Abstract
This study investigates how revenue from the Southern African Customs Union (SACU) common revenue pool affects efforts to contain HIV/AIDS in Botswana, Lesotho, Namibia and Swaziland (BLNS countries). Using a dataset for the BLNS countries covering the period 1990-2007 in annual frequency and a health production function, the study estimates a dynamic panel using the Arellano-Bond (1991) difference Generalised Method of Moments. The study results show that an increase in either SACU revenue or aggregate government expenditure increases HIV prevalence rates. Disaggregating the government expenditures into health and non-health outlays reveals that the health expenditure component decreases HIV prevalence rates. To be precise, the study finds that HIV prevalence rates decline when public health expenditures as a percentage of GDP and public health expenditures as a percentage of total government expenditures increase. It is argued, therefore, that the type of public expenditure is of consequence: public health expenditures decrease, while public non-health expenditures increase the HIV prevalence rates, with the ultimate direction of HIV prevalence rates determined by the dominant of the two effects.
Highlights
Members of the Southern African Customs Union (SACU) – Botswana, Lesotho, Namibia, Swaziland and South Africa – deposit their customs and excise collections into a common revenue pool (CRP), which they share, using a formula that has evolved substantially since the establishment of the union more than a century ago
Against a background of HIV/AIDS at epidemic levels and declining SACU revenue in BLNS countries, this study investigates the relationship between HIV prevalence rates on the one hand, and both SACU revenue and government expenditure on the other
Using a health production function, the study finds that HIV prevalence rates increase with increasing SACU revenue or government expenditure
Summary
Members of the Southern African Customs Union (SACU) – Botswana, Lesotho, Namibia, Swaziland and South Africa – deposit their customs and excise collections into a common revenue pool (CRP), which they share, using a formula that has evolved substantially since the establishment of the union more than a century ago. The revenue-sharing formula (RSF) currently in use was agreed upon following negotiations that started in 1994 and ended with a 2002 Agreement Under this RSF, Botswana, Lesotho, Namibia and Swaziland (BLNS countries) combined get nearly half of the collections in the CRP, their joint gross domestic product (GDP) is less than 10 per cent of SACU’s aggregate GDP. What is the impact of the declining SACU revenue on HIV/AIDS in the BLNS countries? Using a health production function, the study shows that increasing either SACU revenue or aggregate government expenditure increases HIV prevalence rates. An increase in the health expenditure component of public outlays, decreases HIV prevalence rates.
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