By Herryman Moono
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The Economics of Cholera in Zambia: Costs Accounting of the Cholera Epidemic
Since late 2017, Zambia has been on a Cholera alert. Cholera, a highly infectious and acute disease spreads rapidly within and between communities and countries too. Transmitted through the consumption of contaminated water, Cholera has a very high fatality rate with deaths occurring within a few days of contraction. The World Health Organisation reports that about 4 – 5 million Cholera cases are reported annually with deaths of between 100, 000 to 200,000.
Due to the nature of the prominent mode of transmission – the consumption of contaminated water and food – Cholera is predominantly a developing country phenomenon. Poor water and sanitation, a common feature of most developing countries, including Zambia, is a recipe for Cholera, and it is this that has triggered the current epidemic that has led to drastic measures aimed at curbing the rapid spread of the disease.
Since the initial record of Cholera cases in Lusaka, the number of cases and deaths have continued to rise and spreading beyond Lusaka to other parts of the country. To contain the spread of the disease, the Republican President, Edgar Chagwa Lungu instructed the Zambia Defence Services to engage into a cleanup campaign of the key centres of Lusaka that are known to be trigger centres for the spread of the disease. The operation has involved among others, the closure of informal trading centres and the unblocking of water channels in the city. Most shops, especially foods centres that have tested positive for the presence of Cholera have been closed pending the containment of the disease.
Cholera is now certainly a national crisis. It is an emergency, and as with all crises, there are associated short term and long term costs. This brief aims at highlighting the costs associated with the occurrence, spread and containment of Cholera in Zambia. It does not provide actual figures – these can only be simulated and estimated post epidemic – but it does provide indicative costs channels that the country ought to be aware of for future planning.
2. Cholera: The Disease of ‘Poverty’
Everywhere in history, diseases associated with poor water and sanitation have and are always diseases of ‘poverty’. The links between poverty and poor health are obvious. The WHO Commission on Macroeconomics and Health led by Prof. Jeffrey Sachs rightly state that:
‘’Poor and malnourished people are more likely to become sick and are at higher risk of dying from their illness than are better off and healthier individuals. Ill health also contributes to poverty. People who become ill are more likely to fall into poverty and to remain there than are healthier individuals because debilitating illness prevents adults from earning a living. Illness also keeps children away from school, decreasing their chances of a productive adulthood.’’
What is thus clear is that there is a two way link between poverty and diseases: Poverty leads to higher susceptibility to diseases – a case in point, the ‘trigger’ points for the current Zambian Cholera epidemic are all low income areas of Lusaka – Kanyama, Misis, Chawama etc. Coincidently, these are also the areas with the poorest water and sanitation infrastructure, making them suitable breeding and spreading ground for vibrio cholera, the deadly bacteria responsible for Cholera. The second link is that ill health leads to poverty – sick people lose incomes earned from working/participating in the labour market due to their illness. Furthermore, the cost of treating a particular illness sends people into acute financial positions – catastrophic health expenditures. The current Cholera epidemic which has concentrated mostly on the informal sector traders is certainly expected to send more people into poverty – their sole sources of income, their businesses premises are now quarantined and therefore their sources of livelihood has been cut off. Those that are infected cannot trade, even if their trading places are opened.
Notwithstanding the above, however, the current measures are necessary as the nation looks to finding a long lasting solution to the current crisis.
What is clear, however, is that poverty causes Cholera, and likewise, Cholera, if sustained and not contained, will cause and sustain poverty.
3. The Costs of Cholera
Given that Cholera is a preventable disease with significant costs beyond health costs, Economists, especially our colleagues from the Ministry of Finance – Budget Office – should take particular interest, and not merely Ministry of Health officials. More than a health matter, the cholera epidemic is an economic matter – because the resources needed to curb it will have to be monetarised, and likewise, the costs associated with the disease are economic and financial. Importantly, noting that the disease can be prevented, the grave loses to the economy can thus be averted, and it is imperative that forward looking planning takes note and interest in this.
In analysing the feasible costs of the current Cholera epidemic in Zambia, we note two types of costs – the direct and indirect costs. Beyond these, however, we also note the economy wide negative repercussions of the disease that spread to other sectors.
As a premier, and as already stated above, any disease imposes a cost on society beyond the cost related to the sick individual. The Commissions on Macroeconomics and Health (2001) aptly states, that a ‘high disease burden creates a high turnover of the labour force and lowers the profitability of enterprises beyond any direct effects on individual worker productivity. Diseases such as malaria pose risks to all individuals who may enter a particular location, and therefore depress tourism, block otherwise profitable investments, or prevent the effective economic use of arable land or other natural resources. ‘
As a country that is aiming at industrialisation, diseases such as Cholera causes shutdown of firms, and those that continue to operate may suffer high staff turnover and absenteeing during such a crisis which reduces productivity, depresses profits, and cumulatively reduces industrial and national productivity.
The costs are therefore high and worth noting.
3.1 Direct Costs
The obvious and direct costs of Cholera are those costs that are being incurred to contain and treat the disease. We highlight these – though not exhaustive, they are indicative of feasible direct costs:
a) The direct costs of sending Military personnel to clean up Lusaka;
b) The direct doctor costs and scaled up hospital cost of treating Cholera;
c) The direct drugs/ accessories for treating the disease – injection, Manzi amoyo etc;
d) The direct costs of lost taxes to the ZRA emanating from the closure of businesses that pay tax;
e) The direct costs of community outreach and mobilisation to enhance education/information on the epidemic. These will include the paid for adverts in both forms of media as well as the costs associated with daily press briefings;
f) The direct costs associated with setting up ‘treatment’ centres e.g., the move to make independence stadium as a Cholera treatment centre;
g) The direct costs of loss of incomes by the sick individual – if working/business.
h) The opportunity costs incurred by the family members that are treating the sick individual; and
i) The direct transport costs of transporting a sick patient to treatment centres.
Cumulatively, these are significant costs to the economy which should justify careful coordinated future planning. The actual direct costs however can only be estimated post ante and we shall endeavour to provide this estimate once the disease has been contained.
3.2 Indirect Costs
Beyond the direct costs, there are the indirect costs of the disease which fall into two main categories – Morbidity losses and Mortality losses. We outline these below.
3.2.1 Morbidity Costs
Morbidity – the state of being diseased – has the costs related to the loss in economic activity/incomes for the number of days one is infected by the disease. For an employee or businessperson whose incomes depend on their day to day work, the Cholera epidemic, beyond the direct costs, indirectly imposes loss in incomes and business. This is particularly so given that the distribution of the disease is concentrated in the informal sector trading places which accounts for over 80% of the Zambian economy.
3.2.2 Mortality Costs
Mortality – or simply death – has the obvious associated costs relating to the number of years of productive life lost due to premature death during the cholera epidemic. In economic analysis, mortality costs of an epidemic such as the current Cholera epidemic are usually calculated by taking the lifetime earnings that those who died of the illness during the year in question would have earned if they had lived their lives upto the average national life expectancy. In our case, this would involve documenting the demographic and economic profiles of all those who died and then estimate their would have been lifetime earnings, and then discount these to get the ‘present value’. Given that these earnings would not be earned due to death, this will be the mortality cost of the Cholera epidemic.
3.3 Other Economic Costs
Beyond the costs stated above, the Cholera epidemic has other economy-wide effects beyond the ‘obvious’. We explain below, albeit briefly, the trade and tourism costs associated with the epidemic.
3.3.1 Trade Costs
Zambia is aiming at diversifying its economy away from Copper to mostly agriculture, and has in the recent past pushed an agenda to improve non-traditional exports, mostly agricultural exports. A sustained Cholera epidemic would make our exports – especially food exports – unattractive as our export destination may deem our products ‘contaminated’ and not safe for human consumption. Non-tariff barriers to trade such as Sanitary and phytosanitary measures among Zambia’s trading partners might be invoked and made stricter, making Zambian goods unattractive. This reduced forex, and has the direct repercussion of negatively affecting our exchange rate.
Furthermore, Zambia being a transit route for most goods reaching the large Congo market, there is likelihood that the export of goods through Zambia may be restricted until the epidemic is contained, and this has the associated costs of reducing revenues through toll fees and other fees.
Finally, given that Zambia is predominantly an import dependent economy with high cross border trade, measures by other countries to restrict the movement of Zambian traders in the aim of curbing the spread of the disease to other countries has the negative effect of slowing business and thereby contributing to increased poverty.
3.3.2 Tourism Costs
Linked to the economic diversification agenda, achieving increased and sustained tourism requires, among others, good infrastructure that serves and attracts tourists. Among such infrastructure is water and sanitation. Cholera, being a fatal disease that reflects poor national infrastructure is expected to significantly reduce tourist arrivals as they fear infection. The loss in revenue from tourism is not the only cost – there is also the reputational costs that will ensue long after the epidemic. More campaigns would thus need to be had to reassure tourists on measures government would have put in place to redirect tourist traffic to Zambia from neighbouring countries such as Zimbabwe, Botswana and Namibia.
4. Lessons for the future
We have endeavoured to highlight the costs associated with the Cholera epidemic in Zambia and have shown, indicatively, that Cholera is indeed an expensive disease with severe economic disadvantages. Given the feasibly high economic costs of Cholera in Zambia, and given that the channel of transmission are well known with prevention easy, we are of the view that extreme care should be taken in future planning to curb the disease. The economic losses – large as they may be – are avoidable, and future years should prevent them.