The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has highlighted a significant factor contributing to the soaring exchange rate in Nigeria being the expenditure on foreign education and medical treatment by Nigerian students and citizens.
According to Cardoso, between 2010 and 2020, Nigerians spent approximately $40 billion on these expenses, surpassing the country’s foreign exchange reserves.
Foreign education expenses accounted for a substantial $28.65 billion of this total, while medical treatment abroad incurred approximately $11.01 billion. These numbers were shared by Cardoso during a debate organized by the House of Representatives, where top government officials were present.
Cardoso explained that Nigeria’s exchange rate has been affected by a decrease in the supply of US Dollars alongside a surge in demand for them. He cited data from UNESCO’s Institute of Statistics, showing a significant increase in the number of Nigerian students studying abroad over the years, reaching 96,702 in 2018.
This increase in foreign education expenses and medical treatment abroad, totaling nearly $40 billion, significantly exceeded the CBN‘s foreign exchange reserves. Cardoso also pointed out that Personal Travel Allowances amounted to $58.7 billion during the same period, emphasizing the demand for US Dollars in Nigeria.
Furthermore, Nigeria’s annual imports, which require US Dollars for payment, have grown substantially over the years. In 1980, the annual import expenditure was $16.65 billion, but by 2019, it had risen to $54.71 billion. Food imports also increased significantly from $2.63 billion in 1980 to $14.84 billion in 2019.
Cardoso stressed that the demand for foreign exchange for education, healthcare, personal travel, and other needs continues to put pressure on the exchange rate. However, he expressed optimism that ongoing reforms across various sectors of the economy would address these challenges sustainably.
He highlighted that while inflation might persist temporarily, it is expected to moderate significantly by Q4 2024, and exchange rate pressures should reduce with the smooth functioning of the foreign exchange market. To strengthen the inflow of US Dollars into the country, Nigeria must increase exports and attract foreign investments, whether from oil or non-oil sources.
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Nigerian students studying abroad are responsible for the increase in Dollar/Naira exchange rate — CBN Gov. Yemi Cardoso
— Instablog9ja (@instablog9ja) February 6, 2024