This fact is corroborated by a review of the Central Bank’s balance of payment data, which indicate that Nigerians have spent US$11.01 billion on healthcare-related services over the past 10 years. According to the Nigerian Sovereign Investment Authority (NSIA), Nigerians spend over US$1 billion annually on medical treatment abroad. How about healthcare? No one reading this would deny not ever knowing anyone who has travelled abroad in the last few years specifically to receive medical care. If this amount were not sent abroad but was part of the CBN’s Foreign Exchange Reserves, the Naira would be much stronger today. In light of the above, it is no wonder that foreign education has cost the country a whopping sum of US$28.65 billion between 20, according to the CBN’s publicly available Balance of Payments Statistics. Today, a sizeable amount of the foreign exchange request Nigerian banks receive for school fees are for primary and secondary school education, some of which are for neighbouring African countries. In the 1980s and 1990s, you would search hard before you can find parents who sent their children to primary and secondary schools abroad. So, in general, just like the price of cows or cars, the price of the US Dollar in Nigeria is determined by the quantity of US Dollars that flow into the country as well as the quantity of US Dollars demanded by Nigerians. What would happen to the price of bread the next morning? It will rise because the supply of bread has fallen. Imagine for a moment that in a town that used to have 10 (ten) bread bakeries, 9 (nine) suddenly close their shops and only one bakery is left. Similarly, if the supply of a commodity falls, the price also rises. It does not matter what anyone could have done, rent rose astronomically in these cities because of rising demand. Once demand for housing increased when Delta or Osun States were created and civil servants had to relocate to these capital cities, the price of housing (rent) increased. Consider, for example, the price of accommodation (that is, rent) in newly minted State Capitals like Asaba or Osogbo in 1991. If the demand for a product, like sugar or garri, increases, the price will rise. WHAT DETERMINES THE EXCHANGE RATE? One of the first principles of secondary school economics is that the price of a commodity is determined by the interplay of demand and supply for that commodity. Every other currency’s exchange rate, such as the exchange rate of the British Pounds Sterling, derives from the price of the US Dollar. Given that the dominant foreign currency in Nigeria, as it is in many other countries, is the US Dollar, the exchange rate in Nigeria usually refers to the price of the US Dollar. WHAT IS THE EXCHANGE RATE? The exchange rate of the Naira is simply the price of foreign currency.
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