…World Bank report argues that the foundations of productivity, prosperity and economic mobility are built not only in classrooms but also in homes, neighbourhoods and workplaces.
By Elvis Eromosele
For decades, conversations about human capital development have largely revolved around access to education, healthcare and social protection. Governments build schools, recruit teachers, expand hospitals and introduce skills acquisition programmes, often measuring progress by enrolment figures, infrastructure and public expenditure.
These interventions are important. But what if some of the most consequential investments in human development are happening outside these institutions?
What if the conditions in which a child grows up, the quality of the neighbourhood in which a family lives and the opportunities available at work are just as important as what happens in the classroom?
This is the central argument of a new World Bank publication, Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces. Edited by Alaka Holla, Norbert Schady and Joana Silva, the 2026 report challenges conventional approaches to human capital development and proposes a more integrated framework for building productive, healthy and skilled populations.
Its message is particularly relevant to Nigeria, where the challenges of unemployment, weak educational outcomes, inadequate healthcare, poverty and low productivity continue to constrain economic development.
The report makes a fundamental point: human capital is not built in schools and hospitals alone. It is accumulated gradually through the daily experiences, resources, relationships and opportunities available to people in their homes, neighbourhoods and workplaces.
This is more than an academic observation. It has significant implications for how Nigeria designs its economic and social policies.
The worrying decline in human capital
Human capital, broadly defined as the health, knowledge, skills and experience that make individuals productive, is arguably the most valuable asset of any economy. Yet, despite improvements in income and reductions in poverty in many countries, progress in human capital development has stalled or reversed across significant parts of the developing world.
The World Bank report presents a particularly troubling picture. Two-thirds of low- and middle-income countries have experienced a decline in at least one key dimension of human capital development over the past 15 years. Learning outcomes have stagnated, and in most countries, student performance is worse today than in 2010. Average adult height, a widely used indicator of population health, has also declined in several countries.
The employment picture is equally concerning. Only about 40 per cent of women are in paid employment, while nearly one in five young people are neither working nor studying.
These figures reveal a fundamental development problem. Countries may expand access to education and healthcare without necessarily producing corresponding improvements in the capabilities and productivity of their populations. The report estimates that differences in human capital account for roughly two-thirds of the income-per-capita gap between rich and poor countries.
In other words, the difference between prosperous economies and struggling ones is not simply the amount of natural resources they possess or the volume of capital invested. It is also the productive capacity of their people.
The home: Where the foundations are laid
The report identifies the home as the first and perhaps most consequential environment for human capital formation. A child’s development begins long before formal schooling. Nutrition, healthcare, parental attention, emotional support and early stimulation all contribute to cognitive, language and social-emotional development.
The report finds that children whose mothers have higher educational attainment generally perform better in vocabulary and mathematics assessments than children whose mothers have less education. These differences emerge before children reach the age of five and tend to persist throughout childhood and adolescence.
Evidence from Ethiopia, India, Peru and Viet Nam illustrates how early disadvantages can become enduring educational gaps. But the report makes another important distinction: household income alone does not guarantee good developmental outcomes.
Children need nurturing relationships, opportunities to play and learn, emotional support and protection from violence. Money can provide books, nutritious food and access to healthcare, but it cannot automatically replace parental care and attention.
The experience of children left behind when parents migrate in search of employment is instructive. In China, some children from households with higher incomes but inadequate parental care perform worse in mathematics and language assessments and exhibit higher levels of depression.
For Nigeria, this raises important questions about the relationship between economic pressures, parental migration, childcare, nutrition and early childhood development. A development strategy that focuses exclusively on school infrastructure while ignoring what happens in homes risks addressing only part of the problem.
The World Bank recommends strengthening household resources through employment opportunities and cash transfers while expanding parenting programmes, preschool access and girls’ education. The emphasis on girls’ education is particularly significant. Educating girls does not merely improve their individual economic prospects; it can also strengthen the human capital of the next generation.
The neighbourhood: Poverty is also about where people live
One of the most interesting contributions of the report is its treatment of neighbourhoods as an important determinant of economic mobility.
Two families with similar incomes may experience vastly different human development outcomes simply because they live in different neighbourhoods.
The availability of good schools, healthcare facilities, clean water, sanitation, safe roads and employment opportunities can influence how much human capital residents accumulate.
Evidence from Brazil demonstrates the scale of this effect. Children from low-income families who grow up in affluent neighbourhoods complete more years of schooling and earn substantially more as adults than their counterparts raised in poorer neighbourhoods.
The report shows that low-income children in wealthier neighbourhoods earn about twice as much in adulthood as those in poorer neighbourhoods. This suggests that poverty is not merely a household income problem. It is also a geographical and environmental problem.
In Nigeria, the implications are easy to recognise. A child growing up in a neighbourhood with functioning public schools, reliable healthcare, clean water, sanitation and safe streets has advantages that may be unavailable to a child living in an underserved community.
Even when both children attend school, differences in their surrounding environments can affect attendance, concentration, health and eventual performance. The report also highlights the impact of pollution, violence and poor sanitation on human development.
In Indonesia, children living in communities free from open defecation during their first two years of life were more than 10 percentage points less likely to be stunted and achieved better cognitive test scores. The policy implication is clear: improving human capital requires more than interventions directed at individual households. Governments must improve the environments in which people live.
This calls for closer coordination between education, health, housing, transport, sanitation, environmental management and security agencies.
The workplace: Where learning must continue
Perhaps the report’s most important contribution to the employment debate is its argument that human capital development does not end when people leave school.
Workplaces are also learning environments. Through experience, mentoring, formal training and interaction with colleagues, workers develop technical knowledge, communication skills, problem-solving abilities and professional competence. Indeed, the report estimates that half of the human capital accumulated over a lifetime is acquired at work.
However, many workers in developing economies are employed in activities that provide limited opportunities for learning and advancement. About 70 per cent of workers in low- and middle-income countries are engaged in small-scale agriculture, low-quality self-employment or microenterprises employing no more than five people.
These activities often lack formal training, structured management systems and opportunities for professional development. The consequences are reflected in earnings. The report finds that, for the same increase in work experience, earnings rise only about half as much among self-employed workers as among salaried employees.
This is a significant challenge for Nigeria, where informal employment, microenterprises and small businesses account for a substantial part of economic activity. Having a job is important, but the quality of that job matters just as much.
A young person who spends ten years in an occupation without acquiring new skills may accumulate work experience without necessarily increasing productivity or earning potential.
The World Bank therefore recommends expanding apprenticeships, employer-provided training, business development support and opportunities for peer-to-peer learning. Notably, the report identifies Nigeria alongside Colombia and Côte d’Ivoire as countries where large-scale apprenticeship programmes have increased both skills and earnings.
This provides an important starting point for policymakers and private sector employers. Businesses should not regard employee training merely as an administrative expense. It is an investment in productivity, innovation and competitiveness.
The report also highlights evidence from India, where soft-skills training for garment workers increased the productivity of trained workers by more than 13 per cent. Productivity among untrained colleagues also improved by almost 12 per cent, demonstrating the spillover benefits of workplace learning.
Women and young people must not be left behind
The report draws particular attention to the barriers preventing women and young people from participating fully in economic activity.
Around half of women in low- and middle-income countries are outside the labour force, while approximately 20 per cent of young people are neither studying nor working. These are not simply employment statistics. They represent lost productive capacity.
For women, inadequate childcare, unsafe transportation, restrictive social norms and limited access to suitable employment opportunities remain significant barriers. The report finds that expanding access to quality childcare can increase women’s participation in the labour force.
It also recommends safer commuting arrangements, better job-matching services, employability programmes and apprenticeships. For young people, the challenge is not simply to provide certificates but to create pathways into productive employment where skills can be acquired and improved.
Nigeria’s youth population represents an enormous economic opportunity. But that demographic advantage will remain unrealised without investments that connect education, practical skills and employment.
From fragmented programmes to integrated development
The report’s overarching recommendation is a shift from fragmented interventions towards a coordinated, settings-based approach. A government programme designed to tackle childhood malnutrition, for instance, cannot focus exclusively on healthcare.
Families need sufficient income to purchase nutritious food. Communities require clean water, sanitation and waste management. Parents need employment opportunities that enable them to provide for their children.
The challenge therefore cuts across health, agriculture, social protection, infrastructure, education and labour policy. The World Bank recommends using social registries, integrated service centres and case management systems to coordinate support across different programmes.
Such systems can help governments identify vulnerable households, understand their specific needs and connect them to relevant services. The report also calls for better data collection to track human capital outcomes across homes, neighbourhoods and workplaces.
For Nigeria, this is an important governance consideration. Government agencies frequently implement related programmes without sufficient coordination, making it difficult to assess their combined impact. A more integrated approach would help reduce duplication, improve targeting and ensure that public expenditure produces measurable results.
The Nigerian opportunity
Nigeria’s development challenge is not simply a shortage of resources. It also involves inefficiently converting available resources into productive human capabilities.
The country needs better schools, stronger healthcare institutions and more employment opportunities. But these investments must be supported by conditions that allow people to thrive beyond the boundaries of formal institutions.
Parents need the resources and knowledge to nurture children. Neighbourhoods need functioning infrastructure and quality public services. Workplaces need to become environments where people acquire skills, improve productivity and advance professionally.
The private sector has a particularly important role in this process.
Employers can expand apprenticeships, invest in workforce development, strengthen management practices and create more opportunities for young people. Financial institutions can support productive small businesses, while technology companies can expand access to learning and job-matching platforms.
Government, meanwhile, must create the institutional environment that makes these investments possible. The World Bank’s message is ultimately a reminder that human capital development cannot be outsourced to ministries of education or health alone.
It is a shared responsibility involving families, communities, employers and policymakers. The measure of a country’s development should not simply be how many schools it builds, how many people it enrols or how much it spends on social programmes. It should also be how effectively those investments translate into healthier children, more capable adults, productive workers and better economic opportunities.
For Nigeria, the task is to move beyond treating human capital as a social-sector concern and recognise it for what it is: a central economic investment.
After all, roads, factories, technology and natural resources do not create prosperity on their own. People do.
And if Nigeria wants a more productive economy tomorrow, it must start building the conditions for more capable, healthier and better-skilled people today.
To download the full report, click here
