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The Role of the Private Sector in the HIV/AIDS Response

Time (GMT +01) 16:00 18:30


Dr. Jonathon Simon, Director, Center for International Health and Development, Boston University

Dr. Jeffrey L. Sturchio, Merck & Co. Inc.

Dr. Brian A Brink, Anglo American.


Professor Richard Feachem, The Global Fund to Fight AIDS, Tuberculosis and Malaria.


Dr. Fiona Samuels, ODI

Dr Jonathon Simon presented data and conclusions about the impact of the HIV/AIDs epidemic in several African countries (South Africa, Uganda, Kenya, Ethiopia, Botswana, Zambia). His presentation covered the impacts on:

  • Large, formal sector, private firms

  • Small and medium enterprises (SMEs)

  • Labour forces

He also covered:

  • Burden shifting and the realities of much of the private sector in the global response

  • New private sector initiatives

  • Conclusions and priority questions

The impacts on large, formal sector, private firms, can be measured in terms of increased expenses and lost productivity. He therefore argued that it is in the interest of businesses to tackle infection rates among their staff. He said there is effectively an "AIDS tax" on business of between 1 and 12% of the wage bill, depending on country and sector. He argued that the comparative advantage of cheap labour in sectors such as the garment industry in some African countries could be under threat.

Data on the costs to business varied by country and sector. He was also candid in his conclusion that it has to worthwhile financially for companies if they are to spend resources on unskilled workers.

He concluded:

  • The impact of HIV/AIDS on firms' labor costs has so far been real but moderate: 1-3% for most, more for a few.

  • A few variables explain most of the differences in costs among firms: employment conditions (contracts, benefits), HIV prevalence, skill level of workforce.

  • Responses to AIDS are also associated with consistent company characteristics (size, ownership, leadership).

  • Treatment is a good investment for many (though not all) employers.

  • Employer provision of treatment can make sense even when public sector treatment is available.

  • Businesses have other ways to respond to the cost of HIV/AIDS ("shifting the burden").

In SMEs, he said the majority of managers surveyed did not rank AIDS as a big issue for their business. SMEs also have a higher staff turnover (it is not expensive to replace staff), more unskilled workers and more contract workers who do not have access to medical services via the company. There is often no human resources department to raise the issue. Workers themselves often lack information and do not want to face the issue because of the stigma attached.

He concluded that there is a need for HIV/AIDS testing and treatment for SME workers but that as demand is low and providers have not developed an appropriate model, he is not optimistic it will happen soon.

To illustrate the effect on labour productivity he gave an example from a tea plantation in Rift Valley Province, Kenya. The number of deaths (from natural causes) among the workforce was growing steadily (1997-2002). A large percentage of deaths were among people of working age, between 20 and 45, and many were from AIDS or TB. The study found that productivity declined long before the worker got really ill. The company suffered because of decreased productivity, increased pressure on line managers and increased absenteeism. The workers' family also suffered a loss of income as wages depend on quantity picked.

The tea estate data provide first empirical findings on relationship between HIV/AIDS and labour productivity. Simon concluded that we now need to determine if better care and treatment can offset the effects of illness.

He explained that a HAART treatment programme began at the plantation with the objectives of measuring the recovery in individual labour productivity associated with ART for HIV/AIDS and the reduction in additional paid and unpaid leave taken by workers with HIV/AIDS as a result of being on treatment. Results were encouraging, leading to the ability to make a business case for starting people on treatment much earlier.

Dr Simon then moved on to talk about strategies employers use to reduce the burden of HIV/AIDS among the workforce. Business can diminish the size of the burden by investing in prevention, care and treatment, training new workers; or they can shift the burden to the public sector, NGOs, households, female relatives who are carers etc.

He said business can show either a fight response or a flight response. Those that fight will be enlightened corporate leadership, companies with a global brand to protect, with fixed assets, or those forced by local or global activism. Firms that flee are attempting cost avoidance or cost reduction. They may move, screen employees (legally or illegally), reduce workforce size, outsource, or institute prevention programmes.

He argued burden shifting is widespread and that it reinforces the impoverishing effects of AIDS on households and communities. He concluded it may be unrealistic to expect there to be a major private sector role in mitigating the impacts of the epidemic, that it is difficult to tease out the effects of HIV/AIDS from things that may happen anyway and the challenge that Chinese and Korean investors in Africa do not see it as a priority.

He outlined some of the new private sector inititiaves such as the Red Campaign, Unitaid, IFC, and the Gates Foundation.

Dr Simon's overall conclusions were:

  • The impact of HIV/AIDS on private sector firms' labor costs has so far been real but moderate.

  • A few variables explain most of the differences in costs among firms.

  • Responses to AIDS are highly varied depending on industry, size, location, and leadership

  • Provision of treatment services is a good investment for many (but not all) employers.

He left the audience with these priority questions:

  • How effective is care and treatment (ART) in restoring labor productivity and reducing labor costs in the short and long terms?

  • Should workers start therapy earlier?

  • What are the benefits and costs of workplace HIV/AIDS interventions other than treatment?

  • Are workplace-based interventions efficient, compared to community-based interventions?

  • Should skilled workers and trainees be prioritized for interventions? How (whether) to ration?

  • What are the benefits and costs to employers of maintaining a healthy workforce, including but not limited to treatment of AIDS?

Dr Jeffrey L Sturchio agreed with Dr Simon's points that HIV/AIDS affects people in their most productive years and impacts on business results. He moved quickly into Merck's experience in Botswana, Nigeria and Cote d'Ivoire. He explained that Merck works outside the firm to mitigate the effects of the disease.

In Botswana, Merck work in partnership with the Government and the Gates Foundation to:

  • Build national capacity for Botswana's response to the HIV/AIDS epidemic

  • Strengthen the health care system

  • Create and expand community initiatives for HIV/AIDS education and prevention, and for the care and support of people living with HIV/AIDS.

Each partner donates $50m and Merck donates ARVs.
Successes include:

  • 21 HIV/AIDS clinics as part of national network

  • 6 HIV/AIDS health resource centres

  • Support of 17 counselling & coping centres and trained 450 counsellors

  • Funding for 100 community-based projects, including the Dula Sentle orphan-care program and the House of Hope day care centre

  • Trained more than 3,900 healthcare workers

  • Built laboratory capacity to > 20,000 patients/year

  • Built teacher-capacity in > 500 schools (78%) and more than 4,800 teachers

Botswana launched Africa's first ART programme in 2002. It was championed by the President at a time when others were still arguing over the effectiveness of treatment. It now has 32 clinics which treat 85% of positive people. Testing capacity has been decentralised and speeded up.

Dr Sturchio's second example was the workplace programme at the Compagnie Ivoirienne d'Electricité set up in 1999. Data showed that the project was cost saving as well as life saving. Another example from the country was the Partnership with the National Agency for support to rural development (ANADER) which aims to extend access to HIV/AIDS prevention, care and treatment to rural populations with a $4m grant from the PEPFAR fund. Merck provided capacity building for ANADER's project leaders and employees and development of the strategic plan.

In the Niger Delta (Bonny Island) Merck is involved with the Ibanise HIV/AIDS partnership is a collaborative approach aiming at improving HIV/AIDS prevention, care and treatment for the population.

In terms of lesson learned, Dr Sturchio concluded:

  • Complexity of the issues is beyond the ability of any single organization or country to address alone

  • Poverty, ill health and other development challenges require robust and creative partnerships, embracing all stakeholders with resources and expertise to contribute to a nation's response against disease

  • High-level political commitment and engagement are critical

  • Projects must be tailored to meet local needs

  • PPPs have a critical role to play

  • Effective partnerships require:

  • Clear objectives, trust, complementary expertise, and mutual benefits

  • Investment in building the relationships with key stakeholders

  • Commitment, communication and coordination from all stakeholders

  • Persistence

Dr Brian Brink argued that the private sector must react because HIV/AIDS attacks the economically active section of the population. He went on to say that today we have the tools to deal with the epidemic and there is no excuse for new infections or child infections. Thinking needs to focus on how to stop the epidemic.

He said he was alarmed by the complacency he had witnessed. India, for example, has a 1% infection rate. This was the rate in South Africa in 1990; it is now 20%. He said India must not let that happen to them.

He explained that Anglo American in South Africa realised a 'business as usual' attitude was not going to work and started workplace programmes in 2002. He said that today every business must respond. SMEs can and must act to help their employees - it takes effort not money.

The epidemic does not only affect employees: the women in their families shoulder the burden. The epidemic has brought long standing gender inequalities into sharp relief - in developed as well as developing countries.

He argued that the key is HIV testing and that a positive result is no longer a death sentence. Getting a positive result means you can get on to treatment quickly; not knowing your status is the worst case scenario. He called for people to be able to self test and for a major scaling up of testing.

He said businesses need to know the percentage of the workforce who have been tested and employees should have yearly tests. Key factors are stopping workplace infections and getting 100% of positive people onto a care and support programme before they get symptoms such as TB (a growing problem in South Africa where it is becoming drug resistant). He argued that CEOs must lead the way, getting tested first to build a climate of trust. They need to make it clear there will not be discrimination. He also said he included trades unions in 'business' and that they have a role to take good practice into communities.

He concluded with a response to the Three Ones initiative: we should start thinking about the Three Zeros - zero infections, zero people getting sick or dying and zero babies born HIV positive.

Prof Richard Feachem
Global Fund to Fight AIDS, TB and malaria

Prof Feachem began by pulling out 3 topics common to each presentation:

  1. What is it reasonable to expect companies to do?

  2. Prevention in women and girls

  3. Innovative financing mechanisms

On expectations of companies he said that his point of view has changed. Until recently he believed that prevention, testing and treatment were essential in every company and companies who were not doing it should be persuaded. This was the responsibility of business to fund, not of bodies like the Global Fund. More recently, he has realised that some companies, especially SMEs, will never be convinced to act this way because there is no business case for it. Furthermore, the informal sector will not be reached in this way.

He gave the example of the garment industry in Lesotho which employs 60,000 people, mostly young women. Around 30% of the population of the country are HIV positive according to national statistics. The garment industry is precarious and dependent on a cheap labour comparative advantage. Companies are owned by the Taiwanese who are not part of the international consensus on HIV testing. He argued that saying to these owners they must invest in HIV provision will result in them moving their factories to another country to preserve profits. From this he concluded that a public-private partnership is a better way forward. The Apparel Lesotho Alliance to Fight Aids (ALAFA) project is one such partnership.

Regarding prevention in women and girls he argued that female vulnerability and disempowerment need to be tackled. He said that the pendulum had swung back to emphasis on prevention at the Toronto conference but argued that technological advances such as microbicides are meaningless to women who do not have money or freedom to go to the town to buy them.

On innovative financing mechanisms he said that the Global Fund must do more work. Although ODA is growing, the Global Fund is $300m short of its target. Without making up the shortfall, it will not be able to fund recommended proposals.

He said the International Finance Facility (IFF) idea should not be allowed to be quietly shelved. The IFFim (focusing on immunisation) is being launched now, but we should not lose sight of the more ambitious original idea. He said the airline tax initiative (to raise money for AIDS, TB and malaria drugs) must not become a substitute for ODA. He said how the board of Unitaid decides to spend the money will be a critical factor. He said the Red Campaign is a very interesting initiative because it is a win situation for companies, consumers and the fight against HIV/AIDS. Although until now limited to the UK market, it will shortly be launched in the US.


The following points were covered in the discussion:

  • Can the private sector step up to the challenge to spend Gates / Buffett money? Brink replied that it is crucial to get small grants to civil society organisations (he included civil society as part of the private sector). Feachem replied that the sum is substantial ($3bn per year). A big danger is that this money will replace donor financing.

  • How to address stigma and discrimination? How to normalise knowing your status in African countries? How to get people to accept testing and status? Brink replied that increasing access to treatment will change attitudes to test. Legislation outlawing discrimination is also essential. Feachem called for the normalisation of testing and treatment. Simon echoed this, saying the public health response so far had failed.

  • 100% practice of safe sex is more important than knowing who the status of individual employees.

  • Political commitment and how we measure it in countries where leadership is weak. Feachem replied that only a minority of politicians speak up on message; most do not speak up in their own country; and some say inaccurate things. He called for people to call them to account nationally and internationally. Brink pointed out the media's role in publishing and exposing what is going on.

  • The need to demystify sex; achieve gender inequality and recognise women's rights to make decisions on sex.

  • The shortfall on 1m healthcare professionals in SSA and the impossibility of meeting the MDGs without them. health workers need to be recruited and retained and given priority treatment so they can stay active in their jobs. Feachem agreed but said the issue goes deeper: reliable access to medicines, roads and hospital buildings are needed. Brink said conditions need to improved in rural areas and give health workers the tools to help people manage the disease, not just telling them they will die.

  • Funders' policies not to allow payment to carers and educators. Simon called for funded community health workers and cash payments direct to women. This would also stimulate local economy. Feachem said this was not a policy of the Global Fund and it was wrong to assume people should volunteer when we would not make this assumption in our own countries. Brink called for a living wage for care workers.

  • How to mobilise an expanded private sector response beyond programmes for company workers or large donations. Feachem responded that companies can also share their core competencies in financial and programme management.

  • How to get the private sector to contribute more to the Global Fund. The speaker argued that companies should be allowed to contribute to specific projects once these have been approved and the money earmarked (earmarked donations are not allowed). Feachem replied that 95% of the Global Fund's income comes from ODA and earmarking disallowed to avoid governments specifying where their contribution can be spent (beyond their right to influence policy at Board level). For other forms of financing that breaks down; companies and consumers require a focus to galvanise passion. The Global Fund therefore allows gross earmarking - the money goes to Africa, AIDS and women - but not project specific earmarking. The Red Campaign partners have been satisfied with that.


The fifth meeting in the 'Scaling up on HIV/AIDS' series discussed the role of the private sector in the HIV/AIDS response.