In February 2022, the Central Bank of Nigeria launched the RT200 FX initiative as part of a US$200 billion foreign exchange repatriation program. Targeting mainly non-oil exports, Nigerian businesses can claim a rebate if foreign exchange proceeds are repatriated to boost liquidity of funds in the West African country.
With a national election looming in early 2023, the current administration is pushing hard to stimulate greater economic growth and job creation including stabilising FX inflows. The aim of the new regulations is to dramatically reduce pressure on the exchange rate.
Students seeking to study abroad can currently access the CBN’s concessionary rate window and exchange up to $15,000 per semester for educational purposes. However this is only available if the CBN has sufficient reserves.
RT200 repatriated funds are set to replace the current discounted CBN window in the next five years, but in the short term, students and agents are reporting longer delays and speculation has been increasing about the window discounted window potentially closing.
Bukky Awofisayo, African regional head at Intake Education, explained the difficult situation students are facing.
“The wait [for CBN approval] is getting frustrating and the students have a deadline to meet the first payment,” she said.
“We need more resources, more capacity from the CBN”
“Some students are seeking family and friends support overseas but others are still waiting, because that’s the only option they have and because [they need] the discounted rates, they can’t expand their expenses [any further].
“At the end of the day, the market is thriving, it’s growing. We need more resources, more capacity [from the CBN] to assist the students who are looking to study overseas. Don’t forget that Nigeria is a very price sensitive market,” Awofisayo continued.
Many students are forced to pay higher rates to access FX from private payment service providers or on the black market. These rates are dictated by demand, which is currently higher than ever due to inflation, and can be 30% above the published CBN rates.
As a consequence, Nigerian students are being advised to allow extra time for financial transactions and universities may be forced to adopt flexible policies to enable students to start on time. The British High Commission in Nigeria is currently advising students that visa applications are taking a minimum of five weeks to process going into the peak season.
“The Nigerian market is a last-minute-dot-com market but now it’s not the same, we are having to talk about courses that start in 2023,” explained Rose Omonubi, executive director of Nubi Education and member of 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 is something that many parents are looking at when making decisions,” Omunubi continued.
“Once the CBN has approved you, there is no difficulty [in paying], but it is taking a long time now, up to a month and it used to be two days. It’s taking a long time but it is feasible. 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 it facilitates timely payment of tuition fees, accommodation booking and visa application.
Students needing to access sums greater than the CBN capped $60,000 a year will need to source uncapped private FX as a consequence. Tuition fees for overseas boarding schools are also exempt from the CBN discounted rate meaning families have to exchange and transfer funds elsewhere.
Tosin Adebisi, an independent consultant for Vive Africa which specialises in PR and internationalisation strategies for Nigeria, explained the situation further.
“Statutory payments to schools abroad is 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 record numbers of postgraduate applications this year. However, statutory payments to schools abroad is a nagging issue for students coming from Nigeria, and the quicker it is solved the better,” he noted.
“Perhaps this impending crisis will facilitate faster, safer, and more competitive alternatives outside of CBN concessionary rates so that many students are not adversely impacted due to foreign currency scarcity,” Adebisi continued. “Ultimately, stakeholders operating on the continent also need to come in at this time to see how they can collaborate and innovate around the challenge while engaging with the CBN in order to get favourable 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 fulfil requests from students who have completed the appropriate CBN request forms.
With approximately two months left until the start of the new academic year for universities in Europe and North America, time is tight for those students still waiting for CBN approval and may force many students into deciding to choose to trade in higher parallel market rates or defer until January 2023.