In the 21st century, a nation’s true wealth is no longer measured by its natural resources or financial capital but by the strength and capabilities of its people—its human capital.
Countries that have prioritised the development of their citizens through education, healthcare, and skills training have consistently outperformed those that have not, achieving greater economic stability, innovation, and overall prosperity.
“For Nigeria to achieve sustainable growth and improve its HDI ranking, the government must make substantial investments in basic education and healthcare.”
Nigeria has recently faced rising energy costs, placing pressure on its public institutions.
With electricity tariffs increasing by 231 percent from N68 to N225 per kilowatt-hour for Band A customers, as reported by the Nigerian Electricity Regulatory Commission (NERC), hospitals and higher educational institutions are struggling to manage their operational costs, endangering public health and education.
This financial strain has led to disconnections in major institutions like Lagos University Teaching Hospital (LUTH) and the University of Ibadan College Hospital (UCH), disrupting vital services and academic activities.
In response, some institutions, including the University of Ilorin and the University of Ibadan, have implemented drastic measures to reduce energy consumption. These measures include appealing to students to limit their electricity use and enforcing mandatory reductions in electricity supply.
However, these efforts are only temporary fixes and do not address the underlying issue of unsustainable energy costs.
Recognising the severity of the situation, President Bola Tinubu has recently approved a 50 percent electricity subsidy for public hospitals and higher educational institutions. This intervention is designed to ease the financial burden on these institutions, allowing them to continue providing essential services without the constant threat of disconnection.
Read also: FG approves 50% electricity subsidy for public hospitals
Learning from global examples
Nigeria’s move to subsidise electricity for its public institutions is not without precedent. Around the world, governments have implemented similar measures to shield their citizens and public services from the crippling effects of rising energy costs. Between 2021 and 2023, European countries faced a similar energy crisis, driven by geopolitical tensions and fluctuating global energy markets.
In response, Germany allocated a staggering €158 billion to protect businesses, households, hospitals, and schools from escalating energy costs. The United Kingdom followed suit, earmarking €103 billion for similar purposes. These substantial investments were crucial in stabilising the economies of these countries and ensuring that essential services remained operational during a period of unprecedented energy price volatility.
These countries, which rank among the top 20 globally in the Human Development Index (HDI) as reported by the United Nations Development Programme (UNDP), understand the critical importance of safeguarding public services. Their proactive approach to managing energy costs helped prevent a collapse of essential services and protected their citizens from the worst effects of the energy crisis.
In stark contrast, Nigeria is ranked 161st in human capital development. This low ranking reflects significant challenges in education, healthcare, and overall quality of life. The approval of the electricity subsidy is a step in the right direction, but it also highlights the need for more comprehensive policies that prioritise human capital development.
The importance of human capital
The Human Development Index (HDI) is a composite measure used to assess a country’s progress in key areas such as life expectancy, education, and income. Countries that invest in these areas tend to experience higher levels of economic growth and improved standards of living for their citizens.
A striking example of the impact of human capital investment can be seen in the divergent paths taken by South Korea and North Korea. After the Korean Peninsula was divided in 1945, South Korea focused on education and economic reforms, leading to rapid development and prosperity. More than four decades later, the average South Korean is ten times wealthier than their northern counterpart, a clear testament to the power of investing in people.
In contrast, North Korea, which neglected human capital development and focused on an education system designed more for propaganda than practical skills, has faced economic stagnation and widespread poverty. The difference between the two countries underscores the importance of prioritising human capital as a cornerstone of national development.
Read also: Electricity subsidy jumps over 150% to N633bn despite tariff increase
Beyond subsidies: A call for comprehensive reforms
While the 50 percent electricity subsidy for Nigeria’s public institutions is a welcome development, it raises important questions about transparency and long-term sustainability. Nigerians have the right to know how these funds will be allocated, whether the subsidy is a temporary measure or a permanent solution, and what additional steps will be taken to address the root causes of the country’s developmental challenges.
The electricity subsidy is just one part of the puzzle. For Nigeria to achieve sustainable growth and improve its HDI ranking, the government must make substantial investments in basic education and healthcare. According to UNICEF, Nigeria has 18.3 million out-of-school children, representing one in three children. Moreover, the average life expectancy in the country is just 53.6 years, reflecting severe shortcomings in the healthcare system.
To address these issues, the government should focus on rebuilding and upgrading classrooms, equipping hospitals with modern facilities, and ensuring that every Nigerian has access to quality education and healthcare. Partnerships with the private sector could play a critical role in revitalising these essential services.
Conclusion: Building the future
Ultimately, it is the people who build a nation. By investing in human capital, Nigeria can unlock its full potential and ensure that its citizens are equipped to maximise the country’s abundant resources. The electricity subsidy is a positive step, but it must be part of a broader strategy to develop the nation’s human capital and build a brighter future for all Nigerians.
Oluwole Crowther is an Economic Research Analyst, with BSc in Economics, and MSc Economics in view at the University of Ibadan.
