The Central Bank of Nigeria (CBN) is collaborating with Deposit Money Banks to work out strategies to minimise foreign exchange (forex) demand for school fees and medical expenses abroad.
According to the Bankers’ Committee, the measure is intended to prevent crowding out demands for forex by the real sector.
Mr.Herbert Wigwe, the Managing Director, Access Bank plc., told reporters at the end of the Bankers’ Committee meeting in Abuja yesterday, that the banks did not agree on any final position, “but that we should not allow this demand to crowd” out real sector investment because in any event, the money that you use to pay these school fees is from industry that is working locally.
“We should revisit the educational system and make sure our children go to school locally. Why can’t we revisit the health care system to make sure it works better? he queried, saying, “why must we spend so much money on children’s school fees overseas or medical tourism?
The idea which is still on the drawing board he said “is not that you can’t do it, the point is that you cannot access it from the CBN’s limited resources; we did not reach any formal conclusion on it, but that is the general direction that we are headed.”
According to Wigwe, “we have increased demands for invisibles which typically represent demands for children school fees, medicals and all of that moving on the CBN foreign exchange. The problem with that is that it tends to crowd out the critical foreign exchange that should be used in the real sector for manufacturing to support industries to encourage employment. There were questions as to how far we are going to allow this to go on. Shouldn’t we redirect these resources towards the real sector?.
“We focused on the real sector in this case with respect to support most of the manufacturing concerns particularly those that utilise local raw materials for production. At this stage of our economy, we need to look at how to stimulate production so that we will be able to provide goods and services to people at minimal cost”.
Also speaking, the Managing Director, Standard Chartered Bank, Mrs Bola Adesola said “a bit more looking at the numbers and data will happen before the CBN ultimately comes to a decision.