Johannesburg - The blunt admission by Gold Fields that the HIV/Aids epidemic would add up to $10 an ounce in extra gold production costs has focused minds on the price of operating in South Africa.
The country is entering the early stages of an exponential increase in HIV/Aids deaths that will transform the business landscape. As HIV/Aids is not a notifiable disease, and many deaths due to the virus are attributed to other causes because of the social stigma, no one knows for sure how many people are dying.
The figures used to gauge the scale of the pandemic are derived from computer projections. They are based on data collected from blood samples at 400 ante-natal clinics. These are then extrapolated to the population as a whole, and provide no more than mathematical probabilities.
In a country where figures on births and deaths are unreliable, statistics on HIV infection rates carry the proverbial health warning. But there is little doubt that people are dying in ever-greater numbers, and that they will continue to do so for many years.
The projections suggest that 11 percent of the population, or 5 million people, are already infected with HIV, and 250 000 people are believed to have died last year from opportunistic diseases associated with Aids.
Infection rates are forecast to peak at 17 percent over the next decade, with total deaths rising to 7 million people before the epidemic begins to recede.
The government's mortality reports show that more young South Africans are dying now than ever before: 362 450 in 2000 compared with 260 273 in 1997.
Wayne Myslik, a consultant and demographer at NMG-Levy, a business services company that has just released its latest projections of the impact of Aids, warns that the medium- and long-term effects are only dimly understood.
"In five years, HIV/Aids could increase the cost of employment more than 54 percent," he says.
Only a handful of studies have attempted to quantify the macroeconomic impact of HIV/Aids. Investors will need to do this if they are to have any prospect of surviving in the Aids economy.
A study by Stellenbosch University's Bureau For Economic Research is probably the best yet available. It estimates that while South Africa is likely to retain an economic growth rate of 3 percent a year, the overall effect of HIV infection will be to shave about 0.5 percentage points off gross domestic product every year until 2015.
Demographic consequences are even more dramatic. Population growth has been declining since 1990, but HIV/Aids will reverse any growth: by 2015 there will be 10 million fewer people than there would have been.
If all the virus did was to kill people, the macroeconomic effect would simply be to boost the growth rate per capita. But it cripples workers through ill-health during their most economically productive years.
This results in substantial absenteeism, lower productivity and increased costs for recruitment, training and medical insurance. At the same time it alters household expenditure away from traditional patterns of consumption.
As a greater proportion of disposable income is used for medical and funeral expenses, millions of consumers will have less to spend on other commodities. Indeed, markets for all products beyond the basic necessities are set to contract significantly.
There is little doubt the epidemic is scaring off investors. But Murray Coombs, an analyst with Deloitte & Touche Human Capital, insists that capital flight could be greatly reduced if investors have a clearer idea of the impact of the epidemic on individual businesses, and what measures are being planned.
With treatment, people can remain relatively healthy and productive for up to 10 years after HIV infection has developed into full-blown Aids. Pills cost a lot less than recruiting and training new staff, especially now that the price of HIV/Aids medication has fallen by 90 percent over the past 12 months.
Anti-retroviral treatments keep people in work longer and reduce the economic and social impact of the syndrome on businesses, families and communities. - The Times, London