South Africa and the corporate fightback against AIDS

Nowhere on Earth has felt the scourge of AIDS and HIV more than the African continent. Amanda Vermeulen reports on how the business sector has stepped up to lend a helping hand in the fight against the epidemic

In early December 2003, seven of the world's largest corporations put out a press release that they had pooled a $5bn fund using the combined influence of the Global Business Coalition (GBC).

The companies, Anglo American, Chevron, Texaco, Daimler-Chrysler, Heineken, Lafarge, Tata Steel and Eskom, are household names in several regions of the world. GBC was founded in 1997, has 90 members, and is based in New York.

They were about to embark upon an ambitious campaign in Africa to tackle an enemy far bigger than they have ever encountered, and yet far smaller than they had ever seen.

The HI virus, the disease, has already infected over five million South Africans, of which 500,000 needed antiretroviral treatment. The situation has forced corporate South Africa to step up to the plate, largely to preserve their own self interests.

Hot off the wires data, produced by the South African Bureau for Economic Research (BER) in December, showed that, of the 1,000 companies across various sectors, almost one-third reported a negative effect from HIV/AIDS on profits, and more than half expected the epidemic to have an adverse affect on profits within five years.

But only a small number of companies have so far started providing their employees with antiretrovirals (ARVs), with mining houses Anglo American and AngloGold the most active in the field.

According to AIDS information resource Journ-Aids, other companies that have followed the lead of the mining companies include diamond company De Beers, drug and diagnostic group Abbot, and financial services groups Alexander Forbes and Old Mutual. In addition, mobile phone company Vodacom is also providing ARVs to staff, as is entertainment company Multichoice. It is believed that Coca-Cola and Diageo have also followed suit.

Now all the major oil companies operating in southern Africa, including Total, BP, and Shell, have also felt the pressure to move into the HIV/AIDS treatment and prevention field, thanks to some aggressive encouragement from their shareholders and other interest groups, according to Kaisernetwork, a health policy activist organisation. It says that the motivation is coming from advocacy groups such as Health Gap, a US-based non-profit organisation.

In South Africa, Anglo American was the first to kick off a corporate-sponsored ARV programme in August 2002.

Although only around 1,000 workers are currently receiving ARVs under the Anglo programme and another 3,000 are in HIV wellness programmes, spearheaded by Anglo Vice President, Dr Brian Brink, this is largely due to the veil of stigmatisation that still surrounds the disease in South Africa, and the low numbers of people who volunteer for testing.

By the end of the first year of Anglo American's Anti Retroviral Treatment (ART) programme, it had 58 sites with 60 doctors, 137 nurses and 40 counsellors trained. Of the employees treated, 97% were back at work and leading a normal life, says Brink.

Mark Heywood of South Africa's Treatment Action Campaign (TAC) - the non-government organisation which has probably done more to raise the profile of AIDS causes in South Africa than any other organisation - says that while it is commendable that corporate South Africa has stepped into the breach, it has awakened to the epidemic 'almost too late'. 'Corporations should be providing, and can do more. It is still only a minority that are doing anything.'

TAC points to frightening statistics. There are some seven million people in South Africa who are members of medical aids or member-dependents. Yet only 20,000 of them have used medical aid schemes to access ARVs, highlighting the fear surrounding being exposed as infected with HIV.

Heywood says that corporates must also look at the underlying factors which exacerbate the disease. 'It is all very well to look at treatment, but the causal factors, such as the migrant labour system, or the single sex hostels (on the mines) which promoted the spread of the disease, must also be dealt with, as must prevention education.'

TAC has also single-handedly forced patent drug companies to their knees in South Africa, and along with the Clinton Foundation, has introduced a generic mechanism that will reduced the cost of ARVs from about £100 a month sterling per patient (just drug costs alone - no dispensing or diagnostic costs included) to about £8 a month. These will be available in about six months.

This will greatly assist corporate South Africa. Heywood says, rightly of course, that any corporate action should only ever be a complementary programme in association with a committed government roll-out, but TAC knows better than anyone else that the Government has been reluctant on the HIV/AIDS issue.

Corporate South Africa hasn't been motivated purely out of the goodness of its heart. There are hard commercial realities. There is a cost to the deaths of workers. As Journ-Aids says, not only is there the cost of absenteeism and mortality, but re-training, recruitment costs, death benefits, HIV programmes, insurance, pension payouts, funerals, etc. There are also intangible costs such as low morale and poor concentration, and the loss of institutional memory and experience of the workforce.

According to Journ-Aids, a study of six large businesses in retail, agriculture, media, mining and heavy industry in South Africa and Botswana (the most affected country in Africa) showed that direct costs associated with the disease varied considerably. Cost per HIV infection of an unskilled worker ranged from US$2,094-US$15,000 (2001 prices) while a manager cost US$8,736-US$65,000.

The BER report, the very latest - and most comprehensive data to date - said that about 30% of the 1,000 firms surveyed reported higher labour costs associated with HIV/AIDS, while 27% indicated they had lost experience and skills and 24% had incurred recruitment and training costs.

Unfortunately, in South Africa, while news of HIV/AIDS is everywhere you look, few companies seem to have done any real homework on how it affects them.

According to research done by the country's second largest life group, Sanlam, in 2000, about three-quarters of them had little idea how many employees might be affected. This is partly due to testing being strictly on a voluntary basis. But in certain industries it is very high. AngloGold reckons 30% of its 40,000 employees would test positive. Heywood says that 18% of black South Africans would be HIV positive, and about 6% of white South Africans positive. The Asian population is the least affected, coming in just below that of the white population statistic.

Of course it follows that if a company doesn't know what percentage of its work force is affected, it is unlikely to have a strategy in place to deal with it, and this is exactly what Deloitte & Touche found - its results correlating almost exactly with that of Sanlam's.

Of the participating companies in its research, few had assessed the risk factors attached to HIV/AIDS on their business models.

Fortunately, the JSE Securities Exchange, labour and other shareholder-focused organisations have started to realise that transparency in reporting on the affect of HIV/AIDS on a company's operational well-being will become increasingly important to its future prospects. The JSE, for example, has been encouraging listed companies to highlight their exposure to a number of risk factors, but most companies in the current tough economic climate may not want to add another risk factor to their growing list of woes when they are trying to keep investors, not chase them away.

The second King report on corporate governance also suggests that, in the spirit of transparency, issues such as AIDS should be reported on in full, and the South Africa Institute of Chartered Accountants has also noted AIDS in its framework for effective reporting. The Global Reporting Initiative has also developed a resource document to report on HIV/AIDS.

Amanda Vermeulen is the deputy editor of South African magazine, Finance Week.