In support of the federal government’s policy reforms aimed at stabilising the exchange rate market, the Institute of Chartered Accountants of Nigeria (ICAN) has urged the federal government to improve the standard of education to reduce tourism, and foreign exchange pressure.
Innocent Okwuosa, the 59th president of ICAN made known the position of the institute in a media chat recently in Lagos when he highlighted steps to addressing the subsidy removal and naira devaluation policy of the Tinubu’s led-government.
“In view of the identified gaps, the much-anticipated foreign exchange stability and economic growth may remain elusive if solutions are not provided in the short, medium and long term as against the quick fix interventions.
“We recommend among others that the government improve the standard of education and health facilities in the country to reduce education and medical tourism.
“Besides, the government should institute accountability and transparency within the oil industry and foreign exchange market,” he said.
Okwuosa maintained that proper funding of education will improve the standard of learning in the country, which will in turn lead to having students from other countries coming to school in Nigeria, and such will help to attract foreign exchange inflow.
“Remember in those days we used to have students that come from West Africa, from far away countries coming to study in Nigeria. What we are recommending is for us to get that state where we have Europeans, people from other African countries coming to study in Nigeria.
“If that happens, that is foreign exchange inflow, because the issue we are addressing is that of foreign exchange; so a good educational system that ensures all facilities will attract foreign students, and therefore becomes foreign exchange earning to the country.
“If you imagine how much the UK’s education system earns in foreign currency, you will understand what we are proposing,” he noted.
According to universities UK report, “On average, international students in the 2021/22 cohort make a 58 million British Pounds net economic contribution to the UK economy per constituency.
This is equivalent to 560 British Pounds per member of the resident population.”
The 59th ICAN president expressed concerns that if the government must achieve the goal of sustainable economic reform, there must be accountability and transparency in place to gain the trust of the people, which he fears is lacking.
He reiterated the need for CBN, and NNPCL to disclose the extent of unpaid foreign exchange bills and outstanding debt obligations, to enable Nigerians to know if the $3billion, secured from Afrexim Bank as an emergency repayment loan, will make a sustainable impact on the foreign exchange rate.
Besides, he insists there is a need to explain to Nigerians why NNPCL is the channel for obtaining the $3 billion loan rather than the CBN.
ICAN is worried that in the face of the reforms, Nigeria’s currency has been on a depreciation spree against the US Dollar, hitting over N900 to $1 in the parallel market.
Similarly, fuel price which jumped from the previous N184 official pump price to more than N500, saw this price further increasing to N617 in some locations.
“The present reality is that the N617 pump price is no longer sustainable as landing cost of imported petrol has risen, leaving many wondering if subsidy has been smuggled in through the back; because if the landing cost of petrol is more than what NNPC sales, then someone be footing the bill for difference in price.
While we understand the concerted efforts of the government to deal with the twin issues of exchange rate depreciation and removal of petrol subsidy, it appears they have not yielded the desired results.
An immediate visible problem is the threat by the independent petrol marketers to increase the pump price of petrol to N750/litre as the landing cost of petrol has allegedly risen to N651.75/per litre, higher than the N617 per litre fixed by the NNPCL,” ICAN noted.
Furthermore, the ICAN boss pointed out that the increase in petrol landing cost is blamed on the increase in the exchange rate. This, according to him, has led to the thinking that a strengthened naira because of the injection of the $3billion on the forex market will lead to a reduction in the fuel cost.
To this, he said: “While it may be too early to assess the impact of these interventions by the CBN and NNPCL, we are of the view that they appear insufficient to address the issues they are meant to address.
Undisputedly in Nigeria, crude oil export still accounts for more than 90 percent of the foreign exchange revenue which makes it the major source of generating foreign exchange.
However, with production falling to just 1.081 million barrels per day (bpd) in July 2023 compared to the quota of 1.8 million bpd set by the Organisation of Petroleum Exporting Countries (OPEC), our foreign exchange revenue is dwindling.
This is due in part to oil theft, production inefficiencies and lack of accountability in the industry, and as such our foreign exchange revenue and hence exchange rate will continue to be challenged.”