AIDS constitutes an alarming threat in Lesotho, where nearly a quarter of the adult population is estimated to be HIV positive — the third highest HIV prevalence in the world.
First reported in 1986, HIV spread rapidly after 1993, when adult prevalence was about four percent.
By 2004, women and men in all income, education, and migration strata had an HIV prevalence of 15 percent or higher, according to the Joint United Nations Programme on HIV/Aids (UNAIDS) Epidemic Update 2009.
While the costs in terms of human suffering are well documented, the associated macroeconomic costs have tended to get little media coverage.
Even when the coverage has been extended to economic issues, it seems for the most part the cost of Aids has been grossly underestimated.
I believe that the low cost estimates stem from a particular view of how the economy functions, namely, where the Aids-induced increase in mortality reduces the pressure of population on existing land and capital, thereby raising the productivity of labour.
Even if there is a decline in savings and investment as per the relocation of expenditures toward medical care, its impact is dampened by the countervailing effect of increased labour productivity.
Consequently it may be said that the net effect on GDP per capita will be very modest. But is this really so?
The above argument does not take seriously the importance of human capital to the long-term macroeconomic fundamentals and economic growth.
We can say the above logic is perhaps in line with the older classical theories that did not account for human capital as an asset in the economy.
However in line with contemporary thinking, modern economic theories agree that the accrual of human capital is the force that generates economic growth over the long run.
If, as is highly plausible, the mechanism that drives the process is the transmission of knowledge and abilities from one generation to the next, then a widespread Aids epidemic will result in a substantial slowing of economic growth and worse may even result in a total economic collapse.
The argument for the debilitating effects of Aids to economic growth can be made in three steps.
First, Aids destroys the existing human capital in a selective way. It is primarily a disease of young adults.
A few years after becoming infected, it reduces their productivity by making them sick and weak, and then it kills them in their prime, thereby destroying the human capital progressively built in them through child-rearing, formal education and learning the job.
Second Aids weakens or even wrecks the mechanisms that generate human capital formation.
In the household, if one or worse, both parents die while their offspring are still children, the transmission of knowledge and productive capacity across the two generations will be weakened.
At the same time, the loss of income due to disability and early death reduces lifetime resources available to the family, which usually results in children spending less time in school.
Third, as the children of Aids victims eventually become adults and bear children themselves, with limited knowledge received from their parents, they are in turn less able to raise their own children and invest in their education.
As can be clearly seen Aids creates a never ending vicious circle.
In recent years we have seen the above theory play itself out in Lesotho whereby HIV/Aids-related workplace absences, illness, premature death, and early retirements have led to loss of skills and experience and a decline in productivity. The epidemic has grossly affected development, increased inequalities, and put further pressure on an already strained economy, as well as placed higher demands on the health care system.
A 2004 World Bank report estimated that HIV/Aids will reduce gross domestic product of Lesotho by almost a third by 2015.
Our government deserves credit by declaring HIV/Aids a national disaster for so many other African governments have tended to turn a blind eye to the Aids issue.
Through collaboration with various international partners like the USAID, the Clinton Foundation, Medecins Sans Frontieres, Partners in Health, and the Ontario Hospital Foundation, the government of Lesotho has overseen millions of maloti being diverted to Aids related projects.
Mortality rates themselves have declined due to the wider dissemination of the various Aids drugs but the infection rate has not decreased substantially and has in fact stabilised at around the 23 percent mark.
Going forward it will be crucial to recognise the importance of building local capacity in the health system, both on the public and private platforms, decentralisation and strengthening of the health system as this pandemic requires a multisectoral approach.
Further soul searching has to be done with regards to the effectiveness of Aids programmes undertaken thus far this new century.
It is my view that the Aids issue has to be looked at more and more from the vantage point that sees its economic implications, and future solutions and programmes have to be those that involve the community more directly.
The persistent infection rate shows that the message is not getting through and new approaches to dialogue and communication have to be explored.
Lechesa is a freelance writer based in Maseru
