The myth of human capital shortage in Africa

 People with knowledge and skills are being wasted

By Tunde Obadina

It is a common belief that the prevalence of extreme poverty in Africa stems from shortages in skilled manpower needed to spearhead rapid economic growth. This notion has led international development institutions to advise African governments to invest more in human capital development. But are African nations impeded by lack of qualified manpower? The answer is no.

Take Nigeria as an example. University educated Nigerians are more likely to be unemployed than the average citizen in the country. According to the Nigerian government employment data, 28% of workers with university first-degree qualifications were unemployed in the second quarter of 2020, compared 15% with only secondary school education and 5% who never attended school. Nearly a fifth of master’s degree holders was jobless, while a quarter of those with a doctorate was underemployed. Overall, more than half of workers with higher education qualifications were jobless or underemployed.

This employment situation suggests Nigeria’s economic underdevelopment does not stem from a deficiency in knowledge and skills in the workforce. What we see is an over-supply of college-educated people, including doctors, engineers, and teachers.

In economics, a shortage is a condition in which demand for a product or service is greater than its supply. Viewed this way, there is no skilled manpower shortage in Nigeria, even in the health sector. Commentators who point to the low ratios of doctors and nurses to the population as evidence of scarcity in medical personnel caused by a brain drain are mistaken. Yes, thousands of Nigeria-trained doctors work abroad, especially in the West, but the emigration stems mainly from lack of opportunity to use their skills in the homeland.

To make sense of this bear in mind that in economics, demand is not simply the desire or need people have for a product or service. It is want matched by a willingness and ability to pay. The number of medical professionals in employment in a country depends on the amount of money the government and consumers spend on healthcare. It is not determined by the size of the medical workforce. If the government enlarged the pool of physicians by curbing migration by medical graduates or opening more medical schools, the boost to supply would not necessarily improve staffing at local hospitals and clinics. As it is about 40% of medical doctors in Nigeria are unemployed, according to the Nigerian Medical Association. Expanding the workforce without increasing demand will only worsen unemployment in the industry.

Contrary to the claims of international development institutions, including the International Monetary Fund and World Bank, the slow pace of economic growth in Nigeria does not stem from insufficient human capital. What there is wastage of available knowledge and skills. The education system is producing more graduates of technology, engineering, science, education, etc., than the economy is absorbing.

The explanation often advanced by local companies that high graduate unemployment is caused by the poor quality of teaching at the nation’s higher education institutions is flawed. While it is the case that standards at Nigeria’s ill-equipped universities and colleges are low by international standards, Nigeria-trained graduates perform adequately when working in developed economies with the knowledge and skills gained in their homeland.

This is to suggest that improving the quality and quantity of higher education institutions is unnecessary. Increasing investment in human capital development would undoubtedly benefit the recipients of better education. University qualifications are passports to the prospect of regular and well-remunerated employment, at home or abroad. But an enlarged pool of graduates will not necessarily automatically produce more jobs or faster economic development in Nigeria.

We must look to other factors which hinder growth and prevent better utilisation of available human capital. We will find that government policies and actions that constrain the ability of individuals to use their property and faculty to create wealth are a greater obstacle to prosperity than a deficiency in human ability. Power companies do a terrible job supplying energy not because Nigeria lacks technicians. Oil refineries lie dormant not because engineers are scarce. There are few hospitals in the country; not because doctors and nurses are few. The problem is that the economy is malfunctioning. We should look at restrictive government regulations to understand why.