Foreign education forex allocation tumbles 83% — CBN

Nigerians spent $38.17m on foreign education between January and March 2024, according to data from the Central Bank of Nigeria’s first-quarter 2024 statistical bulletin.

The amount spent crashed by 83 per cent from $218.87m recorded in the same period of last year.

However, on a quarter-by-quarter basis, there was an increase of 54 per cent from $24.82m spent in Q4 2023.

The year-on-year decrease in FX spending for foreign education occurred amid a crash in international student enrolment at United Kingdom universities earlier this year.

A survey conducted by Universities UK across 73 universities revealed a significant drop in international student enrolment, particularly in postgraduate programmes. This January saw a 44 per cent decrease in such students compared to the previous year, a reduction greater than anticipated.

This sharp fall in international students, who typically pay higher fees for postgraduate courses, poses a financial challenge for universities.

Also, data from Enroly, used by around 60 universities, indicates a decline in interest among international students studying in the UK, evidenced by a significant drop in deposit payments compared to the previous year.

In February this year, the Governor of the Central Bank of Nigeria, Yemi Cardoso, said that the amount spent on foreign education and medical tourism contributes to Nigeria’s foreign exchange challenges.

In a detailed presentation to the House of Representatives, Cardoso highlighted that an alarming $40 billion has been expended on foreign education and healthcare, a factor contributing to the devaluation of the Naira.

The CBN governor decried the amount of pressure in the foreign exchange market amidst forex scarcity, which adds to the depletion of naira value.

While there was a decrease year-on-year in foreign exchange spending for education services, there was a significant increase in health-related and social services.

The CBN data showed that there was an increase of 122 per cent from $1.04m in Q1 2023 to $2.31m in the same period this year. There was also an increase of 485 per cent from $0.39m recorded in the last quarter of 2023.

Also, in February this year, it was reported that the CBN planned to introduce stringent measures on the purchase of foreign currencies through Bureau De Change operators, with a specific focus on transactions related to overseas education and medical expenses.

As part of the apex bank’s revised regulatory guidelines for BDCs in Nigeria, there will be a cap on foreign currency purchases for school fees at $10,000 per customer annually. This process requires the transaction to be conducted through the BDC’s domiciliary account with a Nigerian bank, ensuring direct payment to the educational institution.

It also stipulates that such transactions must be accompanied by a set of documents: a duly filled out e-Form A, proof of admission or course registration, the educational institution’s bill or invoice, and, for postgraduate studies, a copy of the undergraduate degree certificate or an officially verified statement of results.

In addition to educational fee regulations, the CBN is implementing a limit of $5,000 per annum for foreign currency transactions concerning medical bills abroad.

Similar to the educational fee transactions, funds for medical bills will be transferred directly from the BDC’s domiciliary account to the medical facility, supported by comprehensive documentation.

This includes a completed e-Form A, a referral letter from a recognized specialist doctor or hospital in Nigeria, valid travel documents, and a letter from an overseas medical professional detailing the cost of treatment.

The proposed guidelines were eventually approved in May 2024 by the apex bank, which may further limit the amount of FX spending on foreign education and medical tourism.