Exchange rate may cause massive dropout of Nigerian students abroad
There are strong indications that the planned exclusion of more items including school fees from official foreign exchange market, may cause massive withdrawal by Nigerian students from studying abroad.
This is because aside scarcity of dollars that has hit the banking industry in recent time, most parents who spoke to Sunday Tribune on Saturday said they cannot afford to continue to pay for dollars at the prevailing exchange rate of N325 to a dollar.
A former director (now retired) of the Federal Civil Aviation Authority, Mr.Emmanuel Orji whose son is a student at the Accra Institute of Technology (AIT), Accra, Ghana, said he is considering applying for son's transfer back to Nigeria because the $1,000 school fees for foreign students which he used to pay with N200,000 has risen to N320,000 and may continue to rise.
According to Orji, "as a retired civil servant with other children to look after, my monthly income hardly feeds the family."
A top banker who preferred anonymity disclosed that there are different pressures on different banks in terms of demand, adding that over 15 per cent of the demand of the current foreign exchange that is being given to the banks is for school fees and that this level of demand is high.
According to him, it will be difficult for some parents to keep sending dollars abroad to their children because "the CBN does not have enough dollars to meet demand and we, the banks, do not have enough to sell."
With over $128million ($128,350,066.34) of foreign exchange (forex) purchased by seven banks from the Central Bank of Nigeria (CBN) on behalf of their customers, mainly for divestments from the capital market, school fees, business travel allowance (BTA) and personal travel allowance (PTA), the apex bank is considering exclusion of more items from official forex market.
Of the three invisibles - school fees, PTA and BTA - the payment for school fees abroad featured most prominently on all the lists of the seven banks within the week.
It is because of this that CBN's Director of Banking Supervision, Mrs. Tokunbo Martins, who briefed journalists on the outcome of last weeks Bankers' Committee meeting, in Abuja, said that the monetary authorities would not allow that category of demand to crowd out the productive sector of the economy in the forex market.
Also, in his remarks, the Managing Director of Access Bank, Mr Herbert Nwigwe, explained that the banks have decided to channel such forex to the real sector because those demands tend to crowd out demands to import raw materials and to support industries.
"The problem with that is the fact that it tends to crowd out the critical foreign exchange that should be used in the real sector to import raw materials, to support industries, to encourage employment. So, there is a question around how far we are going to allow this to continue. Shouldn't we redirect these resources towards the real sector as we should?" he queried.