In February 2022, the Central Bank of Nigeria launched the RT200 FX initiative as part of a US$200 billion foreign exchange repatriation program. Mainly targeting non-oil exports, Nigerian companies can apply for a rebate if foreign exchange earnings are repatriated to increase the liquidity of funds in the West African country.
With national elections looming in early 2023, the current administration is working to spur greater economic growth and job creation, including by stabilizing foreign exchange inflows. The aim of the new regulations is to considerably reduce the pressure on the exchange rate.
Students wishing to study abroad can currently access CBN’s preferential rate window and redeem up to $15,000 per semester for educational purposes. However, this is only available if the CBN has sufficient reserves.
Funds repatriated from RT200 are expected to replace the current refreshed CBN window over the next five years, but in the short term, students and agents are reporting longer delays and speculation is mounting that the refreshed CBN window will potentially close. window.
Bukky Awofisayo, Africa Regional Manager at Admission Educationexplained the difficult situation the students are facing.
“Waiting [for CBN approval] becomes frustrating and students have a deadline to pay the first payment,” she said.
“We need more resources, more capabilities from CBN”
“Some students are looking for support from family and friends abroad, but others are still waiting because it’s the only option they have and because [they need] reduced fares, they can’t increase their spending [any further].
“At the end of the day, the market is thriving, it’s growing. We need more resources, more capacities [from the CBN] to help students who wish to study abroad. Remember that Nigeria is a very price sensitive market,” Awofisayo continued.
Many students are forced to pay higher rates to access currencies from private payment service providers or on the black market. These fares are driven by demand, which is currently higher than ever due to inflation, and can be up to 30% higher than CBN’s published fares.
As a result, Nigerian students are advised to allow more time for financial transactions and universities may be forced to adopt flexible policies to allow students to start on time. The British High Commission in Nigeria is currently advising students that visa applications take a minimum of five weeks to process before peak season.
“The Nigerian market is a last minute dot-com market but now it’s not the same, we have to talk about courses starting in 2023,” explained Rose Omonubi, Executive Director of nubi education and a member of the Association of UK Certified Education Agents of Nigeria.
“We have a restrictive exchange rate in Nigeria and it is [a problem]. The exchange rate is very volatile. It’s very high now, and it’s something many parents consider when making decisions,” Omunubi continued.
“Once the CBN has approved you, there is no difficulty [in paying], but it takes a long time now, up to a month and it was two days ago. It’s long but it’s doable. We tell our students to start the application process on time so they can get their fees paid.
Private premium rates can still be attractive to those who can afford them, especially if they facilitate timely tuition payment, accommodation booking and visa application.
Students needing access to sums above the capped CBN of $60,000 per year will therefore need to source uncapped private currencies. Tuition fees for boarding schools abroad are also exempt from the reduced CBN rate, which means that families must exchange and transfer funds elsewhere.
Tosin Adebisi, a independent advisor for long live africa who specializes in public relations and internationalization strategies for Nigeria, explained the situation in more detail.
“Statutory payments to overseas schools are a nagging issue for students coming from Nigeria”
“Last year over 30,000 UK study visas were issued to Nigerian students and we continue to see a record number of postgraduate applications this year. However, statutory payments to overseas schools are a persistent problem for students coming from Nigeria, and the sooner it is resolved, the better,” he noted.
“Perhaps this impending crisis will facilitate faster, safer and more competitive alternatives outside of CBN prime rates so that many students are not affected due to currency scarcity,” Adebisi continued. “Ultimately, stakeholders operating on the continent must also come at this time to see how they can collaborate and innovate around the challenge while engaging with CBN to achieve favorable policies.”
International bank transfers from Nigeria have a longer processing time than other countries with an automatic completion date of 14 business days or three weeks. Some banks in Nigeria already require a 30-day period to respond to applications from students who have completed the appropriate CBN application forms.
With approximately two months left before the start of the new academic year for universities in Europe and North America, time is running out for students who are still awaiting CBN approval and may force many students to decide whether to trade higher parallel market rates or defer until January 2023.