Background and problem statement
The HIV/AIDS epidemic poses a severe threat to the economies of developing countries, and those on the African continent in particular. South Africa, which is being affected fundamentally by the epidemic, is no exception. The estimated adult prevalence of HIV amongst 15-49 year olds in 2001 was 20.1 percent (UNAIDS, 2002), while the ASSA2000 model put adult prevalence amongst 20-65 year olds at 24.1 percent (ASSA, 2003). A recent national household survey in turn has put the 2002 estimate of adult
prevalence amongst those older than 25 years at 15.5 percent (HSRC, 2002).
These infected individuals and affected children all belong to individual households and their deaths will have a significant impact on their families. Hence, the epidemic will have a considerably impact on households in South Africa. Over the next ten to fifteen years, the epidemic has the potential to erode development gains made in past decades. As the disease takes its toll on the economically active population, production and demand are expected to decline, which will slow down economic growth and
development. Research into the socio-economic impact of HIV/AIDS on households and communities is crucial in guiding current and future policies and intervention strategies intended to absorb this impact. From an economic point of view, the primary impact of
the disease manifests mainly among individual economic agents, i.e. individuals and households. An assessment of the socio-economic of HIV/AIDS would therefore have to start on this micro-level of analysis. Aspects of such assessment, amongst other things, includes determining how the disease affects the economic decisions and position of individuals and households over time, i.e. how they generate, save, invest and spend income in response to the disease, and how the epidemic in turn affects their quality of life.