Nigeria: A Focus on Education And Sustainable Economic Growth

13 May 2010

By Salim Salihu Muhammed

In today’s technologically-based global economy, considerable emphasis is placed on the contribution made by people, or what economists refer to as human capital, to economic growth. The theory is that the relative contribution of individuals to growth depends on their human capital – the knowledge, skills, competencies and other attributes that are relevant to economic activity. As a consequence, developing the skills and knowledge of the labour force is regarded as a key strategy for promoting national economic growth. Related to this is the assumption that individuals who contribute more by way of their human capital should earn more. Distributional issues are a consideration as well, since increasing access to education and training can help to address inequality in employment and earnings outcomes for more- and less-skilled individuals. 

Advanced economies of the world, at various stages of their economic odyssey, had admitted the significant role of education in nation building and governance. Studies have shown the handsome returns to various forms of basic education, research, training, learning-by-doing, and capacity-building; these, no doubts, has visualized that no country has achieved sustained economic development without substantially investing in human capital. The question is, when and how does education bring high payoffs? Although theory has suggested a strong causal link between education and growth, the empirical evidence has not been unanimous and conclusive; who gets educated matters a good deal, but the distribution of education is complex and not much has been written about it. How education affects growth is greatly affected by the economic policy environment.

Policies determine what people can do with their education. Reform of trade, investment, and labour policies can increase the returns from education. The distribution of education matters. Unequal distribution of education tends to have a negative impact on per capita income in most countries. Moreover, controlling for human capital distribution and the use of appropriate functional form specifications consistent with the asset allocation model makes a difference for the effect of average schooling on per capita income. Controlling for education distribution leads to positive and significant effects of average schooling on per capita income, while failure to do so leads to insignificant, even negative effects, of average education. The policy environment matters a great deal. Studies had indicated that economic policies that suppress market forces tend to dramatically reduce the impact of human capital on economic growth. Investment in human capital can have little impact on growth unless people can use education in competitive and open markets. The larger and more competitive these markets are, the greater are the prospects for using education and skills. 

No doubt, the recent “earthquake” driven failure in the last year’s National Examination Council (NECO) examinations has proven the falling standard of education in the country and the near lack of policies and needed investment, which if not given the urgent and needed attention, could put it in the same state as the power sector of the country. This is only a tip of an iceberg, as nothing could actually be said about the failures in the tertiary institutions that produce hundreds of thousands of potential managers for the economy. Their failures can be easily identified from result of a failed economic system, both public and private sectors; mismanagement of resources leading to the demise of industries as witnessed in the Micro Finance sub-sector, Agro-Allied industries, and several private enterprises; lacking sufficient and strategic knowledge for the implementation of public budgets in the Ministries, Departments and Agencies. 

Educational policies and curricula are no longer adhered to; research shows that parents contributes to the skipping of the school or study curriculum and aiding a child to pass at all means both at the elementary and post elementary levels. The lack of reading culture and believe in passing by all means is carried on to the tertiary institutions; supported by parents, students only pass through school paying lecturers to earn grades. Nigeria had not actually failed in its educational policies; whether 6-3-3-4 system, Basic and Post Basic. The failure is in the inability to identify indices that could make these policies work, one of which is adequate funding and management of such funds. Even though the United Nations Education Scientific and Cultural Organization (UNESCO) recommends, for nations in striving category in meeting social and economic development, to commit not less than 25% of budget provision to education, the 2010 appropriation budget only provided N249bn, representing just 6% of the budget. In Ghana, since the early 1980s, Government of Ghana expenditures on education have risen from 1.5% to nearly 3.5% of GDP. Since 1987, the share of basic education in total education spending has averaged around 67%. This sharp contrast may mean the country’s non-readiness to rekindle the lost glory of the education sector to enhance its dwindling economic system. 

There is no simple “recipe” for improving quality and internal and external efficiency in the public education system but some general results are found. Firstly, that the elasticity of the return of the reform is decreasing with the size of increased budget, making anti-economical the reliance on a reform consisting in more resources only to significantly improve the poor performance of the system. Indeed, very modest target set to improve the system performance, would require -without more sophisticated policies- huge increments in budget with a poor return. In this sense, the capacity of focused policies should be to improve the productivity of the education expenditure, in particular toward basic education or the disadvantaged students. Secondly, the timing of the reform matters: most policies with very different return in the long term are almost undistinguishable by their short run merits, and policies that are more productive in the short term may be less convenient than competing alternatives in the longer term, so the actual policy may be influenced by the time horizon chosen by the policy makers. Thirdly, effects of the reform are accumulative, and to evaluate the reform by modest, in general, short run merits is myopic and may put the reform at risk of reversion or to deter future investment in the sector. 

One identifiable source of poor educational standard is the attitudinal demand by employers of labour; showing interests on B.sc graduates against their HND counterparts, or insisting on first class grades candidates for employment. This notion had led undergraduates and some parents, mostly the wealthy in the society, to ensure a “successful” graduation with pecuniary certificates, and higher class grades. This goes ahead to affect the manner with which these “graduates” handles strategic decision making positions, both in public and private sectors; letting loose the bags of damage and casualty in our economy. What’s more, vocational education is still seen by Nigeria as “second class” education, and fell out of favour with donors and governments following a policy shift in the mid 1980s. But in a globalising world, the importance of vocational skills to economic development is increasingly being recognised. 

Fundamental economic theory alludes to first understanding an economy's competitive strengths and weaknesses of education thereby fashioning policy in line with sustainable development in the scheme of global economics. Malaysia will never transcend its competitive hurdles until it first realizes this point as a nation to trust on its reform of the education sector in order to stimulate the economy. Malaysia’s government spends over 20% of its budget on education, and the outcome has been tremendous technological advancement. Nobody expects Malaysia’s schools to improve overnight, but proper teacher-training and instruction in schools was a good start. The Nigeria’s 6% provision for education in the 2010 budget left one in awe as to how it plan to improve teacher-training, learning and study environment, educational infrastructure and policies, welfare, and above all, the eradication of discrepancies that exist in employment bracket for graduates. 

That education is an essential ingredient of prosperity is at once obvious and contentious. Obvious because any person able to read this feature knows what a difference it makes in their lives to have gone to school, to have learned to read, write and calculate. Contentious because when social scientists try to “prove” that education is a cause of economic growth it turns out to be quite difficult to decide which came first, the chicken or the egg. What is more, even the basic terms such as “what is education” and “what is prosperity” become vast and cloudy terrains for the technical experts like economists, sociologists, education specialists and policy analysts.

There is strong evidence from the recent past that economic growth has been accompanied by growth in both spending and participation in education. Economists have examined this association quite carefully and come to the conclusion that, through a variety of different avenues and in a number of different ways, invest­ment in education systems does have a strong economic pay-off. This is an important conclusion that is highly relevant to individual, corporate and government decisions regarding investment. The main components of this relationship—educations and income growth—are both very specific, even narrow ways of look­ing at two broader questions: learning and well-being. Indeed neither GDP nor education emerged full-blown on to the stage of history. It may seem like a long-forgotten historical story, but measures of national income like GDP are the result of protracted economic and intellectual processes. In the same way that universal compulsory education did not always exist nor did it become a fixture of social life over night. GDP and education, each in its time, was a radical idea, perhaps more radical than any of the policy initiatives that are com­monly debated today. 

Obviously one of the underlying assumptions behind this way of look­ing at the relationship between education and GDP growth is that societies change over time. For the arguments presented here a further assumption has been made, that the industrial economies that have had the highest rates of GDP growth over the last two centuries exhibit a compositional form of change. This is a form of change where leading sectors, with leading skills (for example recently IT) attract investment and generate jobs, while declining sectors with failing markets become not only less important in the overall share of output but also lose influence over the expectations and behaviour of economy. 

Understanding the factors that contribute to a country’s economic growth has been a long-time objective of economists. In part, this is because a growing economy is one that has the potential to generate prosperity and wellbeing for its citizens while at the same time laying the foundation for a more equitable distribution of the benefits of growth. If more education leads to faster economic growth, then investments in education could pay for themselves in the long run, and could also play a role in reducing poverty. Such reasoning could be crucial in bolstering political support for education investments and ensuring their sustainability. It would be a worthy thought if the Nigerian leaders considers the evidence for an education-growth link, and explores some of the issues that governments and donors face in making investments which will best take advantage of the potential for education to contribute to economic development. If great economies of the world see education as an investment in human capital that had impacted positively on growth and economic development, what then is Nigeria waiting for? 

Salim Salihu Muhammed salimmed16@yahoo.com

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