Since 2014, government expenditure on education as a proportion of total expenditure has been on the decline, while the percentage spent on health has also been falling since 2015. In addition, the proportion spent on education and health has not amounted to 10 percent each of the entire government spending from 1999 till date.
This trend is worrisome despite the huge emphasis placed on human capital development around the world towards accelerating the economic growth. There exists a strong relationship between human capital and economic growth. The former affects economic growth and can help to develop an economy through the knowledge and skills of people.
The consensus that emerged between theorists and practitioners was that high level of income, if not properly managed and equitably distributed, would not necessarily contribute to human development, as was the case with Nigeria (growth without development).
Human capital is directly related to economic growth. The relationship can be measured by how much is invested into people’s education. For example, many governments offer higher education to people at no cost. These governments realize that the knowledge people gain through education helps develop an economy and leads to economic growth. Workers with more education tend to have higher earnings, which then increases economic growth through additional spending.
Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labour so as to produce economic value. Until we develop artificial intelligence, we need human capital to accomplish anything in the world today. In fact, it takes human capital to create some other forms of capital. While a machine may eliminate the need to have hundreds of production workers, it still took human capital to design and build the machine. And as we move progressively into a knowledge-based economy that depends on information, knowledge and high-level skills, human capital will become increasingly important.
In terms of investment in human capital development (education and health), the Vision 2010 envisaged that for Nigeria to achieve a sustainable growth, then expenditure on education and health should not be less than 26 percent and 10 percent of total expenditure,respectively. Over the years, Nigerian expenditure on education and health has generally been increasing, but their proportions to the total government expenditure have been below the minimum level required. Close to two decades hitherto, the expenditure on education and health as a percentage of total expenditure has averaged 5.92 percent and 3.24 percent respectively.This means that not so much has been done within the two sectors.
In education for instance, according to the Federal Ministry of Education, the national literacy rate is about 65.1 percent from which the national female young adult literacy rate is 59.3 percent while that of the male is 70.9 percent between the ages of 15 and 24 years.
The federal government of Nigeria allocates less than 10 percent of her budgetary allocation to the education sector which is far below expectation for a country with about 10.5 million out-of-school children, the world’s highest number. None of the E9 (Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Nigeria and Pakistan) or D8 countries (Bangladesh, Egypt, Nigeria, Indonesia, Iran, Malaysia, Pakistan, and Turkey) other than Nigeria, allocates less than 20 per cent of its annual budget to education. Indeed even among sub-Saharan African countries, we are trailing far behind smaller and less endowed nations in terms of our investment in education.
Trend in education and health expenditure
In 2013, the percentage of Nigeria’s education expenditure to its total expenditure stood at 7.53 percent but was down by 12 percent in 2014 to 7.49 percent. It further declined to 6.52 percent in 2015. With 5.1 percent increase in 2016, the education expenditure to the country’s total expenditure jumped to 6.62 percent. Although in 2017, the sector’s expenditure was the largest within the 5 consecutive years from 2013, but when analysed as a percentage of the total expenditure it dropped to 4.76 percent which is the least percentage in the last 5 years. This implies that although more money was spent in the sector but this was relatively low to the government’s total expenditure.
Source: CBN, BRIU
The Nigeria health sector unlike the education experienced steady growth in sectoral expenditure to its total government’s expenditure in 3 years from 3.47 percent, 4.27 percent to 5.17 percent in 2013, 2014 and 2015 respectively. There was a significant increase of 31.5 percent which amounted to N61.74 billion in expenditure in 2015 from N195.98 billion in 2014. This is the highest increase in expenditure within those consecutive years from 1999 to 2017. Although there was 21.5 percent decrease in health expenditure in 2016, because in that year, health expenditure as a percentage of total expenditure amounted to 3.92 percent, the expenditure increased to N236.1 billion in 2017 from N202.36 billion in 2016. This increase was not commensurate to health expenditure as a percentage of total expenditure which further dropped to 2.48 percent.
Nigeria’s Human Capital Development Index
It is not surprising that Nigeria ranked very low in the Human Capital Development Index (HDI) as it reflects the low level of investment in education and health over the years. Out of 189 countries of the world, Nigeria was ranked 157th (with 0.532 HDI) in terms of Human Capital Development with Norway having the highest index. The giant of Africa among its counterpart African countries like Algeria (3rd), South Africa (8th), Ghana (14th) was ranked 24th out of the 53 countries in the continent of Africa.
The Human Development Index is a summary measure of average achievement in key dimensions of human development: a long and healthy life, knowledge and a decent standard of living. It is used to distinguish whether the country which is developed or developing, and also to measure the impact of economic policies on quality of life. Hence there is need to allocate more funds to the education and health sectors in Nigeria so that the country could compete within the developing countries to ensure a sustainable economy.
Tags: human capital development