What happens to Dangote when stripped of his wealth?

I said I didn’t, coveting the parenting wisdom that I was certain would follow.  Before that, I had just finished my secondary school and was writing my first book while hiding in trees – guava trees mainly.   Also at that time many people, friends, neighbours, my religious teachers and so forth came to me for […]

I said I didn’t, coveting the parenting wisdom that I was certain would follow.  Before that, I had just finished my secondary school and was writing my first book while hiding in trees – guava trees mainly.   Also at that time many people, friends, neighbours, my religious teachers and so forth came to me for one lesson or the other. 
Some of my mates who were still struggling with WAEC, found it particularly surprising that I could effortlessly write essays on any topic; they wanted to learn that.  My secret: have mental templates of different types of writing and a few appropriate quotations and you could deliver an impressive word count – whether they made sense or not, and most of my writings at that time did not.
So why did people come to me for lessons?  My dad reckoned that it was because Allah had given me a gift.  He asked me to reflect on the demographics of my students – most of them were older than me.  My father was given to drawing my attention the blessings of Allah;however, in this case, he taught me my first lessons in human capital.
Why would people seek the company of a teenager who had no money, no influence, no power, no special beauty or oratory?  That is, unlike Dangote, I didn’t need to be stripped of anything, because I had nothing. But people still came because they needed to maximize their utility.  Maximizing utility?  That’s a fancy economics term for satisfying a want.
So what would happen to Dangote if you take away all his wealth and companies and houses and Ph.D. drivers?  Let’s have mercy on him and throw him a pair of trousers, shoes, a shirt and a chewing stick. He would do excellently, that’s what.  Companies and individuals would fall over themselves to ask him to be a CEO, board member, chairman, motivational speaker and so forth. Cutting a mind numbing thought experiment short, it wouldn’t take long before Dangote makes back all his money – and again become the richest black man to boot. When Steve Jobs was sacked from Apple, he founded Pixar, and performed excellently.
Why? Dangote would do well because he has human capital.  Period.  Human capital is the aggregate skills, education, experience, capability, etc. in an individual.  Human capital is a fascinating subject in economics; it can be used to explain many phenomena. It’s the reason why, I’m reasonably certain, Dangote’s house is bigger than yours. It’s the reason why some sell sachet water in the streets while others are accountants. Your human capital can even make you a better Muslim or Christian.  I’ve observed that my well off friends, people who have a lot of human capital (whether in Minna, Abuja or Kano), usually observe the voluntary Islamic fasting on Mondays and Thursdays.
Charles Wheelan, author of Naked Economics (the best economics book I’ve ever read) writes: “Human capital is the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor…”
Nothing raises human capital like education.  To talk about human capital is to examine the impact of education.  For example, why does India have many poor people?  Because the literacy level is not high enough.  According to CIA Factbook, only 62.8% of the population is literate.  This is slightly better than the situation in Nigeria where the literacy level, according to the same source, is 61.3%.  It’s not surprising therefore that about 80% of Nigerians according to DFID live in poverty.
Compare that to a single digit of 3.8% of people below poverty line in Malaysia where literacy level is 93.1%.  At this moment, there’s no unemployment in Malaysia.  A country is said to have eliminated unemployment when the rate is less than 4%; 2013 estimate of Malaysia’s unemployment is 3.1%. 
Mr Wheelan of the Economist writes:  “The most insightful way to think about poverty… anywhere else in the world, is as a dearth of human capital.”
This is why education is important.  Money invested in human capital always yields a return in the future.  In the US, a university education is expected to yield 10% per year on the money spent.
This recalls a conversation I had with a deputy vice chancellor of a Nigerian university.  He balked at the plans of his state governor to send students abroad for postgraduate studies.  “If they come,” he argued, “where would they work?”  This entirely misses the point, because having a community laden with human capital improves the economy of that society for everybody.  
Let’s go back to Malaysia again for a case study.  I once interviewed a vice chancellor in Malaysia who told me that in 70s and 80s, the government deliberately sent Malaysians abroad for university degrees.  At a point, Malaysia had the largest foreign student population in America.  This is to say nothing of those in Canada, Australia, UK and New Zealand.  “When we came back,” the VC recalled, “the capacity of our educational system expanded.”  Now everybody goes there to study.
Here’s a thought experiment I learnt from Mr. Wheelan: imagine 100,000 secondary school dropouts are released into Kano city.  What would happen to the teenagers and how would they affect the society?  Because of lack or limited human capital, many wouldn’t find jobs. Public services would be stretched. Frustration would nudge them to abuse drugs, crimes would increase, and they would generally give everybody a big headache until Governor Rabiu Kwankwaso would beg that they be taken away from his city.
Now imagine that the same people are graduates of the world’s top universities with PhDs, masters and excellent bachelor degrees.  What would happen? There would be an economic boon.  “Many of these individuals,” Mr. Wheelan argues, “would find jobs immediately. (Remember, human capital embodies not only classroom training but also perseverance, honesty, creativity – virtues that lend themselves to finding work.)  Some of these highly skilled graduates would start their own businesses; entrepreneurial flair is certainly an important component of human capital. Some of them would leave for other places; highly skilled workers are more mobile than their low-skilled peers.”
Even the Qur’an asks us: are you going to compare those who know with those who don’t?
A version of this column was first given as a talk to final year students of Excel College Kano on May 9, 2014.