Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has revealed that in the past decade, the foreign exchange demands made by Nigerians to use for education and healthcare purposes has nearly come to a total of $40 billion.
The CBN governor appeared before the House of Representatives on Tuesday alongside other prominent members of the government like the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, and the Minister of Budget and National Planning, Atiku Bagudu, to discuss the free fall of the naira and the state of Nigeria’s economy.
Speaking on Nigerians’ rising need for forex, he said, “According to UNESCO’s Institute of Statistics, the number of Nigerian students abroad increased from less than 15,000 in 1998 to over 71,000 in 2015. By 2018, the figure had reached 96,702 students as per the World Bank. Another report projects the number of Nigerian students studying abroad to exceed 100,000 by 2022.
“Additionally, the UK’s Higher Education Statistics Agency noted a 64% increase in Nigerians studying in the country, riding from 1620 in 2019/2020 academic session to 21,305 by the 2020/2021 session. Given this data, it is crucial to highlight that between 2010 and 2020, foreign education expenses amounted to a substantial $28.65 billion as per the CBN’s publicly available balance of payment statistics.”
Cardoso further said, “Similarly, medical treatments abroad has incurred around $11 billion in costs during the same period. Consequently, over the past decade, foreign exchange demand for education and healthcare has totalled nearly $40 billion. Notably, this amount surpasses the total coined foreign exchange reserves of the CBN. Mitigating a significant portion of these demands could have resulted in a considerably stronger naira today.
“On the supply side of the exchange rate, to bolster the inflow of US dollars into the country, the economy must earn these dollars through exports. Whether oil or non-oil, or by attracting foreign investments.
“A robust economic foundation is essential to produce goods and services that the global market is willing to pay for in US dollars.
“When the supply surpasses demand, the exchange rate appreciates, causing the price of the dollar to fall. Unfortunately, in Nigeria, the contrary has taken place.”
The CBN governor then noted, “To address exchange rate volatility, a comprehensive strategy has been initiated to enhance liquidity in the forex market. This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for PDCs, enforcing the net opening position limit, and adjusting the enumerable standard deposit facility cap.”
He said that these measures will “boost foreign exchange inflows, stabilize exchange rate, and minimize its past route to domestic inflation.”
Speaking on the rate of inflation in the country, he said, “Inflationary pressures are expected to decline in 2024 due to the CBN’s inflationary policy aiming to rein in inflation to 21.4%, aided by improved agriculture productivity, and easing global supply chain pressures.”
Cardoso, while acknowledging the economic hardships faced in recent times, however said, “I want to emphasize that we are now at a turning point and the bold reforms on the way across different segments of the economy, though initially challenging, are aimed at addressing these challenges sustainably.”
He said he is confident that positive outcomes are already emerging and will be more apparent in the future as he further revealed, “As at yesterday, the volume of transactions on our market was over $800 million. This is the first time in many years that it has achieved this level.”
Cardoso then said, “I acknowledge that despite these commendations, the concerns regarding the cost of living and currency rates remain. Indeed, this is the major topic of concern in our villages, our towns, and our cities. The urgency of the matter is not lost on us at the Central Bank, and I really want to assure you that we are working tirelessly with colleagues from across government, including with the leadership of this house to bring lasting solutions.”
“My team and I are dedicated to refocusing the bank by giving primacy to price stability. We also aim to build confidence in the Nigerian economy through the maintenance of stability in consumer prices and the foreign exchange market,” he said.