Why it pays to invest in people

Olusola is a young friend of mine; a pharmacy graduate from the University of Ibadan. He was posted to our national capital for his national service. He decided to remain in Abuja to pursue his career as a pharmacist. Over launch at a restaurant in the Central Business District the other day, he told me the story of his life. His parents had moved from Lagos to Kaduna where he grew up and went to school. He later matriculated at Ibadan.
During his final year as an undergraduate his tutor had the cheek to assign him a research topic that ought to have gone to a Master’s student. It was on the subject of using local additives to bolster medicinal products – “excipients”, he called it. He worked on plantain as a pharmaceutical additive. The external supervisor congratulated him for the work and told his professor that the outcome was of commercial value.
During national service in Abuja he was posted to the National Hospital — a “wasted year” – he laments. Most days he had nothing doing. There were no drugs in the hospital. He decided to work in the evenings for one of the local pharmacies pro bono. Even there, he faced a lot of frustrations. Patients would walk in and simply announce: “I need some antibiotics”. As a trained pharmacist it was his duty to know precisely what the diagnosis is and to recommend the type of antibiotics that would help. As far as patients were concerned, it was none of his business. His job was to sell them the drugs they wanted. Anxious not to lose custom, the drug firms oblige their follies. It’s no surprise that these days there is an epidemic of antibiotic resistance.
He confesses that many doctors are also in the business of misdiagnosis just to boost their low incomes. Patients have been subjected to expensive triple by-pass surgery for ailments that hardly require more than an analgesic and a good bed rest. He tells me he is currently undergoing some external professional exams that will enable him relocate to Canada, Australia, Britain or the United States.
Life in contemporary Nigeria has become a nightmare for many of our middle-class professionals – doctors, pharmacists, architects, accountants and others. Not only is the regulatory environment weak; salaries are low and most clients do not believe professionals should be adequately compensated for their services.
Every day, many of our young professionals are scheming how to leave for so-called “greener pastures”. A recent report estimates that some 2,000 doctors leave our shores every year. They spend years preparing for the gruelling American professional certifications that will allow them practise in the United States and other advanced countries. The median annual salary for a neurologist in the United States, for example, is about US$728,000; in Nigeria, by contrast, it is N6,840,000 (US$19,000). The difference is clear. Nigeria has 80,000 registered doctors, of which more than 50,000 are practising abroad. Recent surveys show that, of those remaining, 92 percent are considering finding a job abroad while 70 percent are taking examinations to enable them move abroad.
One could argue that exporting human capital is not necessarily a bad thing. They point to the increasing volume of remittances that currently stand at the order of magnitude of US$22 billion in 2017, according to the World Bank. In the 1980s when the brain drain became a matter of national concern, the Babangida military administration set up a panel to examine the problem and come up with solutions. After months of collecting allowances and estacodes for aimless tourism abroad, the committee came back with a single recommendation: “Let them go!” Their convoluted logic was premised on the notion that jobs were in any case none-available in that brutal structural adjustment environment and that those who could sell their skills abroad were free to do so.
A country where the brightest and best are hankering to move elsewhere is a country on the path to systemic breakdown. Today, the ratio of doctors per population in Nigeria averages 1:6,000. This contrasts with the WHO recommendation of a doctor per 600 people. The principality of San Marino has 1 doctor per 21 people; Cuba has 1 doctor to 169 people. Overall, Nigeria currently places at 187 out of 191 nations in terms of the WHO index on national health performance.
Nigeria’s average life-expectancy is a low 54.5; as contrasted with poverty-stricken countries such as Yemen (65); Mozambique (57); and DRC (59). We are behind such countries as Japan, where life-expectancy averages 87 years; UK (81); and USA (79). Life in our beloved country has become a Hobbesian nightmare – nasty, brutish and short. Malaria – a preventable disease – costs us over N300 billion annually in lost income; accounting for 11 percent of maternal mortality and 30 percent of child deaths. Nigeria has the third highest infant mortality rate in the world, at 9 percent (behind India (24%) and Pakistan (10%). Every single day, 2,300 precious under-five year olds and 145 women of child bearing age die due to preventable diseases.
The combined lessons of economic science and of world development in the last two decades make it abundantly clear that human capital is the driver of the wealth of nations. The new endogenous growth theories pioneered by economists such as Robert Lucas at Chicago and his student Paul Romer – both of them Nobel laureates – place emphasis on human capital, technology, innovation, knowledge and creativity as the critical factor in creating the society of abundance. The Paris-based OECD defines human capital as, “knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic wellbeing”. It has to do with the quality of the workforce, knowledge, intellectual skills and the institutional interrelations that reinforce innovation and creativity.
Sir Winston Churchill once prophesied that “the empires of the future will be the empires of the mind”. The great British wartime Prime Minister was prescient enough to foresee the knowledge revolution of our twenty-first century. In our day and age, natural resources alone are no longer a guarantee of wealth. In fact, they can prove to be more of a curse than a blessing. The nations that prosper today are those that deploy knowledge in harnessing and adding value to their natural resources for domestic as well as global markets. The greatest wealth of a nation is therefore its people. It is in investing in knowledge, education and skills that the foundation of national wealth and power is built.
In the first decade after independence our pioneer universities were world-class. The Oxford chemist and Nobel laureate Dorothy Hodgkin once told us that the University of Lagos was one of the world centres of expertise in her field of crystallography. In the seventies, Ahmadu Bello University Zaria had the first world class computer centre on the continent. The University Ife also had a notable pool of expertise in nuclear physics. Our premier University of Ibadan was one of the leading centres of excellence in tropical medicine. We are told that the Saudi Royal family used to frequent Ibadan for medical treatment. Today, unfortunately, the glory has departed. According to the Times Higher Education Rankings of World Universities for 2017, the University of Cape Town stands atop the African pantheon. It is the only institution that ranks among the top 200 worldwide. Uganda’s Makerere also ranks among the top 500. Our premier university of Ibadan ranks 11th in Africa and 801 worldwide. Of the top 10 in the continent, 7 are from South Africa: Cape Town, Witwatersrand, Stellenbosch, KwaZulu-Natal, Johannesburg, Pretoria and Western Cape. Most of our universities are a mere shadow of their former glory.
According to a recent report, Federal and State governments had a cumulative expenditure of N43.5 trillion during the three years covering 2016 — 2018, with only N3.34 trillion earmarked for education. And during 2018, the two tiers of government budgeted a total of N17.5 trillion, with only some N1.32 trillion (7.5 percent) devoted to the education. The bulk of the expenditure in the education sector is directed mainly at recurrent costs — salaries, general administration and overheads. Although date on sectoral spending is uncertain, it is clear that capital expenditure for education remains considerably low. Outside the formal education system, very little goes for adult literacy and for skills acquisition. As a consequence, the gains that were made in the past are being lost. Nigeria’s adult literacy rate currently stands at 59.6 percent. We are faced by a situation of some 76 million of our countrymen and women who are locked in the dark night of ignorance and illiteracy.
Human capital theory also emphasise the importance of research, development and innovation for economic prosperity. A review of countries by R & D expenditure shows that there is a direct relationship between investment in knowledge and innovation and national prosperity. It is not for nothing that the most affluent countries are also those who invest heavily in research and innovation: USA ($474 billion), China ($409 billion), Japan ($180 billion), Germany ($109 billion), India ($67 billion), South Korea ($92 billion), France ($60 billion), UK ($45 billion), Russia ($43 billion) Brazil ($35.4 billion), Israel ($13 billion) and Singapore ($10 billion). Nigeria invests a paltry US$300 million in this domain.
Historically, much of the research and scientific activity in our institutions of higher learning, research agencies and industrial firms brings little value because there is no enabling ecosystem and no proper framework for funding research, innovation and commercialisation activities. In rich as well as low-income countries, research is always a risky activity. The promise of success is not always guaranteed. This often means that government has to play a catalytic role not only in promoting research but also in mitigating the inevitable risks while providing the institutional support for commercialisation activities.
When billionaire philanthropist Bill Gates bemoaned our lack of commitment to investing in our people, we went berserk with hand-wringing and lamentations.
Instead of getting so worked up with what he said, we should have just humbled ourselves to learn from a man who has built up a US$700 billion empire, with a net worth of US$90 billion by nurturing talents and investing in the creativity of his workforce. Investing in people is ultimately about creating an eco-system where talents flourish. Our policymakers will need to reframe the paradigm underpinning all our national development efforts to focus on peoples, skills, intellectual capital and the knowledge economy. Education and health are the key to human capital development. An educated populace is also a healthy one. Research has shown that educated mothers are more likely to bring up healthy children who survive infancy. Maternal mortality is also less prevalent among literate women. Health is wealth. An educated and healthy workforce is the sine qua non of national prosperity.
We need accelerated action to boost investment in human capital so as to create a US$1 trillion economy within the coming decade. Investing in health, education and human development is a key driver for growth. Education, health and wealth go together. Linking them to the foundations of peace, freedom and social justice is the summum bonum of national happiness. It is the basis of what the ancient Greeks in the Age of Aristotle defined as Eudaimonia – the flourishing of nations.

Obadiah Mailafia