2. โข What is Human Capital?
โข Human Capital in Nigeria
โข The Human Capital Index
โข Building Human Capital in Nigeria
โข Conclusion
OUTLNE
3. Human capital is a measure of the skills, knowledge, and experience possessed by
an individual or population, viewed in terms of their value or cost to an
organization or country. A few of these include education, skill, experience,
creativity and good health. It has large payoffs for individuals, societies, and
countries such as increased earnings and social capital, a healthy and productive
population which translates to increased economic returns and high GDP.
WHAT IS HUMAN CAPITAL?
4. Nigeria is immensely endowed both in natural and human resources but
unfortunately this has not translated to efficient development and utilization of
human capital. Two key factors to gauge the development of human capital are
education and health.
According to UNICEF, 10.5 million children are currently out of school in
Nigeria. This is the highest population of out of school children in the world.
Education accessibility in Nigeria is at 20.1% which is very low.
The health sector does not fare better either. A survey conducted by Philips, a
global leader in health technology show that 52% of Nigerians surveyed trust the
healthcare system, although only 36% feel that their healthcare needs are being
met. This highlights a clear discrepancy between the expectations of Nigerians
and the reality of the healthcare system, indicating inefficiencies and ample room
for growth. The World Bankโs Service Delivery Indicators surveys conducted in
seven countries in Sub-Saharan Africa show that less than 50 percent of Nigerian
doctors were able to correctly diagnose a basic condition such as neonatal
asphyxia.
HUMAN CAPITAL IN NIGERIA
7. The human capital index is an international metric to benchmark certain
components of human capital across countries. The new index measures the
amount of human capital that a child born in 2018 can expect to attain by age
18 in view of the risks of poor education and poor health that prevail in the
country in which she was born. The index is designed to highlight how
improvements in the current education and health outcomes shape the
productivity of the next generation of workers: it assumes that children born
in a given year experience current educational opportunities and health risks
over the next 18 years. A focus on outcomesโand not inputs such as
spending or regulationโdirects attention to results, which are what really
matter. It also makes the human capital index relevant to the policy makers
who design and implement interventions to improve these outcomes in the
medium term.
THE HUMAN CAPITAL INDEX
9. The human capital index has three main components:
1. A measure of whether children survive from birth to school age (age 5).
2. A measure of expected years of quality-adjusted school, which combines
information on the quantity and quality of education.
3. Two broad measures of healthโstunting rates and adult survival rates
The human capital index is measured in terms of the productivity of the next
generation of workers relative to the benchmark of complete education and full
health. Out of 157 countries listed, Nigeria is placed at a pitiable 152nd position
with a value of 0.34 out of a possible value of 1.00. This means when a child born
today in Nigeria would be entering the labor market, he/she would have attained
only 34% of his/her economic and productivity potential.
THE HUMAN CAPITAL INDEX
10. A first step is improving the quality of basic administrative data in education
and health. UNESCO just recently launched its Global Education Monitoring
(GEM) Report in Nigeria which will help track development in the education
sector. Monitoring of even the most basic health information(births and
deaths) is quite low and this needs to be improved on. High-quality basic
administrative data are essential for governments to understand their needs
and to plan the allocation of public services.
The architecture of the brain forms from the prenatal period to age 5, and so
this is an important stage for developing cognitive and socio-behavioral skills.
Early investments in nutrition, health, social protection, and education lay
strong foundations for the future acquisition of cognitive and socio-
behavioral skills. They also make future skills acquisition more resilient to
uncertainty. Early childhood investments are an important way to improve
equality of opportunity.
BUILDING HUMAN CAPITAL IN
NIGERIA
11. Other possible solutions are investing heavily in the education sector primarily
in advanced research and technology based tertiary institutions to build a
critical mass of innovators that would help use technology to drive localized
development.
Also, over 70% of workers in Nigeria operate in the informal sector and are
not covered by any form of social protection. Initiating a comprehensive
social protection scheme that covers education and health of children in their
formative years and also covers workers irrespective of the nature of their
work would have long term benefits on the health and education of the
current and future generation of Nigerians. All these can be effectively
implemented by leveraging digital technology so as to reach Nigerians
especially those in rural areas.
BUILDING HUMAN CAPITAL IN
NIGERIA
12. Building human capital is essential in adapting to the changing nature of work
caused by automation and globalization. Nigeria like most Sub-Saharan
African countries need to invest heavily in developing its human capital, basic
social protection and productive opportunities for youth. This requires huge
fiscal resources of around 6-8 % of GDP.
Most of the required fiscal resources are likely to come from improved
capacity in tax administration and policy changes, particularly to value added
taxes and through expansion of the tax base. Nigeria could raise, on average,
from 3 to 5 percent of GDP in additional revenues through reforms that
improve the efficiency of the current tax systems. Other taxes like property
and excise taxes could also contribute to the financing of human capital.
Closing tax exemptions and converging toward a uniform tax rate in value
added tax could raise further revenues.
CONCLUSION
