Strengthening the Role of AIDS-Affected MSEs in Productive Markets

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This paper notes at the outset that with 39.4 million people HIV-positive or living with AIDS around the world, it is not surprising that AIDS is having an economic impact on households, businesses, and even national economies. It notes further that micro and small enterprises (MSEs) are particularly at risk because they comprise more than 90% of all enterprises in the world and already face constraints to market access. The additional burden of HIV/AIDS on MSEs could be sufficient to push many of these firms out of the markets in which they are currently active.

This paper looks at the important issue of sustaining the role of MSEs in productive economic activity when MSEs are directly affected by HIV/AIDS. It identifies the constraints that are specific to HIV/AIDS-affected MSEs and presents promising approaches to address these constraints and mitigate the impact of HIV/AIDS on MSEs.

The paper begins by introducing the value chain concept. It states that even before the appearance of HIV/AIDS, MSE participation in value chains was constrained by numerous factors – limited resources with which to serve the market, high transaction costs for both MSEs and their commercial partners, significant risks within value chain relationships, and lack of market information, understanding, and access. The paper then moves onto an overview of HIV/AIDS in the world today before presenting in brief what is known of the impact of HIV/AIDS on the macroeconomy, sectors, businesses, and households.

The paper identifies four major constraints specific to HIV/AIDS-affected MSEs participating in value chains:

  • Resource Constraints – HIV/AIDS results in further declines in MSE resources, often in unexpected and therefore hard-to-resolve ways;
  • Transaction Costs – MSEs coping with AIDS face additional hurdles in producing the quantity or quality demanded by buyers, which further increase transaction costs;
  • Risk for MSEs and Large Firms – HIV/AIDS reintroduces a significant level of uncertainty and change into already delicate risk equations;
  • Lack of Market Orientation – In and AIDS-affected MSE, key employees may have less contact with business associates because of illness or care giving. In addition, MSEs often have increased numbers of employees from vulnerable groups – women, children, and the elderly – who have more difficulty accessing market information

Finally, the paper examines a “small but growing” set of strategies now in use to reduce these constraints and keep MSEs actively connected to markets, even under the stress of HIV/AIDS:

  • Asset Protection via Financial Services
  • Asset Protection via Legal Services
  • Workplace Policies and Programs
  • Labour-Saving Technologies and Production Inputs
  • Inter-Firm Cooperation
  • Vertical Linkages

The paper is primarily targeted at development practitioners striving to enhance the economic livelihoods of the poor and working in geographic areas with a high prevalence of HIV/AIDS. It is also set out to be relevant for health professionals – it provides insight and suggestions for programming to mitigate the economic impact of AIDS and thus strengthen access to healthcare and nutritional status at the household level and beyond.

Document Information

Document Type Paper
Author Irwin, B, Grant, B, Parker, J, Morgan, M
Year of Publication 2005
Publisher USAID
Number of Pages 61 pp.
Edition microREPORT
Region / Country Global /
Primary Language English (en)
Keywords Health, Hiv/Aids
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