Foreign education causes capital flight without reciprocity
By Jeph Ajobaju, Chief Copy Editor
Educating children overseas, a penchant that runs all the way from Muhammadu Buhari and Yemi Oshinbajo to nearly every other affluent Nigerian, has cost the economy $28.65 billion in 10 years.
Central Bank of Nigeria (CBN) data shows that the education sector suffered the massive capital flight between 2010 and 2020, triggered by poor quality local education coupled with incessant strikes by lecturers in public universities.
Shipping money abroad for any purpose depletes Nigeria’s foreign reserves and the naira exchange rate has become the focal point for the economy considering the direct impact it has on the cost of goods and services.
It is also the major reason why there are multiple exchange rates and a widening disparity between the parallel market rate and official rates.
For most analysts, this is also the basis for some of the harshest regulatory onslaughts being witnessed by startups, particularly in Fintechs.
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Quest for foreign education
The World Bank stresses that human capital development is integral to any country’s sustainable development and poverty reduction. Education and knowledge capacity building are critical drivers of human capital development.
So investment in education is one of the bedrocks of society and helps determine the level of development. The value of education cannot be overemphasised, as it shapes both individuals and society, and is a huge source of economic value.
CBN data shows that Nigerians remitted more than $28 billion to foreign academic institutions in 10 years without significant reciprocity in form of inflows from foreign sources to the local education sector.
The huge net dollar outflows have dual adverse effects of underinvestment in domestic education and creating pressure on the naira exchange rate.
The high demand for dollars to pay foreign educational institutions affects Nigeria’s foreign reserves and contributes immensely to piling pressure on the exchange rate.
Global ranking
Data from Webometrics shows that the highest global ranking university in Nigeria is the University of Ibadan (1,196) followed by Covenant University (1,314).
No Nigerian university is in the global top 10.
Nairametrics reports that this is not entirely surprising given that the funding of education at all levels is below the recommended benchmark by the United Nations Educational Scientific and Cultural Organisation (UNESCO).
UNESCO’s benchmark for funding education is 26 per cent of the national budget and 6 per cent of Gross Domestic Product (GDP).
Nigeria’s education budget has averaged around 8.3 per cent in sharp contrast to the recommended target and continues to drop. In terms of GDP, the figure is even more dismal, as education got just 1.94 per cent of real GDP in Q1 2021 and 1.86 per cent in 2020.
According to UNESCO data, about 76,338 Nigerians were studying abroad as of 2018, the highest from an African country.
The views of youths
A random survey of Nigerian youths shows various reasons why they pursue academic qualifications outside the shores of the country.
Ejiro Ovuakporaye, a marketer at a Fintech company, said she desires to further her studies overseas because foreign degrees are more appreciated in Nigeria compared to local ones.
Besides, she told Nairametrics, “in Nigeria, we spend about six years for a four-year course, due to strike actions.”
Morenikeji Alabi, a statistician and investment trader, said she would prefer to study in any country apart from Nigeria, due to a lack of practical research facilities, adding that local universities are not competitive to attract foreign students.
A lot of overseas universities run online programmes for foreign students, a platform not available in most universities in Nigeria.
The Nigerian education sector requires adequate funding and willingness to build competitive value among its peers worldwide.