CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Education and health are the basic objectives of development; they are important ends in themselves. Health is central to well-being, and education is essential for satisfying and rewarding life: both are fundamental to the broader notion of expanded human capabilities that lie at the heart of the meaning of development (Todaro and Smith, 2010). The Nigerian economy could be said to have enjoyed some macroeconomic stability in the recent time as its rate of economic growth averaged 2.01 percent within the last two decades. However, as a result of high and rapid growth rate of the population, per capita growth rate has remained negative and it averaged -0.852. According to World Development Indicator, (2004) with its large reserves of human and natural resources, Nigeria has the potential to build a prosperous economy, reduce poverty significantly, and provide health care services, education, and infrastructure services that its population needs. Nevertheless, despite the country’s relative oil wealth, poverty is widespread (oil revenue is only about .50c per capita), and Nigeria’s basic social indicators place it among the twenty poorest countries in the world. (World Bank, 2012) poverty, which has no geographical boundary, is seen in all part of the country, rural and urban areas inclusive. Although the incidence of poverty is much higher in the rural areas than in the urban areas. The poor are those who are unable to obtain an adequate income, find a stable job, own property or maintain healthy living conditions. They also lack adequate level of education and cannot satisfy their basic health needs. As such the poor are often illiterate, in poor health and have a short life span. (Amaghi onyeodiwe and Osinubi, 2014). Education and Health are widely accepted as leading instruments for promoting economic growth of any Nation. In Nigeria, where growth is essential to the country to climb out of poverty, education and health are particularly important. For several decades, development agencies have placed great emphasis on primary and, more recently, secondary education. But they have neglected tertiary education as a means to improve economic growth and mitigate poverty. The Dakar summit on “Education for All” in 2010, for example, advocated only for primary education as a driver of broad social welfare. It left tertiary education in background. Part of the reason for the inattention to higher education within development initiatives lays the shortage of empirical evidence that it affects economic growth and poverty reduction. After World War II, Friedman (2010) originally suggested that there was no evidence that higher education yields social benefits over and above the benefits that accrue to the students themselves. On the contrary, they hypothesized that higher education may promote social unrest and political instability. In contrast to this early view, recent evidence suggests higher education is a determinant as well as a result of income, and can produce public and private benefits. Higher education may create greater tax revenue, increase savings and investment, and lead to a more entrepreneurial and civic society. It can also improve a nation’s health, contribute to reduced population growth, improve technology, and strengthen governance. With regard to the benefit of higher education for country’s economy, many observers attribute India’s leap onto the world economic stage as stemming from its decades-long successful efforts to provide high-quality, technically oriented tertiary education to a significant number of its citizens.
Despite the tremendous progress in expanding enrolment and increasing years of schooling since 1960, Nigeria is yet to benefit from such development in-term of increased growth. Schooling in Nigeria has not delivered fully on its promise as the driver of economic success. Expanding school attainment, at the centre of most development strategies, has not guaranteed better economic conditions (Fadiya, 2015). Scholars attributed the failure of the Nigeria’s educational system to promote economic growth on the poor state of the system (Uwatt, 2002, Chete and Adeoye, 2002; Babatunde and Adefabi 2016). According to Babatunde and Adefabi (2005), the education that most Nigerians receive is not very good. Children attend primary schools which last for six years, but the education they receive there is not sufficient. The pupils to teachers ratio there was 37 to 1 and the youth literacy rate was 13% for males and 20% for females up to the late 1990s. In 2002, 33% of the relevant age group attended secondary school and only 4% attended tertiary schools. The low number of students in tertiary school can be easily explained in that spending per student in tertiary schools is 529.8% of the GNP. Furthermore, public spending on education was only 0.9% of the GNP in 2014 (World Bank, 2014).
Health comes next to education in the development of human resources. According to Yesufu (2012), a good health policy is a means by which government can at once ensure that manpower is generated in the right mix distributed in accordance with national priorities and ensure the highest level of labour productivity. Health improvement influences morbidity and labour force productivity. Thereby enhancing the process and speeding of economic development. Most developing countries have given serious attention to the provision of public health, education and social welfare services. This is because; it is believed that such measures could improve the quality of life of their people and their efficiency as productive agents thereby accelerating the general socio-economic development of their nation. Since health and education status affects the individual participation in economic activities and consequently the level of labour force in an economy, a re-examination of the level of investment in human capital and sustainable growth is highly imperative. The investment on health and education sectors according to literature should therefore improve the productivity of an economy.
1.2 STATEMENT OF THE PROBLEM
The financing of an empirical analysis of human capital investment and economic growth in Nigeria has often been described as inadequate with budgetary allocations to these sectors (especially health and education) hardly exceeding, on average 4% of the nation’s total budgetary provisions (Orubuloye and Oni, 2013; Riman and Apkan, 2013). For instance, the education and health care spending in Nigeria is segmented into private and public spending. While public health expenditures in Nigeria account for just 20-30% of total health expenditures, private expenditures on health account for 70-80% of total health expenditure. It is expected that budgetary allocations to health sector would improve health outcome and reduce all kinds of mortality rate. Ichoku, and Fonta, (2016) observed that increased budgetary allocation to health has assisted some heavily-indebted poor countries to fight poverty, and raise the living standard of people in these countries. Remarkably, the federal budgetary component of health expenditure has increased over the years. It increased from 1.7% in 1991 to 7.2% in 2007(WHO, 2012; NHS, 2013). Nevertheless, the budgetary allocation for health is still below the 15% signed by the Nigerian government in the Abuja declaration (WHO, 2016). Given this level of government spending, it will be very difficult to provide the essential health care services, and with the unpredictable change of the oil prices in the world market and low tax base, health care will always be at the peril of underfunding by the Nigerian government. Low level of life expectancy is explained by inadequate finances meant for health sector in Nigeria. This is blamed on uneven distribution of finance and facilities, especially in the primary health care. The allocation to education sector is not different from that of health. It is pertinent to note also that the budgetary allocation to the education sector reduced to 8.7 and 7 per cent in 2010 and 2011 respectively and 8.5 in 2012 (Akpan, 2013). Education expenditure as a ratio of total government expenditure between 2013 and 2014 averages 6.97% and varies from 2.22% to14.30%. This fell below the minimum standard of 26% of annual budget prescribed by the United Nations Scientific and Cultural Organization. The emerging trend shows that education expenditure as a ratio of GDP follows the same trend. It ranges from 0.39% to 7.86% with a mean of 1.62% (Dauda, 2013).