By Charles Robertson, Global Chief Economist, Renaissance Capital
Around 84m Nigerians are registered to vote in the country’s elections next month, making these the largest democratic exercise in African history. Its elections are assuming global importance as Nigeria now ranks third for the number of children in the world, after India and China. To secure the best future for these children, the most important policy Nigeria’s victorious president could pursue is an adult literacy campaign.
Many ask why sub-Saharan Africa (SSA) has not lifted itself out of poverty as Asia has done over the past few decades. The first answer is education. The economist Mary Jean Bowman showed in the 1960s that without an adult literacy rate of 70-80%, countries did not industrialize. This is still true. No countries with adult literacy below 70% have sustained a manufacturing sector that is one-fifth of the economy. Manufacturing is around half that level in most SSA countries because until recently, literacy rates have been too low.
Across west Africa, only Ghana has an adult literacy rate sufficient to industrialise. This is ironic because Ghana’s failure to emulate Asian development has become almost a cliché in development circles. Many point out Ghana had higher per capita GDP than South Korea in 1960. By 2017, South Korean’s per capita GDP of $30k was 18 times higher than Ghana.
Korea’s transformation began with a campaign to abolish illiteracy. It lifted adult literacy rates from 22% to 96% by 1958. A little rivalry helped. North Korea claimed 100% by 1949. By contrast, Ghana’s adult literacy rate was 27% in 1960 and nearly all of SSA, except Mauritius, was sub-40%. This is insufficient even to sustain real GDP growth according to Bowman’s 1960s research. No prizes for guessing which exceptional SSA country is one of the richest in Africa today.
Nigeria’s adult literacy rate is around 60% according to UN estimates for 2015. Thanks to high primary school enrolment and young people entering the workforce, this should exceed 70% by 2025 and perhaps 80% by 2030. If this could be accelerated, Nigeria would have met one pre-condition that could lift potential GDP growth from 4-5% (ie just above 3% working age population growth) to India’s 7-9% growth rate. It is no coincidence that India’s strongest ever growth is coming as its adult literacy crossed the 70% threshold in 2015.
A concerted adult education campaign would also help heal a dangerous division in Nigeria, between the highly literate south and the much less literate north. This threatens to widen the economic gap between potentially booming Lagos and parts of the north already challenged by Boko Haram (a terrorist group determined to fight “western education”). It inevitably fuels difficult political choices. Should a government invest in the south which has literacy rates of 70-80% and can “take-off” providing high tax revenues in the medium term, or transfer wealth to the poorest parts of the north where poverty is acute?
Education is not just a Nigerian issue. Across a swathe of Africa, we fear that a lack of human capital will constrain strong economic growth in 2020s, after a decade when high investment has done so much from Ethiopia to Senegal. Encouragingly, when we raised this with the prime minister of Ivory Coast in October, he said talks were already underway with the World Bank on how to lift adult literacy.
Why is literacy needed to get people out of subsistence farming and into simple textile jobs? A senior manager who ran Levi’s operations across Asia in the 1980s told us it was needed in multiple ways, even for simple tasks like knowing which box (Europe or the US) the jeans should be placed in.
Is industrialisation required for rapid growth? Historically yes, but maybe not now. We use industrialization as short-hand for higher value-added work which could be in services too. But we are confident that adult literacy is required by Filipinos in call-centres or those writing financial market research in India. The much-hyped benefits of the mobile phone revolution across Africa cannot spread to those who can’t read the text message from their bank.
We recognise that education is only the first pre-condition for economic take-off. We think electricity is the second pre-condition, and is insufficient across most of SSA (Ghana is again a positive exception today). But education has to come first.
It is not our place to tell political leaders what they should do. We only hope that by highlighting what data tells us, they might transform their countries more quickly. It will take vision and determination and provide little short-term reward. The pay-off of much higher economic growth will not accrue to the leaders winning elections today, but will be enjoyed by their children and grandchildren. We can think of no policy that is more important.
Charles Robertson is the head of macro-strategy at Renaissance Capital and co-author of the Fastest Billion.