World Bank Chief charges Nigerian government to invest in human capital development
World Bank Group President, Dr. Jim Yong Kim, has called on the Nigerian government to devote more funds to human capital development, adding that the country must focus on things that can spur real economic growth to match its growing population.
Kim gave the admonition during a press conference at the on-going World Bank meeting in Washington DC where he also frowned at the country’s paltry less than one percent to GDP allocation to the health sector.
“I think Nigeria, of course, has suffered from the dropping oil prices. I think things are just now getting better. But the conversation we need to have with Nigeria, is in many ways, related to the theme that I brought to the table just this past week which is, investment in human capital.
The percentage of GDP that Nigeria spends on healthcare is less than one percent. Despite that, there is so much turbulence in the northern part of the country, and there is the hit that was taken from the drop in the oil prices. Nigeria has to think ahead and invest in its people; investing in the things that will allow Nigeria to be a thriving, rapidly growing economy in the future, is what the country has to focus on right now.
The World Bank chief warned that Nigeria cannot rely on oil prices going back up, again, to provide adequate investment solution to the developmental challenges, adding that it must explore other possible areas of growth.
“And this is true for most of Africa. If you look at the numbers in terms of how successfully African countries have invested in their human beings versus other regions, there is a real issue. And so, over this next year, not only in Nigeria but in all of Africa, we’re going to focus on accelerating investments in human capital – investments in health, education, social protection – so that Africa can prepare itself for the next phase in economic development,” Dr. Kim said.
Speaking further he said, “One of the real questions that we all have is our traditional notions of economic growth which are agriculture, to light industry, to heavy industry. How many countries in Africa will actually experience that, and do we need to really think about another kind of path to economic growth that’s very focused on a small to medium enterprise as an entrepreneurship as they have in other parts of the world. I think we still don’t know that. But the one thing we know is that better health outcomes, better education outcomes will be critical no matter what the global economy looks like. So, yes focus on the North, hope that as commodity prices stabilize, oil prices come back up and the economy will grow a bit more; but put much focus on what the drivers of growth in the future will be.
The World Bank chief also shed some light on what the global organisation was doing to support startups and young entrepreneurs who represent a huge growth opportunity for the continent. He stressed that it was working with the United States Government and Women Entrepreneur Financing, which has been able to raise $350 million of grant based financing, which will be leveraged into at least one to two billion dollars of support for women entrepreneurs.
He said the World Bank was also trying to work out something with working with e-commerce giant Alibaba to provide support for small businesses in Africa. According to him, “Alibaba in China, has developed a system where within five seconds, literally within five seconds, they can provide loans to small and medium enterprises for up to $160,000. And they do that solely based on the online activities. So, online activity for Alibaba is a better measure of credit worthiness than the traditional processes that we call Know Your Customer, KYC.
“So, what we’re looking at is, can we utilize some of these methods, these rapid disbursements of capital to small and medium enterprises in Africa? Right now, the answer is not yet, because we don’t have enough information on online behavior. So, Jack Ma, the CEO of Alibaba, recently visited Kenya which is probably the one country that has the most information on people’s online behavior. 98 percent of Kenyan’s do some form of financial transactions online.
“So, it gets back to the question of Nigeria. I think with Africa, we have to be much more creative. We have to think, so that are going to be the drivers of growth if, in fact, light manufacturing is becoming mechanized. If 3D printing is going to make garments and shoes, what is going to happen with the light manufacturing industries, are they going to go back to the developed countries? And then, if you don’t attract light industry what about heavy industry? So, it might be a different path altogether; and if that’s the case, again, investing in people is important and then looking at innovative ways of moving capital. Moving capital quickly and efficiently to people who are going to start promising businesses is probably a major direction we have to go. Right now, it is still pretty slow and pretty difficult because we’re always working with financial intermediaries, which make things much more difficult for us.”
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