Mining Nigeria’s Untapped Human Capital Reserves

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A country of more than 180 million people, the most populous black nation, with the largest economy in Africa and considered one of the biggest and most attractive markets not just on the continent but across the global emerging market, should not be contending with a significant human capital deficit. But this is Nigeria!

In April this year, Bill Gates was in Nigeria to meet with high-profile politicians. During his visit, he gave a rather unpleasant assessment of the country’s economic roadmap, noting that while the government was pursuing infrastructure and investment initiatives in order to turnaround the fortunes of its people, the real issue lies in the inability to sustainably develop the most important aspect of its economy. Nigeria has largely ignored a gold mine by forgetting to develop human capital, which is considered the aggregate of the skills, knowledge or other intangible assets that can be deployed to create economic value for individuals and the community. Education, training and innovative skills mixed with health care, are highly valued by countries seeking the competitive edge. The World Economic Forum’s Global Human Capital Index 2017 ranked Singapore, the city state with a population of only 5.6 million, 11th out of 130 countries compared to Nigeria’s 114th overall; 122th in development and 124th in know-how with its 193 million population.

Gates, whose foundation has invested more than $1.6 billion in Nigeria to date, was keen to note that his visit was to prioritize supporting Nigeria’s poorest people to ensure a sustainable and inclusive future economic growth to enable the country to meet its ambitious growth and development agenda. According to the press statement released by his foundation, his agenda was centered around discussions on what can be done to accelerate Nigeria’s progress, and how the Bill & Melinda Gates Foundation can continue to partner in health, agriculture and financial inclusion to support Nigeria’s goals.

Harsh as it may have seemed to the Nigerian government, this seems like the current reality. The nation is ranked 25 out 26 countries on the World Economic Forum’s (WEF) human capital optimization index for Africa, coming in only before Chad, a country that has been ravaged by civil unrest since 2008.

The World Economic Forum’s Human Capital Index, which measures the extent to which countries and economies optimize their human capital through education, skills development and its deployment throughout the life-course, finds that Sub-Saharan Africa, on average, currently captures 55 percent of its full human capital potential, compared to a global average of 65 percent, ranging from 67 to 63 percent in Mauritius, Ghana and South Africa, to only 49 to 44 percent in Mali, Nigeria and Chad.

In October 2017, the World Bank had made similar assertions. The Bank’s President, Jim Yong Kim, declared that Nigeria spends less than one percent of its Gross Domestic Product on health, implying that the government spends more on its people, invest more in human capital development than “covet vacuous economic growth statistics.” It was contained in an article published by local newspaper Punch that the top 10 countries spend between nine and 11 percent of GDP on health with the United States remaining the top spender at 16.4 percent. According to the World Health Organization, Angola spent 6.5 percent on health in 2015; Brazil 6.5 percent; Egypt 3.5 percent; Ghana 3.1 percent; India 4 percent, and South Africa 6.3 percent. Nigeria was, however, ranked 140th out of 195 countries studied between 1990 and 2015 in access to, and quality of health care by Lancet, a popular British medical journal.

Education too is in anguish. Reports suggest that 35 percent of teenage and early-adult aged girls in the country are married, while we have as much as 80 percent of girls out of school in several northern states. The country’s tertiary institutions are also in poor shape as all continue to remain elusive from the top 20 lists of outstanding universities in Africa. In the United Nations Human Development Index that measures healthy life, knowledge and decent living standard, even in Africa, Nigeria was not ranked highly on the high or medium development list in 2016, instead, it was in the low development status list, ranked 20th out of 48 countries despite having the largest economy.

In 2015, the National Bureau of Statistics (NBS), the country’s national data mining and statistics management organization published a report on population and education. The report revealed that from 2005 to 2015, Nigeria’s population grew by a massive 43 million, from 140 million people to 183 million. A United Nations’ report projected that, by 2050, Nigeria will become the world’s third largest country by population and one of the six nations with a population of over 300 million. However, educational and infrastructure development are not keeping pace and unemployment rate is increasing. Nigeria, Africa’s most populous nation on Jan. 1 birthed 20,210 babies according to a United Nations Children’s Fund (UNICEF) report, trailing behind, India 69,070 and China 44,760, raising a red flag about the quality of human capital development.

Education, a critical foundation and major enabler of sustainable human capital development, is poorly managed. Over 40 million children do not get the opportunity to complete their primary education. An estimated 10 million more drop out of tertiary education programmes, making them unemployable or restricted to blue-collar jobs. The educational system also stifles learning and limits creativity and ingenuity of graduates, which in turn weakens the nation’s ability to build a creative, dynamic and solutions-driven economy- a mainstay and a unique selling point for economies like Singapore, Malaysia, Japan, the EU, US, and China.

Bridging the human capital gap would, therefore, require a complete overhaul of the foundation- education. An educational system weakened by unfavorable national policies and poor governance cannot change the country’s human capital narrative. Rebuilding school, retraining teachers and academic administrators, and rebuilding policies will all help in shaping a new narrative.

Investing in education is critical to the economic future of Nigeria. At present, Nigeria continues to commit less than 10 percent of its annual budget to education, a critical make-up of the country’s future economic fortunes. “The current quality and quantity of investment in this young generation in health and education just aren’t good enough. So, I was very direct,” Bill Gates told CNN after his visit to Nigeria. For starters, Nigeria must dedicate more of its budgetary allocations to education and health. Building a healthy and thinking society will always make for a prosperous nation.

Public education must be given the required attention. Government-owned learning institution requires a complete overhaul, backed not only by finance but with the right policies and partnerships required to nurture and sustain an effective system. The current American University of Nigeria in Yola, formed by a partnership between the American University Washington D.C. and a Nigerian businessman and politician Atiku Abubakar is a model that mirrors the future. The plan has led to the establishment of one of Nigeria’s top and most innovative tertiary learning facilities with world-class training equipment and top facilitators building a new community of business and academic leaders in Nigeria. Already, it is considered a success story.

Beyond these, a quick fix comes in the form of learning from others. China, Singapore, and a few other nations have employed this strategy with great success. For the Chinese and Singaporeans, their governments committed to shipping out a significant number of its citizens to learn various disciplines and grow capacity is diverse economic areas from developed nations in the West. For over 20 years, China paid for over 5 million of its citizens to go abroad for studies every year. This exposed them to a wealth of knowledge and technical know-how and equipped them with innovative solutions to solving critical societal issues. These sponsored citizens have returned and played a significant role in the rebuilding of China. This model has been replicated by a number of nations in Asia with great successes recorded in overall development and societal wellbeing. Today, construction projects delivered across the globe are predominantly handled by Chinese nationals.

The average Nigerian is extremely enterprising, seeking to create value in their different disciplines; skilled or unskilled. From professors to painters, doctors to drivers, and entrepreneurs to electricians, many Nigerians go out of their way to learn a skill and make a living out of it. The essence of fully functional vocational and technical institutions cannot, therefore, be overemphasized. Perhaps, polytechnics across the country could be revamped to offer courses that will equip individuals for career paths often cited as “blue collar” and usually captured in the informal sector, read a publication by Guardian. It explains that formal education in plumbing, electrical techniques, auto mechanics and carpentry amongst others is likely to offer a decent standard of living for the enrolled candidate post-graduation. These professions are regarded as inferior but generate appreciable income for several individuals in developed countries.

We require a system that rewards or develops these skill sets and ensuring they grow into profitable and sustainable ventures. The government can promote business-enhancing policies that spur growth for these businesses. Unemployment is still rift due to the sheer inability of some small ventures to grow into reputable businesses. In Nigeria alone, there are 30 million small businesses in operation. But many have struggled to build a reputable organization out of their ventures. Having a young, educated and dynamic society will go a long in providing these businesses with people who can offer innovative solutions that enable growth and sustain profitability. Also, addressing issues such as access to land and capital, fair taxes and less government bureaucracy, will go a long way in supporting Small Scale and Medium Enterprises to grow their business, not forgetting that entrepreneurship, mentorship and advocacy organisation, envisioned toward ideas and creative plans for advancing the course of the young people.

Chief Executive Officer, Chimex Phoneland Limited, Emebo Chimezie, confirmed in an interview with the local newspaper (The Guardian) that lack of basic infrastructure, multiple taxes and poor electricity forestall existence of small businesses. He asserted that nurturing an enabling environment will not only grow small businesses but improve human capital by driving employment. “I have been thinking about establishing a phone manufacturing company in Nigeria. It is capital intensive but it is something I will love to do if government can be of help. If we can have one in Nigeria, it will create more employment and develop the nation’s economy. “We have already trained engineers that know how to repair phones. This set of people can work in any phone manufacturing company. For example, Chinese people who manufacture phones don’t have factories in Nigeria. But they produce phones and bring down to Nigeria and after selling, they take the money back to their country, creating employment for their people,” he said.

 

Health also requires the right attention. The country currently commits only 7 percent of its budget to healthcare. With inadequate funding, facilities are undermaintained, research is almost non-existent and health workers become less creative, effective and largely unproductive. Maternal and Child health indices in Nigeria have remained consistently dismal. In upper middle-income countries, the average life expectancy is 75 years. In lower middle-income countries, it’s 68. In low-income countries, it’s 62. In Nigeria, it is lower still at 53 years. Nigeria is one of the most dangerous places in the world to give birth, with the fourth worst maternal mortality rate in the world, ahead of only Sierra Leone, Central African Republic, and Chad.

The Chairman, Senate Committee on Health, Lanre Tejuosho, summarized the current state of the sector. “Because of limited government and pooled health financing, health spending is dominated by out of pocket expenditure. In 1999 National Health Insurance Scheme (NHIS) was established to compliment government spending and provide greater health financing for households, however as at 2016 only 7.9million people which is less than 4 percent of the population were covered, predominantly federal government civil servants.

“Even though Nigeria delegate delivery of health services to states and local governments, most health spending is at the central level.

“Primary Health Centres (PHCs) receive little or no operating budgets. They are meant to be funded by the local governments. If PHCs receives any cash at all, it’s from predominant sources and user fees which put people into poverty.

“In average, health workers across the country receive salaries with two to three months delay and only a third of facilities receive salaries on time to meet operational costs. Additionally, late passage of the budget which was delayed in 2016, 2017 and 2018 and lack of advance info on cash available for capital expenditure under cuts budget execution. In my view, the above shows that we do not prioritize health in financing decisions. The little we spend is on what does not impact the majority of the people,” the lawmaker said.

Investment in public health is therefore inevitable. The primary health care system requires an upgrade and the National Health Insurance Scheme needs to be given more attention. The welfare of health workers is also critical to a successful development of a working and sustainable healthcare system. With the Nigerian Senate poised to pass the 2018 budget inclusive of the 1% Basic Health Provision Fund, there’s hope that the upward momentum towards Universal Healthcare in Nigeria will continue and be sustained in the long term. The Senator said the addition of the one percent Consolidated Revenue Fund as basic health care provision fund will affect the current 2018 budget positively. “The 2018 health budget is about 4 percent of the annual which is about N51 billion but with the addition of this one percent of the consolidate revenue which is about N55 billion, we are now doubling the capital of the budget.” The lawmaker said the basic healthcare fund will be pumped into the NHIS to help reduce out of pocket spending and also help in revitalizing the over 30,000 PHCs across the country.

There is a popular saying that a healthy society is a productive society.

The road to sustained human capital development may be long and rough, but ex-Microsoft CEO explained that for starters, he wants the Economic Recovery and Growth Plan—a plan developed by the current administration to return the economy to prosperity—refocused in favour of stronger investment in health, education and skills acquisition rather than its current emphasis on physical infrastructure. The reality of economic growth is the diversity of tacit productive knowledge − or knowhow − that a society has at the heart of the economic growth story.

Bill Gates concludes: “Growth is not inevitable. Nigeria has unmatched economic potential, but what becomes of that potential depends on the choices you make as Nigeria’s leaders. The most important choice you can make is to maximize your greatest resource, the Nigerian people. Nigeria will thrive when every Nigerian is able to thrive. If you invest in their health, education, and opportunities—the “human capital” we are talking about today—then they will lay the foundation for sustained prosperity. If you don’t, however, then it is very important to recognize that there will be a sharp limit on how much the country can grow.”

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