CBN Board Member Wants Forex Allocation For Overseas Education Stopped

The Central Bank of Nigeria has been asked to block foreign exchange allocation for overseas education as dollar scarcity intensifies.

Obadan, Mike Idiahi a Non-executive Board Member of the apex bank and a member of the Monetary Policy Committee believes that the forex allocation for education abroad is inadequate at the point when the bank is not able to fund foreign exchange obligations.

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Obadan who is a Professor of Economics, University of Benin Member gave the advice in his personal statement at the July 2022 Monetary Policy Meeting published by the CBN.

Obadan said, “On the part of the Monetary Authority, there is no doubt that it is in a difficult situation because of excess demand for foreign exchange in the face of a rather uncomfortable foreign exchange supply situation. In the context of foreign exchange management, there is need for a critical review of the structure of forex demand for invisible payments abroad with a view to identifying the unessential elements for rationalisation.”

Between December 2021 and February 2022, Nigerians spent over $220.86m in overseas school fees, sourced mainly from the apex bank.

According to CBN data, in December 2021, the apex bank spent $90.67m on foreign education.

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In January 2022, a total of $60.2m was spent on overseas education, while  $69.9m was spent in February 2022.

Foreign exchange crunch has frustrated different sectors of the Nigerian economy particularly manufacturers and the aviation sector.

Manufacturers are lamenting that dollar rationing has crippled their activities, while the aviation sector is on the verge of collapse.

According to the  International Air Transport Association, foreign airlines are owed $465m until last week when the CBN released $265m to offset some of the trapped revenue belonging to airlines.

Nigerians engaged in online businesses can only spend $20 or $50 per month for dollar denominated transactions using their naira cards, based on a new policy by banks.

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Most Banks have also suspended the use of naira cards for International Automated Teller Machine (ATM) cash withdrawals and POS transactions.

But the CBN Board member said the amount allocated to funding foreign education can be channeled to more profitable activities.

He said using scarce foreign exchange for payment of school fees has a negative impact on the economy.

He said, “Some analysts have rightly wondered why the Bank should, for example, continue to provide foreign exchange to fund primary, secondary and undergraduate education abroad in an era of serious forex shortage. It is true that many public schools are in bad shape.

“But there are many good private schools at the primary, secondary and university education levels. If parents are willing to fund the very expensive foreign education, it will be far cheaper for them to educate their children in the most expensive and good private schools in Nigeria.”

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