Nigeria’s current account balance continues to be a source of concern as data published by the Central Bank shows that Nigeria spent a whopping $9.01 billion (N3.24 trillion) on personal foreign travels (also known as Personal Travel Allowances, PTA) in 9 months (January – September 2019).
According to the CBN report, PTA on foreign trips by Nigerians rose from $5.59 billion between January and September 2018, to $9.01 billion in the same period of 2019. This means PTA rose by a high 61.08% in one year.
Also, the CBN report shows that Nigeria’s current account balance continues to balloon into deficits no thanks to the services sector huge foreign exchange demand driven by travel and business services. See: Nigeria’s current account deficit rises again
Educational travel expense tops the chart
In the period under review, data showed that PTA on foreign travels by Nigerians is mainly on education, health, and other personal travel expenses.
- Unsurprisingly, education tops the chart as Nigeria spent a whopping $4.55 billion on education travel expenses between January and September 2019. This means Nigerians continue to rely heavily on foreign education and medical tourism despite efforts by the government to curb imports.
- Medical tourism gulped a total sum of $1.92 billion within the period.
- Personal travel expenses, which are largely vacation-related expenses gulped $2.53 billion.
- Overall Education gulped 50.5% of total expenses on personal travels, other personal travels (28%) and Medical tourism (21.3%).
PTA gulps $58.7 billion in 10 years
A further check in to CBN published data showed some very worrying trends, as foreign travel expenses continue to drive Nigeria’s current account balance into negative. For instance, in the last 10 years (2010– 2019), Nigeria spent an astonishing $58.7 billion on PTA.
- Analysis of current account balances for the last 10 years showed that travel expenses gulped 88.5% of Nigeria’s current account deficit.
- A further check reveals that in the third quarter of 2010, Nigeria spent the sum of $1.63 billion on PTA. Fast forward to the corresponding period of 2019, the figure rose $2.99 billion.
- Within the period, expense on education travel took the biggest share, constituting 44% of the total PTA.
- Overall, education travel gulped $26.3 billion in just 10 years, other travel expenses gulped $16.7 billion, while $10.13 billion was spent on medical travel expenses.
Why it matters: With over 200 million population, Nigeria’s economy is still plagued with perennial problems such as poor health sector, decay in the educational sector, low level of infrastructure, the high unemployment rate among others. Key investments into critical sectors in the country continue to be elusive often due to poor incentives and ease of doing business.
- Following the bad state of infrastructures in the country, Nigerians who can afford the luxury to travel seek for foreign education or better quality healthcare abroad squeezing out forex from our reserves.
- The CBN report implies that the majority of Nigerians travel abroad for schooling or reasons like work, tourism, access to better medical facilities and so on.
- Recent data released by Canada Immigration shows that Nigeria ranked 8th with the highest number of permanent residents admitted to Canada in 2017.
- This means on a month-to-month basis, Nigerians travel of countries, Canada, the U.K, the U.S, India and a host of many other countries. While the number keeps increasing, the demand for foreign exchange surges.
- Nigerians also travel to the United States to have Children mostly due to high infant mortality rates in the country. This also requires significant forex for personal travels.
As Nigerians permanently leave the country to enjoy better infrastructures and basic amenities that could have been provided in the country, they sometimes sell nearly all their property and belongings and then converting the proceeds into forex before traveling. This continues to pile pressure on the country’s depleting forex reserves dragging the economy down.