Human Capital: The Greatest Asset of Economies on the Rise

April 3, 2017

Keith Hansen, Fred Matiang'i, and Lutz Ziob The East African

This opinion piece was originally published in The East African on March 31, 2017.

The skills, knowledge, and innovation that people accumulate are the greatest assets of economies on the rise. Recent evidence shows that human capital explains up to two thirds of income differences across the world. This is profoundly important for Africa today.

Smart and timely investments in human capital will play the central role in shaping the trajectory of African nations in the coming decades, for a number of reasons. These include large youth populations in many countries, and the rapidly growing and changing skills demands of this technology-intensive century.

Without a greater supply of homegrown talent in areas such as agriculture, energy, extractive industries, construction, manufacturing, and information and communication technology, it will be hard to build prosperous, inclusive, and resilient economies that can compete and succeed globally.

Countries with deep development challenges—including China, India, and Korea—have gained enormously from building science and technology capacity. UNESCO reports that Korea, a big spender on research and development, has surpassed Japan in the volume of high-tech exports, even coming through the global financial crisis unscathed. This is even more remarkable considering that as recently as 1960, the country was a largely agricultural economy rebuilding from a devastating war.

In Africa, a rebalancing in higher education towards the applied sciences, engineering and technology has been long overdue. Less than a quarter of the continent’s tertiary-level students are enrolled in these programs (in Uganda and Tanzania, the share is as low as 10 and 20 percent respectively), and the region has just 92 scientific researchers per million people against the global average of over a thousand.

But there is good news. Efforts are already underway to connect key players—governments, universities, financiers, and the private sector—who can hasten this process. This coming week, the Government of Kenya and the World Bank Group are co-hosting the fourth PASET (Partnership for Skills in Applied Sciences, Engineering and Technology) Forum in Nairobi, to precisely this end.

The multifaceted PASET initiative is led by African countries wanting to become knowledge economies. PASET is working with new partners from China, Korea, and India, and deepening industry linkages with universities and technical and vocational education and training institutions. The focus is on sectors such as agriculture, manufacturing, energy, health, ICTs and transportation that are high-priority for Africa.

One example of PASET’s work is a regional scholarship and innovation fund that will help train thousands of PhDs across Africa, mostly in African universities. Various African countries have together committed US$10million to start seeding this fund. By encouraging regional cooperation, PASET aims to leverage private sector and partner resources to build capacity for high quality PhD programs in Africa.

Also this week, the Africa Centers of Excellence (ACE) program celebrates its Kenya launch. This Africa-wide program is financed by the World Bank Group and implemented by national governments. In East and Southern Africa, 24 competitively selected centers in eight countries (including Kenya, Tanzania and Uganda) will enroll about 3,500 graduate students, and generate African expertise in areas ranging from phytochemicals and textiles to water, agribusiness and renewable energy.

In West and Central Africa, where ACE has been operational for a few years, results are already visible. The ACE for Genomics of Infectious Diseases at Redeemer’s University in Nigeria has published crucial research on the Ebola virus. The ACE for Applied Mathematics and ICT at the University of Gaston Berger in Senegal now hosts the headquarters of the International Laboratory for Research in Computer Science and Mathematics. A few other centers have acquired international accreditation in their fields.

The private sector also has a very keen interest in building skills and capacity among youth in Africa.

Microsoft, through its 4Afrika Initiative, has been developing business and technology skills for improved employability and entrepreneurship. Through a number of blended learning programs – ranging from online courses to experiential internships and on-site technical support for start-ups – 4Afrika has been able to upskill close to 800,000 young people across over 17 African countries, including Kenya, since 2013. 4Afrika has also partnered with a number of local organisations, such as the YALI Regional Leadership Centre in East Africa, to extend ICT training to more young leaders and entrepreneurs.

Another example of private sector commitment is Huawei’s Seeds for the Future Africa program, which will train 1,000 African students over five years in ICTs.

But greater technical-scientific skills constitute only one point on the continuum of deliberate and collaborative investments African countries are beginning to make in people. The foundation for human capital is in fact set long before students get to the level of higher education. There is a huge body of medical and socioeconomic evidence showing that investing in the early years—in the nutrition, stimulation, and protection of children—is essential to ensure future productivity and economic growth.

Ensuring access to high-quality basic education is also critical, and without stronger science and math education through secondary school, countries will find it hard to build a pipeline for higher education in science and technology. Importantly, the quality of education of workers has been a major factor explaining East Asia’s high rate of economic growth in recent decades, as compared to Latin America.

Ultimately, building a higher level of technical-scientific skills is one of the surest ways to better prepare the 11 million youth expected to enter African labor markets every year for the changing world of work. And the bottom line is that human capital will be the ultimate asset for this century, offering more provident prospects for prosperity for all.  

Mr. Keith Hansen is Vice President, Human Development, World Bank Group; Dr. Fred Matiang'i is Cabinet Secretary, Ministry of Education, Science and Technology, Government of Kenya; and Mr. Lutz Ziob is Dean of the 4Afrika Academy, Microsoft.