Zimbabwe: Selected Issues and Statistical Appendix

HIV/AIDS is a major and immediate concern for Zimbabwe. Current prevalence rates are at a level close to 20 percent of the total population, and at over 30 percent for adults in the 15–49 age group. The number of AIDS-related deaths, and of orphans are indicative of the adverse, current and future impact upon a fragile health-care system, fiscal balance, human capital accumulation, production, and economic growth. The food shortages of the past year have exacerbated the situation, as many patients fail to attain adequate nutrition levels and food intake and their families’ coping mechanisms are stretched to the limit. This chapter presents an overview of recent trends in prevalence rates; discusses the impact on social sectors and the strategies being adopted by the government and the international community to address these; and summarizes quantitative estimates of the fiscal burden and overall medium-term macroeconomic impact of HIV/AIDS on Zimbabwe.

Abstract

HIV/AIDS is a major and immediate concern for Zimbabwe. Current prevalence rates are at a level close to 20 percent of the total population, and at over 30 percent for adults in the 15–49 age group. The number of AIDS-related deaths, and of orphans are indicative of the adverse, current and future impact upon a fragile health-care system, fiscal balance, human capital accumulation, production, and economic growth. The food shortages of the past year have exacerbated the situation, as many patients fail to attain adequate nutrition levels and food intake and their families’ coping mechanisms are stretched to the limit. This chapter presents an overview of recent trends in prevalence rates; discusses the impact on social sectors and the strategies being adopted by the government and the international community to address these; and summarizes quantitative estimates of the fiscal burden and overall medium-term macroeconomic impact of HIV/AIDS on Zimbabwe.

III. Economic Impact of HIV/AIDS in Zimbabwe21

A. Incidence

56. Current HIV/AIDS prevalence rates in Zimbabwe are estimated to be 34 percent of the adult population. UNAIDS estimates that by end-2001, approximately 2.3 million adults and children were infected including 600,000 cases of full-blown AIDS, and over 750,000 children orphaned. Health welfare indicators have deteriorated; infant mortality rates have increased from 52 to 67 deaths per 1000 births over the 1990s, largely due to mother-to-child transmission of the infection; life expectancy has declined from its peak of 62 years in 1985 to 43 years in 2001, the major reduction coming post-1992.22 The Ministry of Health and Child Welfare estimates a weekly average death toll of 2,500, totaling to about 1 percent of the population over 2002. Compared to other countries in Southern Africa, the basic statistics are rather dismal. HIV/AIDS prevalence rates and AIDS-related deaths in Zimbabwe are lower than Botswana and Swaziland alone, while no other country in the region reports as high a proportion of orphans in the population as Zimbabwe (6.1 percent of the population).

A03ufig01

Trends in Life Expectancy and Infant Mortality in Zimbabwe: 1982–2002

Citation: IMF Staff Country Reports 2003, 225; 10.5089/9781451841480.002.A003

Source: US Census Bureau, International Programs Center

HIV/AIDS Prevalence in Southern African Countries

(2002)

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Source: UNAIDS/WHO Epidemiological Fact Sheets.

57. Prevalence rates appear to be quite similar across the country, but are higher for young women aged 15–24, and in border areas. Similar prevalence rates in various regions reflect, in part, the mobility and regularity of interaction among populations in various parts of the country.

58. The outlook for longer-term human welfare indicators is bleak (see Box III.1).

Performance of Human Welfare Indicators With and Without the AIDS Pandemic

In 2002, the US Census Bureau’s International Population Center released new projections for a set of human welfare indicators for Zimbabwe from 1980 through 2O50 taking into account the impact of the HIV/AIDS pandemic, and compared them to projections obtained in the absence of AIDS. The main assumption underlying this analysis was that the impact of the epidemic will reach its peak in 2010 (or equivalently, that HIV prevalence rates will peak approximately 5 years prior to 2010). Almost all the indicators reflect the very significant adverse welfare impact of HIV; for example, projected total population in 2010 falls from an estimated 17.5 million with no-AIDS to 12.5 million (more than a 20 percent difference); the crude death rate, which in 2000 was about 18 percent (or over 10 percent higher than without AIDS) is projected to rise to 27 percent by 2010, whereas without AIDS, it is estimated to decline marginally.

Source: US Bureau of Census, 2002, Demographic Projections and Estimates.

B. Social Sector Impact of HIV/AIDS

59. Zimbabwe’s health sector is beset by a number of problems related to adequate supply and quality of health care in the country; specifically, the rapid erosion of the number of skilled medical professionals, and the inadequate supply of drugs, both HIV/AIDS-specific and generic. The increasingly tight foreign exchange situation and increasing inflation from 2001 onward are, to a large extent, responsible for this problem; for example, lack of foreign exchange has made it very difficult for the government to import a range of essential medicines required to combat opportunistic diseases like tuberculosis.23

60. Zimbabwe’s health sector has been hit by a massive exodus of doctors and nurses since at least 1998. According to press reports, in a sixteen-month period through end-2000, over 4,000 nurses and doctors left the country. In 2000, the Health minister noted that each of the country’s five major hospitals lost, on average, 24 senior nurses and three doctors every month, most of them headed for Botswana, South Africa, or the UK. There is considerable evidence that this trend continues unabated even today. A large proportion of health care professionals appear to be moving out of Zimbabwe soon after earning their medical degrees.24 This trend reflects low pay scales common throughout the public sector in Zimbabwe, especially when compared to Botswana and South Africa, where the demand for medical professionals is also increasing owing due to HIV/AIDS.

61. Zimbabwe allocated approximately 3 percent of its GDP to health care in the 2002 budget, an amount totaling Z$34 billion. No budgetary allocations were made towards the purchase of anti-retroviral (ARV) drugs despite a sizeable total allocation of over Z$7 billion to medical care services. While this has been remedied in the budget for 2003, with Z$2.5 billion being allocated for the import of ARV therapy, the Ministry of Health expected that most of this amount would go unspent owing to the lack of foreign exchange. Given an estimated private annual cost of US$300 per person for ARV therapy, the treatment is well out of reach of most Zimbabweans. Other services currently provided through heavy government subsidization include counseling and testing at public health centers in Harare. According to UNAIDS, this service has significantly contributed to an increase in public awareness about HIV/AIDS, as its low cost has encouraged more patients to access it than would have occurred otherwise. UNAIDS also reported that if the government’s foreign exchange difficulties continue, this subsidy may be eliminated, making it prohibitively costly for the average Zimbabwean to pay the private cost of access.

62. The demand for and supply of education are likely to fall over the medium-term, thereby decreasing Zimbabwe’s human capital. The population growth rate has decreased and school enrolments have declined, the latter reflecting the fact that family networks are weakening owing to parental deaths, increasing the number of orphans having to drop out of schools to provide for themselves or younger siblings.25 The increased mortality of teachers and administrators in the education system correspondingly affect supply. The cumulative effect of these changes implies a reduction in human capital accumulation; taken together with the direct decrease in human capital stock because of AIDS deaths, this scenario paints a grim picture for medium to long-term growth in Zimbabwe. In a recent study,26 Haacker estimates that by 2010, the number of teachers that would need to be trained simply to replace those dying from AIDS will be about 83 percent of the total trained, an increase of 30 percent from 2000. This level of teacher replacement may not be possible, as the number of pupils in schools themselves fall, thereby decreasing the size of the pool from which these new teachers can be trained.

C. Government Response

63. Zimbabwe’s National AIDS Policy is the outcome of a multisectoral, consultative process. “The Strategic Framework for a National Response to HIV/AIDS, 2000–2004” of 1999 sought to adopt a number of internationally recommended interventions, including general awareness and behavior change, youth programs, expansion of voluntary counseling and testing, prevention of mother-to-child transmission, ensuring blood safety, prevention of sexually transmitted infections, and surveillance. A National AIDS Council (NAC) was established in 2000 to spearhead and coordinate the implementation of this policy in which specific programs are formulated and implemented at the provincial or district level by 10 Provincial (PAACs) and 83 District AIDS Action Committees (DAACs), with technical assistance provided by the NAC. These action committees are comprised of members of their own communities, who are in a better position to determine the priorities for their district. The process involves field visits of technical facilitators to the DAACs, wherein they undertake planning through community-wide consultation. This process eventually yields the annual plans and budgets of the DAACs.

64. The financing of the DAAC programs is handled through outlays from a National AIDS Trust Fund (NATF), financed through an AIDS levy introduced in 2000, a 3 percent surcharge on assessed income and corporate tax. Zimbabwe was the first country to introduce a tax specifically designed to raise domestic contributions to fight HIV/AIDS. The total cumulative amount collected through the levy at end-2002 was Z$5.2 billion. As a percentage of GDP, the amount collected has hovered close to 0.3 percent since its inception.

AIDS Levy and its disbursement, 2000–021/

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All figures are percentages.

Source: Staff calculations based on information provided by authorities.

65. Disbursements to the DAACs are made on a monthly basis, and vary from month-to-month and from district-to-district; cumulative disbursements through end-2002 amounted to Z$2.3 billion, about 44 percent of the revenue collected through the AIDS levy over the same period. The utilization rate has improved steadily between 2000 and 2002, reflecting in part, the increasing capability of the DAACs in implementing their programs. At present, the NATF money is disbursed at a rate proportional to the rate at which a DAAC is able to spend the money allocated to it; the presumption being that the latter, in turn, reflects the speed of program implementation. In order to improve accountability and discourage corruption, the NAC intends to discontinue individual-based disbursements, and instead concentrate on community-based programs such as hospices, and care centers.

66. A multi-agency mission under the UN Relief and Recovery Unit visited Zimbabwe in March 2003. Its report27 acknowledged that the government had successfully initiated the creation of a supportive environment for HIV/AIDS prevention, mitigation, and care. It also identified certain key areas where a more vigorous effort would bear considerable fruit, including prevention of new infections, extension of care for people living with HIV/AIDS, an increased response to the needs of orphans and vulnerable children, and more operational engagement of leadership within the government. The report also stressed the importance of enhancing coordination among the various agencies working in Zimbabwe, including the government.

D. Donors and the International Community

67. There are a number of international organizations, donor agencies, and NGOs working on prevention and mitigation of HIV/AIDS in Zimbabwe (see Box III.2). Recently, the United Nations has embarked on an initiative to bring these agencies under a unified umbrella with a view to better coordinate and match expertise and financial resources to local needs.

Major HIV/AIDS Program Areas of International Agencies in Zimbabwe

United Nations: Through the UN Development Assistance Fund, it has traditionally focused on the following areas of support: promotion of sexual behavior change; HIV surveillance; voluntary counseling and testing; programs to lessen mother-to-child transmission; and special programs for youth and commercial sex workers. Recently under the UN Thematic Group initiative, the UN has been pushing for a coordinated effort among the international agencies to prioritize specific anti-AIDS programs in Zimbabwe and to promote a more systematic study of the impact of the pandemic upon the country. Issues currently being discussed include: how best to study and target vulnerable groups, particularly in light of mass displacement and closure of on-farm hospices resulting from the fast-track land reform program, including possibly a displacement study; development of more sensitive HIV indicators; and obtaining priority for HIV patients in government’s food delivery program. Zimbabwe is scheduled to receive US$22 million in the first round of the UN Global Fund disbursement; half of this amount is targeted toward HIV/AIDS, and is likely to be spent on the purchase of generic drugs and vaccines to combat opportunistic infections.

UNAIDS: Assisted in defining both the national strategic plan, and the district planning processes. It provided financial support to the NAC secretariat, including the funding of its Executive Director’s office, and is currently discussing the possibility of a coordinated public awareness program with the NAC.

USAID: Formulated a strategic five-year plan (2000–2005) that includes mitigating the impact of HIV/ATDS as a primary goal. It has designed its programs to strengthen the ability of NGOs to address HIV/AIDS, and in turn relies heavily upon them to implement social marketing of voluntary counseling and testing (VCT). It has launched programs to generate increased community support activities on behalf of children affected by HIV/AIDS; to supply contraceptives to the public sector and is supporting social marketing of contraceptives. It is also supporting operational research for development of an ARV program in Zimbabwe.

WHO: Assists the government in overcoming manpower problems in the health sector; is currently training health care workers in Harare and Bulawayo in the delivery of ARVs. It also supports the salaries of four health care workers in the Ministry of Health, and is discussing the possibility of two more positions specifically to look into HIV/ATDS issues. It provided technical support for the expansion of prevention programs related to mother-to-child transmission; and is currently considering the provision of rapid HIV testing kits.

Department for International Development - UK: Supplies free condoms, vaccines and other medical infrastructure.

Center for Disease Control - US: Provides rapid action test kits to pregnant women, besides sponsoring training of medical professionals and the acquisition of surveillance systems.

European Union: Provides drugs to counter opportunistic and sexually transmitted infections.

E. Fiscal Burden and Macro economic Impact

68. The fiscal implications of HIV/AIDS arise from increased outlays for care and prevention, increased personnel costs associated with higher morbidity and mortality, and reduced tax revenues as HIV/AIDS affects profits and the scale of economic activity over the next decade. First, an increase in the demand for health services necessitates a corresponding increase in public sector outlays in this direction. Second, there is likely to be an increase in rehiring and retraining costs associated with an increase in skilled manpower turnover owing to the death of teachers and other public sector officials.28 In addition, the morbidity and illness that precede death imply a reduction in the on-the-job productivity of infected individuals and their family members, the latter because of the necessity of devoting time to home-care of the patient, and this imputed cost must be assessed to arrive at an appropriate measure of the total burden. Finally, an increase in turnover of public sector employees due to death implies an increased payout of pensions and other annuities to the surviving family members.

69. Recent IMF studies29 estimate that with the effects of the pandemic becoming more pronounced over the next decade, the cost of prevention and clinical treatment in Zimbabwe may increase to 0.3 and 1.1 percent of GDP, respectively, by 2010. An earlier World Bank study30 estimated that, after accounting for the expensive treatment apparatus, training costs of personnel and related infrastructure, the annual per patient cost of ARV therapy for Zimbabwe could be as high as US$2,000, plus US$400 for prevention and treatment of opportunistic infections and palliative care. On this basis, Haacker (2002) estimated that even with very limited coverage rates (30 percent for palliative care, 20 percent for clinical treatment, 10 percent for ARV); total HIV-related health-care cost of the government could increase to 3.5 percent of GDP by 2010 compared to 2.1 percent of GDP in 2000.

70. Replacing sick workers may become difficult as the epidemic develops over the next 4–5 years. A study by FAO31 found that Zimbabwe lost an estimated 10 percent of its agricultural labor force to AIDS by 2000 and projected that the infection could claim as many as 23 percent by 2010. Not surprisingly, the resulting impact on economic growth could be devastating;32 Haacker (2002) estimated that by 2015, Zimbabwe’s GDP per capita could be about 7 percent lower than in a no-AIDS scenario, or a cost of approximately ½ of a percent of GDP per capita lost per annum between 2000 and 2015. The food shortages arising out of the drought conditions in 2002 and 2003, and the displacement of many commercial farm workers and their families (who constitute a total population of 1–2 million people) in the course of the fast-track land reform program has stretched the coping mechanisms of these families already. In consequence, the adverse impact on labor productivity and loss of life due to HIV/AIDS and related opportunistic infections increase, relative to a situation where food shortages and unemployment shocks are absent. Hence, the actual cost in terms of GDP per capita lost due to HIV could well be greater than the Haacker estimate. In addition, this cost will be more pronounced the longer these economic conditions persist. Indeed, a vicious cycle may well develop, whereby the economic recovery is not achieved due to productivity and human capital losses related to HIV/AIDS.

71. The long-term cost, productivity, and growth impact of HIV/AIDS on the economy is, therefore, likely to be sensitive to the disease distribution by occupation groups. If skilled labor groups are the most affected in the initial phases of the epidemic, then the adverse macroeconomic impact will be more pronounced. First, because the direct impact on the stock of human capital is larger, this reduces the supply of (skilled) labor, thereby lowering the (marginal) productivity of all factors of production, which imply a decrease in the rate of investment. Moreover, the (net) cost of training future skilled professionals increases as well, because lower life expectancy of adults implies a lower average return to investment in education; if this induces lower investment in human capital accumulation, this will adversely affecting future production. At the present moment, the data being collected on prevalence from antenatal clinic surveys in Zimbabwe are not disaggregated to a degree that allows inferences about occupation-specific prevalence rates. However, comparable data from other countries in the region suggest a pattern implying similar prevalence rates for most occupation groups.33 For Zimbabwe, UNAIDS health representatives estimated prevalence rates among teachers and public sector officials to be significantly higher than the population average.

72. Zimbabwe’s social security system covers only that part of the labor force employed in the formal sector, which constitutes a small fraction of the total adult population.34 Families with no members in the formal sector labor force are therefore particularly vulnerable to the income shocks emanating from HIV/AIDS; neither do they have any insurance coverage from their employers, nor does the government have at present a scheme to provide safety nets for them. As more and more HIV infected patients develop full-blown AIDS, the families of those not employed in the formal sector will be far less equipped to cope with the economic impact of lower working hours of income earners, and family deaths. This will almost certainly perpetuate and exacerbate the (already considerable) income and wealth inequalities in Zimbabwe over the coming decade.35

21

Prepared by Jay Surti and Gustavo Bagattini.

22

The first case of AIDS in Zimbabwe was identified in 1985.

23

International intellectual property rights agreements (TRIPS) related to the production and replication of such drugs makes cheaper procurement virtually impossible. It was partly to get around this problem that the government declared HIV/AIDS a national emergency in 2002.

24

Inter Press Service Report, July 30, 2002, noted that of the 87 doctors awarded degrees in 2001, 37 left the country by July 2002 (See www.aegis.com/news/ips/2002/IP020738.html).

25

Many orphaned children also live with extended family members who are less likely to send them to school; see Anne Case, Christina Paxson, and Joseph Ableidinger (2002), “Orphans in Africa”, NBER Working Paper 9213.

26

Haacker, M. (2002), “The Economic Consequences of HIV/AIDS in Southern Africa”, IMF Working Paper 02/38, Washington, DC, pp.11–12.

27

United Nations Relief and Recovery Unit, Zimbabwe Humanitarian Situation Report, March 24, 2003.

28

This depends upon the assumption that it is possible to replace every person leaving the labor force due to HIV/AIDS. While this may not be possible in the long run, if prevalence rates remain high, it is an acceptable assumption over the short to medium term. Finally, the return to investment in human capital itself falls in the medium to long term, especially if capital flight and emigration become a major problem. This implies that even if the total number of people being trained declines, the per person training cost will increase.

29

See for example Haacker, M. (2003), “Providing Health Care to HIV Patients in Southern Africa”, IMF Policy Discussion Paper 01/03, Washington, DC.

30

Bonnel, R. (2001), “Costs of Scaling HIV Programs in Southern Africa: Methods and Estimates”, World Bank, Washington, DC.

31

“The Impact of HIV/AIDS on Food Security”, FAO, 2001.

32

Agriculture has been the driving force of the Zimbabwean economy since independence. For more details, see the chapter on Agricultural Production and Land Reform in this SIP.

33

In Lesotho and Swaziland.

34

All registered employers are required by law to subscribe to the National Social Security Authority (NSSA) and thereby obliged to provide a variety of benefits to employees, including death allowances, life insurance, and pension contributions.

35

In a study of 14 southern African countries, the Southern African Regional Poverty Network computed the average Gini coefficient for Zimbabwe in 1998 to be 0.63, the second highest behind Namibia. See SADC Regional Human Development Report 2000: Challenges and Opportunities for Regional integration, published by the UNDP. A summary is available at www.sarpn.za/RegionalViews/zimbabwe.php