Business Case presentation IFC

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					IFC Against AIDS
Protecting People and Profitability
Session Outline

    Why does IFC care about HIV/AIDS?
    What is the “business case”?
    What is “IFC Against AIDS”?
Why IFC Takes AIDS Seriously

    A priority for the development community
    95% of people infected live in developing countries
    Most companies not aware of risks
    Companies don’t know where to start
    An integral part of IFC’s commitment to sustainable
The Business Case:
    Three categories of risks

    Reputation risk
    Financial impact
    Threat to company’s viability
The Reputation Risk
The Financial Risk:
      Impact on the Bottom Line

    Medical and other benefits costs
    Absenteeism and lower productivity
    Labor turnover, recruitment and training costs
    Experienced personnel
    Enabling environment
    Shrinking markets
The Business Case
Benefits vs. Costs

     Boston University AIDS impact assessment on six corporations
      in South Africa and Botswana.
     Six industries: mining, metals processing, utilities, agribusiness,
      retail, and media.
     Findings:
          The annual "AIDS tax" on business was as much as 5.9% of the
           corporations' labor costs.
          Workplace AIDS programs would reduce this “AIDS tax” by as much as
          All six companies would have earned positive returns on their
           investments if they had provided antiretroviral drugs at no cost to HIV-
           positive employees.
                                          Source: Harvard Business Review, February 2003
The Business Case
Benefits vs. Costs

                     Source: Roberts et al. 1997
The Business Case
Benefits vs. Costs

     A University of California-San Francisco study on large Ugandan
      companies (500+ employees) found that even programs
      offering the most expensive HIV treatment — anti-retroviral
      care — can be cost-effective especially in light of 85% price
      reductions offered by drug manufacturers for sub-Saharan Africa.

                                     Source: UCSF electronic newsletter Daybreak, 7/14/2000

     A study of 16 large firms (average 1,200-1,500 employees in each
      firm) in Kenya estimated that the AIDS impact could be 3-8% of
      total labor costs by 2005 and 4% of profits.

                                  Source: AmfAR - Treatment Insider Newsletter, January 2003
The Business Case
Benefits vs. Costs

     A major industrial company based in KwaZulu-Natal,
      South Africa recorded a 31% increase in the number of
      ill-health retirements between 1995 and 1997; of these
      retirements, 17% of them were due to AIDS.

                                             Source: Galloway et al. 1998
The Business Case
Benefits vs. Costs

     Most firms pay funeral costs such as coffins, transport of the
      body and a number of mourners, and 6-12 months payment of
      death gratuity. One sugar company in Uganda estimates this cost
      to total US$500 per employee.

                                                    Source:Nabalonzi et al. 1995

     Chilanga, Zambia’s largest cement factory saw a 15-fold increase
      in funeral-related absenteeism between 1992 and 1995. As a
      result, the company has restricted employee absenteeism for
      funerals to only those for a spouse, parent or child.

                                                      Source: Bloom et al. 2001
Financial Institutions
Benefits vs. Costs

     Barclays Bank – Zambia
       The death rate among employees increased from 0.4% in
        1987 to 2.2% in 1992.
       The company lost an average of 36 of its 1,600 employees
        annually to HIV/AIDS.
       More than 70% of the deaths occurred in those under 40.

       Ex-gratia payments to families increased by nearly 350%
        between 1991 and 1992.

                                                    Source: Bloom et al. 2001
Financial Institutions
Benefits vs. Costs

      In South Africa, the cost of employee benefits, sick
       leave, and lost productivity can increase because of
       AIDS by as much as 2.9% for a financial services
       company. These costs represent the discounted value of
       all future expected extra costs, as a percentage of the
       discounted value of all future expected salaries.

  Source: Actuarial Solutions - AIDS impact assessment To Employers of Financial services companies in South Africa
Financial Institutions
Corporate Image Enhancement

     In 2003, Standard Chartered Bank received the Award
      for Business Excellence in the Workplace of the Global
      Business Coalition on AIDS for its leadership
      demonstrated over a number of years in addressing HIV
      in the workplace and the surrounding communities.

                                    Source: Global Business Coalition on HIV/AIDS
Global Manufacturing and Services
Benefits vs. Costs

     A South African sugar mill found that HIV-positive employees
      took, on average, 55 additional sick days during the last two
      years of their lives, incurring economic costs of nearly 8,500 Rand
      per worker. Costs to the industry were projected to increase 10-
      fold in the next 6 years.
                                                             Source: Morris et al. 2000

     A detailed analysis of the Lonrho Companies (a group that has
      holdings in mining, sugar, cotton, automotive and other
      industries) found that the cost of HIV/AIDS was about 1.1% of
      total costs for the company, and consisted of 3.4% of gross profits.

                                                Source: Ntirenda, C. and Zimba D. 1998
Global Manufacturing and Services
Benefits vs. Costs

     In Madras, India, a study of large industries conducted by
      UNAIDS in 1998 found that absenteeism was expected to double
      by 2000, largely as a result of Sexually Transmitted Diseases
      (STDs) and HIV-related illnesses.
                                                                     Source: UNAIDS 1998

     Survey among the Confederation of Tanzania Industries'
         Medical care costs have been increasing over the years due to HIV/AIDS-
          related treatment.
         More than 50% of industrialists spend up to 20% of their annual medical bill
          on HIV/AIDS-related care.
         About 40% of company death benefits went to funeral services for
          employees who died of HIV/AIDS-related illnesses.
                                                                     Source: All Africa 2003
Global Manufacturing and Services
Benefits vs. Costs

     Chilanga, Zambia’s largest cement factory saw a 15-fold
      increase in funeral-related absenteeism between 1992 and 1995.
      As a result, the company has restricted employee absenteeism for
      funerals to only those for a spouse, parent or child.

                                                                  Source: Bloom et al. 2001

     DaimlerChrysler – South Africa estimated that averting one new
      HIV infection among its employees saves the equivalent of three
      to four annual salaries.

                                 Source: AmfAR - Treatment Insider Newsletter, January 2003
Benefits vs. Costs

     In 2000, Debswana tallied the cost of AIDS care to be 10.7% of its
      payroll. A South African agency estimated in 1997 the average
      annual AIDS-related cost per patient to be 45,000 Rand ($9,500 at
      the time), but that shot up to 70,000 Rand ($15,500) in
      unmanaged patients.
                                                                     Source: UNAIDS, 2002

     Gold Fields – South Africa’s second-largest gold producer
      estimated that HIV/AIDS was costing the company US$3.22 per
      ounce of gold produced. The company estimated that the cost of
      inaction would have been more than US$10 per ounce by
                                  Source: AmfAR - Treatment Insider Newsletter, January 2003
Benefits vs. Costs

     National Railways of Zimbabwe (NRZ):
       In 1990, the company reported operational problems due to an
        absenteeism rate greater than 15%.
       A later impact study estimated the company’s AIDS costs at
        Z$39million, which is equivalent to 20% of the company’s
       In 1997, absenteeism costs increased further to Z$80 million.

       Training costs to replace skilled workers (direct training and
        lower productivity) were projected to increase fivefold due to
        AIDS between 1991 and 2000.

                                Source: National Railways of Zimbabwe, 1997
Oil and Gas
Benefits vs. Costs

     A study commissioned by the South African subsidiary of
      British Petroleum (BP) found that workers with AIDS had taken
      on average 27.5 more sick days than expected. Each death from
      AIDS equaled four days of a manager's time and resulted in 20
      employees losing five days of productive time.

                                 Source: AmfAR - Treatment Insider Newsletter, January 2003

     A petroleum refinery in Zambia found that 84% of worker deaths
      from 1987-1992 were AIDS-related. Medical expenses were
      approximately US$225 per patient.
                                                                  Source: Bloom et al. 2001
Benefits vs. Costs

     Tea Estate – Kenya. Study findings:
       HIV-positive workers had plucked significantly less tea than
       In their last two years of life, those who ultimately died of AIDS
        had produced roughly one third less tea than other pluckers.
       Their earnings had declined by more than 18% during their last
        year of life.
       The quantity of tea plucked had declined and the use of leave
        time increased as they became closer to death.

                                                          Source: Fox et al. 2003
Risk to the Viability of Small Enterprises

     A study of 209 small businesses in South Africa identified
      HIV/AIDS as one of the three main factors that cause
      nearly 80% of South African start-up SMEs to fail
      every year (the other two factors are crime and
      inadequate management expertise)

                                               Source: S. Eeden et al. – 2001
When to contact IFC Against AIDS
    The company relies on a workforce separated from
     their families for long periods of time
        Mining, construction, shipping, trucking, and other industries employing
         migrant labor
    Employees’ salaries tend to be higher than in the
     surrounding community
    The sector can be a target for activists
        Extractive industries, companies with a strong brand name, companies
         sensitive on their “license to operate”
    The company relies on key jobs/individuals
        The loss of one of those key individuals can prove catastrophic
    Large workforce
        The magnitude of direct and indirect costs will be stronger
IFC Against AIDS

    Has dedicated resources to work with clients
    Will develop a fruitful relationship with clients
     to manage HIV/AIDS in their workplace and
    Integrates HIV/AIDS, malaria and TB in its
    Promotes partnerships between clients and
     NGO and other partners
    Systematically extracts lessons learnt from its
IFC Against AIDS
The mission of IFC Against AIDS is to protect people and profitability by
being a risk management partner, HIV/AIDS expert and a catalyst for
action where HIV/AIDS threatens sustainable development.

    Guidance                    Training                Development
        Africa                     Africa                & Research

         M&E     M&E    M&E       M&E        M&E     M&E     M&E

          GENDER       GENDER   GENDER         GENDER      GENDER


                    Demonstration effect
Client identification: nature of deal,
                                                                   IFC Against AIDS Guidance:
sector, country, internal stakeholders
Mapping out IFC team & value-add
                                                                   Client Engagement Process
                                                          Implementation and                                Sustainability and
        Foundations of an                                                                                     maintenance
        HIV/AIDS program                                      partnership
                                                                                                     M&E and program transition:
                                                   Program execution and
 Infrastructure and assessment:
                                                   consolidation of partnership:                     • Consolidation of lessons
 • Assessment of programmatic                                                                        learned
                                                   • Client and NGO implement the
                                                   program                                           • M&E and progran evaluation
 • Senior management buy-in
                                                   • Eventually IFC Against AIDS                     • Bridge plan of action
 • Partnership with service                        develops supervisory role
 providers                                                                                           • Feedback to management
                                                   • Feedback to management
                    Roles                                                                           • IFC Against AIDS:
                                                                                                    Assist client with evaluation of program;
                                                  • IFC Against AIDS:
 • IFC Against AIDS:                                                                                evaluation of NGO; refine tools and
                                                  KAP survey with client; training on IFC Against
 First mission to client; assessment of                                                             approach; senior management meeting
                                                  AIDS tools and approach for service provider;
 program conditions; senior management
                                                  senior management meeting
 meeting; referrals to service providers; AIDS                                                      • Client:
 Committee training                                                                                 Extend the reach of the program to
                                                  • Client:
                                                                                                    customers, suppliers and partners;
                                                  Develop workplan and negotiate contract with
 • Client:                                                                                          develop “bridge” plan of action;
                                                  NGO; encourage staff participation
 Identify AIDS Committee members and                                                                evaluate the program at conclusion
 schedule training; identify Focal Point; draft
                                                  • NGO:
 and adopt policy statement; draft Roadmap                                                          • NGO:
                                                  Proposal to client for services; participate in
 for Action; develop a budget including in-                                                         Work with client on evaluation of program;
                                                  training on IFC tools and approach; implement
 kind contributions                                                                                 proposal to client for next programmatic
                                                  services; regular reports to client (and IFC)
                                                                                                    phase; continuation of implementation

            Months 0-6                                         Months 6-12                                    Months 12-18
                                           IFC Against Aids: Training Program
Identification of clients to be enrolled
in the Training Program (companies
with 50-500 employees) by sector                   Goal of the IFC Against AIDS Training Program:
and country/region
 PEP Africa constituencies                        To build the capacity of SME’s and IFC portfolio clients
 MSI, SME Service Centers                         on HIV/AIDS through a training program, to prevent and
 IFC portfolio clients                            mitigate the impact of the disease on their businesses
 SME clients and SMEs in the supply
chain of larger clients or that are key
constituencies of strategic clients           SME Training Program: Initial
                                               One full day
                                                                                     Follow-Up Process
                                               Maximum of 15-18 companies
Business Case Drives                          per cohort                              Formal: Cohorts meet
                                               Maximum of 25 participants per       with facilitator every four
 Interactive presentations to SME            cohort                                 months
business owners                                Modular, interactive, including       Informal: Via telephone
 Enrollment of company                       case studies and PLWHA talk            or e-mail
 representatives in the Program                Participants develop their own        Some face-to-face
 Involvement of partner                      company’s HIV/AIDS action plan         meetings also when
organizations                                 for the next four months               feasible

Other Training Initiatives:                                             12 month period
 Facilitators (within the PEP Africa-IFC Against AIDS Cross-cutting themes in theTraining Program and
project)                                                       Initiatives of IFC Against AIDS:
 AIDS Committees within client companies
 Service Providers (NGOs identified to partner with clients)      • Monitoring and evaluation
 Senior managers within IFC client operations                              • Gender
 IFC staff                                                        • Stigma and discrimination
 Partner organizations (training of trainers)
“It is inevitable that a firm doing business in
the developing world will pay for AIDS. It is
just a question of when and how much.”

Lee Smith
Former President, Levi Strauss International
IFC Against AIDS
 Sabine Durier - Program Leader
    Tel: +1-202-473-4176, Email:
 Gillette Conner - Program Officer
    Tel: +1-202-473-4040, Email:
 Tish Enslin - Program Officer (Johannesburg)
    Tel: +27-11-731-3062, Email:
 Noleen Dube - Program Officer (Johannesburg)
    Tel: +27-11-731-3059, Email:
 Martin Lutalo - Program Analyst
    Tel: +1-202-458-1406, Email:
 Ilídio Silva - Consultant (Maputo)
    Tel: +1-258-84-3070-360, Email:

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