Human capital and economic growth

Naglaa Arafa
Tuesday 18 Jul 2023

Increasing the level and composition of human capital formation in Egypt is necessary in order to boost productivity and economic growth, writes Naglaa Arafa


“It was not by gold or silver, but by labour, that all the world's wealth was originally purchased.” This quote from Adam Smith, the renowned economist and philosopher, clearly underscores the centrality of human capital as a driver for economic growth.  According to the World Bank Human Capital Project, to which Egypt is a party, human capital is the knowledge, skills and health people accumulate throughout their lives, enabling them to realise their potential as productive members of society. Human capital formation is associated with higher earnings for individuals, higher incomes for countries, and stronger social cohesion in society.   

With a population of almost 105 million and approximately 60 per cent are youth, Egypt has human capital, but increasing the level and composition of human capital formation is necessary to boost productivity and economic growth. Moreover, a skilled workforce is critical for attracting investment. The government is currently exerting all efforts to enhance domestic and foreign investments as well as exports through noteworthy achievements in infrastructure to enable businesses to operate more efficiently, as well as the launch of the State Ownership Policy Document and the Golden License.

The Government is also implementing key programmes for human capital formation, such as the Takaful and Karama social security programme, the Hayat Karima (Decent Life Initiative), the Mit Million Sehha (the Hundred Million Health Programme), the Technical and Vocational Education and Training Reform Programme (TVET Egypt), and the National Programme for the Development of the Egyptian Family.    To reap the full potential of all these efforts and in anticipation of the increase in investment and the ensuing demand for a skilled workforce, there is an urgent need to accelerate and broaden the scope of those ongoing interventions that are catalytic for human capital formation by targeting them to include women and young people in rural and remote areas through:

  •  Expanding the geographical coverage of vocational education and training institutions and facilities to reach out to young people in the different governorates to enhance their skills and thus their employability. This is in addition to modernising and broadening the scope of training and curricula to cover a broader spectrum of the current and future skills requirements of the labour market, such as startups, the English language, dental hygiene, entrepreneurship, plumbing, welding, graphic design, fashion design, organic farming, and farm management, among others.  Upgrading and digitising content for vocational education and training and making it available online will enhance access by young men and women in rural and remote areas to knowledge and learning, which is free. Running public awareness campaigns will be necessary to motivate youth to enrol and engage in vocational education, to share success stories, and to inform them of the career-growth potential of vocational training and its role in innovation and problem-solving.


  • Broadening the scope of and access to professional development to build specific expertise and knowledge-based skills and competencies for priority disciplines and sectors such as project management, financial markets, negotiation skills, agricultural production, and fisheries, as well as global themes and challenges such as climate change. Digitising, upgrading, and availing this content online will also be necessary to boost outreach and encourage the continuing education of women and girls.


  • Access to the Internet is the backbone to realise all the above, accelerate human capital formation, and address challenges to delivering education, healthcare, and public services, especially to poor women and youth in rural and remote areas.  The Inclusive Internet Index developed by the Economist Intelligence Unit tracks the progress of 100 countries towards availing Internet access to all in the four categories of inclusion: Availability, Affordability, Relevance, and Readiness. While Egypt’s overall ranking is 57th in the 2022 Index, it ranks in the middle on Availability (49th) and Readiness (47th). The rankings regarding Affordability (67th) and Relevance (66th) refer to the high cost of access to the Internet relative to income, the level of competition in the Internet marketplace, and the lack of content in the local language.   

Egypt’s achievements in its E-finance programme have already scaled up access to social assistance and pensions and have shown the huge and untapped potential of innovation and technology to increase efficiency and communication to provide public services for the poor. Human capital formation as well stands to benefit enormously from further E-health and E-learning programmes and initiatives to increase knowledge, learning opportunities, and public health messaging, services and information.

* The writer is a former assistant resident representative of the UN Development Programme (UNDP) in Egypt.

* A version of this article appears in print in the 20 July, 2023 edition of Al-Ahram Weekly

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