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‘Desola Eghagha - Quramo Conference April 2016

Human Capital Development Towards Industrialisation

What is Human Capital?

• American economist Theodore W. Schultz invented the term “Human Capital” in the 1960s to reflect the value of our human capacities. He was of the opinion that Human Capital like any other type of capital could be invested into via education, training & enhanced benefits that will lead to an improvement in the quality & levels of production.

• A more recent definition per “Investopedia” defines Human Capital as “the collective wealth of knowledge, talents, training, skills, judgement & accumulated experiences for a population.

Ultimately a person’s abilities, education & experiences have economic value both for the individual in question & the economy as a whole.

What is Human Capital Development?

Human Capital development simply put, is the investment of resources (time, finances, etc.) in growing/building up the skill-set of people in a population/an organisation.

It requires critical analysis to determine how to measure its return and optimize its benefits for the parties involved in particular and the general population.

Importance of Human Capital Development to Nations

Adam Smith in his book, “An Enquiry Into the Nature & Causes of the Wealth of Nations”, stated “…improvements to Human Capital through training, education & experience make the individual enterprise more profitable, but also add to the collective wealth of society”.

In other words investing in the development of Human Capital benefits not only the individual(s) in focus, but benefits the economy of the nation as well.

A country though a separate legal entity, ceases to exist if it has no people/citizens such as a President, Governors, civil servants, employees of industries/organisations, all of which are required to maintain the country’s existence.

Political leaders & businesses alike are beginning to recognise the immense positive impact of good people who are skilled & motivated in growth & development .

Human Capital Development towards Industrialisation; Why?

• In every nation (developing & developed), the industries are the “foundation” of the economy. Every sector within that “foundation” (agriculture, manufacturing, oil & gas, construction etc) are dependent on the availability of skilled manpower particularly technicians. Where such manpower is locally unavailable, it must be imported (additional pressure on our already meagre foreign currency reserve).

• Is it therefore not logical that our next step as a nation is to invest in the upskilling of our youth who make up 78% of our population to feed the industries in this vital sectors?

Why Invest in Human Capital Development contd…

In the modern society in which we all live, we all can attest to the fact that competition is so fierce & fast that any competitive edge gained by the introduction of new processes/technology can be short-lived if competitors are able to adopt the same processes/technology.

To implement change our people must have the same or better skills & abilities. The nation must recognise the inherent value and prospective contribution of its people to the economy & treat money spent on upskilling its people as “investment” in an important asset & not an “expense” to be kept at the barest minimum.

Challenges to Human Capital Development towards Industrialisation

Governments encounter many challenges to make the most of available skills. • The ability to assess the quality and quantity of the skills

available in the population, determine and anticipate the skills required in the labour market, develop and use those skills effectively in better jobs which inadvertently lead to better lives, is a major hindrance in developing countries due to poor data collection and analysis.

• Maintaining skills throughout each individual‘s lifecycle is another key challenge as it requires setting up high-quality, easily accessible opportunities for adult learning – both up-skilling and re-training.

• Inadequate supply of internationally acceptable certified skills and the attendant cost of achieving these certifications.

The Way forward - Changes Required in Our Educational System to Support Industrial Africa

• Skills policy development requires coherence and co-operation across all areas of life(private sector, social partners, teachers and parents )and levels of government. Involving said parties in the forming of these policies will make its implementation and success more probable.

• Re-establishing/re-equipping/restructuring the Government Technical Schools.

• Internationally recognised certification is critical as this creates a dual opportunity for the learners;

- recruitment by locally based international organisations- export of skilled labour

• Including relevant practical industry work experience to the vocational studies in both technical schools and secondary schools, will help to broaden the minds of our young school leavers to possible lucrative careers in the industrial sector.

Skills development is more effective if the world of learning and the world of work are linked.

Learning in the workplace offers several advantages:• it allows young people to develop “hard” skills on modern equipment in a

workplace, and “soft” skills, such as teamwork, communication and negotiation, through real-world experience.

• Hands-on workplace training also helps to motivate disengaged youth to stay in or re-engage with the education system and to smoothen the transition from education into the labour market.

• Workplace training also facilitates recruitment by allowing employers and potential employees to get to know each other, while trainees contribute to the output of the training firm and earn some income. Employers have an important role in training their own staff.

• However some, particularly small and medium-sized enterprises, might need public assistance to provide such training.

Lessons from Other Parts of the World

Take a look around the Nigerian Industrial scene. It can be observed that the majority of the players are American, European, Indian, Arab & more recently the Chinese.

This is a direct result of the huge investment of these nations in upskilling their people with internationally recognised and certified vocational skills.

In Nigeria we have mostly small to medium size private training providers delivering internationally recognised certifications which has invariably made it quite expensive for the average learner. The government needs to take a que from these nations and 1. invest in the upgrading its technical schools to enable them deliver

internationally recognised certified vocational skills2. Partner with industries and give incentives (e,g tax holidays) to

industries both indigenous & foreign, to sponsor traineeship programmes.

Conclusion

Key issues concerning the development and management of a coherent and effective skills strategy include the involvement of the private sector and social partners in the setting of schools curricula that produces skills more relevant to labour demands, the splitting of financing responsibilities between government, the private sector, students and their families.

Achieving this co-operation and ensuring it is fruitful is a major challenge in both developed and developing nations. But I believe if we as a nation are determined, it is achievable.

Questions?