Financing the long-term costs of HIV/AIDS in SA

South Africa is facing a major and mounting financial challenge as it strives to respond to the HIV/AIDS epidemic in the country. South Africa has 5.7 million people currently infected with the HIV virus, the largest number in the world, and half a million adults and children are becoming newly infected each year (UNAIDS, 2009).

The South African government has made important strides in the expansion of the prevention efforts and the ARV treatment programme, with over 1million people now on the public treatment programme. The government has progressively allocated new resources to fund the response to HIV/AIDS in the 2009/10-2011/12 medium term period through conditional grants and equitable share allocations. In addition, donors (external development partners) and certain businesses have made important contributions to the response.

New infections still occurring

Despite these achievements, the national HIV prevalence remains around 17% and new infections continue to occur. With expanded prevention efforts, including male circumcision, the National Strategic Plan (NSP) target of halving new infections can be achieved from 400 000 per annum currently to 200 000 new infections annually by 2020. The HIV prevalence rate should reduce to around 10%. However, this means increasing numbers of people will be requiring treatment in the coming years, between 2.5 and 3million patients by 2020. A growing proportion of these patients will access ARVs through the private sector, but the largest portion will remain dependent upon the free public service.

Currently the country is spending close to R20 billion annually (including public, external and private sector contributions), in total on HIV/AIDS. This includes the social mitigation and research activities, as well as the treatment and prevention activities. It is estimated that the expanded response required for an impact on prevalence and new infections, will cost an increasing amount to almost double by 2020 per annum (R39 billion) in total.

The public antiretroviral therapy (ART) programme will increase from around R9 billion currently to R15 billion by 2020, or less with the recent reduced tender prices for ARVs. Other treatment services, such as palliative care and home based care will also need to be provided and these and others will cost another R7 billion in 2020, while mitigation efforts must also be maintained and could cost around R6 billion. The necessary prevention activities will require around R10 billion.

There is good news

The good news is that if South Africa can continue to expand its response over the next 10 years, then all these efforts will reduce the new infections and prevalence rates, and after 2020 the costs will begin to reduce significantly. Considering also the productivity gains through reduced mortality and morbidity (sickness), the overall amount required for HIV/AIDS will become once again manageable within the public budget.

It is therefore imperative that the external partners and the business sector increase their contributions over the next 5 to 10 years to enable these successes. "We would argue that the donors really need to stay with this, and the next five years are absolutely critical," said Robert Hecht, another of the report's authors. In terms of finding alternative public funding sources, "the government needs to think outside the box," says Teresa Guthrie of the Centre for Economic Governance and AIDS in Africa.

She explains that these options include a mandatory contribution from business profits to HIV/AIDS activities, a Financial Transaction Tax (FTT) such as the Robin Hood Tax being considered in Europe, a Currency Conversion Tax (for the purchase of Rands), a small AIDS levy on individuals and businesses, or other levies such as an airline or cell phone tax. Combined, these options could raise significant funds for the government, and could be removed once the impact of an expanded response is felt after 5 to 10 years.

Now is the critical time for the South African government, the external partners and the business sector to increase their commitments to HIV/AIDS, so as not to lose the ground that has been gained, and to ensure the necessary expanded response to HIV/AIDS while also strengthening the health care systems to cope with the additional demands.