The WEF announced its Global Human Capital Report 2017 on Wednesday. (File Picture: AFP)

The world is facing a talent crisis, and African countries have been among those who are failing in its efforts to maximise its citizens’ economic potential, according to the World Economic Forum's (WEF) Human Capital Index released this week.

The Human Capital Report 2017 finds countries’ failure to adequately develop people’s talents is underpinning inequality by depriving people of opportunity and access to a broad base of good-quality work.

Only 62% of the world’s human capital is fully developed, according to the report, with the United States and Germany amongst the best-performing nations in a top 10 dominated by smaller European countries. 

In Africa, Kenya with a ranking of 78, outperformed South Africa and Nigeria with rankings of 87 and 114 respectively.

Nigeria was also placed in the bottom 10 in two of the WEF’s pillars – development (122) and know-how (124), the report also stated that the West African country does better in ensuring the talents at its disposal are deployed effectively within the economy (66).
 
The report shows South Africa having developed 58% of its workforce, outperforming most of its regional peers when it comes to building capacity through educational attainment. 
 
"There are bright spots too when it comes to the development of future skills, for example ranking 19th for staff training. South Africa's greatest challenge lies in the deployment of skills throughout the workforce where it ranks 109. Chronic unemployment, under-employment a large informal sector are the main reasons for this", the report said.
 
According to the report, Kenya does relatively well in terms of deployment but worryingly for a country with aspirations to become the tech hub of Africa, it performs poorly both in development of future skills (101) and know-how as well as the use of specialised skills at work (74).
 
According to the WEF’s Human Capital Index, 62 percent of human capital has been developed globally at present. Only 25 nations have developed 70 percent of their people’s human capital or more.
 
With the majority of countries leveraging between 50 percent and 70 percent of their human capital, 14 countries nevertheless remain below 50 percent.
 
The fundamental tenet of the report is that accumulation of skills does not end at a formal education, and the continuous application and accumulation of skills through work is part of human capital development.
 
 All too often economies already possess the required talent but fail to deploy it.
 
While much is often made of inter-generational inequalities when it comes to the realisation of human capital, the report actually finds that every generation faces considerable challenges when it comes to realising individual potential.
 
For example, while younger people are consistently better off than older generations when it comes to the initial investment in their education, their skills are not always deployed effectively and too many employers continue to look for ready-made talent.
 
The problem of under-deployment of skills among the young also affects those coming towards the end of their working life. Meanwhile, few among those currently in employment – across all age groups – are gaining access to higher skilled work and opportunities to enhance know-how.
 
“The Fourth Industrial Revolution does not just disrupt employment, it creates a shortfall of newly required skills. Therefore, we are facing a global talent crisis. We need a new mindset and a true revolution to adapt our educational systems to the education needed for the future work force,” said Klaus Schwab, Founder and Executive Chairman, WEF.
 
The top 10 is dominated by smaller European countries – Norway (1), Finland (2), Switzerland (3) – as well as large economies such as the United States (4) and Germany (6). Four countries from East Asia and the Pacific region, three countries from the Eastern Europe and Central Asia region and one country from the Middle East and North Africa region are also in the index top 20.
 
At a regional level, the human capital development gap is smallest in North America, followed by Western Europe, Eastern Europe and Central Asia, East Asia and the Pacific, Latin America, and the Middle East and North Africa. The gap is largest in South Asia and sub-Saharan Africa.

With an overall average score of 52.97, sub-Saharan Africa is the lowest-ranked region in the index. Rwanda (71), Ghana (72), Cameroon (73) and Mauritius (74) have developed more than 60% of their human capital. South Africa (87), the region’s second largest economy, comes towards the middle in the region. Nigeria (114) ranks in the lower midfield and Ethiopia (127) is the lowest performer, fourth from the bottom on the index overall. 
 
North America is the strongest regional performer, with an average score of 73.95. The United States (4) ranks in the top 10 and Canada (14) in the top 20.
 
Western Europe has an overall average score of 71.10, the second highest after North America. The rankings are dominated by the Nordic countries – Norway (1), Finland (2), Denmark (5) and Sweden (8), as well as Switzerland (3) and Germany (6) – which collectively take the region’s top spots. Twelve countries have crossed the threshold of developing at least 70% of their human capital. The Netherlands (13) and Belgium (15) rank ahead of the United Kingdom (23) and France (26) to make up the mid-range of the regional league table, while three Mediterranean countries – Portugal (43), Spain (44) and Greece (48) – take the bottom ranks.
 
Eastern Europe and Central Asia ranks in third place globally, with an overall average score of 67.36. East Asia and the Pacific region scores towards the middle of the range of the index, with an overall average of 65.77.

Latin America and the Caribbean scores in the lower middle range of the index, with an overall average score of 59.86. The Middle East and North Africa has an overall average score of 55.91. South Asia scores second lowest in the index, with an overall average score of 54.10.