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Nigeria’s fuel subsidy cut effects “unlikely to be felt” for a year

The fuel subsidy which was ended by Nigeria’s incoming president will play a small part in a surge of international student migration, but its full effects are “unlikely to be felt” for at least a year.

Nigeria's incoming president moved to end the subsidies almost 50 years. Photo: Pexels

The country's central bank made the decision to liberalise to the foreign exchange rates

The move, which the president has said would free up money for education among other advantages, has proved divisive across the country, with labour unions furious at the 50-year subsidy’s cut.

People across Nigeria were seen lining up at petrol stations to try and get as much as possible before the prices went up at the end of May.

While international student migration might see a slight uptick in numbers, a commentator is unconvinced that it will have the largest effect on movement amid other current events.

“The bank unifying the foreign exchange rates will also have a big impact,” Emeka Ude, managing director of BCIE, told The PIE News.

The country’s central bank made the decision to liberalise to the foreign exchange rates, which led a massive devaluation of the Naira.

“Before, everybody was waiting and watching the market, and queuing up to use the discounted rates to wire their school fees – now, since yesterday [June 14], because of the unification of rates, that’s been thrown out the window.

“So students are having to make the decision of, ‘am I willing to pay up to a million more Naira just to wire my fees?’ The answer, I think, is yes,” Ude explained.

“Students are having to make the decision of, ‘am I willing to pay up to a million more Naira?'”

“I don’t think the subsidy will affect them at the moment, but we will see its effects probably a year from now,” he added.

The issue of the fuel subsidy of course, has an immediate effect on transport – flights for students to get out of the country will become much more expensive, but the president has said that it is a burden that must be shouldered to “save the country from going under”.

“The government I lead will repay you through massive investment in transportation infrastructure, education, regular power supply, healthcare and other public utilities that will improve the quality of lives,” said president Bola Tinubu.

The compounding issue with the subsidy’s end may be that it instead heightens the people’s “trust deficit”, as Ude calls it – fewer people have faith in the government, so they may leave and get their education elsewhere.

A recent survey of 1,054 Nigerian adults suggested that 52% of highly skilled employees plan to quit their jobs and relocate abroad.

“Families [whose children want to study abroad] have this storage of funds protected out there because there’s no real social protection agency – so they just let the system be what it is,” Ude said.

“There is this ‘protect yourself’ kind of mentality. I don’t think this situation will cause numbers to go down, but I’m still seeing swathes students coming into my office saying let’s go, I want to apply.”

Ude said that this is likely not just because of the government’s recent decisions – which also include firing the governor of the central bank and skepticism around the new student loans bill signed into law in June – but because of the UK’s pending dependants rule.

“There is this ‘protect yourself’ kind of mentality”

The ban, which has been introduced for international students on master’s taught courses, greatly affects Nigeria, which saw a 146% rise in the amount of dependants being brought to the UK in the last year.

“With the UK government saying that the dependency system is changing by January next year, that’s what people are trying to take advantage of.

“[People here] haven’t really trusted the system here for a long time. There was a recession in Nigeria in 2016; people didn’t care, they just shipped out. The same is happening now too,” he insisted.

Despite the new president’s insistence that the “sacrifice” of the fuel subsidy “will not be in vain”, Nigerians will still seek their education elsewhere, even in the face of the enticing new zero-interest student loans framework.

“There might be those who are ready to listen to the old folks who say things can work out eventually, but all these younger students who don’t really listen to the news – all they care about is ‘what do I want right now? I want to go out there, get my education’,” Ude added.

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