Surviving away from home during Forex scarcity: What are my options?
There has never been a more difficult time to be living abroad on support from Nigeria. As the exchange rates spiral out of control, we have progressed from one CBN-imposed international spending limit review to another unto the recent total clampdown on spending internationally on Naira-denominated cards. Indeed, survival away from home has been really horrendous. How else can you describe the situation of a student in a suburban town where monthly living costs can run up to 900.00 US Dollars every month who has only got a Naira bank card that does not work?
I am not well versed in the economics of why. Hence, I will focus this article on the survival options I have used in the last couple of months and learnt about by some personal research. Hopefully, this will draw public attention to the plight of most Nigerian students abroad. Perhaps, other students will join in to suggest other options they have found viable. This may benefit a few students abroad - current and prospective.
Firstly, let us take a quick look at some of the factors that are considered in choosing an option for funds transfer especially from Nigeria.
Exchange rate - this is the most important factor.
Service charges - these can get really high and unpredictable.
Delivery time - you also want to be sure your money will be delivered in good time.
Compliance - newest among all but none the less important with rapidly increasing government regulations.
Some of the available options are: use of bank cards, bank transfers and money transfer, crptocurrency and community-based payments.
Bank Cards: 24 months ago, it would have been enough to have your money in any account in Nigeria. With a Mastercard, you could access sufficient funds to meet your needs using a combination of ATM drawals, POS and online payments. The rates were friendly although a few complained about the bank charges. Then came the crash in global oil prices and the first signs of dwindling government forex reserves. With those came wave after wave of regulations almost on a monthly basis until the recent grind to a total halt to international spending on naira-denominated bank cards. Only a few folks with domiciliary cards can still live in the old culture but at a price. Of course, they have to get foreign currencies from the black market at exorbitant rates (470 naira to a dollar at the time of writing). Moreover, bank charges still apply.
Bank Transfers: The high street banks have shown that the old concept of money is changing. How else does instant payment work today? All the computer has to do is apply a few zeroes here and remove an equal number there. No money actually moves. However, when it comes to cross border payments, it gets complicated since they need to back each transaction by real currencies which are scarce in the Nigerian situation. So default mode - go to the e-money payment guys - Western Union, Moneygram, etc.
Money Transfer: Bad news. These businesses are designed to send money from developed economies where the hard currency is to the growing economies where families are in need of it to survive. So the charges are supported by this downward flow and not the other way round. Either way, the rates are very unfriendly - today, Western Union will hand you 373 Naira for a dollar. That is about 100 Naira less than the amount to buy back the dollar from the BDCs since the banks will not sell to you.
One method that could work going from Nigeria to other parts of the world is Paypal. So you have an account in Nigeria, transfer your funds to it and you can receive it on another account anywhere else Paypal is supported. In most countries, the fund can be transferred to a local bank account. Be warned though, the exchange rates applied by Paypal are set to keep the business profitable.
So far, we have seen some compliant methods with really unfriendly exchange rates. We will now look at some other methods which can either be categorized as compliant or not but may be solving real problems.
Cryptocurrency: - The king here is Bitcoin. There are several others if you care to check. Basically, your money are protected by some crypto-algorithms and valued by a regulatory body called the exchange. More like having stocks in the stocks exchange. To make it simpler, you can buy Bitcoins in Nigeria and get the cash out anywhere else in the world. You get charged some fees for every transaction made.
Community-based payment: - Very recently, I stumbled upon this one. My friends in the United Kingdom are excited about it and I have had to check it out myself. OmniBorder.com. It appears to be a community of people who live across different countries, mostly Europe, and help out each other in making payment from individual accounts. From my observation, Nigeria appears to be a popular destination - easy to guess why. I am not sure if other countries outside of Europe are supported at writing time.
The very friendly rates and zero fees stand out on OmniBorder.com. You simply register to make a payment and someone from a network of verified users can accept to assist you at the rate you have chosen. It is definitely not a problem for my friend to accept my Naira in Nigeria and give me US dollars in the United States at a rate that we both decide. I am yet to use this one but asides from the extra time approval seems to take, OmniBorder comes out on top when it comes to rates and charges. It is surprisingly not as popular as it should be.
Frankly speaking, these are hard times for Nigeria and especially for Nigerian students dependent on home for studies abroad. We are surviving because we are a resilient people - always able to find a way out from difficult situations. We thrive. Long may we continue.
Olatunde Jademi writes from North Carolina State University, USA