•Says economy improving
From Ndubuisi Orji, Abuja
Governor, Central Bank of Nigeria (CBN), Dr Yemi Cardoso, yesterday, identified increasing number of Nigerian students studying abroad, as well medical tourism, as part of factors responsible for the depreciating value of the naira.
Cardoso, who stated this when he appeared before the House of Representatives, said that foreign exchange demand for education and medicare amounted to almost $40billion in the last 10 years.
The CBN boss added that the foreign exchange crisis is worsened by the fact that the country currently depends on imports for 99 percent of cars and textiles. He explained that the exchange rate has increased owing to two major factors- a decline in the supply of US dollars and a surge in the demand.
On the state of the economy, Cardoso said positive outcomes are emerging. “For instance, the volume of transactions done at the stock exchange on Monday, February 5, 2023 is $844million. This was at the close of work Monday. NNPC has commenced the process of opening account with CBN in line with Mr President’s directive that the NNPC move crude oil sale proceeds to CBN.
Also appearing at the House of Representatives, the Finance Minister, Mr Olawale Edun, said that Nigeria is economically better than where it was on May 29, 2023.
“There is now a reduction in consumption of petrol by about 20 million litres. The government is confronting pipeline vandalism and oil production is rising. We now do 1.65 million barrels per day. More palliatives and more succour are coming to augment the rising cost of living. We are looking inward and focusing on domestic resource mobilization. The government has also brought budget deficit down. We are turning the corner”, Edun said.
In his submission, the Minister of Budget, Senator Atiku Bagudu, told the legislators that the government delivered a budget that now has capital expenditure that outweighs recurrent expenditure.
“We have a capital expenditure of 39% of the budget. There is also a marked increase in budgets for infrastructure, health and education which are the enablers of growth. There are many provisions in the budget to support agriculture.
Agric funding has increased. More funding for small-scale farmers so they can do better as individuals and also contribute better to national productivity.
“However, recent data shows a significant change. According to UNESCO’s Institute of Statistics, the number of Nigerian students abroad increased 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. Another report projects the number of Nigerian students studying abroad to exceed 100,000 by 2022. Additionally, the UK’s Higher Education Statistic Agency noted a 64% increase in Nigerian students studying in the country, rising from 13,020 in the 2019/2020 academic session to 21,305 by the 2020/2021 session.
“Given this data, it’s crucial to highlight that between 2010 and 2020, foreign education expenses amounted to a substantial $28.65 billion, as per the CBN’s publicly available balance of payments statistics. Similarly, medical treatment abroad has incurred around $11.01 billion in costs during the same period.
“Consequently, over the past decade, foreign exchange demand for education and healthcare has totaled nearly $40 billion. Notably, this amount surpasses the total current foreign exchange reserves of the CBN. Mitigating a significant portion of this demand could have resulted in a considerably stronger naira today”.
“Personal Travel Allowances have accounted for a total of US$58.7 billion during the same period. Notably, between January and September 2019, the CBN disbursed US$9.01 billion to Nigerians for personal foreign travel.
“Continuing on the topic of the demand for US Dollars, Nigeria’s annual imports, which require doilars for payment, amounted to US$16.65 billion in 1980. By 2014, the annual import expenditure had significantly surged to US$67.05 billion, although it gradually decreased to US$54.71 billion as of last year. Similarly, food imports escalated from US$2.63 billion in 1980 to US$14.84 billion in 2019.”
The CBN boss added that the foreign exchange crisis is worsen by the fact that the country presently depends on imports for 99 percent of cars and textiles.
According to him, “in 1980, more than 75 percent of the vehicles used in Nigeria were , domestically produced by companies like Volkswagen in Lagos, Peugeot in Kaduna, and others. Presently, over 99 percent of the cars driven are imported, necessitating dollar payments.
“Similarly, in 1980, the majority of the clothing worn was sourced from Nigerian textile mills in Funtua, Asaba, Kano, Lagos, and various other towns and cities. Today, nearly all the clothing worn is made from imported fabrics. 25. Given the substantial demand for education, healthcare, professional services, personal travel, and similar needs, the exchange rate is bound to face ongoing pressure. “
He added that “on the supply side of the exchange rate, to bolster the inflow of US Dollars into a country, the economy must ‘earn’ these dollars through exports, whether oil or non-oil, or by attracting foreign investments A robust economic foundation is essential to produce goods and services that the global market is willing to pay for in US Dollars. When such supply surpasses demand, the exchange rate appreciates, causing the price of the dollar to fall. Unfortunately, in Nigeria, the contrary has taken place.”
Earlier, the deputy speaker, Benjamin Kalu, who presided over yesterday’s plenary, said the kind of reforms envisaged by the parliament is such that address immediate needs and lay framework that can withstand future challenges.
Kalu said “We are at a pivotal moment where the decisions we make and the policies we implement will impact the lives of millions of Nigerians. The reforms we envisage should not only address the immediate needs but also lay a resilient and dynamic framework that can adapt to future challenges and opportunities.
“These measures should stimulate growth, foster innovation, and uplift the lives of every Nigerian. As we engage in this sectoral debate, let us remember that the eyes of our nation are upon us, looking with hope and expectation for outcomes that will reinforce the pillars of our economy, safeguard our fiscal integrity, and ensure a prosperous and inclusive future for all Nigerians.
“In the face of numerous daunting challenges facing our constituents, including hunger and worsening inflation, the role of the Parliament is not just of oversight but of active, visionary leadership. It is our responsibility to legislate, debate, and meticulously craft policies that will address these issues head-on.”
