AIDS Economics Home Page

Thank you, co-chairs. I am honored to share the panel with such distinguished leaders in this global struggle.

I speak to you today both as a World Bank Vice President and as a Zimbabwean who has lost people to AIDS. From both of those vantage points, AIDS is of grave concern to me. For AIDS is undermining development around the globe, and it is ravaging my home continent most of all.

Figures just released by UNAIDS show the epidemic is even worse than any of us had expected. Thirty million people are living with HIV/AIDS worldwide. In almost half of Sub-Saharan Africa, adult HIV prevalence exceeds 8 percent. In Botswana and in my own home country, Zimbabwe, one in four adults is infected.

This situation calls for a renewed response to the epidemic—not only as a health issue, but as a development issue. And that response must be built on partnerships in which we all play an active part—but it depends above all on governments. Let me say a few words on the development impact of AIDS, then explain why governments must take the lead in confronting AIDS, and conclude by discussing the role of international funding.

 

AIDS Is A Development Issue

Why is AIDS a development issue? Let me suggest five reasons. First, AIDS is turning back the clock on development.

The epidemic overwhelmingly targets the developing world, where 90% of persons with HIV/AIDS live. In the short time I speak today, another 200 people will become infected—virtually all in developing countries. AIDS destroys promise; it shortens and impoverishes life; and it crowds out vital human investments.

One of the best overall measures of development is life expectancy, which increased by 24 years in the developing world from 1950 to 1990. AIDS is now turning back those decades of progress. Life expectancy has already declined by as much as 12 years.

Let me bring this point closer to home. From independence in 1980 and for nearly a decade thereafter, Zimbabwe made stunning health advances. But AIDS has already erased all the life expectancy gains made since then. Further, if the worst projections come to pass, by about 2010 life expectancy will return virtually to where it stood the day I was born, in what was then Southern Rhodesia, half a century ago.

Second, AIDS is a development issue because at the household level, AIDS hits families where it hurts most-in the most productive ages and especially among women. In 20 Zambian firms, worker mortality increased five- to eight-fold from 1987 to 1992. Women-the poorest but most important agents of development-are especially vulnerable because of biology and social and economic inequality. In Africa, women under 25 are the fastest-growing group with AIDS.

And poor children’s development suffers when an adult dies from AIDS: 7.8 million African children are orphans, who typically have much higher malnutrition and much lower school enrollments.

Third, AIDS and poverty together drive a vicious circle. AIDS thrives on poverty at the same time that it deepens it. This blocks a central goal of development, which is to better the lives of the poor. Poverty and inequality are both strongly correlated with high HIV. That means that countries that are poorer or more unequal are those hardest hit by the epidemic. The world’s poorest region, Africa, shows this vicious synergy in action. Twenty-one million Africans have HIV/AIDS; and the 15 countries with highest HIV rates are all in Africa.

Fourth, AIDS forces countries to make tragic choices—between today’s lives and tomorrow’s lives, and between health and the dozens of other vital investments for development.

Giving palliative care and treating opportunistic infections in a typical case costs almost three times the average per capita income. AIDS increases the price and reduces the availability of health care for everyone, because safety costs, recruitment costs and staff attrition all rise. The best estimates are that in a “standard” developing country with 5% HIV prevalence, total national spending on health will increase by more than 40 percent. Inevitably, AIDS will deprive other sectors. For example, the cost of treatment for one AIDS case for a year is equal to sending ten children to primary school for a year. This hurts poor nations, and most of all the poor within those nations.

Finally, development itself can contribute to the spread of AIDS.

Labor migration, urbanization and culture changes can fuel the spread of AIDS. For example, Africa’s urban population is growing fast—5% per year. Among urban sex workers, HIV rates are as high as 50% in Tanzania and over 80% in Zimbabwe. Specific projects also carry the danger of spreading the epidemic. We at the World Bank in particular must recognize these hazards and include costs of mitigating AIDS in planning development projects.

You will notice I have said nothing about macroeconomic effects. You would think such an epidemic could have a vast macroeconomic impact.

In truth, we simply do not know yet. Models suggest the impact will be comparatively modest—perhaps 0.5% annual decline in per capita income. But I have to tell you that for me, these numbers simply don’t matter. Development is more than GDP. Where life is getting poorer, where life is getting sicker and shorter, development is clearly deteriorating.

To summarize, AIDS reverses the gains of development, undermines the foundations for development, and targets those who are most vulnerable and most important in the development process. Of few other diseases is this true, and none on the scale of AIDS. That is why I say, AIDS is a development issue.

 

The Vital Role of Government

So you may ask me-all right, Madavo, what must be done? My answer is: Governments must take a strong lead in confronting AIDS. Why? Because there are things that only governments can do, or make it possible for others to do.

First, only governments can put AIDS at the center of the development agenda-and not just on the health agenda. Governments need to give AIDS a high profile, speak openly about it, make it publicly acceptable to discuss, and ensure it is addressed in every sector.

Second, only governments can create more favorable conditions for others to play their roles. Since 1980s, civil society, NGOs and some religious groups have taken the lead against the epidemic. They continue working hard in difficult circumstances. Governments can create the policy and legal environment to make it easier for them and everyone else. In other words, governments cannot succeed alone. Partnerships with persons affected and infected by this epidemic, with NGOs, with churches, and with the private sector are vital, especially to reach the marginalized.

Third, only governments can ensure adequate public information, a “public good,” because private markets will not do so. An unduly large share of people still don’t know how to protect themselves. In surveys, only about half of Africans with nonregular sex partners mentioned condoms as a means of protection. People also need to know how they are at risk and learn skills to reduce it. Governments can provide reliable information on costs and benefits of tools, efficacy of treatments, trends in infection, and high risk practices. The good news is that information programs work.

In Thailand, a government-led condom program, combined with public information on HIV prevalence among sex workers, led to growing use of condoms and slowed STD/HIV epidemics.

Fourth, only governments can effectively reduce the spillover effects of unsafe behavior on others. Governments can reduce legal and social barriers, and subsidize costs, of safer behavior to help reduce consequences for others. Lower the cost of condoms-not only the price, but the inconvenience and embarrassment-through social marketing and legal changes. Make treatment of STDs and infectious AIDS-opportunistic infections easier, cheaper and more convenient. And lower cost of safe injecting for drug users. Again, we know these programs work. We know this from countries such as Uganda and Thailand.

Fifth, only governments can adequately protect the poor and those who are especially vulnerable to HIV/AIDS. By breaking the silence, eliminating discrimination against persons with HIV/AIDS, and protecting the marginalized. By reducing household poverty to keep women out of the sex trade, while improving access to information, condoms and STD care. By ensuring that the poor have access to adequate health services. By empowering women through economic independence, girls’ education, and female-controlled preventive methods. And by ensuring appropriate sexual education and reproductive health programs, especially to young girls and boys.

Above all, governments need to act now-or confront even more tragic choices in the near future.

Where governments have acted boldly, HIV incidence has declined. Where prevalence is low, early interventions can reduce ultimate prevalence. Where prevalence is higher, acting now protects the poor and the next generation.

And this is my message. There is still time. Governments of 30 nations, representing nearly half the developing world are in areas with early HIV/AIDS epidemics, and therefore in a position to act quickly, decisively, and with results.

Now, as you all know, my institution spends much of its time explaining what governments should not be doing, such as running costly state enterprises or investing in things with low development impact. We do so precisely so governments can create the space to focus on core tasks where its leadership is vital. I submit to you that AIDS prevention is one of those tasks—not only a legitimate, but a fundamental responsibility of government.

 

The Role of International Partners

What, then, are the roles for international funding agencies in this government-led partnership? I suggest it is to support governments in four ways.

· Keep AIDS at the center of the policy agenda, both at the macro and project levels.

· Supplement country resources, especially in poor countries with severe epidemics.

· Broadly disseminate the latest information (biological, technical, policy) and facilitate cross-country sharing of experience.

· Facilitate those international public goods that will not develop without external support- like research into a vaccine, and evaluation of programs.

Now what about the Bank? As most of you know, the World Bank is a public institution owned by some 180 governments. Probably every country represented in this room is a shareholder of the Bank. The goal of our work is to reduce poverty and improve the quality of people’s lives. Over the past 15 years, this has meant vastly increasing investment in human development-notably health and education. Today the Bank is the largest external source of finance for health projects in the developing world. We have supported AIDS programs since 1986. We have committed $800 million to 70 projects worldwide, nearly all from our soft-loan fund, IDA. Let me mention a few examples.

In Brazil, a $160 million innovative project has financed NGOs/CBOs who have reached sex workers, street children, and drug users, and revamped laboratories. In Uganda, we have supported three projects, including an STI project which promoted safer behavior, condoms, promotion of STI care-seeking, and STI treatment. In India, an $84 million project has focused especially on youth. In all three of these countries, much of loan proceeds went to treatment for opportunistic infections and STDs.

We also do more than just country programs. We have also supported regional programs in Africa, Southeast Asia, and Latin America to strengthen regional collaboration and improve regional consultation. Globally, the Bank has just set up a task force with the International AIDS Vaccine Initiative to explore ways of funding that would encourage industry to develop a vaccine more quickly. And we continue working with bilateral and multilateral partners, including UNAIDS.

However, I would be the last to say that we have done enough. We need to do more to move beyond the health sector; to disseminate information; and to promote global goods. Because our resources are loans to governments, we cannot start programs on our own. Governments must first seek our support. But along with UNAIDS and other partners, we are adopting a new strategy to expand our help to governments in several ways:

· By supporting top-level commitment by national leadership

· By developing comprehensive, multisectoral programs that consider AIDS in macro policy development and project design, preparation and implementation

· By expanding investments in women’s health, education and opportunities

· By working on behavioral change to overcome social/cultural barriers

· By designing and implementing cost-effective prevention, care and treatment of persons with AIDS and for the millions of AIDS orphans

· And by putting youth at the center and removing legal barriers to helping them

But only where governments show leadership can external support make a difference. This includes committing their own resources. We now know that where the policies are right, aid has a large effect on development. But where policies are wrong, aid is literally a waste of money. We in the international community can help, but governments must lead.

Let me close by speaking again as an African. These are hopeful times in Africa. With four straight years of good economic performance and political openings across the continent, Africa stands on the threshold of real opportunity. Properly managed, this could be what World Bank President Wolfensohn has called “Africa’s moment.” But the challenges are formidable, and if they are not addressed head-on, the moment will swiftly slip away.

AIDS is clearly among the most daunting of the challenges that face Africa. Yet let us remember that unlike the challenges that have gone before-wars of independence, global economic upheaval, droughts, floods-AIDS is one hundred percent preventable. This adversary moves quickly. Those countries who delay, invite defeat. But those countries who take fast, forceful, coordinated action can control this scourge and keep clear the path for development. What African governments save will not only be millions of African lives, but Africa’s future. My wish is that African leaders-and, indeed, all leaders throughout the developing world-will act boldly and act now.

 

Thank you.

The World Bank Development Economics Development Research Group

AIDS Economics Home Page