The Business Response to HIV/AIDS: Impact and lesson learned

the utilities that are essential inputs for most market activities. Business is also dependent on the
education sector for its future workers, managers and business leaders. This is a sector that is acutely
impacted by HIV/AIDS through reduced numbers of experienced teachers and numbers of children
attending school (due to lower household incomes, caring for family members, becoming orphaned and
HIV/AIDS infection). For example, in Zambia 40 percent of teachers are infected with HIV and are
dying at a faster rate than the number of teacher graduations.2
"HIV/AIDS is a major development challenge, if not the most important development
challenge confronting us in Africa today."
James Wolfensohn, President of the World Bank Group
Businesses do not work in isolation and so the impact of HIV/AIDS on all productive sectors, on the
business supply chains, the effective labour supply and intellectual capital directly impacts on individual
companies. These impacts can significantly affect the ability of business to operate. This may lead to a
reduction in foreign direct investment, discouraged by these potential production deficiencies
exacerbated by HIV/AIDS. There is a danger at a national level of governments, fearful of a possible
negative business response to their experience of the epidemic, maintaining a policy of denial.
There are limitations with macroeconomic impact analysis, such as the unreliability of data on
prevalence rates and demographics. However, despite the lack of available information on individual
companies, it is much easier to identify clear and substantive impacts.
2. INDIVIDUAL COMPANY LEVEL IMPACT
The importance of identifying the impact of HIV/AIDS on individual companies is two-fold:
i. Long-term sustainable business responses will only be achieved if all stakeholders (leadership,
managers, personnel, shareholders) within companies are convinced of the real business rationale for
action. In particular, a committed and knowledgeable leadership is paramount, as highlighted in
many of the Profiles in this report.
ii. A clear understanding of the specific impacts of HIV/AIDS on a company and of the context in
which these occur (e.g. modes of transmission), is a critical factor in the development of effective and
appropriate policy and programme responses.
Beyond the macro-level impacts on markets, labour, savings and investments that are described above, it
is possible to identify two broad areas in which HIV/AIDS impacts on individual business operations:
A. Productivity
B. Increased costs
Basic business principles combined with extensive experience clearly provide the direct link between
HIV/AIDS, declining productivity, rising production costs and declining company profits. For example,
a USAID-funded study of a transport company in Zimbabwe estimated the total cost to the company
arising from HIV/AIDS was equal to 20 percent of profits.3 In this case, over half of the costs incurred
were through higher health-related costs. This causal relationship between HIV/AIDS and declining
profitability is more complex than this evidence initially implies, as illustrated in Figure 3.

14 THE BUSINESS RESPONSE TO HIV/AIDS: Impact and lessons learned