Nigeria’s Human Capital Advantage

 

Heavy traffic is seen on the Lagos-Abeokuta expressway in Nigeria's commercial capital Lagos

by Rotimi Okewole-Lawal

The term ‘Human capital’ was popularized by Gary Becker, an economist from the University of Chicago and Jacob Mincer. Human capital refers to the stock of knowledge, habits, skills, experience, social and personality attributes, embodied in the ability to perform labor so as to produce economic value. Many theories explicitly connect investment in human capital development to education. The role of human capital in economic development, growth productivity, and innovation has frequently been cited as a justification for government subsidies for education and job skills training. Human capital is directly related to economic growth. This relationship can be measured by how much is invested into people’s education. Many developed governments offer higher education to their citizens at little or no cost, these governments realize that the knowledge people gain through education helps develop an economy and leads to economic growth. Just as accumulation of personal human capital produces individual economic (income) growth, so also does it have a positive effect on the national income of a nation.

658-1028The true success factor behind China’s growth was as a result of huge investments made in human capital development and much of that was made in the 1950s-1970s. The size of China’s population is a historical advantage that China has leveraged on throughout its 5,000 years of history. This advantage greatly facilitated the construction of The Great Wall of China, a structural and engineering marvel that is one of the Wonders of the World. Isn’t this something Nigerian policy makers, business elites and intellectuals can learn from? For Nigeria to achieve the kind of growth that China has achieved over the years we have to invest more in our human capital base, especially basic education in rural areas and most importantly basic education and empowerment of women.

It is indeed education that will however pay in the long run and once Nigeria has attained sustainable growth in that area, then infrastructure will be self-financed by the growth itself. Sadly Nigeria faces a tougher challenge in improving basic education because we have historically under-invested in it. Building schools alongside educational training facilities is expensive for the country because we have a larger rural population no doubt about it and this is why Nigeria may very well have to forgo more infrastructural investments to make up for her historical neglect. Infrastructures are not the magic wands for China’s success and they will not be for Nigeria.

The advantages of an immense human capital base cannot be overemphasized. Greater skill facilitates worker mobility across occupations, industries and regions. This helps people in reallocating resources, both human and physical towards more productive opportunities. A more educated workforce is a more flexible workforce. People with higher levels of education are better able to absorb new ideas, adapt to foreign technologies, improve local technologies, understand and apply knowledge from outside the country to local situations. As Nigeria enters world markets, it will have access to new forms of technology and organizational arrangements hence, the demand and necessity for a more skilled workforce will increase. But really, how can we actually make greater investments in human capital?

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Germany in most recent times witnessed a record low of unemployment rate at 3.9% since her unification in 1990. The major catalyst behind this was their embrace of the dual system of education which encourages development of vocational skills. The Germans know as we should that, some students are bored by the traditional mode of studies, some don’t have the aptitude for the classroom environment and some would rather work with their hands. They realize that everyone won’t benefit from higher educational institutions but they can still be successful and contribute to society. One way of training for your future occupation in Germany is by pursuing a dual vocational training programme. Such programmes offer plenty of opportunity for on-the-job training and work experience. Programmes usually last between two and three years which comprises of theoretical as well as practical elements. Not surprisingly, perhaps a majority of German students (about 51.5 %) choose this path. Employment prospects for students who have completed a dual vocational training programme are very high.

Nigeria for too long has attempted a mundane approach towards education: Finish secondary school; go to the university; graduate and we’ll all be happy. To our continued dismay, this system doesn’t always work. If Nigeria wants to remain competitive, we have to keep our young people engaged. Nigerian business and political leaders should learn from the German approach and invest in creating and supporting a vocational education system. Businesses will get the skilled workers they need, young people will see new career opportunities open up to them, our middle class will be strengthened, and our economy will benefit.

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In conclusion, a high growing population density has numerous advantages. Even though population growth is often associated with a shortage of resources, a high growth can lead to a greater consciousness of innovations when it comes to producing food, as well as increasing other much needed amenities. Also, more people mean, a greater pool of individuals who can generate new ideas for improving productivity in a wide range of fields. It isn’t coincidence that the most innovative major industrialized country, the U.S., also has one of the fastest growing populations.

Nigeria currently has a population of approximately 190 million people, the seventh largest in the world. This should be seen as a blessing rather than a curse. Major emphasis should therefore be placed on labor intensive industries like agriculture, mining, manufacturing, hospitality, textile & clothing etc in order to maximize the full potential of our human capital advantage. Hence, if the rich human resources in rural areas can be transformed into human capital, it would certainly change the disadvantages of over-population into competitive advantages and Nigeria’s economy will perhaps attain sustainable growth.

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