Foreign education, medical tourism killing Naira – Cardoso
The House of Representatives Tuesday took on major state actors over the state of the nation’s economy, at the end of which Nigerians got the assurance that things would soon look up in no distant time.
At the sectoral policy debate organised by the Green Chamber to address the rising cost of living were; Minister of Finance and Coordinating Minister of the Economy Wale Edun, Minister of Budget and National Planning Atiku Bagudu, Governor Central Bank of Nigeria (CBN) Yemi Cardoso, and Chairman Federal Inland Revenue Service (FIRS) Zacch Adedeji.
It was also revealed how Nigerians spent over $40 billion to access education and healthcare abroad between 2010 and 2020, as well as $58.7 billion spent by government on Personal Travel Allowances during the same period.
‘Nation on road to disaster’
Addressing the gathering, Edun said: “Where we are as a nation is a much better place than we were in on May 29, 2023. As things improve, there will be further intervention on behalf of the vulnerable to assist in the cost of living. We have heard from the Governor of the CBN. He has talked about the importance of sustainability.
“Before the implementation of the 8-point agenda of the President began, we were in an unsustainable place in terms of the fiscal situation of Nigeria. We were on the road to economic disaster.”
Speaking further on the fiscal policy under the immediate past government, he said: “We had expenditure which was wasteful and unsustainable by way of the subsidy not just on fuel but the subsidy on foreign exchange which confused the incentive framework and people were chasing cheap dollars in order to make an instant profit.”
He added: “Likewise, there have been other benefits which have accrued as a result of the changes that have been made. However, inflation has increased, the cost of living has spiked, and right from the onset, Mr President is committed to making sure that the poorest and the most vulnerable are not left behind. The palliatives, the interventions have been rolled out.”
In all of this, the minister urged Nigerians to be hopeful. “Let us be confident, calm, and assured that Nigeria will change in terms of economic management and that there will be intervention in every sector.”
On his part, Bagudu said President Bola Ahmed Tinubu was fully committed to national development.
“What is happening in our country is obvious to someone visiting a construction site; we are very clear that we are on the right path and the challenges of the moment are being tackled.
“We are getting support from international partners, and they are all acknowledging the commendable steps that the president is taking. We have seen investments in the rail sector, the NNLG, and we assure you that we will overcome the challenges of the moment and sustain the economic growth as promised by the President,” Bagudu said.
Also speaking, CBN Governor Cardoso said: “The concern as per the cost of living is genuine, and the urgency of the matter is not lost on us at the CBN, and we are working tirelessly to bring up a lasting solution”, adding that inflation was expected to decline in 2024.
According to him, the challenges of the exchange rate had been tackled, adding that they were fueled by speculation, increased forex demand, increased capital outflow and excess liquidity.
Tracing the genesis of the current fiscal challenge, he said Nigerians spent over $40 billion to access education and healthcare abroad between 2010 and 2020, the amount Cardoso said, was more than the nation’s foreign reserve at the moment.
According to him, the high number of Nigerians in foreign schools and medical tourism were two of the major factors that put the naira under pressure.
The CBN governor, however, clarified that the disclosure of this huge sum expended on foreign education and medical tourism, was not targeted at anyone, but rather, to explain the factors putting the naira under pressure.
He said the demand for dollars by these students and those travelling for medicals abroad was hurting the naira, noting that the number of Nigerian students schooling outside the country had increased tremendously and estimated to be above 100,000 students.
Cardoso said: “Another report projects the number of Nigerian students studying abroad to exceed 100,000 by 2022. Given this data, it’s crucial to highlight that between 2010 and 2020, foreign education expenses amounted to a substantial US$28.65 billion, as per the CBNs’ publicly available Balance of Payments Statistics.
Similarly, medical treatment abroad has incurred around US$11.01 billion in costs during the same period. Consequently, over the past decade, foreign exchange demand for education and healthcare has totalled nearly US$40 billion.
“Notably, this amount surpasses the total current foreign exchange reserves of the CBN. Mitigating a significant portion of this demand could have resulted in a considerably stronger Naira today.”
The CBN governor also said the government spent $58.7 billion on Personal Travel Allowances within the same period and disbursed an additional $9.01 billion to Nigerians for personal foreign travel between January and September 2019.
Also taking his turn, the FIRS head, Mr Adedeji, said the Service was not a revenue-generating agency but a collection body, stressing that the body was doing a lot to increase the nation’s revenue base.
And as a response to the various submissions made by the major economic policy formulators at the session, the lawmakers made some interventions and sought some clarifications.
And in a response to Ali Madaki (NNPP, Kano) over the controversial relocation of a CBN department to Lagos state, Cardoso said the decision was for operational efficiency, and not political as being speculated in some quarters.
Also on the issue imported 43 items banned, raised by Sada Soli (APC, Katisna), he replied: “CBN does not have a responsibility to determine who imports or not, for that reason we want to ensure that we abide by our remit.
“The issue is not for us to determine. That is a fiscal issue; it has nothing to do with us. We are going back to do what we are supposed to be doing.”
Earlier in his opening remarks, Deputy Speaker of the House, Hon. Benjamin Kalu, said it was time to recognise the urgency and importance of the engagement.
“We must also confront the stark realities of the economic, fiscal, and revenue challenges that our beloved nation, Nigeria, is currently facing.
“In the face of global economic shifts and domestic challenges, it is clear that robust reform measures are not just beneficial but imperative. We are at a pivotal moment where the decisions we make and the policies we implement will impact the lives of millions of Nigerians,” he stated.