The World Bank Group yesterday advised Nigeria to invest more in health and education to strengthen human capital development.
Its President, Jim Yong Kim, said at the opening ceremony of the World Bank/International Monetary Fund (IMF) Spring Meetings in Washington D.C, that the bank would release an index to rank countries according to how much they invest in human capital of the next generation.
The measurement, he said, would provide information that Heads of State and finance ministers need to know in order to invest in building human capital. The index will make those measurements hard to ignore.
Kim said: “There is no getting away from the need to invest much more effectively in health and education. And I think, you know, if you look at all of the difficulties in terms of increasing their resources for hard infrastructure, things like roads and energy, and also the need to increase investments in human capital, every African country has to look much more seriously at how it improves its own domestic resource mobilisation.
“So in other words, they should be better at collecting taxes to provide the basic services. We think countries should collect at least 15 per cent of Gross Domestic Product (GDP) in taxes.”
Kim said the global economy was solid, adding that it is expected to rise to 3.1 per cent in 2018, which would be its strongest performance since 2011. The growth, he said, would be driven by recovery in investment, manufacturing, and as commodity-exporting developing economies benefit from firming commodity prices.
He said the challenge would be how to ensure that strong growth translates into inclusive growth, so that the benefits of global economic integration are enjoyed by all members of society.
“This period of robust growth is a great opportunity to invest in human and physical capital. Filling infrastructure gaps, improving education and health outcomes, and increasing female labour force participation could continue to drive growth. If policy makers around the world focus on these key initiatives, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and increasing shared prosperity,” Kim said.
He said the bank was dedicated to ending poverty wherever it exists in its client-countries, adding that it is always looking to leverage every available resource to meet its clients’ immense challenges.
Kim advised African leaders to be focused on their debts and where they were taking the loans from.
“Be very focused on the conditions, the interest rate, among others. So that’s one issue that you have to look at very carefully.”
The bank, he said, was concerned that many African countries were not prepared to compete in what is increasingly becoming a digitalised economy. “We also see lots of evidence that suggest that many of the low skill jobs will be taken over by technology. Now, there’s also tremendous hope for technology. I think there’s tremendous hope that technology could help some African countries, many African countries we hope, will leapfrog and go forward and find new ways of driving economic growth,” he said.
He said: “Also, if African countries were to remove fossil fuel subsidies that are often very regressive, in other words, they help the rich more than they help the poor. Even agriculture subsidies, there are many agricultural subsidies that are also very regressive. They don’t help the small holder farmers, but they help others in the value chain. And things like tobacco taxes. Tobacco taxes have been shown to be very effective at raising revenue and decreasing smoking and can be used to finance all kinds of things”.
Kim said there were so many things that could be done to help countries invest in physical infrastructure and human capital, but it requires reform and courage.
“And so I know these kinds of things that I’m talking about are difficult, but please let all the African leaders know that the World Bank Group is ready to help them undertake all those measures,” Kim said.
On corruption, he said the bank had adopted strict measures to follow every dollar that “we lend to ensure that the dollars we provide are not used for other purposes. “Now, I think our methods of detecting corruption have gotten better, but corruption still exists everywhere. And there’s not a country in the world that’s exempted from it. So we would just simply encourage leaders to work with us and work with the IMF, work with other institutions like ours to improve their approaches to detecting and stamping out corruption,” he said.
On education, Kim said the bank had been able to learn that it is not just how many years one has been in school, but how much is learned in those years of school.
According to him, as economies become more digitalised, the relationship between health and educational outcomes is only going to get stronger over time. “And I so I think it’s time for all countries to really take a hard look at how well they’ve invested in their own people because that is likely going to be the most important determinant of whether they’ll be able to keep up with economic growth,” he said.
Kim said human capital was not just for children, but also skills programmes for adults. “The human capital agenda, I think, has been neglected for far too long, and what we have shown in our report that was released a little while ago called The changing wealth of nations is that human capital represents 65 percent of all the wealth in the world. And we haven’t paid enough attention to it. So that’s the one message I would focus on,” he said.
IMF Managing Director Christine Lagarde said international cooperation was needed to help reduce poverty, adding that countries should step up structured reforms. She urged Nigeria to reduce government deficit and allow more exchange rate flexibility.
The IMF, she said, would step up surveillance to tackle corruption, adding that the Fund will work within its competence in that area.
“We will do the most we can in accordance with our economic principles to achieve results,” she said.