• Thursday, July 25, 2024
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How ‘brain capital’ can solve Nigeria’s revenue crisis

How ‘brain capital’ can solve Nigeria’s revenue crisis

The export of Nigeria’s brain capital is seen as having a huge potential to boost foreign exchange inflows into the country and shore up government revenue.

Africa’s biggest economy is facing a revenue crisis as the production of crude oil, a major source of revenue for the federal government, has plunged to a record low.

“Even with the Dangote refinery, revenues generated from crude oil sales and potential savings from the cancellation of the petrol subsidy programme are unlikely to drive the growth that Nigeria truly needs,” said a report titled ‘Brain Exports: Growing the Nigerian Economy’.

The report published by PricewaterhouseCoopers (PwC) said that Nigeria must now respond by moving from exporting the lowest value-added product (crude oil) to brain exports, and receiving foreign cash flow along with other value-adding benefits critical for economic development.

“Nigeria has great potential as a nation for exporting brain capital as the cost of exporting high value-added services has shifted significantly in favour of the country’s integration into Global Value Chains,” it said.

The country’s oil production declined by 30.2 percent to 972,394 barrels per day (bpd) in August 2022 from 1.4 million bpd in January, according to the Nigerian Upstream Petroleum Regulatory Commission.

Harris Eyre, a renowned Australian neuroscientist, defines brain capital as an economic asset that integrates brain health and brain skills in the knowledge economy.

In an increasingly digitised and global economy, the Organization for Economic Cooperation and Development sees brain capital as crucial, saying brain skills such as creativity, intelligence, systems thinking and more are leading to innovation, a measurable and crucial ‘deliverable’ of worker productivity today.

But for Africa’s most populous nation, a broken educational system and a dearth of opportunities are leaving many behind in a global race for the skills that would make them competitive in a knowledge-based economy.

The federal government’s budgetary allocation to education has not been more than seven percent of its total budget for the past few years. The United Nations Children’s Fund said the country has the highest number of out-of-school children in the world.

A 2020 national youth survey by the National Bureau of Statistics shows that only 45.1 percent of Nigerian youths between the ages of 15 and 35 years have knowledge of or skills in word processing.

“The Nigerian government has not really seen the importance of having a knowledge-based economy. In fact, I don’t see us transiting to that type of economy in the next decade,” Damilola Adewale, a Lagos-based economic analyst, said.

Nigeria was ranked 163rd out of 191 countries in human capital development and 114th out of 132 countries in innovation last year, according to the United Nations Development Programme.

“Nigeria is not ready for the future of jobs, not because of intellectual capacity but the fact that the government and structure that creates opportunities for these people are not there,” said Jennifer Oyelade, director of Transquisite Consulting, a recruitment and training consultancy.

Nigeria’s working-age population of over 70 million people presents a significant brain capital advantage compared to some other countries that are experiencing a decline in their workforce.

The US Census Bureau International Data Base said the estimated working-age (15-64) population of South Korea, Japan, Spain, Germany, China, Russia and Italy would decline by 27.3 percent, 26.3 percent, 25.4 percent, 21.0 percent, 19 percent, 18.3 percent and 14.4 percent respectively in 2050 while that of Nigeria would increase by 120.8 percent.

The declining workforce in America and Europe and the need for talent to sustain economic performance in these regions indicate that exporting Nigerian skills and expertise will benefit all parties, analysts at PwC said. “Nigeria exports brain capital and these markets provide jobs.”

They advised that the need for the upgrade to digital skills, such as software engineering, artificial intelligence, robotics, payment solutions, creative design, digital applications, and data analysis has become apparent as the COVID-19 pandemic has forced many businesses to go digital to survive.

“The demand of the global high-value services job market provides Nigerians with substantial opportunities, particularly in the ICT sector and software development spaces.”

A recent ‘State of the Developer Nation’ report said there were 26.8 million active software developers worldwide in 2021, and the projected number will be 45 million by 2030.

PwC predicts that this number would mean an addition of 18.2 million new jobs in 10 years. “Nigeria can work towards capturing two million of these jobs through GVC insertions.”

Read also: Medical practitioner urges FG to improve wellbeing of doctors to check brain drain

Experts believe that cash flows from international diaspora remittances, an example of brain capital export, appear to be more resilient in the face of global economic changes compared to oil prices.

In 2021, a total of $19.2 billion in diaspora remittance came to Nigeria, an 11.6 percent increase from $17.2 billion in 2020, according to the World Bank. The 2021 figure also makes it the highest in sub-Saharan Africa.

While remittances improved, the decline in oil production has affected Nigeria’s foreign reserves, which tumbled to $37.95 billion on October 12, 2022, the lowest in more than a year.

“There are many things that the diaspora can be tapped for beyond remittances alone,” Obinna Amusiem, chief executive officer at NEGX USA, said.

“We already know what the money is being used for, but can it be harnessed better so that it can lift up the economy in such a way that would deliver higher benefits to the society than just being used for unnecessary things,” Amusiem said.

The PwC report recommends that Nigeria needs to start treating education as an infrastructure for development, not a social service, especially for digital education.

It said: “The brain export strategy requires a relatively lower investment than is required to follow the traditional (agriculture to manufacturing) development path and is also less risky as the investment is decentralised, the sectors are diverse and markets (and customers) are many.

“In the mid to long term, brain export has the added advantage of boosting confidence required for large ticket single investments in Nigeria, the size of which is needed for further exponential growth.”