The Central Bank of Nigeria (CBN) has revealed that Nigerians expended over $98 billion on foreign education, healthcare, and personal travels within the span of a decade, according to its data.
CBN Governor, Olayemi Cardoso, disclosed this while addressing the House of Representatives on Tuesday in response to inquiries by lawmakers concerning the recent rapid depreciation of the naira.
The discussion was prompted by the naira’s plunge from around 900 naira per dollar to over 1,400 naira per dollar in the official market last week, prompting concerns from various sectors, including the organized private sector and citizens, about increased hardships and potential job losses.
Addressing the lawmakers, Cardoso attributed the depreciation to increased demand pressures in the foreign exchange market, driven by factors such as speculative forex demand, inadequate forex due to low remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities.
To tackle the volatility in the exchange rate, Cardoso outlined a comprehensive strategy aimed at enhancing liquidity in the forex markets. These measures include unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau De Change operators, enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility cap.
According to the CBN governor, between 2010 and 2020, foreign education expenses totaled $28.65 billion, while medical treatment abroad incurred around $11.01 billion during the same period. Personal Travel Allowances accounted for a total of $58.7 billion over the decade.
The cumulative expenditure of $98 billion on foreign trips, medical tourism, and overseas education surpasses the total foreign exchange reserves of the central bank, indicating the magnitude of forex demand in these areas.
Cardoso also highlighted the significant decline in Nigeria’s export earnings compared to increasing imports, emphasizing the need for economic reforms to address these challenges and stabilize the exchange rate.
Furthermore, he emphasized the role of attitudinal change among citizens in stabilizing the exchange rate and expressed optimism that the policy measures implemented by the apex bank would yield positive results in the short to medium term.
The discussion also touched on Nigerians’ preference for foreign products, including education and medical services, which contributes to increased demand for foreign exchange. Despite challenges, efforts are underway to revitalize the economy through reforms in various sectors, including agriculture, security, and infrastructure.
Additionally, stakeholders such as the Manufacturers Association of Nigeria Export Group highlighted the need for government support to enhance non-oil exports and address challenges faced by exporters, including access to funding and incentives.
As the government works towards economic recovery and stability, collaboration between policymakers, regulatory agencies, and the private sector remains crucial to achieving sustainable growth and development.
