• Wednesday, June 12, 2024
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BusinessDay

Naira devaluation stokes fees of Nigerian students abroad

Countries with the highest number of international students

Universities abroad have not increased their annual tuition fees for 2020. That notwithstanding, new and continuing Nigerian students who will be resuming schools abroad for the September 2020/2021 academic session could be paying as much as an additional N2 million to complete their tuition fees on the back of the depreciation of the naira.

Nigeria’s persistent dollar scarcity, which has led to a further weakening of the naira, means that Nigerians travelling abroad for studies would not only be spending more on their tuition but on the cost of living.
Exacerbated by the outbreak of Covid-19 and lower crude oil price, dollar shortages in Nigeria pushed the Central Bank of Nigeria (CBN) to adjust its official currency peg against the dollar by 23 percent within just five months this year.

The apex bank first devalued the official exchange rate in March to N360 from N307. With the further decline in oil price, a commodity that accounts for more than 90 percent of the country’s foreign-exchange earnings and more than a half of its revenue, the CBN recently moved FX rate from N360 to N379 per dollar.

With the current exchange rate, Nigerian students in the UK universities who paid an average of N6 million (using N463 to change £13,000) annual tuition fees in 2019 academic year would be paying almost N8 million (N606 for £13,000) in 2020, according to BusinessDay analysis.

Average tuition fee for international students studying in the UK is about £13,000 per annum.
The situation is the same for Nigerian students who are studying in the US as the exchange rate for the naira against the dollar has weakened by more than N73 in 2020.

The naira should be anywhere between N427 and N491 to the dollar, converging with the black-market rate, Renaissance Capital said in a note to clients on July 7.

Fitch Solutions expects naira to weaken to N475 against the US dollar at the end of this year, and further decline to N510 next year.

“The depreciation will come in a series of steps, as in recent years,” it said, adding that policymakers are very unlikely to fully liberalise the FX regime.

The naira’s black-market rate declined to 475 per dollar on Wednesday from N306 a year ago, as compiled from data by abokiFX.com, a platform that collates rates from street traders in Lagos. That’s the weakest since February 2017.

“I will be resuming school online by September and be travelling abroad when they open the airport but my dad has been complaining about the tuition fees he is going to pay as it is now higher than the budgeted amount,” a young Nigerian who simply identified herself as Efe told BusinessDay on Twitter.

In 2016, the Nigerian government added overseas study to a growing list of expenditures for which it would no longer provide foreign exchange from the central bank.

This means that Nigerian parents cannot purchase foreign currency through official bank channels in Nigeria in order to pay foreign school fees. Parents who need to acquire foreign funds to support their students abroad must do so in the open market, at a much higher exchange rate, or via foreign currency accounts held abroad.

According to market analysts, the central bank official exchange rate used mainly for government transactions and the budget is not usually accessible by the ordinary citizens except, of course, they have connections.

“Those who can afford foreign education for their children can afford it but Nigeria cannot allocate foreign exchange for those who decide to train their children outside the country,” President Muhammadu Buhari told Al Jazeera in March of 2016. “We just can’t afford it.”

According to Anthony Kila, professor of Strategy and Development and international director of studies at the European Centre of Advanced and Professional Studies, the government is to be blamed because it has not done its best to make Nigeria’s education system attractive.

“Nigerians tend to travel abroad for studies because the education system is bad in the country and those that go abroad are the ones that can afford it,” Kila said.

While many Nigerian students may have a hard time paying their way through schools abroad, enrolling in Nigerian universities, especially public ones, is not an option for many as the country’s education standard has been questioned by many.

The United Nations Education, Scientific, and Cultural Organisation (UNESCO) had recommended that 15 to 20 percent of the total budget should go to the education sector. Nigeria’s 2020 budget only allocated 6.48 percent to its education sector. It was 7.11 percent in 2019, 7.14 percent in 2018, 7.27 percent in 2017, and 9.20 percent in 2016.