Timor-Leste: World Bank warns of ‘crisis of human capital’, need to invest

The World Bank has warned that Timor-Leste faces a crisis of human capital and needs to improve the efficiency, equity and sustainability of its investments, especially in child nutrition and education, to have a hope of reaping any demographic dividend from its young population and to avoid the situation worsening still further. 

“Timor-Leste faces multiple human capital challenges,” reads a World Bank report released on Wednesday. “A child born in Timor-Leste today will only be 45 percent as productive as an adult as she could be if she enjoyed complete education and full health. 

“This is lower than the global average (56 percent) the average for the East Asia & Pacific region (59 percent), and the average for its peer income countries in the region (50 percent),” it stresses. “Unfortunately, without urgent transformative action, things could get worse.”

In the semi-annual report analysing Timor-Leste’s economy, with a special focus on the new generation, the bank noted that despite some progress in recent years, shortcomings continue to be evident, especially in education and health.

“Without an adequately healthy, educated, and productive population, Timor-Leste’s demographic transition may give rise to socially and economically destabilizing conditions,” it warns.

The institution pointed to indicators such as “high rates of early life morbidity and mortality as 5 percent of children born will not survive to age 5; poor childhood nutrition; and poor learning outcomes due to low levels of education service delivery and quality. 

“Poor nutrition during childhood results in reduced educational attainment, long-term income loss and increased risk of noncommunicable diseases in adulthood,” it states.

The World Bank recalls that the country’s greatest potential, young demographic capital, is affected by the financial situation, the impact of the Covid-19 pandemic and other structural problems, which “require urgent measures to strengthen human capital”.

In order to capitalize on this enormous opportunity, “Timor-Leste will have to improve the efficiency, equity and sustainability of its investments in human capital.”

And, in this context, “investments to reduce malnutrition in young children are needed to improve the health and productivity of the Timor-Leste population in the long term [and] renewed efforts are needed to address the learning crisis”.

Despite the increase in the number of educational institutions, “learning outcomes are poor and disparate”, with a high failure rate, which requires “a focus on the quality of education spending, including improving teacher capacity.”

But the report stresses that in a context of the need to “put the fiscal position on a sustainable basis”, the Timorese population “will now, more than ever, have to be the driver of the country’s income growth.”

In the long term, investments in human capital are essential for the country’s long-term sustained growth, contributing to economic growth and poverty reduction, improving social cohesion and equity, and strengthening people’s trust in institutions, it adds.