Small and Medium Size Enterprises (SMEs)

Primary Resource

The Private Sector and HIV/AIDS in Africa: Taking Stock of Six Years of Applied Research. S Rosen, F Feeley, P Connelly, JL Simon. Boston University Center for International Health and Development. June, 14 2006.

Findings

Impact

For most small and medium-sized companies in Africa, HIV/AIDS is not a pressing issue. The surveys of SMEs in South Africa, Zambia, Kenya, and Uganda consistently found that HIV/AIDS ranked well below several other business issues as a concern for senior managers. Few managers report ever having discussed HIV/AIDS as a business issue, and fewer still believe that HIV/AIDS is having a serious impact on their companies. Most perceive little pressure to act from employees, shareholders, or other constituencies. While some managers may simply be misinformed, it seems unlikely that business leaders are systematically failing to notice sustained, major effects of the epidemic. A more likely explanation is that companies in Africa—and particular small and medium-sized companies—face myriad challenges to staying in business, ranging from power failures to high and unpredictable taxes to political instability. In such an environment, AIDS ranks low on the management agenda.

Response

Most companies that have implemented an active HIV/AIDS program have relied on
dedicated human resources staff to lead the effort. Small and medium-sized companies typically do not have human resources staff, and other managers do not see enough impact to justify the investment of their own time to understand the epidemic, research the response options, and put them in place. Other deterrents to investing in HIV/AIDS programs include relatively high employee turnover, lack of redundancy in the workforce that would allow individual workers to take time out to participate in HIV-related activities, individual rather than policy-driven relationships with employees, high discount rates, and a dearth of available cash. Smaller companies, moreover, cannot benefit from the economies of scale available to large companies.

In a survey of HIV/AIDS service providers conducted in South Africa in 2004, it was found that private service providers charged smaller companies—those with fewer than 250 employees—2-3 times more per employee than they charged larger companies. Expectations that large numbers of SMEs can be persuaded to establish HIV/AIDS programs without support from business associations may therefore be unrealistic. Greater societal benefits may be obtained, moreover, by encouraging SMEs to focus on job creation, and relying on governments and NGOs to provide healthcare.

From the structured interviews that were conducted with a random sample of 80 SMEs located in KwaZulu Natal (KZN) and Gauteng provinces the following discoveries were noted:

• About one quarter of the companies sampled provided some HIV/AIDS services to employees and fewer than half incurred any direct costs to provide those services.
• Although 52 per cent of the companies believed they had lost employees to AIDS, few of those employees were regarded as critical to operations.
• AIDS accounted for 10 per cent of the overall annual employee turnover of 13 per cent. Few companies incur direct costs in recruiting or training.
• Just 30 per cent of permanent employees have access to employer-sponsored healthcare.
• HIV/AIDS ranked 9th of 10 major business concerns faced by SMEs.

Since managers believe few employees are leaving the workforce due to HIV/AIDS and SMEs appear to incur few costs to replace workers, managers are relatively unconcerned about HIV/AIDS. Serious demand-side barriers exist in the market for HIV/AIDS services for SMEs. For most of the SMEs in the survey, the constraints are too great to expect SMEs to play a major role in the national response to AIDS without assistance.

Primary Resource information

S Rosen, F Feeley, P Connelly, JL Simon. "The Private Sector and HIV/AIDS in Africa: Taking Stock of Six Years of Applied Research." Boston University Center for International Health and Development. June, 14 2006.

Other resources

Connelly P, Rosen S. “Will small and medium enterprises provide HIV/AIDS services to employees? An analysis of market demand.” South African Journal of Economics 2005. 73:613-26.

Connelly P, Rosen S. “Opportunities to expand HIV/AIDS services to employees of small and medium-sized companies in Wynberg, South Africa.” Project report. Center for International Health and Development Boston University School of Public Health. April 2005.