Borrow less, invest more in human capital, World Bank cautions Africans
With global debts at all-time high of $146 trillion, African countries, including Nigeria, have been advised to exercise some restraint on excessive borrowing in order to protect their economies from financial risks, while encouraging active and serious human capital investment.
Investment in human capital was re-echoed by the Founder, Tony Elumelu Foundation, Tony Elumelu, while speaking as a panelist on, Digital Economy for Africa, saying that with 60 per cent of the continent’s population under 30 years, there are immense investment opportunities in the region.
World Bank Group President, Jim Yong Kim, who cautioned against too much loans gave the charge yesterday at a press conference to end his opening remarks at the ongoing IMF/World Bank Spring Meetings in Washington D.C., also told policymakers to be “very focused on where you are taking the loans from, the conditions attached; and the interest rates.”
Rather than borrowing indiscriminately, he advised African countries to focus more on investment in human capital.Kim said: “we, (World Bank), are extremely concerned that many African countries are not prepared to compete in what is increasingly becoming a digitalised economy. We also see evidence that many of the low-skilled jobs will be taken over by technology and there is also tremendous hope for technology in many African countries.”
He argued that there is no running away from human investment for sustainable economic growth, especially in education and health, as refusing to do so would mean that “African children will not be prepared to compete in the future. So if you learn less, you earn less.”
Accordingly, he said human capital development is a huge issue for the World Bank, adding that, “every African country has to look more seriously at how it increases its own domestic resource.”
Elumelu during the panel session, which was presided over by Kim, said: “The truth is that the population of Africa presents opportunities. We have 60 per cent of our working population at the age of 30 and we have 65 per cent of our economy in the informal sector. This presents quite interesting opportunities for digital economy.”
He noted that young Africans are determined, energetic, hungry to succeed and make a difference, and are extremely intelligent, but the environment makes it difficult for them to excel.He, however, argued that there can be no talk about digital economy in Africa without fixing critical infrastructure, particularly reliable access to electricity.
“So, if we want to truly address the issue of digital economy in Africa, these challenges have to be fixed.“Secondly is the issue of governance. Governments need to understand that if we prioritise the young ones and make the operating environment conducive, they would be able to optimise the required intellects, they would do well, and we would be able to solve some of the problems in the continent. So, regulation is major, intellectual property is very important, incentivising investors are all factors that will help us address these issues.
“For the entrepreneurs in Africa, I will say, let’s not look at the challenges, but the opportunities. There are lots of opportunities in the continent, and we need to look at these opportunities. Let’s fix policy issues and all these issues I have identified and investors will come to Africa.”
Meanwhile, at an earlier press conference, IMF Managing Director, Christine Lagarde, had stressed the need for countries around the world to enhance financial sector resilience, rebuild policy space, and undertake necessary structural reforms to deal specifically with corruption and governance.
Lagarde charged countries “to promote an open and rule-based multilateral trade system that works for all, and to durably reduce excess global imbalances,” adding that “a cooperative approach to regulation will reap the benefits of financial technology, while addressing risks to stability and integrity.”She disclosed that the Fund is also embarking on major policy reviews, including on surveillance, the Financial Sector Assessment Programme, programme conditionality, concessional lending tools, debts sustainability analysis, and capacity development.