At the end of 2003, 5.3 million people were estimated to be living with HIV/AIDS in
South Africa, the highest number of any country in the world. Further, the HIV/AIDS
prevalence rate among adults 15-49 years of age in South Africa is estimated at 21.5%,
compared to 7.5% in sub-Saharan Africa and 1.1% globally. As the epidemic moves from
infection into impact, prime-age mortality (PAM) rates are increasing rapidly. According
to the South African Medical Research Council, an estimated 370,000 South Africans
died of HIV/AIDS in 2003, make the disease the leading cause of death in almost all
South African provinces (MRC, 2004). Moreover, while it is thought that HIV prevalence
in South Africa may be approaching its plateau, the majority of AIDS deaths have yet to
happen (MRC, 2004).
The economic impact of these deaths includes the loss of earnings due to incapacitation
and death, the financial cost of care and the opportunity cost associated with the time of
care-givers, and the financial cost of burial arrangements. Other costs associated with
infectious disease more generally include those arising from behaviour changes such as
reduced propensity to save or invest, changes to demographic behaviour such as fertility
and family composition, and changes in the allocation of resources within the household,
such as education and care of children and the workload of the elderly. An increasing
number of studies are focusing on the measurement of the overall impact of HIV/AIDS
deaths at the level of the household (Yamano and Jayne, 2003; Naidu and Harris, 2005),
and most conclude that this impact is likely to be significant. A limitation of the majority
of these studies is the tendency to treat those affected as a homogenous group with
similar trajectories prior to the shock that is induced by HIV/AIDS. As a result, the
impact measured is for the ‘average’ household observed at a single moment in time. As
UNECA (2003:5) have commented, economic models of the impact of HIV/AIDS have
thus yet to capture the immiseration impact at the household level.