the increase in health care spending by the government.

The government ends up having to borrow from both foreign and local lenders so as to be able to meet the targets of the budget that they have fixed in any given financial year. The result of the heavy borrowing is an increase in the rate of inflation. This affects each household because the money they have now purchases less than it would have before (http://www.avert.org).

In the provision of health care, it has become very expensive for the individual households. This is caused by the fact that there is massive drainage of health care workers in most of these countries. There are too many people who are infected with the disease causing an increase in the workload of the healthcare workers.

When this is combined with the low wages that they get, it leads to their immigrating to other areas where they can get more money for the services that they give. In order to maintain those who have been left in the service, there is need to increase their wages and this cost is pushed on to those who are seeking health care making it next to impossible for them to acquire it especially the HIV/AIDS patients.

There is also a problem of having a large number of infected health care workers, this is because a major cause o death in the industry thus depleting the number of workers further. This combined with the other two factors are a cause of increase in the cost of attainment of healthcare.

This affects households by reducing the amount of income that can be used for consumption thus affecting the economy. The hospital resources are also under strain because the disease is chronic yet the numbers of HIV/AIDS patients that are using the hospital’s resource are more than those who are suffering from other diseases.

The death of income earners in the various households means that the children who are orphaned become dependants on other income earners. This is if they do not become the heads in their houses. The increase in dependants on the income earners leads to less income used for consumption. There are now more people who depend on the same income thus reducing the real income of the household. There is also the reduction of customers that a business can get because the same amount of money that was initially used by one household is now being used by two households.

Also, the increase in amount of dependants on the few income earners who are now available leads to depletion of savings. Since the income earned cannot be enough to sustain the increased number of dependants, the income earner is forced to use up the saving that they had kept aside. Since savings and investments go hand-in-hand, it means that the rate of investment is also affected. There is less investment by households and also the various businesses because decreased savings causes an increase in the interest rate of borrowing. The decreased rate of investment affects employment.

The income earners usually have to quit working because they have to take care of the ill. This especially affects the female income earners because they have to take care of the family. The female workers and students may end up becoming commercial sex workers which is a job description that is not taxed by the government. In other words, it means that the number of taxpayers has reduced yet the number of workers has increased. By becoming commercial sex workers, they increase their chances of contracting the disease and dying thus continuing the vicious cycle of poverty.

The increase in the work load of caregivers affects their output in their various workplaces. The women who work in industries are unable to produce at optimum level because of increased absenteeism at work. This reduces the amount of income that they get since their working hours are greatly reduced. They may also be fired because they end up becoming a liability to the company because the cost of maintaining them as workers becomes too high for the company. This leads to a decrease in the amount of money that can be spent by the household on consuming. Furthermore with reduced income, there is reduced saving since all the money earned goes directly to consumption.

The assets that people own end up being sold in order to acquire treatment for the sick. Even after death of the sufferers, there are still funeral expenses and hence further sale of the assets. The households are then left very poor with nothing to fall back on especially once the income earners in the household succumb to the disease. Since the savings have already been used up, there is no way that the households can recover their previous economic status and this increases the rate of poverty. In other words, there is an increase in the amount of poor people in the continent (http://www.avert.org).

The households which have been affected by the disease end up depending on other households. They become a burden to them and cause an increase in the debts that these people have. These debts are even made worse by the fact that there are high chances of the income earners losing their employment. To avoid this, the older children end up becoming laborers to support their families.  This has changed the composition of workers to having more children than adults in the labor force. Since the children are unable to be as productive as the adults they are paid poorly. This pushes them further into poverty.

Work cited

AVERT. The Impact of HIV/AIDS on Africa. Retrieved on 29th November 2007 from http://www.avert.org/aidsimpact.htm

Chaminuka P., Anim F., Debustus L. K. & Nqangweni S. impact of HIV&AIDS on Agriculture and Food Security. The Case of Limpopo Province in South Africa 2006 FANRPAN pg 2-8