Nigerian parents who reside in the country but who have children studying in foreign schools face challenging times as they struggle to raise money for the foreign exchange to fund their children’s education due to scarce foreign currencies amidst rising rates. Some of the parents who spoke to news correspondents on the development, expressed their frustration at the falling value of the naira, which they had to use to purchase foreign currencies to pay the tuition of their children as well as other associated costs and living costs.
At the parallel market on August 26, 2023, the naira traded at 915 against the US dollar, while the pound sterling was sold for N1,180. At the Investors and Exporters’ forex window, the Naira commenced trading at N773.29 per dollar on Friday and hit a high of N799.9 per dollar before closing at N778.42 per dollar. The currency lost by 0.87 percent compared to the N771.69 that it exchanged for the dollar on Thursday.
Floating of the naira stabilizes the naira but is non-subsidized.
On June 14, 2023 – about two weeks after the presidential inauguration – the newly-elected president of Nigeria, Bola Tinubu, effectively let the naira “float.” A floating currency refers to one whose price is determined by supply and demand factors in relation to other currencies. A floating exchange rate is different to a fixed – or pegged – exchange rate, which is entirely determined by the government of the currency in question. When Tinubu implemented this policy, he consequently let go of the official exchange rate determined by the Central Bank of Nigeria (CBN).
As a result, the CBN ceased to subsidize the US dollar for importers as well as students studying abroad. Now, everybody has to source their forex from operators of Bureau De Change (BDC) or at a non-subsidized rate from banks, as commercial banks had usually told customers that forex was unavailable. This had happened to a Lagos businesswoman who had two children studying in the United States. According to her, sourcing forex to pay for her children’s fees and meet other needs was nightmarish before the floating of the naira.
Several parents recount their experiences with sourcing foreign exchange.
Before now, she said that she would have to apply for the purchase of dollars three months ahead. But earlier this year, when she knew that she had to renew her children’s fees after summer, she applied for forex, and up until May, the bank kept giving her excuses. Although she had enough naira in her account, the officials in charge told her to keep checking with the bank and claimed that some people were in the queue before her.
After a few weeks and her children were being harassed by the school, she had no choice but to use a BDC via a peer-to-peer transaction. She said that the rate was expensive, but she had no other option. However, she said that things had stabilized with the floating of the currency. Similarly, the father of a medical student in the US said that he always made sure he applied for forex long before he would need to pay for his son’s fees.
Father didn’t need to patronize BDC anymore.
He said that it was better for the money to be in the school’s account than for the school to send his son away. He said that foreign universities would not listen to any complaint or understand the glitches Nigerians face. Commenting on how he used to get the forex before the floating of the naira, he said, “I simply patronized Bureau De Change operators.” He said that they were more reliable and would demand more money, but you were sure to get the forex remitted into your account in due time.