Tanzania: Human Capital Investment Vital to Economic Growth

The investment in human capital is central to development and contributes immensely to delivering substantial economic benefits in the long term.

According to a World Bank report, investment in human capital is fundamental for Tanzania to develop economically, alleviate poverty and achieve the aspirations articulated in 2025 Development Vision.

“Investment in human capital is essential for Tanzania,” stated the World Bank report titled, Human Capital; the Real worth of Nations.

It added that, to generate future income and achieve sustainable development, people are the most important asset countries have. Investment in human capital is considered as means of improving the quality of life and sustaining economic growth.

The report urges Tanzania to invest more on Human Capital as one of the biggest investments to attain the envisaged development.

According to the report, for Tanzania, the Human Capital Index (HCI) is estimated at 0.40, which means that children and youth may reach only 40 percent of the earnings that they could aspire to with full health and education.

The four countries that top the Human Capital Index (HCI) ranking -Singapore, South Korea, Japan, and Hongkong -are all in East Asia, and part of the success of these countries in achieving high values on the HCI and high growth rates for GDP per capita is that they made investment in youth a high priority.

Initially, governments that performed well in human capital index focused on improving and universalizing basic education to ensure that labour-intensive industries would find the employees they required.

As the focus for growth shifted progressively to more technology-intensive industries, governments invested more in upper secondary and tertiary education and in technical and vocational education and training, giving more attention to the quality of the education provided.

“Education and training policies required substantial budget allocations, but expanding the role of the private sector in education was also crucial for the top four countries,” said the report.

The report urges Tanzania and other African countries to learn from the East Asia experience.

The analysis is part of the World Bank Human Capital Project (HCP). It relies on both the Human Capital Index (HCI) and data on human capital wealth (HCW).

One HCP aim is to measure how much social sectors, among them health and nutrition, education, social protection, and labour, contribute to worker productivity. In Tanzania, it appears that both the HCI and HCW per capita are low.

To boost investments in human capital, the report suggests a variety of policy options, namely enhancing access to and quality of health care, improving children’s nutrition, the quality of education, gender equality, and worker skills.

Currently, Tanzania is improving access to education by constructing new schools and expanding the existing ones. However, the country must also relive the early-grade traffic jam.

“Large class sizes and overcrowded classrooms in the early grades result in poor learning, grade repetition, and ultimately dropouts. These problems can be eased by expanding access to pre-primary education so that children are prepared for primary school, and making the environment conducive to learning with smaller class sizes, better-trained teachers, and reliance as needed on the language children speak at home,” said the report.

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