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Growing FX Demand for Education and Medical Tourism Puts Pressure on Naira – Cardoso

Boom RadioNG | February 7, 2024

Mr Yemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has highlighted the impact of medical tourism and the increasing number of Nigerians studying abroad on the devaluation of the naira. Speaking before the House of Representatives, Cardoso revealed that Nigerians spent over $40 billion on education and healthcare abroad between 2010 and 2020.

According to Cardoso, mitigating a significant portion of this demand could have resulted in a stronger naira today. He explained that the Nigerian foreign exchange market is currently facing increased pressures, leading to a continuous decline in the value of the naira. One contributing factor is the growing trend of Nigerian students studying abroad, with data from UNESCO’s Institute of Statistics and the World Bank showing a significant increase in the number of Nigerian students studying overseas.

CBN Governor, Mr. Olayemi Cardoso at the National Assembly on Tuesday, September 26, 2023.
photo credit: CBN

Cardoso cited UNESCO’s Institute of Statistics, which reported that the number of Nigerian students abroad rose from less than 15,000 in 1998 to over 71,000 in 2015. By 2018, this figure had reached 96,702 students, as per the World Bank. Additionally, projections indicate that the number of Nigerian students studying abroad will exceed 100,000 by 2022. The UK’s Higher Education Statistic Agency also noted a 64 percent increase in Nigerian students studying in the country.

The demand for foreign education and healthcare has had a substantial impact on the foreign exchange market. Between 2010 and 2020, foreign education expenses amounted to $28.65 billion, while medical treatment abroad incurred around $11.01 billion in costs. Over the past decade, the total foreign exchange demand for education and healthcare has reached nearly $40 billion, surpassing the current foreign exchange reserves of the CBN.

Cardoso further highlighted that demand pressures on the foreign exchange market are exacerbated by factors such as personal travel allowances, which accounted for $58.7 billion from 2010 to 2020. The import expenditure for annual imports and food imports has also contributed to the demand for US dollars. Additionally, the majority of vehicles and clothing worn in Nigeria are now imported, further necessitating dollar payments.

CBN Governor, Mr. Olayemi Cardoso at the National Assembly on Tuesday, September 26, 2023.
photo credit: CBN

To address the situation and bolster the inflow of dollars into the country, Cardoso emphasized the need to earn dollars through exports, whether oil or non-oil, and attract foreign investments. He expressed concern over the decline in oil exports, which constituted over 90 percent of foreign exchange earnings, from $93.89 billion in 2011 to $31.4 billion in 2020.

In conclusion, the growing demand for education and medical tourism, along with other factors, has put significant pressure on the naira. Mitigating this demand and focusing on earning dollars through exports and attracting investments are crucial steps to strengthen the Nigerian economy.

Written by Boom RadioNG

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