Tag: Foreign exchange

The difficulty in sourcing for foreign exchange (forex) is giving parents with children studying abroad goose bumps.  KOFOWOROLA BELO-OSAGIE and OLUWATOYIN ADELEYE examine the challenges parents, students and foreign admissions firms are facing because of the economic recession.

Sourcing for foreign exchange (Forex) has never been this difficult.  Industrialists, travellers, and parents with children schooling abroad are having a hard time getting forex.  The economic downturn has worsened the problem. Gone are the days when paying school fees was just a matter of applying to banks for forex at inter-bank rate.  Now, parents are forced to go to the parallel market (popularly known as black market) to buy dollars and other currencies at exorbitant rates.

The dollar moved from less than N199/dollar in the last quarter of last year at interbank rate to N278 in June, N313 in August, and N310 last Tuesday.  However, in the black market, there is an additional cost of over N100. While it was N310 at the inter-bank rate last Tuesday, black market was as high as N470. Unfortunately, it is difficult to buy foreign currency at inter-bank rate because of scarcity.  Herein lies the problem of parents who have to fund their children’s education abroad.

Mr Kenneth Ilalokhoin, CEO of Global Networks Educational Services Company, which helps to place students in schools in the United Kingdom, United States, Canada, Australia and other parts of Europe, said banks hardly honour requests for foreign currency at inter-bank rates.

“Students have been facing challenges. Before now, students can apply to banks to have tuition fees remitted to schools abroad. Not anymore. The few banks that are doing it now take forever to remit to the schools.  Some students have to resort to the parallel market to pay fees. They fund their domiciliary accounts and the banks remit on their behalf. If you have a student in the second or third year, you don’t want to break their education so you are forced to go to the parallel market,” he said.

A parent, who prefers not to be named, corroborated Ilalokhoin.  He said efforts to get dollars from bank to fund his daughter’s education in Canada were futile. “They never give you,” he said. He said he has had to resort to creative means to pay her fees.

“I have practically emptied my account here. The black market rate is crazy.  To get around it, I have a lot of friends abroad who usually have one or two things to do in Nigeria. They reach me and I help them do what they have to do in local currency. When they repay me, they remit in dollars and I send to my daughter to settle her fees,” he said.

The falling value of the naira forced Mrs Mildred Okafor (not real names) and her husband to rethink sending their daughter to Canada.  With the foundation fees costing up to $25,000, they are considering allowing her to complete her first degree at the Covenant University, Ota, where she has been offered admission to study Engineering.

“It is outrageous; and she is the first child.  We are being advised to allow her study here for the first degree then save towards her masters,” she said.

A Nigerian student, Jude Osagie, who has applied for postgraduate studies in Canada, complained of the high dollar rate.

He said: “I just applied to a medical school in Canada for my masters but I really pity my father who is paying the fees. He has been saving for the fees for so long and I know he has deprived himself of a lot of luxury just so that my siblings and I can have this kind of education. My fees are about 20,000 CAD (Canadian dollar) which translates to about N6.6 million. As at two years ago, when I was an undergraduate student in Ukraine, that same amount was N2.7 million and even then, some of my classmates had to withdraw from school due to expenses. And the exchange rate was still better then. So I can imagine what people are going through now with the current rate. It is really bad.”

Another parent, who runs an educational services firm in Nigeria and has a son studying in the United Kingdom, said she and her husband had to pay fees at the exorbitant black market rate.  She said they were sustaining his education because it is their priority.

“I agree that it is impossible to get foreign exchange at inter-bank rate.  The black market is the only place to get it.  We survive by simply making school fees the priority.  I just came back and I changed pounds for N560. I couldn’t buy anything,” she said.

With foresight, another parent said her family was able to escape the foreign exchange fluctuation.  However, she admitted many parents were caught unawares and had to withdraw their wards.

“We had no problem because we had foreseen the situation and paid our daughter’s fees on time.  But I know parents are not having it easy.  People are withdrawing their children abroad because of the problem,” she said.

Changing the Naira into other currencies presently is not a choice that Dr Ibilola Amao says she makes.  To fund her children’s education abroad, the Principal Partner, Lonadek Oil and Gas, says she now exports value that allows her to be paid in foreign currency.

She counseled parents to become creative.

“Look for products and services to export.  I cannot afford to change Naira into forex.  But I have what has value abroad.  We need to think and work outside the box.  It is time to be creative,” she said.

Agencies that place students abroad are feeling the pinch as many parents are rethinking sending their children abroad because of affordability.

The Administration Officer, GVC Travels and Tours, Miss Olayinka Akinkunmi, said patronage has reduced ‘drastically’ this year for studies. On the contrary, she said students are beginning to explore visa options that allow them to work.

“The recession is affecting us from the angle of exchange rate. The exchange rate has doubled within the last one year, making it difficult for many students from Nigeria to pay their tuition fees and cover their living expenses. Many have been discouraged to pursue their career abroad. Even the few who can afford the exchange rate find it hard to get normal price from their banks due to low circulation of dollars from CBN to various banks.

“The number of applicants we have had in the past one year has reduced drastically because people cannot afford the fees any more. Canadian dollar used to be N154 some months ago is now N234 hence people are discouraged. They prefer to go for visa packages that will give them work abroad instead of study,” she said.

Mr Asukwo Ntekim, Business Development Manager, Preparation for Life Ltd Education Consultants, another foreign education placement firm, said the recession has affected school choices of students.

“The exchange rate particularly has made things very difficult for some families who have the ambition to send their wards abroad. Definitely, there has been some reduction in the influx of applicants with us compared to about two years ago when the exchange rate was much cheaper.

“The issue is that some parents who harboured such ambition usually have a budget to work with. So even though the school fees for the schools they plan to apply for their wards remain the same, the exchange rate has made it almost triple the amount when converted to the naira so many people have had to compromise their decisions on this.  For some other parents, the desire and zeal are there so they would just reduce their ambitions by going for cheaper schools abroad. So if quality used to be the standard for choosing the school, the standard has now reduced to pricing. Recession has made people prioritise cheaper schools over quality,” he said.

Some schools/firms have devised ways to help parents pay tuition fees of their wards without going through the black market.

One of such is Abbey DLD Group of Colleges, which runs GCSE, A Levels and Foundation programmes that serve as pathway into top UK universities.

Its Student Admissions Manager for Africa, Mr Jalaludden Muazu, said to check dwindling enrolment from Nigeria – its biggest market, the colleges came up with a flexible and affordable payment plan that allows parents to pay in naira.

“We have a package for parents in Nigeria. We have done it for a few already. The main arrangement we have on ground is that we give a discount of up to 30 per cent on tuition fees.

“We also spread the payment in four instalments for them within the year. Right now, I am working with a parent to make payment in naira. We are planning to collect his naira equivalent using inter-bank rate and remit for him to the school,” he said.

Ms Edna Joseph, whose firm, Profound Educational Services Ltd helps place Nigerian students abroad, said some Canadian colleges are now giving Nigerian students more time to pay up.

She said: “A lot of students are stranded.  No money to pay fees and even for upkeep.  Parents have problems sending money.  Some Canadian schools are aware of the Nigeria situation and are kind of making it easy by giving some sort of payment plan or a time frame to pay the money.

“The payment plan depends on what the school deems fit.  They may specify an amount to be paid each semester – with a certain amount payable each month.

“The parents are also sorting themselves out.  For those with relatives in Canada who still maintain a Nigerian bank account, they  could easily get dollars from relatives who pay on their behalf while they remit the naira equivalent into the relatives’ naira account.”