Nigerians spent a whopping $1.38 billion on foreign education expenses between January and September 2022, data from the Central Bank of Nigeria (CBN) has shown.
This amount represents a naira equivalent of N634.5 billion, using the current exchange rate of N461/$1.
However, there was a decrease of $502.6 million when compared to the $1.88 billion spent between January and September of the previous year.
Foreign Education spends: Trend analysis by Nairalytics, the research website of Nairametrics showed that Nigerians have spent a total of $1.38 billion to fund foreign education expenses between January and September 2022, representing the lowest level since 2016.
- On the other hand, Nigerian universities are yet to receive any form of inflows from any foreign students, printing a highly unfair balance of payment. Nigeria has recorded a huge flux of migration to other countries in recent times, mostly through the education route.
- This is particularly because education has proven to be one of the easiest ways to receive visas from European countries, especially the United Kingdom.
- Nigerians who want to relocate abroad now apply for admission to foreign universities and upon admission, apply for study visas, which allow them to work and school in the host country during the cause of their study.
How this affects the economy: Foreign expenses in form of education, and health, amongst others, are registered under personal travel allowances (PTA), which are recorded as debit transactions for Nigeria’s balance of payment.
- The balance of payment (BoP) tracks all transactions made between a country and the rest of the world over a defined period. According to the CBN, Nigeria recorded a current account deficit of $603.14 million in Q3 2022 and a deficit of $1 billion in the nine months, as a result of excess outflows compared to inflows.
- A negative balance means that Nigeria transferred more FX to other countries in the review period compared to the forex value received, which consequently affects the number of funds in the external reserves and by extension the country’s exchange rate.
- Recall that the CBN continues to defend the naira at the Investors and Exporters window, however, at the parallel market where the rate is determined by the level of demand and supply, the exchange rate has endured significant depreciation.
- For example, in 2022, the local currency depreciated against the US dollar at the parallel market by over 20%, owing to increased demand for FX, while supply has been impacted by dwindling capital inflows, and oil export earnings, amongst others.
Huge labour gap: While Nigerians both young and old have jumped on the japa train, the Nigerian labour market has also suffered a massive flux of resignations, especially in the areas of IT, and banking, leaving organizations with a huge vacuum to fill.
- The mass resignation suffered by the Nigerian economy in 2022, has left most business entities in the country with a human resource gap, considering that many of those who left the African giant in 2022, were senior members of the organizations, and/or technical members of the team.
- This has created a major setback in the labour market, as organizations now have to onboard, train, and retrain new members to fill the space left by their predecessors.
Forex expenditure by Nigerians is an important indicator of Nigeria’s exchange rate, hence, an interesting statistic that requires frequent tracking.
It is worth noting that while the data from the CBN shows decreased spending on foreign education through the official PTA allocations in 2022, FX accessed from the parallel market or other sources may not be captured, which could suggest that the numbers are understated.
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