HUMAN CAPITAL INVESTMENT AND DEVELOPMENT IN NIGERIA: THE ROLE OF EDUCATION AND HEALTH ABTRACT Despite various efforts

of the successive Nigerian governments, virtually all indices of human development especially those of health and education are embarrassingly low. These indices include infant and maternal mortality rates, life expectancy at birth, population per physician, adult literacy rate, and gross primary and secondary enrolment ratio. In the same vein, the level of resource commitments to health and education compare very unfavorably with the situation in other developing countries. It is apparent that for any nation to develop economically there is need to improve the nation's human capital by investing heavily on education and health care. The paper also suggests measures that are likely to make this possible. Prominent among them are: upward review of the budgetary allocation on education, most especially to primary and secondary education, stable macroeconomic policies, good governance and the fight against corruption. Empirical results indicate that there is, indeed a long-run relationship among labor force, physical capital investment proxied by real gross domestic capital formation, human capital formation, proxied by enrollment in educational institutions and economic growth in Nigeria. Findings show that there is a feedback mechanism between human capital formation and economic growth in Nigeria. Thus, the policy implication of the findings is that government should place a high priority on human capital development. Efforts should be intensified to increase investment in human capital to achieve the growth which would engender economic development. Most importantly, education should be given prominence in Nigerias developmental efforts. This would propel the economy to higher levels of productivity. INTRODUCTION The role of human capital in economic growth cannot be overemphasized. The development of human capital has been recognized by economists to be a key prerequisite for a countrys socio-economic and political transformation. It is highly imperative for any government to continue to lay emphasis on the development of human capital given its contribution to economic development. As observed by a number of studies' human capital development through the provision of health care services and education is important for increase in productivity, increase in per capita income, expansion of knowledge and reduction of poverty. The Nigerian experience, though with its abundant human and natural resources seems to provide a contrary situation given the quality of its human capital which is classified as low when compared with those of the East Asian countries because of a number of factors, such as prolong education and health care delivery; deficiencies in inputs to and the process of corruption; executive turnover (resulting from political instability); and inconsistency in policy formulation and implementation. The consequences of these constraints include among others; deterioration in health care services and low education attainment witnessed in recent time. For instance, because of the declined in
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health care services and education, infant mortality rate of 114 per 1000 birth was recorded in 1997 and a decrease in literacy level most especially among women was also recorded with 53% of them not educated in 1995 (World Bank 1995). Over the years, successive Nigerian governments recognized the importance of human capital formation in the development process and have embarked on various programmes and projects which led to the establishment of educational institutions and health centres throughout the country. In more recent times, renewed attention was paid to the role of human capital formation in the countrys development process and this has prompted the federal government to declare in its 1999-2003 economic policy programme that the economy exists for and belongs to the people, and at all times the general well-being of all the people shall be the overriding objectives of the government and the proper measure of performance (FGN, 1999). This policy statement of the government is further reiterated in the National Economic Empowerment and Development Strategy (NEEDS). The provision of high-quality education and health care to all the countrys citizens is considered a key element of public policy by all levels of government (FGN, 2004). Against the above background, the aim of this study is to examine the impact of human capital formation on economic growth in Nigeria between 1977 and 2006 and on the basis of the findings, recommend policies and measures for improving human capital formation in the country. Human Capital Development: Definition, Determinants and Importance Human capital has been defined in various ways. The concept of human capital refers to the knowledge, skills, attitudes, physical and managerial effort required to manipulate capital, technology, and land among other things, to produce goods and services for human consumption (UNECA, 1990). According to Appleton and Teal (1998), human resource capital is a broad concept which identifies human characteristics which can be acquired and which increase income. It is commonly taken to include people's knowledge and skills acquired partly through education but can also include their strength and vitality which are dependent on their health and nutrition. On a general note, human capital usually focuses on health and education as inputs to economic production According to Harbison and Myers (1964) and Jhmgan (1995), human capital development refers to the process of acquiring and increasing the number of people who have the skills, education and experience which are critical for the economic and the political development of a country. Human capital development is therefore associated with investment in man and his development as a creative and productive resource. According to Dessus (2001), the importance of human capital to economic development depends on the quality of schooling, the educational infrastructure, the initial endowment in human capital (which is usually determined by the parents' level of education); and the ability of the system to distribute equally educational services within the population. According to Lau, et. al (1991) heavy investment in human capital via education
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will in the long run enable the individual to perform new task, receive and process new information, communicate and therefore co-ordinate activities with one another; evaluate and adjust to changed circumstances. Furthermore, investment in human capital will help reduced individual subjective thinking and unnecessary anxiety thereby helping to enhance his probability of adoption of new innovations or practices in production technology. The World Bank (1991) stated that increased investment in human capital (through education) would not only improve people's ability to acquire and use information, but it will also deepen their understanding of themselves and the world, enrich their minds by broadening their experience and improve the choice they make as consumers, producers and citizens. Education will also strengthen their ability to meet their wants and those of their families by increasing productivity, and their potential to achieve a higher standard of living. It will also improve their confidence and their ability to create and innovate thus multiplying their opportunities for personal and social achievement. Investing in human capital most especially women education, will also enhance their productive capacity, increase their income and make them better informed about the value of health care and personnel hygiene. An educated woman will be able to improve the health and life expectancy of her children and create incentives for reducing family size, which in turn will help reduce poverty (Psacharopaulos and Winter 1992). Having realized the importance of human capital development to economic development, massive investment in education in a number of countries is given high priority. For instance, between 1991- 95 the percentage share of spending on education on the total expenditure of the central government in South Korea, Malaysia and Indonesia were 18.8%, 20.4% and 9.8% respectively (World Bank 1997). In Nigeria as represented in Table A, the percentage share of spending on education from the total expenditure of the federal government was 20.5% in 1980, which rose to 24.6% in 1989 and declined to about 15.5% in 1997.

Table A: Federal Government Estimated Expenditure on Key Sectors of the Nigerian Economy (N Million) Year Total Education Expenditure (N million) (N million) Edu. 1980 7,541.50 1981 5,986.90 1982 5,976.10 1983 6,660.50 1984 3,458.40 1985 4,459.00 1986 4,999.20 1987 3,853.40 1988 7,330.00 1989 7,876.00 1990 12,077.70 1991 12,009.80 1992 14,812.30 1993 36,944.70 1994 52,652.00 1995 73,016.20 1996 1997 84,796.40 102,623.00 15,348.15 15.5 15,906.57
Source: Central Bank of Nigeria (Various issues) Statistical Bulletin. Lagos: CBN. Central Bank of Nigeria

Percentage Share of the Key Sectors Agric. Health 6.2 13.5 19.5 18.2 8.3 22.8 18.4 10.2 8.8 13.4 11.2 5.5 6.2 7.6 22.7 6.7 6.5 8.7 4 4.1 4.7 4.1 5.4 5 7.2 6.1 8.3 5.7 5.4 6.3 6.9 9.9 5.7 6.9 5.7 9.6 Trans/Com Def. 31.9 28.1 22.3 17.1 8.7 8.2 12.8 12.6 9.5 10.8 14.2 4.9 6.6 4.8 3.1 6.4 12.9 8.21 Gen Adm. 17.4 19.8 19 10.5 16.3 26.8 21.8 18.1 21 16.7 12.5 18.4 20.1 20.2 12.1 13.3 12.3 18.1 7.9 18.7 24.1 29.4 25.7 22.9 21.3 32.9 41.9 32.7 31.6 50.0 46.0 44.0 35.4 50.1 38.5 49.7

20.5 1,546.01 16.4 981.85 18.9 1,129.48 14.5 965.77 24.9 861.14 19.0 847.21 21.8 1,089.83 16.9 651.22 14.7 1,077.51 24.6 1,937.50 19.0 2,294.76 13.2 1,585.29 13.9 2,058.91 21.6 7,980.06 19.5 10,267.14 17.4 12,704.82 18.1

(Various issues) Central Bank of Nigeria Annual Report and Statement of Account Lagos: CBN.

The consequences of this decline are the deterioration in educational standards witnessed in recent times. For instance, the monthly pay of teachers in primary schools and tertiary institutions could not cover the prices of their basic needs. School libraries were grossly inadequate for the number of students in the country's educational institutions (Odusola 1997). There are large numbers of empirical studies that confirm the strong association between health and economic growth. For instance, Blooms and Sachs (1998), as cited in Hamoudi and Sachs (1999), provided empirical evidence on the relationship between health variables and economic growth rates and found that health variables play a significant role in determining economic growth rates. They showed this by investigating cross-country data between 1965 and 1990, using a basic growth model, and they found that an increase of life expectancy by one percent accounted for an acceleration of GDP per capita growth by over 3% per annum. In addition, health and demographic variables explained over half of the differences in growth rates between Africa and the rest of the world over that same period. Ramirez, Ranis, & Stewart (1997) explored two way linkages between economic growth and human development empirically with the help of cross-country statistics. The study argues that public expenditures on health and education represent especially important links in determining the strength of the relationship between economic growth and human development. Two chains namely, economic growth to human development and from human development to economic growth can generate self-reinforcing, vicious cycles of development, as well as identifying lop-sided performers. The study finds that over time lop-sided development rarely carry on: countries initially in favor of economic growth lapse into the vicious category. Hence, even though both human development and economic growth should be encouraged together, human development should be given first priority. In Nigeria, several studies have emerged in an attempt to provide quantitative evidence to the growth-human capital nexus. Akangbou (1983) and Mbanefoh (1980) determine the social and private returns to the different levels of education-primary, secondary and university, using cross-sectional data. On the basis of the positive rate of returns often computed, inference is made about the positive role of human capital on economic growth. Odusola (1998) using ordinary least square technique found that human capital, proxied by real capital and recurrent expenditure on education, is positively related to growth, although the relationship is weak. The Nigerian Economic Society held a conference on human resource development in Africa in Nigeria in 2002 and several interesting papers were presented. Some of the papers showed a positive and significant contribution of human capital to economic growth (Adamu, 2003; Uwatt, 2003; Chete and Adeoye, 2001). Adamu (2003) undertook an empirical investigation to determine the impact of human capital formation on economic growth in Nigeria between 1970 and 2000, using co integration and error-correction mechanisms. The results indicate that investment in human capital in the form of education and training can lead to economic growth because of its impact on labor productivity.
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Summary, Conclusion and Recommendations It is evident that there is a feedback mechanism between human capital investment (at least on secondary and tertiary education) and the real gross domestic product in Nigeria. Thus, the policy implication of the findings is that government should place a high priority on human capital development. Efforts should be intensified to increase investment in human capital to achieve the growth which would engender economic development. Most importantly, education and health should be given prominence in Nigerias developmental efforts. However, concentration should be on basic education (comprising both primary and secondary education) and higher education. This would propel the economy to higher levels of productivity. There is also the need for the government to create enabling environment which would encourage heavy investment in infrastructural foundation that can enhance labor productivity and induce growth. The intervention measures aimed at increasing the amount of government expenditure on human capital development (education) that would guarantee an improvement in human capital development (education) by the year 2015 should include among others; the allocation of the highest share of public spending on education and health; and highest share of education funds on both the primary and secondary education which tends to favor the poor the more. In addition, enough funds should be made available by the government for the promotion of institutional framework and the provision of incentives that would motivate skilled workers to devote their time to growth-promoting activities. Similarly, efforts should be made to encourage the inflow of foreign technologies into the country in order to maximize the social benefits of public investment in education. Increasing spending on human capital development via education should he complimented with stable macroeconomic policies and physical investment in infrastructure services. This is important for increasing internal efficiency and improving the quality of education. Increasing internal efficiency and improving the quality of education entails the establishment of performance standards, particularly for primary and secondary schools (which the people especially those that are poor can easily afford), and the development of a system of assessments to monitor what students are learning and what teachers are teaching. Spending on education should also be complimented with improvement in equity in education. Equity in education has two principal aspects (i) everyone has right to a basic education. That is, to acquire the basic knowledge and skills necessary to function effectively in the society; and (ii) the government's obligations to ensure that qualified potential students are not deprive education because they are poor or female, or are from disadvantaged ethnic minorities or geographically remote regions. Achieving equity in education also requires both financial and administrative measures. Financial measure, such as scholarship are important at all levels to enable the children of the poor to cover fees and other direct costs, such as transportation, books, and uniform; and when appropriate, it can compensate families for the indirect costs of sending their children to school (for example loss of labor services for the household). Administrative measures can take the form of increasing the enrolment of the children of the poor, female, linguistics/ethnic
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minorities and students with special educational needs e.g. disabled children. There is the need for a pragmatic reform of the nation's education system with emphasis on the inclusion of all stakeholders (teachers, parents, non-governmental organizations, community-based organizations, and the private sector). The reason for this is to have a national consensus on the strategies to raise the quality of education, especially for the poor. For the private sector in particular, it direct involvement in the development of human capital is important since private individuals and organizations in most cases exhibit greater flexibility in deciding how much to spent on education and how to effectively manage the inputs and outputs of education. To guide against misuse of education funds, policy inconsistency and bad governance that have ruined the nation's education system should also be addressed. With stable education policies and good governance the government will able to provide necessary opportunity including infrastructure services for the development of education and quality personnel that would manage the education sector; and provide appropriate information that will permit accountability, transparency and openness which in the long run would help increase the quality of human capital and ultimately help to accelerate development in Nigeria. A careful implementation of the above measures would not only increase the amount of money allocated to human capital development (education and health) by the government by the year 2015, but also improve the standard of health and education at both the primary and secondary levels; which are essential for any developmental takeoff of any nation.

REFERENCES Adamu P.A. (2003) The Impact of Human Capital Formation on Economic Development in Nigeria: An Error Correction Approach In.: Human Resource Development in Africa. Selected Papers for 2002 Annual Conference, Nigerian Economic Society, Ibadan, pp 5378. Akangbou, S.D. (1983) Cost Benefit Analysis of Educational Investment in Bendel State of Nigeria. Journal of Nigerian Educational Research Association 3 June, pp 29-38 Appleton, S and Teal, F (1998) Human Capital and Economic Development. African Development Bank Economic Papers No. 39 Bloom, D and Sachs, D. J. (1998) Geography, Demography and Economic Growth in Africa. Brookings Papers on Economic Activity, 1998 (2), 207-295. Central Bank of Nigeria (CBN) (various years) Statistical Bulletin Lagos. CBN. Central Bank of Nigeria (CBN) (various years) Annual Report and Statement of Account. Lagos. CBN Chete, L.N. and B.W. Adeoye (2001) Human Capital and Economic Growth: The Nigerian Experience, In.: Human Resource Development in Africa. Selected Papers for 2002 Annual Conference, Nigerian Economic Society, Ibadan, pp 79-102 Dessus, S. (2001) Human Capital and Growth; The Recovered Role of Education Systems, World Bank Policy Research in Working Paper. No. 2632. Federal Government of Nigeria (1999) Nigerian Economic Policy 1999-2003. Abuja: Hamoudi, A. A. and Sachs, D.J. (1999) Economic Consequences of Health Status: A Review of Evidence. Paper Presented at the Center for International Development, Harvard University. Harbison, F and Myers, C (1964) Education, Manpower and Economic Growth. New York: McGraw-Hill. Lau, L Jamison, D. T. and Louat, F. F (1991) Education and Productivity in Developing Countries: An Aggregate Production Function Approach. World Bank Policy Research in Working Paper. No. 612.

Mbanefoh, J.F. (1980) Sharing the Costs and Benefits of University Education in Nigeria: A Suggested Approach. The Nigerian Journal of Economics and Social Studies 22(1), pp 67-84. Odusola, A. F. (I997) Poverty in Nigeria: An Eclectic Appraisal. In Proceedings of the Nigeria Economic Society Annual Conference on Poverty Alleviation in Nigeria1997:Ibadan: NES: 121-140. Odusola, A.F. (1998), Human Capital Investment and the Empirics of Economic Growth in Nigeria. In.: Rekindling Investment for Economic Development in Nigeria. Selected Papers for 1998 NES Annual Conference, Nigerian Economic Society, Ibadan, pp257272 Psacharopaulos G and Winter, C (1992) Women's Employment and Pay in Latin America. IMF/World Bank Finance and Development. Vol. 29 No. 4. Ramirez, A., Ranis G., and Stewart, F. (1997) Economic Growth and Human Development. Center Discussion Paper No. 787. United Nations Economic Commission for Africa (1990) Handbook of Manpower Planning in Africa. Addis Ababa. UNECA Uwatt (2003) Human Resource Development and Economic Growth in Nigeria, 19602000 Human Resource Development in Africa. Selected Papers for 2002 NES Annual Conference, Nigerian Economic Society, Ibadan, pp 53-78 World Bank (1991) Challenges of Development. World Development Report 1991 New York, Oxford University Press. World Bank (1995) World Development Report 1995: Workers in an Integrating World. Washington D.C.: Oxford University Press. World Bank (1997) Selected World Development Indicators. World Development Report 1997. New York. Oxford University Press.