An advisory of a university based in Manchester, the United Kingdom, urging their students to pay up their outstanding tuition fees before the Central Bank of Nigeria (CBN) stops its Form A discounted rate has sparked a reaction from Nigeria’s apex bank.
The UK institution was said to have issued an advisory urging students whose tuition was paid from Nigeria to pay up as much portion of their outstanding fees as possible, through Flywire, prior to December 31, 2022, based on claims that the CBN planned to withdraw the “Form A” discounted rate in order to have more forex within the Nigerian economy.
Before I analyze what the CBN is saying….
What is Form A Discounted Rate?
Form A in relation to foreign exchange allows customers to purchase USD, EUR, and other international currencies at the official rate (usually called PTA or CBN rate) or interbank rate.
This privilege enables legitimate foreign students, importers, those who seek foreign medical attention, and those who want to make payment for invisible services to access forex at the official rate which is ‘cheaper’ and more ‘affordable’ than the black market rate.
The CBN rate at the time of this writing was NGN422/USD while it’s NGN609/USD at the black market rate, that’s a difference of NGN187, that’s huge.
The NGN422/USD is the Form A discount rate which is specifically designed by Nigeria’s apex bank for legitimate people who make payments in FX for foreign services.
In today’s market, it’s called Business Travel Allowance or Personal Travel Allowance exchange rate which is presently NGN422/USD and NGN516.78/GBP, and NGN446.31/EUR
Is CBN Planning to stop the FX discounted rate privilege?
Before and during the primaries of two major political parties in Nigeria – All Progressive Congress (APC) and the People’s Democratic Party (PDP) – Nigerians and the rest of the world saw how dollars were doled out thousands of dollars, Pounds and EUR to buy votes.
What followed thereafter was unimaginable: those who wanted to pay overseas tuition fees had their applications delayed for weeks or more than a month by the CBN.
Some of them had to approach the black market to meet their forex demands. It was reported that the heavyweight politicians caused the forex scarcity at the time.
If primaries of political parties could trigger scarcity of USD, EUR and others, by the end of 2022 – two months before Nigeria’s presidential election scheduled for February 25, 2023 – politicians would have bought up the entire CBN’s Forex vault.
Is the advisory real?
Officially, there is no memo to the effect that the CBN is planning to stop the Form A discounted rate, but technically, there is going to be a scarcity of forex as Nigerian approach general elections.
Vote buying is real in Nigeria. While the ruling APC is warming up to retain power, by all means, the main opposition PDP is tired of being called an opposition.
They’re desperate to return to the seat they left on May 29, 2015. Expectedly, it’s going to be Dollar for Dollar because FX is easier to carry than the naira because of the value amount involved.
The Manchester-based institution which issued an advisory may definitely not be wrong. They must have based their advisory on precedence.
And it’s important to remind ourselves that in February 2022, Godwin Emfiele, the 10th indigenous CBN governor hinted that the apex bank would stop the sales of forex to commercial banks in Nigeria.
At least more than 70% of foreign students who applied for foreign tuition fees on the CBN’s platform for FX application complained of a delay on one of our earlier posts of no response from the authority managing the platform.
CBN calls the advisory misleading
In its usual manner, on Wednesday, June 22, 2022, CBN reacted with a statement through its Director, Corporate Communications Department, Mr Osita Nwanisobi, saying it is misleading, false, and misleading.
The reaction of the apex bank is coming amid a shortage of forex and rationing of US dollars, Pounds, and EUR by the CBN which is putting the admission of some Nigerian students to foreign institutions in jeopardy.
Even while the delay in honouring forex applications remains unaddressed by the authority, whose institutions here have been grounded for their failure to meet the signed agreements with university teachers close to a session, the CBN is quick to debunk an advisory from a foreign institution.
One of the reasons Nigerians prefer foreign institutions is the incessant strike by the members of the Academic Staff Union of Universities (ASUU) and the archaic curriculum system that doesn’t align with what’s obtainable in the labour market.
The statement read:
“While also reminding all stakeholders that front-loading (for both visible goods and Invisibles) was contrary to the provisions of extant regulations, the CBN spokesman assured that the Bank will continue to meet all legitimate demands for foreign exchange.”@centralbankng on Instagram
Avoiding delay in forex application for Form A discounted rate
Nigeria’s apex bank stated that the best way to avoid long delays is for “authorised dealers to ensure that payments for tuition outside Nigeria are made no earlier than 30 days prior to due date”.
Since the trading monitoring system was opened by the CBN for Nigerian students in foreign students to ease the stress of forex applications and costlier black market rate, students complained that there is no one to attend to their complaints