Scenario A:
Company Alpha needs 100 entry level industrial welders. It partners with a local community college (think of a Polytechnic which offers only OND), supporting the school with $1 million, to train those 100 young people, with a custom curriculum it has created with the school. At the end of the two years, those 100 young people are hired by Company Alpha. And the company also deducts that $1 million from its tax.
Scenario B:
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Company Beta needs the same 100 welders but because its partnerships with any school is likely treated as an expense, it sees no strategic benefit to do that industry-college collaboration. So, instead of putting that $1M in the school, it opens a training unit, with $2m to do the same thing. As that happens, it is distracted from its core mission since it is now running a big training program, with associated asset under-utilization challenges.
Lessons: Scenario A is what happens in the United States. Companies save money as they partner with universities and colleges because the tax system encourages that. The companies which do these things are not doing them because they like those schools, they do them because they use one stone to kill many birds: you support a local school, you get all you want, and you still save tax money.
Scenario B is really what we have in Nigeria unless you have sophisticated accountants. Largely, when you give, it could be an expense line with no strategic tax repositioning. In the US, you can donate your software to a university to use to train their students, which if they become very familiar with, it benefits you, since most will ask for what they are familiar with at work. You get tax credits on that donation and the process is simple; quantify the value and deduct when you file your tax.
Many years ago, when I was a student in Johns Hopkins, they added this optional course on IOS development, and Apple engineers were to teach it with a professor. Yes, that was an the early phase of IOS-based app development evolution, and Apple distributed their staff across leading American universities to inject the courses into school programs. Apple possibly deducted everything it spent on those partnerships even as it seeded a foundation for the IOS App Economy.
My Last Line: Nigeria must evaluate why companies do not like to partner with our schools, preferring to replicate practically whatever schools have. Can the reform of the tax system help?
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Our economy is not integrated, rather it’s disparate and sometimes at war in its destitute parts. Even agencies and departments that work for the same government are canceling themselves out. The graduates the schools produce are for which market exactly? Nobody has answered that question. Rather, all you have are school systems that simply admit and graduate students; and public and private sectors that just show up and check whether the products from the schools can fit in or need to be retrained. The inefficiencies and low productivity are endless.
Nigeria’s case is beyond tax reforms and incentives, we need to first rethink everything about education and school systems. For now the Trust Quotient existing between the academic and industry is too low to the point of nonexistent. And when that is the case, throwing money at the problems won’t deliver the goodies.
When you value resources below your feet more than the very humans standing on them, your case is almost hopeless. Do we even understand the role of human capital in economic development and advancement of prosperity? We are just here to dig crude oil, gold and any precious metals we can find. Now you know why everything is strange here.