The response of African businesses to HIV/AIDS

This paper is to summarizes what is known about the internal costs of HIV/AIDS, such as increasing absenteeism, higher pension payouts, and breakdowns in worker discipline and morale, to companies in Commonwealth countries in sub-Saharan Africa. The authors identify a dozen different types of workforce costs that HIV/AIDS will impose on African companies in the coming years. After briefly reviewing existing estimates of the costs of HIV/AIDS to business, they present a model for assessing these costs and describe some of the strategies companies are adopting to reduce the costs.

The paper argues that companies, while bearing some of the costs of AIDS prevention and care internally, will be able to shift many of the internal costs of HIV/AIDS onto governments and households. Doing so may make sound business sense and even be necessary for their survival.

Transferring costs to government, to households, and to a lesser extent to other companies is a rational response by profit-maximizing businesses, and it should be expected. Companies will avoid costs because they can; governments and households will bear those costs because, in most cases, they cannot avoid them. Governments in the Commonwealth countries of Africa can and do constrain the actions of private companies through regulations. However, if governments demand too much of the private sector, companies are likely to fail or, if they can, relocate to lower-cost countries. Private sector bankruptcies and relocations are an undesirable outcome for everyone: governments lose tax revenue, employees lose jobs, and communities lose investment and commercial activity.

Because of this threat and the importance of a successful private sector to achieving economic growth in Africa, the moral argument that businesses should bear all the costs of HIV/AIDS among employees is considered by he authors to be a risky one. They end by arguing that recent statements from development organizations implying that the private sector is the solution to the HIV/AIDS epidemic in Africa should thus be viewed with caution. Private sector action is only one of the many solutions that will be needed to sustain social and economic development in the face of this crisis.

[Adapted form authors]