How nations develop their human capital can be a more important determinant of their long-term success than virtually any other factor.
BY KUDZAI GOREMUSANDU
Human capital means the knowledge and skills people possess that enables them to create value in the global economic system.
Human capital is not defined solely through formal education and skilling. Human capital is a key factor for growth, development and competitiveness. This link works through multiple pathways at the individual, firm and national level.
Learning and working provide people with livelihoods, an opportunity to contribute to their societies and, often, meaning and identity. Workers’ skills lead to productivity and innovation in companies. At national level, equality of opportunities in education and employment contribute to economic development and positive social and political outcomes.
It can be enhanced over time, growing through use — and depreciating through lack of use —across people’s lifetimes. The Global Human Capital Index treats human capital as a dynamic rather than fixed concept.
The Global Human Capital Index 2017 ranks 130 countries on how well they are developing their human capital on a scale from 0 (worst) to 100 (best) across four thematic dimensions — capacity, deployment, development and know-how — and five distinct age groups or generations — 0–14 years; 15–24 years; 25–54 years; 55–64 years; and 65 years and over —to capture the full human capital potential profile of a country. It can be used as a tool to assess progress within countries and points to opportunities for cross-country learning and exchange.
At a global level, the human capital development gap is smallest in North America, followed by Western Europe, Eastern Europe and Central Asia, East Asia and the Pacific, Latin America, and Middle East and North Africa. The gap is largest in South Asia and Sub Saharan Africa.
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There are significant opportunities for economies with already high talent capacity and development, such as France, Greece, Italy and United Arab Emirates, to boost their human capital performance through a focus on the know-how index, including opportunities for high and medium-skilled work as well as broadening the complexity of the economies in question through sectoral investment.
In North America, Western Europe, Middle East and North Africa and Eastern Europe and Central Asia, more can be done to improve the deployment of their countries’ high capacity talent.
Sub-Saharan Africa and South Asia need much better investment in developing their current and future workforces in order to expand beyond their relatively low current capacity.
Sub-Saharan Africa is the lowest-ranked region in the Index. Rwanda (71), Ghana (72), Cameroon (73) and Mauritius (74) have developed more than 60% of their human capital. South Africa (87), the region’s second largest economy, places towards the middle in the region. Nigeria (114) ranks in the lower midfield and Ethiopia (127) is the lowest performer, fourth from the bottom on the Index overall.
Nigeria, sub-Saharan Africa’s largest economy and most populous country, has a relatively large pool of tertiary educated workers, especially among its older generations, and comparatively strong staff training.
However, it simultaneously records low primary and secondary education attainment across all age groups and one of the lowest current primary school enrolment rates globally, pointing to excessively uneven human capital outcomes and the untapped opportunities of pursuing a more inclusive human capital development approach.
The two top-ranked countries in the region, Rwanda and Ghana, owe their comparatively strong performance to, respectively, almost completely closed education and employment gender gaps and significantly improved educational attainment of the country’s younger generations.
Like Kenya (78), both countries benefit from the stock of know-how embodied in large medium-skilled employment sectors and comparatively strong education quality and staff training, laying the foundation for building their future human capital potential. However, all three countries still have room for further improvement in their secondary education enrolment rates, ensuring this progress is shared as broadly as possible across their populations.
South Africa, the sub-Saharan African region’s second largest economy, has the continent’s highest share of its workforce in high-skilled occupations and is well-regarded for its staff.
Human capital is critical not only to the productivity of society but also the functioning of its political, social and civic institutions, understanding its current state and capacity is valuable to a wide variety of stakeholders Core to Africa human capital development is the concept that investment in developing talent across the lifecycle — through education and employment — enhances human capital.
Even with similar levels of upfront educational investment, on-the-job learning is critical for generating returns on the initial investment, as well as ensuring that people’s skills grow and appreciate in value over time.
Technological change and its impact on labour markets calls for a renewed focus on how Africa’s human capital is invested in and leveraged for social well-being and economic prosperity for all.
Many of today’s education systems are already disconnected from the skills needed to function in today’s labour markets and the exponential rate of technological and economic change is further increasing the gap between education and labour markets.
Furthermore, the premise of current education systems is on developing cognitive skills, yet behavioural and non-cognitive skills that nurture an individual’s capacity to collaborate, innovate, self-direct and problem-solve are increasingly important.
Current education systems are also time-compressed in a way that may not be suited to current or future labour markets.
They force narrow career and expertise decisions in early youth. The divide between formal education and the labour market needs to be overcome, as learning, research and design, knowledge-sharing, retraining and innovation take place simultaneously throughout the work life cycle, regardless of the job, level or industry.
Education delivery and financing mechanisms have gone through little change over the last decades.
In many countries, many youth and children may find their paths constrained, depending on the type of education they are able to afford, while others may not have access to even basic literacy and learning.
