This paper analyses the effect of health expenditure and life expectancy on HIV/AIDS in selected African countries. Using a panel data from 40 African countries within the period of 2005 to 2014, both linear and nonlinear models were estimated. The Hausman test conducted approves the appropriateness of the random effect. Random effect estimation with interaction term shows health expenditure has positive and significant impact on HIV/AIDS prevalence. At average life expectancy, 10% increase in health expenditure will positively influence the HIV/AIDS pandemic by 0.982% while reducing HIV prevalence by 0.164% will increase life expectancy by 10% at the average health spending. The research findings suggest Governments and Non-Governmental Organizations (NGOs) must invest more resources into health sector, especially the public health and encourages National governments in Africa countries to step up to fund their own responses should there be a decline in donor funding for HIV/AIDS programmes.

Keywords: Fixed effect, HIV/AIDS prevalence, health expenditure, life expectancy and random effect.