9 November 2012

Namibia: Investing in Human Capital


An Ingredient For Economic Growth and Poverty Alleviation

AS a country are we re- ally investing in our key assets our human capital? Unfortunately I have not come across empirical evidence that demonstrates the cost of investment by both employers and Government in our human capital. Government has this year allocated over (N$9.4 billion) – its big- gest chunk of the national budget – to education and training and it can be commended for that.

However, what is not clear is how much of such investment will be used to cover operational expenditure and what will be spent on actual human capital development. Unfortunately, I could not find statistics as to how much the private sector is contributing towards human capital development in this country, although there are some indications the role the private sector is playing in contributing towards skills development is a positive one.

Such investments can be identified through provision of bursaries, sponsorships to education and training institutions provisioning of experiential learning (internship) opportunities to students from tertiary institutions. More research should be conducted to determine private sector investment towards in capital development.

A notable concern is the global competitiveness of Namibia in improving the provision of education and training in the country. The findings of the World Economic Forum, in its recent report (2012- 2013), revealed scary statistics on Namibia’s global competitiveness particularly when one looks at the education and training sector which is ranked 127 out of 144 countries. According to the report, Namibia’s enrolment rates remain low while the quality of the education system remains poor.

In this article I am going to discuss the human capital theory as a key ingredient to support economic growth and improve the livelihood of our citizens. At the core of human capital theory is the idea that humans, and more precisely, their stock of knowledge and skills, are an important production factor. This notion is similar to the idea that financial capital is required for production processes.As investments in human capital lead to specific returns (i.e. wag- es), people tend to invest in human capital.

The debate on human capital theory argues on the premise that in- vestment in knowledge, skills and know-how of the workforce can signif- icantly contribute to the productivity and economic growth of a nation. In a nutshell, one can argue that human capital can provide a country with a competitive edge that could lead to economic growth and enhance everyone’s welfare. Thus human capital consists of those elements in humans that improve the quality of labour, such as skills, knowledge and wisdom, which makes it worth more in the production process.

While it is claimed that competitive pressures, globalisation and the changing technolo- gy are causing firms to re-evaluate the process of how work is done, such global economic and technological change requires workers to exhibit a broader range of skills in the workplace that makes employees flexible and adaptable in different environments. The fast-changing work- place associated with new work methods is forcing employees to be flexible and adaptable.

In this way, they become responsive to changing demands in the workplace and learn to cope with the challenges of acquiring new sets of skills in order to be up to date with technological changes.

Implication of economic transformation requires employees to adapt their skills, knowledge and attitudes to make them flexible and adaptable in a changing environment. It has therefore increasingly been observed that the workplace transformation is demanding new sets of skills, to which the education and training system should respond.

The manifestation of global integration and technical changes at the workplace has made education and training very important in a competitive process.

Since employers demand a variety of skills from graduates entering the labour market, the Organisation for Economic Co-operation and Development (OECD) found that that workers should be able to demonstrate teamwork, the ability to cooperate in an unclear environment, problem solving, the capacity to deal with non-routine processes, the ability to handle decisions and responsibilities, communication skills and the capacity to see workplace developments in a wider context.

A major assumption of the theory of human capi- tal is that human capital is obtained through education and training, and that the more education (years of schooling) a person has attained, combined with work experience, the higher the individual’s productivity levels and consequently a higher income. Investing in our human capital is not only the responsibility of the state, the private sector and civil society should also play and important part in this endeavour.

Let us continue investing in the skills development of our human assets if we are to achieve the noble dream of Vision 2030 for Namibia to become an industrialised nation and an economically competitive one.

Raimo Naanda has a PhD from Stellenbosch University, and is currently employed as Senior Manager: Human Resources Development at Telecom Namibia.

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