Improving Nigeria’s Low Human Capital Index Ranking

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Muhammadu Buhari

Ugo Aliogo in this report examines Nigeria’s ranking on the recently released Human Capital Index by the World Bank

At the just concluded International Monetary Fund (IMF) and World Bank annual meetings that took place in Bali, Indonesia, the World Bank Group released edition of its Human Capital Index (HCI), where it ranked Nigeria 152 out of a total of 157 countries surveyed. The HCI measures the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and education that prevail in the country where he or she lives. The Index measures each country’s distance to the frontier of complete education and full health for a child born today.

The President of the Bank, Mr. Jim Yong Kim, said it was unfortunate that Nigeria was ranked low.

He explained: “Nigeria unfortunately ranks 152 out of 157 countries. We provide quite a bit of support to Nigeria in terms of the health budget. But we feel that the overall spending on health in just far too low at 0.76 per cent of Gross Domestic Product (GDP). Also, the educational outcomes in Nigeria are very poor.”

He described human capital as a key driver of sustainable, inclusive economic growth, saying investing in health and education has not got the attention it deserves.

“This index creates a direct line between improving outcomes in health and education, productivity, and economic growth. I hope that it drives countries to take urgent action and invest more – and more effectively – in their people.

“The bar is rising for everyone,” Kim added. “Building human capital is critical for all countries, at all income levels, to compete in the economy of the future.”

Improving Health and Education
However, various experts have reacted to the implication of the ranking to the economy and stressed that the education and health sectors which are the core of the HCI should be given the priority attention it deserves.
The Director, Research and Training, National Institute for Legislative and Democratic Study, Prof. Yemi Fajingbesi, said the HCI is a means of measuring government policy on human development, adding that before now, the Gross Domestic Product (GDP) was what was being used to calculate it.

He said the GDP only shows the productivity of a nation and does not talk about human development, especially the wellbeing of the people.

He also noted that the HDI is a composite statistics of life expectancy, education and income per capital indicator of a country.

Fajingbesi, explained that a country would therefore score high when the life expectancy at birth is longer, the education period is also longer, and the income per capital is higher.

According to him, “What I will make out of the report is that when you examine the HDI over the years, from 2010 when the HDI was 0.480 to 2012, when it was 0.512 and our ranking in those years was worst.

“The score lies between zero and one. The closer you are to one, the better the human development index. For instance, if you score from 0.8 and above, it is considered to have a very high human development. If you score between 0.7 and 0.799, it is considered to be high human development. If you score between 0.55 and 0.699, it is considered to have a medium human development. But the moment your score, scores below 0.559. For instance, any score between 0.00 and 0.549, it is considered to be low human development.

“So as long as Nigeria scores below 0.550, no matter the position, it is a low human development. What we should try to do is to struggle and move above 0.550. The latest score of Nigeria is just 0.532 and the previous one was 0.530 which meant that we were moving little by little up. The slow pace movement talks simply about the priority of government.

“The government policy priority is not taking human development. In the case of education, it looks at the expected year of schooling, and the mean (Average) year of schooling. So when you combine these two, it gives us the education index.

“So what government needs to do is to improve on our healthcare, in order to improve the life expectancy at birth. Government has used the School feeding programme to attract children to school. One of the major challenges we are facing in this country is hunger. The School feeding programme is aimed at the reducing the number of children out of school.

“The reason why many of these children are out of school is the search for what to eat. The moment these children understand that there is what to eat, they will come. But my fear with this is that people go to school, not the intention to study but because there is food.

“Under this administration, I don’t think much has been done in the area of HDI. The problems are in our educational and reward system. A lot needs to be done in revamping our educational system and make it more relevant. The educational system should be a response to the national needs where you graduate people who would contribute the development of the economy.

“It is not just this government; it is a long term problem. The situation is getting worse everyday because government is not responding adequately to the problem. Government is aware, but nobody is making conscious effort.”

The Team Leader, Department For International Development (DFID), Growth and Employment in States Programme, Mr. Henry Adigun, explained that the HDI is a problem because Nigerians don’t even understand it.

He also stated that the big problem facing the country presently is that the source of revenue is low. Adigun said the economy is still oil dependent and oil itself cannot affect much in the revenue.

“We have a situation whereby 65 percent of our revenue is driven by oil. Even if it was 80 percent index, we will not still afford it because the point is that the oil is insufficient,” he noted.

The Team Leader said the other factor is that there is a very small middle class who is less than five percent of the population, stating that middle class is the consumption pattern which allows earning money, creating jobs and servicing the country.

According to Adigun: “The third issue is that the government is facing challenges; therefore things such as education and health which are the core of HDI are not being addressed systemically. So we have a situation whereby only the federal government has a transfer scheme and States don’t have it. Poverty is an aggregated phenomenon. It is not federal alone.

“So in a revenue formula where someone earns 65.3 and others earn 35.7, if each of them is contributing 30 per cent of that revenue into that poverty alleviation, then you might have some sparing results. We have to find out what is the national aggregation spending on education, it is abysmal? What is the national aggregation spending on health, it is abysmal?

“Health and education are the core component of HDI. If your expenditure pattern does not reflect understanding on the needs of the society and you are not spending them on the areas where they can transform society, nothing can happen. It is this way because we don’t have the money and the thinking needed to address the challenges we are facing.

“The oil revenue is a pittance. The federal nation budget is smaller the budget of the south of New York. There is income disparity. In Africa, our Gini co-efficient is 5.1, Gabon 2.53, and Uganda has 2.58. There is income inequality but it is not as high as many parts of the world.

“Building an economy requires building the education sector, and the quality of your workforce. When you build the quality of your workforce, then build good infrastructure. With good infrastructure, you can attract investments. The non-oil earnings are 7.8 per cent of the national earning. We need to continuously have conversation around the issue, cut our expenditure on recurrent. Presently, every dollar Nigeria earns we spend 75.3 on paying salaries, less than two percent of the population. Even States that are not indebted spend 75 percent of it on paying salaries which is corruption.”

In his argument, a member of the Ibadan School of Government and Public Policy, Prof. Kuta Yahaya, said government has responded well especially with the last National Economic Council (NEC) meeting, where the Vice-President Prof Yemi Osinbajo stated the council has declared a state of emergency on education.

He stated that the measure was aimed at recognising that there is problem in the sector especially with the World Bank report on HDI and something urgent needs to be done to address the challenges facing the sector.
Yahaya explained that from the meeting the federal government requested that all States of the federation must allocate 15 percent of their budget to education.

Yahaya added: “For a very long time, United Nations Educational, Scientific and Cultural Organization (UNESCO) has been canvassing for a 26 percent allocation to education. But we have not done more than five percent. The maximum we have done is seven percent over the years. Therefore, this is a quantum leap and the effort is coming at the right time, when the federal government is proposing the 2019 budget.

“The state governments are proposing the budget along that line. Those that have submitted their own to the state assemblies can make amends by going further to do some adjustments to make sure they accommodate 19 percent. There is a consensus that the quality of your education determines your human capital development attainment. I know the country is not short of enormous human capital potentials.”

In his reaction to Nigeria’s position in the HDI ranking, the former Director-General, Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) Dr. John Isemede, said the lack of political will on the part of government to have a defined direction for country’s educational system.
He argued that as part of measures to improve the sector, there is need for the revival of technical education in the country.

Isewede explained that in Japan and South Korean, where Nigeria imports some of its steel and Cars, there is huge investment in technical education.

He added that the failure of the educational system has led the country to fully embrace the import substitution strategy.

According to him, “The issue is that we have taken education, health and agriculture to the background. We need to pull these sectors to the forefront, and government should move a step further and revisit the Oronsaye report and give these institutions, Ministries, Departments and Agencies (MDAs) of government target, then there will be an improvement. We should focus on the technical education such as the Chinese and the South Koreans.

“Economic development is different from economic growth. The organised private sector must be alive to their responsibility and suggest measures to move the country forward. The Universities should work with the private sector, the MDAs should be given targets and those in the Ministry of Works should go to the field and maintain roads. Government should invest more in research and development; if there is no research and development we will still remain where we are.”