HIV/AIDS, Poverty and Growth: Evidence from a Household Impact Study conducted in the Free State province, South Africa

Households affected by HIV/AIDS bear a substantial burden of illness and death, and this is associated with more severe poverty. Many affected households rely heavily on social welfare grants, which imply that government will in future years be faced with increasing claims. Affected households also spend less on food than non-affected households. In the longer run, this may contribute to malnutrition, which means that it will be particularly important to investigate policy programs that can enhance the food security of affected households. The utilizing of savings and new borrowing appears to be a common strategy employed by affected households to cope with illness and particularly with a death in the household. The amount of savings utilized and money borrowed by affected households in the recent past are considerable. Hence, illness and death appear to put considerably strain on household finances. The danger of course in the longer run is that these actions will move households deeper into poverty as more resources are crowded out in favor of debt repayments in the absence of improvements in household income. Access to medical aid has been shown to be the single most important predictor of poverty status. This may suggest that wider access to affordable medical aid with certain minimum benefits and/or the introduction of a broad-based basic income grant or social security system offering minimal support may be important in mitigating the impact of the epidemic. Continued efforts at poverty reduction will therefore remain crucial, particularly insofar as education and employment has also been shown to offer protection to affected households having to cope with illness and death. 1 This research paper is sponsored by USAID and administered by the Joint Center for Political and Economic Studies Inc. under a subcontract agreement from Nathan Associates Inc.