In the first quarter of 2024, Nigerians spent $38.17 million on foreign education, representing an 83% decrease from the $218.87 million recorded during the same period last year, according to the Central Bank of Nigeria (CBN). Despite this significant year-on-year decline, there was a 54% increase from the $24.82 million spent in the fourth quarter of 2023.
The reduction in foreign exchange (FX) allocation for education abroad coincides with a notable drop in international student enrolment at universities in the United Kingdom. A survey by Universities UK, covering 73 institutions, revealed a 44% decrease in postgraduate enrolments compared to the previous year. This downturn poses financial challenges for these universities, which rely heavily on higher fees paid by international students.
Data from Enroly, used by approximately 60 universities, also indicates waning interest from international students, as evidenced by a significant drop in deposit payments.
CBN Governor Yemi Cardoso highlighted in February that foreign education and medical tourism expenditures are major contributors to Nigeria’s foreign exchange issues. Presenting to the House of Representatives, Cardoso noted that an alarming $40 billion has been spent on foreign education and healthcare, exacerbating the devaluation of the Naira.
While FX spending on education has decreased year-on-year, there has been a substantial increase in allocations for health-related and social services. The CBN reported a 122% rise in these expenditures from $1.04 million in Q1 2023 to $2.31 million in Q1 2024. Additionally, there was a 485% increase from $0.39 million in Q4 2023.
In a bid to manage these expenditures, the CBN announced in February plans to implement stringent measures on the purchase of foreign currencies through Bureau De Change (BDC) operators, focusing particularly on transactions for overseas education and medical expenses. These measures include an annual cap of $10,000 per customer for school fees, requiring transactions to be processed through the BDC’s domiciliary account with a Nigerian bank and supported by necessary documentation, such as a completed e-Form A, proof of admission, and an educational institution’s bill or invoice.
For medical expenses, the CBN is setting an annual limit of $5,000, with funds transferred directly from the BDC’s domiciliary account to the medical facility, accompanied by a referral letter from a recognized specialist or hospital in Nigeria, valid travel documents, and a detailed cost letter from an overseas medical professional.
These revised regulatory guidelines, approved in May 2024, aim to further limit FX spending on foreign education and medical tourism, helping to alleviate pressure on Nigeria’s foreign exchange market and support the stability of the Naira.
