Nigerians eyeing overseas studies battle FX scarcity

“Since May 14, I have been waiting for the £4,000 I requested from the bank to pay for the deposit I must make at the British university where I intend to pursue my master’s degree,” a young Nigerian who identified herself simply as Veronica told BusinessDay.

She said the deposit is needed for her to be able to get a confirmation of acceptance for studies (CAS), and my course is slated to start in September.

“Without the CAS, I would not be able to apply for a visa, and visa application these days takes up to five weeks,” she added.

BusinessDay learnt that it is difficult for Nigerian students studying or seeking to study abroad to access the funds they need to fulfill their academic obligations because of foreign exchange (FX) shortage in the country.

Last week, there were comments on Twitter that the Central Bank of Nigeria (CBN) wanted to restrict international students from using Form A to pay for their tuition from their bank accounts.

Form A is an application form designed by the CBN to pay for service transactions. The form allows customers to purchase funds at the CBN or interbank rate to make payments for eligible services as predetermined by the foreign exchange manual.

On Twitter, an email purportedly written to a Nigerian student at the University of Hull in the UK said: “From 2023, the requirement to use Form A when transferring your money from your bank account to the university is no longer needed.
The change has occurred following a decision by the Central Bank of Nigeria which has resulted in the Form A scheme being eliminated.

“Payers that plan to leverage the Form A scheme over the coming weeks should prepare to do so in advance to ensure sufficient time to meet their financial commitments.”

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However, the CBN released a statement, saying it had not stopped the allocation and sale of foreign exchange for the purpose of paying school fees and medical bills overseas.

The International Monetary Fund said in June that despite supportive oil prices, Nigeria’s gross foreign exchange reserves fell to $38.6 billion at the end of May 2022 from $41.5 billion in September 2021.

“The external reserves have been impacted by a lot of factors, which include pressure on importation of goods services, particularly petroleum, rigid foreign exchange fixed policy of the CBN, among others,” Muda Yusuf, chief executive officer of Centre for Promotion of Private Enterprise, said.

The limited access to FX from CBN by commercial banks has led to these banks coming up with rules to manage FX spending.

Banks require a month’s notice for students to request FX. A recent email sent to customers by Access Bank said, “Due to limited FX availability provided by the Central Bank of Nigeria, we require a 30-day period to fulfil requests for school fees, upkeep, and rent payment.”

Those who also require Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) were instructed to submit their applications 14 days earlier to allow disbursement within the timeline.

In March, some banks reviewed the spending limit on their naira cards for international online and PoS transactions to $20 monthly, an 80 percent reduction from the previous limit of $100.

Students are not the only ones affected by the FX scarcity. Some foreign investors have been unable to access their funds. This has discouraged investors from investing, thereby limiting the inflows into the country.

According to the Capital Importation report of the National Bureau of Statistics (NBS), the total value of the foreign investment in the country declined by 28.1 percent to $1.6 billion in the first quarter of 2022 from $2.2 billion in the fourth quarter of last year.

The World Bank, in its latest Nigeria Development Update report, said the country would not be able to attract the desired level of foreign investment if it fails to implement a single exchange rate regime and embrace the timely implementation of foreign exchange policy.

The multilateral lender said favourable external conditions such as high crude oil prices provide the country with the opportunity to implement a single exchange rate that is reflective of the market dynamics.

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