A new Blavatnik School of Government Working Paper, "The economy wide impact of HIV/AIDS and the funding dilemma in Africa," has been published to provide fresh evidence and insight for governments into developing sustainable strategies for dealing with HIV/AIDS.

While medical advances in drugs mean that HIV can be well treated, the economic cost of implementing these treatments remains the key reason for why the disease continues to be a major killer in Africa. However, new studies show that although the funding of treatments and prevention carries a large cost for resource-poor countries, this is vastly outweighed by the long-term economic benefits the investment brings. Only through targeted government intervention and frontload investment, such as foreign-aid and direct taxation, can the HIV pandemic and funding dilemma in Africa be resolved.

Using Uganda as its case study for analysis, the Blavatnik School’s latest Working Paper, authored by Dr Judith Kabajulizi and Prof Mthuli Ncube, demonstrates how effective government policy can have a positive impact on treating HIV/AIDS. Uganda has the highest prevalence rate of the disease in East Africa, but this paper demonstrates that the country has the capacity to mobilise domestic resources and fund the scaling up of treatment and prevention strategies.

In order to measure the long-term economic impacts of HIV/AIDS, the authors used a Computable General Equilibrium (CGE) Model, which captures the flow of household and government finances and can predict the impact of HIV intervention costs. Their study finds that levels of productivity are far lower without government investment, and GDP growth rates are much higher with it. The research suggests that this funding can be achieved by increasing revenues from direct taxes or from foreign-aid, which generate similar levels of growth in GDP (approximately 7%).

The evidence provided in this paper aims to be of particular relevance to the countries of Sub-Saharan Africa, a region home to 70% of people living with HIV and which bears a disproportionately high burden of the disease in comparison to the rest of the world. The research is supported by the Rush Foundation, as part of the RethinkHIV initiative.

Download The economy wide impact of HIV/AIDS and the funding dilemma in Africa. View all Blavatnik School of Government Working Papers.

The authors of the working paper are:

• Judith Kabajulizi, Blavatnik School of Government, University of Oxford
• Mthuli Ncube, Blavatnik School of Government, University of Oxford