The World Bank Group has released a report highlighting that current deficits in health, education, and workplace skills are costing low- and middle-income countries 51% of their future labor earnings, with Nigeria facing losses equivalent to 111% of projected earnings. Despite rising incomes and declining poverty over the past 15 years, two-thirds of these countries have seen declines in nutrition, learning, or workforce skills, underscoring the urgent need for a new approach to human capital investment.
The report, *Building Human Capital Where It Matters: Homes, Neighborhoods and Workplaces*, shows that 86 out of 129 low- and middle-income countries experienced setbacks in human capital development between 2010 and 2025. It emphasizes that progress requires investments beyond formal institutions, focusing on real-world settings that shape human capital, including homes, neighborhoods, and workplaces. Mamta Murthi, World Bank Group Vice President for People, noted that strengthening these areas can improve labor productivity and expand the types of jobs economies can sustain.
At home, early childhood development is crucial. Skill gaps linked to family circumstances emerge before age five and persist throughout adolescence. Poor care environments, including high rates of violent discipline, negatively impact learning and mental health. Neighborhood conditions also influence long-term outcomes, with children from wealthier areas earning twice as much as peers from poorer communities, regardless of parental income or education. Exposure to poor infrastructure, crime, and pollution further limits health and skill development.
In workplaces, most labor in low- and middle-income countries is in self-employment or small-scale agriculture, where formal training and on-the-job learning are limited. Women and youth face participation gaps that further constrain skill accumulation, with around 50% of women and 20% of youth out of the workforce or education. Policies targeting apprenticeships, labor market reforms, and better access to on-the-job learning are essential to increase human capital and future earnings.
Specific findings from Nigeria illustrate the potential impact of targeted interventions. Interactive parenting and early learning can more than double children’s readiness for school. Historical trends show worsening nutrition, evidenced by declining adult heights across generations. Interventions like cash and asset transfers combined with maternal health counseling have improved household expenditure and reduced stunting. Large-scale apprenticeships and government-supported outsourcing in SMEs have increased youth earnings, business innovation, and economic productivity.
The report introduces the Human Capital Index Plus (HCI+), which tracks human capital accumulation from birth to age 65, showing how gaps in health, education, and employment translate into lost lifetime earnings. Nigeria’s 2025 HCI+ score is 131, above the Sub-Saharan Africa average of 127, but its education pillar remains low, with only 11.3% completing tertiary education. Gender gaps also affect earnings, and closing them could increase Nigeria’s HCI+ score and future labor earnings by 3%. Extending effective schooling to 12 years could boost labor earnings by 20%, highlighting a major long-term opportunity.
The report recommends comprehensive strategies, including early childhood and parenting programs, targeted neighborhood interventions, labor market reforms to expand apprenticeships and childcare, and integrated policies across homes, neighborhoods, and workplaces. Strengthening data collection and monitoring progress is essential to enable countries to address deficits, increase skills, and create a virtuous cycle of higher productivity and long-term human capital development.
