The Cost of HIV/AIDS to Businesses in Africa

Objectives: Better information on the potential costs of HIV/AIDS to the private sector is needed to determine whether companies have a financial incentive to invest in prevention and treatment interventions. Our objective was to estimate the cost of HIV/AIDS to businesses in Africa using company-specific data on employees, costs, and HIV prevalence. Methods: Six formal sector enterprises in South Africa and Botswana provided detailed human resource, financial, and medical data and carried out voluntary, anonymous HIV seroprevalence surveys. We estimated the present value of incident HIV infections with a 9-year median survival and 7% real discount rate. Costs included were sick leave; productivity loss; supervisory time; retirement, death, disability, and medical benefits; and recruitment and training of replacement workers. Results: HIV prevalence in the workforces studied ranged from 7.9% to 25.0%. HIV/AIDS among employees added 0.4-5.9% to the companies’ annual salary and wage bills. The present value of an incident HIV infection ranged from 0.5 to 3.6 times the annual salary of the affected worker. Costs varied widely across firms and among job levels within firms. Key reasons for the differences included levels and stability of employee benefits, HIV prevalence, and the contractual status of unskilled workers. Some costs were omitted from the analysis due to lack of data and results should be regarded as quite conservative. Conclusions: AIDS is causing labor costs for businesses in southern Africa to rise and further threatens the competitiveness of African industry. Research on the effectiveness of workplace interventions is urgently needed.