Here is where Nigeria’s wealth lies

Countries with large reserves of oil are usually considered to be wealthy but Nigeria despite having the largest oil reserve in Africa is far from wealthy.

Nigeria has one of the most crushing poverty rates in the world with 89 million of its 200 million people living under $1.90 per day.

A large oil reserve co-existing with so much poverty in the same country is an indication that Nigeria’s wealth may lie in some other place outside its crude oil. Before the oil price crash of 2014, Nigeria had one of the strongest GDP growth rates in Africa growing by 6.3 percent but it failed to generate decent jobs and poverty was widespread, a paradox of growth without development.

Beyond GDP numbers

Gross Domestic Product is the best-known indicator for measuring economic progress but has its limitations because it does not report on assets that are critical for growth. According to the World Bank, wealth is an indicator that provides information on the prospect of growth in the long term by systematically tracking assets. However, the combination of GDP and wealth provides a fuller picture on economic trends and whether they are sustainable or not.

According to a report by the World Bank, the wealth of a nation can be obtained by aggregating natural capital (such as forests, minerals and oil), human capital (earnings over a person’s lifetime); produced capital (buildings, infrastructure, etc.) and net foreign assets.

In the report by the bank titled, the changing wealth of nations 2018, it tracked the wealth of 141 countries between 1995 and 2014 and found that human capital is the largest component of global wealth, accounting for two thirds of total wealth globally while Natural capital accounts for one tenth of global wealth.

It is striking to note that countries that are now described as high-income have relatively lowratio of natural resources to total assets when compared to poorer countries, an indication that poorer countries may be constrained by high level of natural resources dependence.

According to the World Bank, countries do not improve their economic situation by liquidating natural capital alone but by investing earnings from natural capital into sectors such as infrastructure, as well as education and health, which increase human capital.

Natural capital is the stock of natural resources.

This means Nigeria’s wealth is not in its oil reserves but in how much of its earnings it can invest in its largest component of wealth, its people.

The report also showed that more than two dozen low-income countries, where natural capital dominated overall wealth in 1995, moved to middle-income status over the last two decades, but they achieved this by investing the proceeds from their natural resources in human capital.

This indicates that in low-income countries, growth comes in part from the efficient use of capital, and investing those earnings into infrastructure and education.

For Nigeria, ever since the discovery of oil, it has exported its oil to other countries to get revenue but the proceeds have not been diverted to the development of its greatest wealth component, its people. Instead, the worsening socio-economic indicators are top reasons while Nigerians are fleeing to other countries for greener pastures.

The country’s high poverty rate is coupled with skyrocketing prices, which is squeezing the life out of Nigerians, with inflation currently at 18.1 percent. To make matters worse, 23.1 million Nigerians are without jobs, too many desperate people for a country with a high level of insecurity.

Tales of brain drain

Yemi Abodunrin recently completed a 5-year medical course in one of the best universities in Nigeria but he is about to leave for the United Kingdom (UK) to pursue an international residency training and has no plan to return.

“I won’t come back to Nigeria, I will be able to put my skills to better use in the UK but most importantly, they would pay me well,” Abodunrin, 28, said.

Bola Makinde’s story is quite different, he studied Engineering in a Nigerian University but left the country five years ago to start a nursing career in Australia.

“They paid me even while on the course and as soon as I was done, the pay is more than what I would have been paid with a job in Nigeria,” and like Abodunrin, he is not coming back either.

The UK, like most developed countries, has been making it easier for doctors to come into their country and many Nigerian doctors are jumping on this train.

According to the Nigerian Medical Association (NMA), about 2000 medical workers leave the country annually to developed countries with the majority leaving as a result of low wages and difficult working and living conditions.

The NMA reported in 2020 that out of 75,000 doctors officially registered in Nigeria, over 33,000 had left the country leaving just above 50 percent of that number to man the health institutions in the country.

Nigeria is also the largest source of African immigration to the US, numbering about 376,000 from which significant numbers of professionals have emerged.

According to the US government census data, the Nigerian Diaspora is overall the best educated, while its members are more than twice as likely to have secured an advanced degree. Nigerians are also more likely than the general American population to work in professional or managerial occupations.

While Nigerian healthcare professionals are excelling overseas, the lack of these professionals is costing Nigeria dearly. The densities of doctors, nurses, and midwives are too low to effectively deliver essential health services currently at 1.95 per 1,000.

20 percent of the children in Nigeria do not live till their fifth birthday due to the lack of basic facilities. Nigerians also have one of the lowest life expectancy rates in the world at 54.81 years.

Last year, Chris Ngige, Nigeria’s Labour minister mentioned that the increased rates of doctors leaving to developed countries should not be a cause of alarm. “If we have surplus, we export,” he said

However, the realities in Nigeria do not justify the above statement. The World Health Organisation (WHO) has recommended 1 doctor per 600 people in every country but at 1 doctor per 5000 people, Nigeria has one of the lowest doctor-patient ratios in the world. The UK has a doctor-patient ratio of 1 per 300 with the ratio set to improve as more doctors flock in from countries like Nigeria.

Human capital is majorly measured by the health and education of the people, making the above trend worrisome. Only 4.4 percent of Nigeria’s 2021 budget is allocated to health as against the 15 percent agreed by African countries in 2001 known as the ‘Abuja Declaration’.

According to Nigeria’s Ministry of Education, the number of out-of-school children stands at 10.1 million, an increase of more than 3 million from last year. The kidnap for ransom business is booming across northern Nigeria, and schoolchildren are its hottest commodity, the fear has kept more children out of school.

It is not surprising that Nigeria has one of the lowest Human Capital Index in the world, at 0.36, its ranks 168th out of the 174 countries surveyed, only better than Liberia (0.32), Mali (0.32),

South Sudan (0.31), Chad (0.30) and Niger (0.29).

Human capital index (HCI) measures how much capital each country loses through lack of education and health. An educated and healthy population leads to increase in productivity and national output, which improves economic growth.

While brain drain is detrimental to the development of Nigeria, there are some perks to having Nigerians outside the country, which includes Diaspora remittances.

According to the IMF, remittances represent household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies. Remittances include cash and noncash items that flow through formal channels such as electronic wire, or through informal channels, such as money or goods carried across borders.

Nigeria remains the largest recipient of remittances in Africa and 5th recipient globally, preceded only by India, China, Philippines and Mexico. According to the World Bank, 1 in 2 Nigerians live in households that receive remittances.

Remittances help poorer recipients in Nigeria meet basic needs, fund cash and non-cash investments, finance education, foster new businesses, service debt and essentially, drive economic growth. According to analysts, 70 percent of remittances are used for consumption purposes, while 30 percent of remittance funds go to investment purposes, which fuels growth. Since 2015, at the peak of the collapse in oil prices that started a year earlier, Diaspora inflows through official means have continued to outstrip receipts from oil.

While Diaspora remittances into the country surged 20.6 per cent to $25.1 billion in 2018, from $20.8 billion in 2014, revenue from oil plunged 57.4 per cent to $18 billion in 2018, from as high as $42.7 billion in 2014, according to data obtained from the Central Bank’s quarterly reports and analysed by Businessday.

A similar trend was recorded in the preceding years of 2017, 2016 and 2015 when remittances stood at $22 billion, $19.7 billion and $21.2 billion, respectively, as against oil revenues of $13.4 billion, $10.4 billion and $19.6 billion, respectively, within the same periods.

The unprecedented growth in Diaspora remittances is due to Nigeria’s youthful populace scattered around other countries in search of greener pastures. However due to the pandemic which squeezed income in 2020, remittances fell 27.7 percent to $17.2 billion in 2021, from $23.8 billion