Friday 19 February 2016


THE foreign exchange crisis rocking Nigeria’s economy entered another phase last week when the Bankers Committee rose from its meeting in Abuja, Thursday, with a resolution to shut supply windows to medical tourists and students studying outside Nigeria.

The committee made up of the Central Bank of Nigeria (CBN) and chief executives of 23 Deposit Money Banks had at that meeting agreed that rather than continue to finance Invisible items where students and medical tourist fall, and which accounted for about 15 per cent of total forex allocation last year, it would now be routed to support the real sector. This means that Nigerians wishing to go overseas for medical treatment as well as those hoping to study overseas will now have to go to the parallel market to source foreign currency at N391 to a dollar.

But while the latest policy could actually save Nigeria more in foreign exchange, there is strong apprehension in several quarters that the country would suffer huge human and material losses, owing to its deficient infrastructure in the two key sectors.

For instance, in the face of poor medical facilities in the country, the implication is that death toll from diseases that cannot be treated local would rise astronomically in the days ahead.

In the education sector, the low quality of graduates of Nigeria tertiary institutions which often forced employers of labour to go head-hunting for Nigerian students trained abroad would now worsen. But with this new Bankers Committee policy, only fewer Nigerians with the resources to buy foreign currency at N391 to the dollar can continue to enjoy such privileges.

Speaking at the end of the Bankers Committee meeting, in Abuja, last week, the Director, Banking Supervision of Central Bank of Nigeria (CBN), Mrs Tokumbo Martins, stated that banks have resolved that most of the foreign exchange demands would now be given to develop the real sector.

Martins said that although the decision will be painful, it was a sacrifice Nigerians will have to go through, in the short term, to have a long term development of Nigeria and the economy.

“You know it is something that affects all of us and I think that the watchword is belt-tightening. It is the pain we may need to go through today, short term, so that there will be long term development in the country whether it is infrastructure or manufacturing. So, the question is how we can prevent or reduce the crowding out of the real sector where there is increase in demand on the invisible. It is something that CBN is looking at and is something the Bankers Committee is looking at. If you think about it, the pressure on forex now —from school fees abroad is significant. At what point should we begin to look inwards? The pressure on medicals is significant. At what point should we begin to look inwards? As Nigerians, we also need to be patriotic in terms of our sentiments. We need to think about what do and have to sacrifice today for the long-term benefit of our country and the economy?” she asked

Also, in his remarks, the Managing Director of Access Bank, Mr Herbert Nwigwe, explained that the banks have decided to channel such forex to the real sector because those demands tend to crowd out demands to import raw materials and to support industries.

He said, “the problem with that is the fact that it tends to crowd out the critical foreign exchange that should be used in the real sector to import raw materials, to support industries, to encourage employment. So, there is a question around how far we are going to allow this to continue. Shouldn’t we redirect these redirect these resources towards the real sector as we should?”

Also, quoting data from the Central Bank of Nigeria (CBN) to support his assertion at a seminar on devaluation last week in Lagos, Edo State Governor, Mr. Adams Oshiomhole, who was the keynote speaker at the event, blamed the current foreign exchange (forex) restriction on demand and supply imbalance.

“I understand that our total receipts from forex inflow is less than $1 billion- about $700 million-and outflow stands at $4billion per month. So if you earn less than $1billion and your outflow remains at about $4billion, obviously, in the next one year, our foreign reserves will be zero.

The CBN, had in a circular, released on June, 23, 2015, prohibited about 41 items from accessing forex through the official window, a development the nation’s manufacturers insist was in bad faith.

But the apex bank had hinged its policy decision on efforts at conserving foreign reserves as well as facilitating the resuscitation of domestic industries to improve employment generation.

Placing a ban or restriction on an area where the government has been unable to prove that it has adequate facilities to provide quality services to Nigerians is contestable, former Chairman, Manufacturers Association of Nigeria (MAN), Apapa Branch, Mr. Joseph Aluya,told Daily Sun at the weekend.

‘‘If the restrictions are in areas where the country is self sufficiency, then one would agree with the position of the CBN. But if they are in areas where the country is lagging behind, then such pronouncements could be counterproductive.

The development is affecting a lot of people. It is not an isolated case. Among 100 people, you find more than 20 having kids overseas. This also applies to people who need medical attention overseas. Would it be fair to deny sick Nigerians the privilege of good medicare and allow them to die in defense of the Naira? For me, it is a dicey situation,’ ’he maintained.

Aluya insisted that in a situation where a particular need is lacking in-country, the citizens or businesses operating in such environment, would have no choice than to go outside the country to source for such needs.

Chairman, Senate Committee on Tertiary Institution and Tertiary Education Trust Fund, Senator Binta Masi, lamented over the capital flight of $2 billion spent annually on education abroad.

Masi, who frowned at Nigerians travelling to other African countries to get educated, said Nigeria was getting it right on the initiative of the research and education network.

Similarly, the Nigerian Medical Association (NMA), estimates that Nigerians spend about $500 million annually, on medical tourism while about 5,000 patients travel to India monthly for treatment in a rising phenomenon called medical tourism.

Medical tourism’ is originally a term used to qualify a patient’s movement from highly developed nations to other areas of the world to get medical treatment, usually at a lower cost.

More recently, however, the term is being generally used to mean every form of travel from one country to another in search of medical help, which can also simply be called ‘medical travel’. It also includes traveling to countries where treatments for particular conditions are better understood.

According to a former President of Nigeria Medical Association (NMA), Dr. Osahon Enabulele, the association had been encouraging public office holders to patronise Nigerian hospitals and doctors rather than going overseas for minor ailments that could be handled locally.

“In fact, things have gone so bad in the country that Nigerians travel abroad to conduct medical check-up on simple matters such as blood pressure,” he said.

According to the NMA, Nigeria has the resources and manpower to tackle most ailments ravaging citizens within the country, but regretted that government officials who are expected to patronise health facilities at home are now the ones flying out to India, USA and Europe for medical attention, thereby putting more pressure on the country’s reserves.

It says the country is suffering in the midst of plenty and needs laws to address issues of medical tourism. A medical board that would screen public office holders to ascertain their eligibility for medical treatment abroad is necessary particularly where public funds are involved.

The association lamented the staggering amount of money Nigeria is losing to foreign countries (especially India) on medical tourism.

According to reports, U.S and Great Britain before now accounted for greater number of Nigerians seeking foreign healthcare but Indian has now outperformed these countries in recent years. It is estimated that 95 per cent of Nigerians traveling abroad for medical treatment go to India.

The NMA said India rakes in well over N40 billion, which is about 50 per cent of annual medical tourism bill. (Over 5000 Nigerians travel to India, with each of them spending between $20,000 and $40,000 on the average a year.) India was also projected to have raked in a whopping $2 billion from global medical tourism valued at $20billion a year.

In a recent interview, former Akwa Ibom State Governor, Mr. Godswill Akpabio, lamented the loss of several billions of naira in foreign exchange to health tourism as well as thousands of jobs amid growing restiveness among millions of unemployed youths in the country.

“We lose billions of dollars every year to medical trips abroad. We have also lost a lot of people, not because we don’t have the expertise in the country,’’ he had said.

Meanwhile, the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said it was high time the CBN came up with a forex policy that would address the crisis confronting the nation.

In an economic note released on Thursday, Rewane said, “Nigerians are perplexed at the endless slide of their currency, now trading at N391/$, the lowest point ever.

“This is happening even when the oil price is up at $31pb. The debate as to whether to devalue the naira is not the real issue. The discourse should be whether we need an exchange rate policy or not. The absence of a policy is a recipe for economic anarchy and a race to the bottom.”

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