NIGERIA: Weak currency hits students abroad
Commercial banks have received fewer applications from parents to process tuition fees for students abroad. An official at the Central Bank of Nigeria who did not wish to be named, said that last year more fee applications had been processed by the central bank on behalf of commercial banks.
For the past eight months there has been a close correlation between the drop in the number of tuition fee applications for Nigerian students abroad and the weak local currency - the Naira - along with a gradual decline in the country's foreign currency holdings.
Nkiru Okechukwu, an international economics expert, said the central bank had to prudently manage foreign reserves in its possession. "There are competing demands for these scare resources. Industries must import machines and raw materials. Refined petroleum products must be imported," Okechukwu said. Paying the tuition fees of students abroad was a relatively low priority.
The value of the Naira has declined because of lower international demand for crude oil, Nigeria's economic mainstay, Okechukwu explained. A year ago the country exported about two million barrels of crude oil a day and the barrel was selling for around US$147.
At that time Nigerian's foreign reserve was $67 billion. The story is different today: outgoing central bank governor, Chuwukuma Soludo, recently admitted that foreign reserves had dwindled from $48 billion to $ 45 billion in the last two months.
These factors, along with job insecurity, have made remitting money for students abroad more and more difficult. Traditionally, Nigerian middle class parents have sent their children to study abroad and those who could afford it preferred to send them to Britain, North America or other Commonwealth countries. This is no longer the case.
Apart from the weak local currency and shortfall in foreign reserves, closure of factories and businesses have led to retrenchment of managers - members of the middle class - as well as ordinary workers. Many parents who dreamed of sending their children to study overseas have changed their minds.
Bayo Akin, an engineer in a manufacturing company in Lagos, said he simply could not afford to send his children abroad - and was not even sure he would keep his job. "The company I work for has informed my colleagues and myself that our parent company may fold because of the current international financial and economic crisis. Consumers are not buying our products," Akin said.
Even a special scheme to assist Nigerian students in the UK is faltering. A Nigerian financial institution, Bank PHB, established a loan scheme to assist Nigerian students in Britain, called the UK Education Scheme.
The scheme takes care of fees, accommodation and living costs for the duration of the beneficiary's course. But to benefit from the scheme, each student must open what the bank calls an education account with an initial deposit of about 50% of the fees stipulated by student's chosen university.
Nduneche Ezurike, an official at the bank, said: "It is a product targeted at a particular market as a solution to a particular need." The problem is that the market is no longer there.
A bank official, who did not want to be named, said the scheme had not attracted enough customers. "When we conceived of the loan scheme, some few years ago, we targeted professionals whose earning power was a source of envy. We felt that these professionals, who were in favour of a British university education, could afford to send their kids to UK. Then came the recession. And our potential customers fizzled out."
A source close to the National University Commission revealed that an (undisclosed) number of Nigerian students in the UK had been making frantic enquiries whether they could apply for inter-university transfer to Nigerian universities so they could continue their studies at home.
Two main categories of students were involved, the source said: students whose parents had lost their jobs and wanted to relocate with their families back in Nigeria, and parents who were no longer able to remit money to children abroad because they had been retrenched or because of the depreciation of the Naira.
Like camels marooned in a desert and squabbling for water at an oasis, returning students will have to compete hard with other Nigerians for limited spaces in Nigerian universities. A few weeks ago, some 1.5 million Nigerians sat for common entrance tests into 95 universities whose carrying capacity, according to the NUC, is about 170,000 students.
The battle for admission into the next academic session promises to be stiff for returning and home-based candidates.