Human development is the end; economic growth a means. The purpose of wealth should be to enrich people’s lives, to broaden people’s choices and to enable every citizen, every child, every woman and every man to reach her or his full potential. Yet, as the experience of many countries has shown, economic growth does not automatically translate into human development.

The basic tenets of human development are enshrined in the Constitution of the new South Africa, reflected in its Bill of Rights. They are the primary objectives around which strategies for reconstruction and development have been established. They are key to the transformation of society, to the successful integration of the country into the global economy and to the achievement of sustainable development and prioritising the needs of the poorest people.

South Africa is a relatively prosperous country, with vast resources, modern and well-functioning physical infrastructure and a wealth of institutions. It is also a country of widespread and persistent poverty and deep inequalities – primarily the legacy of legitimised racial discrimination that deprived the vast majority of communities access to basic services and opportunities. The distortions of centuries of colonialism and five decades of social engineering have cast a long shadow. Today, less than five years after our historic transition to a fully representative democracy, their legacy remains deep and far-reaching.

Despite this, major advances have been made in developing the legislative and policy framework for human development since 1994. Progress towards access to basic services has been varied, with some significant achievements, setbacks and challenges. However, the scale of poverty and inequality is still overwhelming, particularly amongst the poorest communities in rural areas and informal settlements and amongst women.

This report is the first in a series of annual South African Human Development Reports. These reports will examine key aspects of society, and will explore the links between poverty, inequality and human development, the legacy of the divisive past and the shared aspirations for a better life for all. They will examine the options available to South African government and civil society and will propose courses of action, based on national and international experience.

This first Human Development Report focuses on the relationship between HIV/AIDS and development. The focus is critical. In South Africa today, HIV/AIDS threatens to reverse progress in human development and the promotion of a representative and participatory democracy. There is thus an urgent need for a comprehensive review and broader understanding of its origins and impacts.

According to the global Human Development Report for 1998, South Africa enjoys one of the highest human development ratings among sub-Saharan African countries – surpassed only, within SADC, by the Seychelles and Mauritius. In terms of economic performance measured through per capita income South Africa occupies the 80th position. However, when measured in terms of the Human Development Index (a combination of per capita income, life expectancy and educational attainment) it falls nine places. Ranked 89th out of 174 countries, South Africa has attained similar levels to Sri Lanka (ranked 90^th). However, the latter has achieved this ranking despite a significantly more modest per capita income. The implication is that that South Africa has been far less successful in translating economic performance into effective improvements in human development for almost all of its people.

While indicators project an aggregate situation within countries without reflecting internal inequalities, they are useful for comparisons between countries.

According to the HDR 1998, the poorest 20 per cent of Sri Lankans are estimated to have an income of $ 1,348 per year (real GDP per capita); their counterparts in South Africa have an income of $ 516. The wealthiest 20 per cent of South Africans have an estimated real per capita income of $ 9,897, compared with some $ 5,954 amongst their counterparts in Sri Lanka. HDR 1998 reveals that only 6 per cent of Sri Lanka’s population is not expected to reach the age of 40, significantly outperforming South Africa which predicts 13 per cent. South Africa’s adult illiteracy rate is, at 18 per cent, almost double that of Sri Lanka where it is 9.8 per cent. Clearly, there are significant advances to be made in human development through more equitable, efficient and effective utilisation of available resources within South Africa. This national HDR highlights the importance of a people-centred approach to development.

The first South Africa Human Development Report looks at one of the most tragic aspects of the social legacy of segregation and one of the most daunting challenges facing the new South Africa – the rapidly spreading HIV/AIDS epidemic. It examines the relationship of HIV/AIDS with poverty, social dislocation, with an artificially distorted and discriminatory labour market and with lack of access to basic services. It analyses the impact of the high rates of HIV prevalence and the inevitable increase in incidence of AIDS-related illness and mortality rates.

The report concludes that the spread of HIV/AIDS represents a challenge to all South Africans, threatening to offset recent gains in human development. It underlines the urgency of effective prevention and changes in behaviour and attitudes in order to combat HIV/AIDS and mitigate its effects. Such actions are key to the consolidation of recent gains of transition to democracy and human development, to the achievement of the goals of economic growth and progress and towards equitable and sustainable development.

The overwhelming message of the report is one of hope. Hope that reflects the emerging partnership between government and civil society; hope based on the demonstration by other nations that apparently inexorable trends can be reversed; hope founded on a growing awareness of the magnitude of the challenge and of the scope for preventive action; hope based on a better understanding of the dynamics of the epidemic and on more accurate analysis of the impacts and preparedness for their mitigation. Above all, this message of hope is inspired by the will of persons infected by HIV and AIDS to fight back and lead fulfilling lives, by the resilience of South Africa’s communities, by the determination of its young people and the tradition of social mobilisation and new-found solidarity that helps to bind these elements together in effective action.

HIV/AIDS presents a major challenge to development. From the health perspective it is a serious concern because there is as yet no vaccine, no cure, no affordable treatment. AIDS is almost always fatal. There is a long incubation period between infection and illness. This means that persons infected with HIV may infect others, including their partners, without realising that they place them at risk.

South Africa is currently experiencing one of the most rapidly progressing HIV epidemics in the world. HIV prevalence among prenatal clinic attendees has increased twenty-fold over the past eight years to over 16 per cent in 1997. By the end of that year, it was estimated that 3 million people, over half of them women, were infected with HIV. Moreover, the epidemic is spreading as rapidly in rural areas as in urban areas.

The determinants of the epidemic cannot be explained only in terms of individual risk taking behaviour. The causal factors are rather to be found in the poverty and deprivation experienced by most South Africans and in the social, economic and political alienation suffered by most of the population. They are a direct reflection of the social, political and economic history of the country. The spread of HIV and AIDS in South Africa is fuelled by the apartheid legacy of the migrant labour system, the accompanying spread of sexually transmitted diseases and the subordinate status of women.

The impact of HIV/AIDS on the gross domestic product is incremental. Already, there is a marked impact – on individuals, households and communities. The effects on the health service are multiple, including the rapid rise in new cases of tuberculosis, about half of which are attributable to HIV infection. The public sector health service is having to cope with rapidly rising AIDS-related admissions to hospitals, compounded by increasing absenteeism and a fast-rising tuberculosis incidence rate among health care providers themselves. All this at a time of severe budgetary constraints.

Projections of the path of the epidemic suggest that the overall prevalence of HIV will reach almost 25 per cent in the general population by the year 2010. By that year, life expectancy is projected to fall from the 68.2 years anticipated in the absence of the AIDS epidemic to 48.0 years. This has devastating implications both for the social structure of households and for their quality of life.

Transmission of HIV also occurs from mother to baby. Child mortality rates are predicted to increase from an anticipated 48.5 without AIDS to almost 100 per 100,000 in the year 2010 as a direct consequence of the AIDS epidemic. Even where the risk of infant and child mortality is reduced through costly and complex public health interventions, by 2010 South Africa will have to cope with the almost unimaginable reality of some 750 000 orphans from households affected by HIV/AIDS. An unavoidable consequence of the epidemic will be increasing numbers of children, traumatised by the experience of seeing their parents die, who will face deepening problems of access to education and poor nutrition. These could result in social anomie, increasing the capacity of the epidemic to replicate itself. The personal and social deprivations experienced by the children of the next generation may in turn expose them to the risk and impact of HIV infection.

HIV/AIDS threatens to roll back years of achievement in human development. The gains of recent decades, particularly with respect to life expectancy and educational attainment, will inevitably be eroded by the impact of current high rates of HIV prevalence and the rise in AIDS related illnesses and deaths. Adults and children alike will be affected by increased pressures on school-attendees and educators.

South Africa may be classified as a middle-income country, but the extent of poverty and inequality amongst its people shows that income has not been invested equitably in human development. Poverty manifests itself in many ways – all of which undermine the coping capacity and development prospects of vulnerable groups. The brunt of poverty is carried at the household level. It is here that the impact of low resources, inadequate social services, limited access to basic foodstuffs and lack of opportunities combine to create a disabling environment.

Disease and limited access to health care characterise the situation of the socially excluded, who are intensely vulnerable to the impact of an epidemic that requires additional resources and health care and which, at the same time, strikes at the bread-winners, educators and carers in the household. The disproportionate impact of HIV/AIDS on those who are traditionally the most economically productive household members increases the burden on those, generally the young and old, who are generally themselves in need of care. Moreover, the epidemic reduces the time available for women to engage in economically productive activities, constituting a powerful new threat to gender equity. A growing number of poor households depend for their livelihoods on the modest income of pensioners and the unpaid labour of their grand-children.

Poverty and the HIV/AIDS pandemic are two of the most devastating diseases ever to hit Southern Africa. The crippling effect of these two cancers on the human and economic fabric of South Africa is only now beginning to sink in among most communities. Already the debilitating impact of living with HIV/AIDS in the midst of poverty is being felt in hundreds of thousands of households across the country. There are few prospects for arresting the spiral in the near future.

The impact of the HIV/AIDS epidemic often leads to stigmatisation, discrimination and isolation from traditionally supportive social networks. The secrecy that surrounds HIV/AIDS in many communities compounds efforts to deal with the infection. The poorest households are the hardest hit. In extreme cases, people take risks with their lives in the struggle to make a living and provide for their families. Rural women in poor communities lack both the information and the power to insist on safe sexual practices with their migrant partners. Among the migrant populations in urban areas, the number of younger sex workers is rising in the face of poverty and lack of economic opportunities. Few among them are in a position to insist on safer sex.

To date, official responses to the epidemic have been limited largely to the provision of hospital care, which is generally beyond the means of poor households. Significant disparities persist in terms of access to basic health and welfare services; these have been compounded by limited budgets and lack of trained personnel (for example Northern Province has a population of 4.7 million people served by only 350 doctors and 240 social workers).

The growing problem of unemployment, with rates that are currently over 30%, reduces the capacity of households both to cope with HIV/AIDS and to work their way out of poverty. There is an urgent need to make at least the basics of HIV prevention and AIDS care available, accessible and affordable.

Despite the high and rapidly rising prevalence of HIV in South Africa, very few people are ‘open’ about their HIV status. People who realise that they are infected with HIV are reluctant to seek support at any level; those who think they do not have HIV are reluctant to believe that AIDS is ‘real’ because of the invisibility of the epidemic.

Human rights violations have contributed to the fear that surrounds HIV infection. For many, ‘confidentiality’ is a mechanism for self-protection. Unfair discrimination by employers, colleagues and communities has put so high a price on disclosure that most people are afraid to inform even their families or friends about their infection.

Yet, examples from other parts of the continent demonstrate that the involvement of persons living with HIV and AIDS is one of the most effective ways of combating the spread of the epidemic. Knowledge of HIV status is vital to care and treatment and to the safety of others.

Deprivation, in terms of lack of access to basic social services and economic opportunities, increases vulnerability to HIV and AIDS. Poverty and inequality limit the capacity of millions of South Africans to translate awareness into effective behaviour change. Gender inequality and abuse of women, with its roots in the multiple burdens imposed on women and their lack of power, even in stable relationships, are major contributors to the spread of HIV infection.

High rates of HIV prevalence are also beginning to sustain and deepen underdevelopment. Participants in the ‘Poverty Hearings’ confirmed the direct relationship between HIV infection, human rights violations and underdevelopment. People with HIV testified that they experience doubly the consequences of inequality: poverty places them at greater risk of infection. Once infected, they face an apparent conspiracy on the part of society to keep them poor, apart and beyond access to health care.

Actual violations of rights suffered by people with HIV and AIDS have included unfair discrimination in employment and in access to private and public health care and educational facilities. Particular problems arise from the wide-scale HIV testing by the insurance industry, with knock-on effects on access to jobs and home-loans.

The extent of such unfair discrimination has not yet been recognised by all parties; campaigning has largely been left to those whose rights have been violated, to non-governmental organisations and to PWA themselves.

Continued violations of the human rights of infected and affected people present a major obstacle to human development. HIV infection has attracted discrimination on so great a scale that, for many, it constitutes a new form of apartheid, unfairly robbing them of the chance to participate as equals in the reconstruction and development of South Africa.

The HIV epidemic in South Africa has the potential to prevent the achievement of sustained human development. As the multiple and cumulative impacts of the epidemic work their way through the system, all sectors of society and the economy will be affected. So far, the impact of the HIV epidemic has been largely hidden, reflecting the initially slow build-up of infection in the general population and the delay in progress to AIDS.

It is essential not to be lulled into a feeling of complacency about the epidemic simply because its inevitable effects on the economy and society have not yet materialised. Evidence from other sub-Saharan African counties suggests that increasing and intensifying levels of social and economic distress will occur in South Africa..

The projected consequences of the epidemic include demographic effects such as the impact of HIV-related illnesses on morbidity and mortality. In other parts of Africa, adult mortality has doubled or trebled because of HIV and AIDS, and similar outcomes are projected in South Africa. HIV infection is concentrated in age groups with critical social and economic roles – both women and men in the age range 15–35. One consequence of this will be a significant reduction in life expectancy to levels not experienced in recent decades.

The impact on the economy will be generalised and systemic. The economy functions well only to the degree that the inter-dependent parts are efficient. The HIV epidemic will undermine its capacity to perform, reflecting both the scale and nature of current HIV infection and projected increases over coming decades. HIV infection is concentrated on the core of the labour supply; it is present in rural, peri-urban and urban populations alike, in all regions of the country and across all socio-economic categories. It is not confined to the unskilled or those with access to few resources.

The impact of the epidemic will, however, affect different economic sectors – both private and public and different sub-strata of society – unevenly. Inevitably, poor communities will be least able to cope with illness and the loss of livelihood. But even those who are better off will be directly and indirectly affected by the spreading consequences of the epidemic and its impact on the smooth functioning of the economy.

The cumulative economic effects of HIV and AIDS are now emerging. They are already dramatically present for the many households that are already suffering the erosion of economic and earning capacities at a time when they face increased health and related expenditures.

This reality is still not captured in official aggregate statistics; there have been no assessments of effects on households and communities and the costs of the epidemic are seriously underestimated. Social output and capital, especially of women, are not counted.

In addition to the direct impact of HIV and AIDS on individuals and households, there is a real and significant cost for the economy and society. All sectors are affected.. Evidence from the private sector indicates a general perception that impacts are presently low. Few companies consider HIV a threat to their performance. This reflects the lag in the progression of HIV from infection to sickness and death. Despite this, many workers at all levels are infected. This is increasingly apparent from declining productivity, rising rates of absenteeism, loss of skilled and experienced labour – over time it may result in higher labour costs and weakened economic performance.

It is precisely because South Africa has a relatively sophisticated economic system that its economic performance is so vulnerable to the effects of the epidemic. Modelling of the epidemic elsewhere has demonstrated that the more skilled and experienced the population experiencing HIV infection, the greater the impact will be – both sectorally and at the macro-economic level. Over time, the epidemic will have significant sectoral and macro impacts, unless effective policies and programmes are immediately put in place to plan for and address effects on labour supply and labour productivity.

Public industries and public services will not be exempt from the spread of the epidemic. They will experience both the consequences of HIV infection for public employees and their dependants and the consequences of changing demand for public goods and services. Once again, the effects are likely to be greater and more observable in South Africa than in other African countries. In part, this reflects the greater availability and range of public services and the determination of Government to extend these in quality and quantity to the whole population. The HIV epidemic will make these human development targets increasingly difficult to attain. This could intensify frustration among disadvantaged communities and prolong their limited access to basic services.

One of the public services most likely to be affected is the health sector where there is already evidence of the crowding-out of other non-HIV related illnesses. Demands on health services will massively intensify while, simultaneously, the capacity of the health system will be undermined by losses of staff due to HIV and AIDS. Another sector central to human development is education. Again, increasing incidence of HIV and AIDS will reduce the capacity of students to attend school and to learn. Expansion of enrolments and improvement of teaching will be eroded by staff losses and reduced institutional efficiency. The provision of social security will also be affected. Demands for assistance will inevitably accelerate as a consequence of intensified poverty and the disintegration of households affected by the epidemic, with rising demands for support to children and elderly dependants.

The challenge is enormous. The question is – what can be done?. The evidence in South Africa and experience elsewhere show that, in fact, there is a great deal can be done to influence the course of the epidemic. Effective prevention and care are two sides of the same coin; they must be addressed together.

It is clear, for example, that the formal health system will not be able to cope with the increasing demands of those infected with HIV and AIDS. The answer is not to wait for the system to collapse under pressure. What is required is a re-thinking of how best to support and extend community-based care and support for those who are infected and affected. Government at central, provincial and local level has an important role to play in redesigning health and social support systems. Taking such steps, urgently and in partnership with the private sector, unions, NGOs/CBOs and, above all, communities will allow the sector to cope.

The enormous task of planning for and dealing with the impacts of the impending HIV/AIDS catastrophe must be undertaken with urgency. In so doing, South Africa must recognise the tragic links between poverty and the spread and impact of HIV/AIDS. It must address the HIV/AIDS pandemic and debilitating poverty together and as a matter of course. The mutually reinforcing relationship between these two diseases is no accident. The sooner this is realised, the more successful will be the efforts to arrest the swift-spreading disaster. The response to HIV/AIDS must be part of a broader strategy of access to basic services, infrastructure and opportunities.

Creativity and responsiveness are the key to addressing the epidemic. What is required is, above all, imagination – the ability to respond as a society. What is needed is the ability to design creative alternatives and to address the fundamental causes and contributory factors of HIV infection, including the tragic legacy of economic, social and political exclusion. The objective of human development is that all citizens participate in and benefit from economic growth and social progress. To the degree that this objective is achieved, South Africa will be able to respond effectively to the HIV epidemic

HIV prevalence is already high in South Africa, and is on the increase more or less everywhere. There is an urgent need to give much higher national priority to issues of prevention, to improved care and support for the growing numbers of those affected and to the increasing levels of HIV-related morbidity and death.