Nigerians’ spending on foreign education, healthcare and personal travels gulped over $98bn in 10 years, according to the Central Bank of Nigeria data.

The CBN Governor, Olayemi Cardoso, who made the disclosure while addressing the House of Representatives on Tuesday, was responding to an inquiry by the lawmakers on the factors behind the rapid depreciation of the naira in the last few weeks.

He spoke against the backdrop of the central bank’s battle to stabilise the exchange rate amid dollar shortage.

The lawmakers had invited Cardoso and other economic managers following last week’s plunge of the naira from about 900/dollar to over 1,400/dollar at the official market.

Members of the organised private sector and Nigerians have raised concerns over development, saying it would lead to more hardships and job losses.

However, speaking with the lawmakers, Cardoso argued that the foreign exchange market was facing increased demand pressures, causing a continuous decline in the value of the naira.

According to him, factors contributing to this situation include speculative forex demand, inadequate forex due to low remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities.

To address exchange rate volatility, he said a comprehensive strategy had been initiated to enhance liquidity in the FX markets.

This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau De Change operators, enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility cap.

Cardoso revealed that between 201O and 2020, foreign education expenses amounted to a substantial $28.65bn, as per the CBN’S publicly available Balance of Payments Statistics.

Similarly, medical treatment abroad incurred around $11.01bn in costs during the same period. Within the same period, Personal Travel Allowances accounted for a total of $58.7bn.

Cumulatively, Nigerians spent about $98bn on foreign trips, medical tourism and overseas education, a figure the CBN governor said was more than the total foreign exchange reserves of the central bank.

Further compounding the situation, according to Cardoso has been the consistent decline in Nigeria’s export earnings against the backdrop of increasing imports.

In contextualising the problem, Cardoso pointed out that Nigeria’s annual imports, which require dollars for payment, amounted to $16.65bn in 1980.

By 2014, the annual imports had significantly surged to $67.05bn, although it gradually decreased to $54.71bn as of last year.

Similarly, food imports escalated from $2.63bn in 1980 to $14.84bn in 2019.

Cardoso said, “In 1980, our import expenditure stood at $16.65bn, while our exports amounted to $25.97bn, resulting in a surplus of $9.32bn. Thus, during that year, we managed to fulfil the demand for dollars from our existing supply and still had over $9bn in surplus. In such a situation, the exchange rate (the value of the US Dollar) would not increase because, similar to any commodity, its supply surpassed its demand.”

Also contributing to the free fall of the naira, per the apex bank, has been a significant decline in Nigeria’s oil revenues.

“Moreover, from 2003 to 2013, we experienced a surplus of $331.73bn in the economy, with oil exports alone contributing over $798bn. This surplus of dollars would typically stabilize the exchange rate, leading to a “strong” naira.

“ Regrettably, over the past 12 years, oil exports, constituting over 90 per cent of our foreign exchange earnings, have declined from $93.89bn in 2011 to US$31.4bn in 2020,” Cardoso added, while noting that monetary policy actions were sometimes inhibited by transmission lags.

“It also seems that the task of stabilising the exchange rate, while an official mandate of the CBN, would necessitate efforts beyond the bank itself and indeed to an attitudinal change of all our citizens,” he added.