Forex allocation for foreign education drops 83% — CBN
By Esther Agbo
Nigerians spent $38.17 million on foreign education in the first quarter of 2024, according to the Central Bank of Nigeria’s latest statistical bulletin.
This figure marks an 83 percent decline from the $218.87 million spent during the same period in 2023. However, on a quarter-by-quarter basis, there was a 54 percent increase from the $24.82 million spent in Q4 2023.
The year-on-year decrease in foreign exchange (FX) spending on education abroad coincides with a significant reduction in international student enrolments at UK universities. A survey by Universities UK across 73 institutions noted a sharp decline in international postgraduate enrolments, with a 44 percent drop this January compared to the previous year.
This unexpected decrease presents financial challenges for universities, as international postgraduate students typically pay higher fees.
Additionally, data from Enroly, utilised by around 60 universities, showed a substantial drop in deposit payments from international students, indicating waning interest in studying in the UK.
Central Bank Governor, Yemi Cardoso, highlighted in February that spending on foreign education and medical tourism significantly contributes to Nigeria’s forex challenges.
In a presentation to the House of Representatives, he revealed that $40 billion had been spent on these areas, exacerbating the naira’s devaluation.
The CBN governor however criticised the intense pressure in the foreign exchange market due to forex shortages, which is contributing to the decline in the value of the naira.
While FX spending on education services declined year-on-year, there was a notable increase in health-related and social services expenditures.
The CBN data showed a 122 percent rise from $1.04 million in Q1 2023 to $2.31 million in Q1 2024, and a 485 percent increase from $0.39 million in Q4 2023.
In February, the CBN announced plans to introduce stricter measures on forex purchases through Bureau De Change (BDC) operators, particularly for overseas education and medical expenses.
The new guidelines for BDCs in Nigeria, which is part of the apex bank’s revised regulatory, approved in May 2024, include a $10,000 annual cap per customer for educational fees, requiring transactions through the BDC’s domiciliary account with a Nigerian bank and direct payments to educational institutions.
Required documents include a completed e-Form A, proof of admission or course registration, the institution’s invoice, and for postgraduate studies, a copy of the undergraduate degree certificate or verified statement of results.
Similarly, a $5,000 annual limit for medical expenses abroad was implemented by CBN, with funds transferred directly from the BDC’s domiciliary account to the medical facility backed up by proper documentation.
Necessary documentation includes a completed e-Form A, a referral letter from a recognised specialist or hospital in Nigeria, valid travel documents, and a cost letter from an overseas medical professional with details of the cost of treatment.
