The Economics of a Masters’ Degree: The United Kingdom’s Gain and Nigeria’s Loss

The year is 2021, and as the video of the Ambassador of the United Kingdom to Nigeria filters into the social media space, urging people to come study with the promise of a 2-year post-study visa, I was particularly intrigued because more than anything this was more than a brag on the quality of their education system or the opportunity living in the UK brings to Nigerians who have been starved of a working viable system where they can have dreams and birth their visions

It was beautiful to watch her make the case and the video was properly done and before one could say Jack Robinson it was everywhere and spiking the number of student visa applications in fact there was over a 100% increase in the applications.

A casual glance at the UK Government website shows that Nigeria was third in the list of countries granted visas for different levels of studies, our figures double that of the United States who the previous year had more visas granted

The interesting part of it is that the top two countries with appreciable increase though have almost times five of our figure (China) and triple our figure (India)

Further deep dive into the published data shows that a total of 620,000 student visas (about three different categories)  have been granted since Q4, 2019 till Q3, 2021, and of these figures Nigeria has a total of about 50,000 (do ignore my round off errors). This represents about 8% of total visas issued worldwide

Total Applications worldwide

Total Applications Nigerians

Now to the economics of the masters’ program

The Home Office is the government agency responsible for issuing visas and is an agency that is basically self-funded, in fact, there are reports online it made £500 million in profits in 2018. For any applicant to get a student visa, the student must pay for the underlisted:

Visa Fees – £348 This is non-refundable if unsuccessful

NHS/IHS Fees – £645 This is refundable if unsuccessful

Tuition Fees – £13,000 average fees and depending on the school about 50% of this is paid by enrolment for courses

Living Expenses – £1500 monthly approximately, can be up to £2,000 for a family of 4

Total is about £15,000

Other Fees not paid directly to the home office or schools include

Covid Tests – £50 if double Jabbed and £100 otherwise

Flight Fees – £1,000 (One-way ticket on Virgin or BA)

Tuberculosis Testing – N50,000 for adults and N26,000 for children (IOM conducts all tests)

English Language Tests £200 approximately depending on whether your school requires it or not

Visa and other fees

Direct injection of cash into the UK economy from the above is £9.3Billion (620,000*£15,000), this figure goes to about £11 Billion if you consider that students are allowed to bring with them their spouses and children to the UK making average family size of 4 (Main Applicant, Spouse, and about 2 Children). Nigeria’s contribution to the above is £744 million and £880 million respectively

Air Travel

Each of the 620,000 successful visa applicants would have spent about £620 million on flights, either on British Airlines or other competitors in the market, with their family members included the figure almost triples and when you consider likely vacations and other family visits you can imagine how this number rises.

The number of passengers on daily flights into and out of the UK is quite mind-boggling, it is part of the reason why the UK was more flexible with Covid Controls until the recent spike brought by Omicron which resulted in some African countries being put on the red list. Air Travel Companies I believe were very instrumental in getting the UK government to eliminate the list as empty planes are not good for business  or tourism and taxes for the government

Housing

Average student accommodation costs about £400 a month, including utility bills at about 100 a month, internet and TV at about another £50 pounds monthly, if your family is larger you pay more.

Due to the influx of students, there have been severe housing shortages for would-be tenants leading to hike in rental prices, this means new houses are needed and more real estate investment opportunities are being created leading to more jobs for lawyers, brokers, property agents, masons, electricians, plumbers, and the whole construction value chain, more furniture will also be purchased (IKEA is smiling) as well electronic gadgets like boilers, kitchen hobs, etc.

Overall, there is more money coming into the sector as banks can lend money to real estate developers to build who will sell to buyers who will also get mortgages from the same bankers based on their credit scores

Food, school supplies and transport

The average person will spend about £20 on food daily, depending on the city you live you will spend about £4 on daily bus pass, although school is free up to Secondary School level you should expect to spend about £2 per child per day on school meals as well as uniforms. Visits to stores like Tesco, Morrisons, etc are not left out neither will Primark, M&S, and others do not feel the influx of cash.

Taxation

The average student is allowed to work for 20 hours during school term and up to 40 hours outside that, that gives a total of 1440 hours of work (20 hours*4 weeks*6 months) + (40 hours*4 weeks*6 months), the dependent spouse can work 40 hours for the whole period giving about 1,920 hours.

The figures above using UK average wage of £11 per hour means students can hope to earn £15,840 while their dependents earn £21,120, taxes will definitely be paid as well as a pension. This is a total of £23 Billion pounds of contributions to the economy of the UK annually, Nigerian students contribute about £2 Billion of this figure

The bulk of students, as well as dependents, also work in sectors where there is a shortfall due to Brexit and Covid, thereby providing the UK with much-needed manpower (Skilled, Semi-Skilled and Low Skilled), the UK as a serious economy has a shortage occupation list online

It is clear that the UK government strategy post Brexit will work and will attract but funds as well as skilled manpower to rival the silicon valley of California in the shortest time possible, the student visa will continue to bring a fresh influx of funds and innovative ideas to the UK for a long time to come

I strongly believe our Nigerian leaders who have constantly remained blind and always played the ostrich should wake up to their responsibilities and actively learn how a country can attract interest and stress-free FDI into their economy to create jobs and earn more money via taxation which they seem not to be able to get right till recently.

Imagine if enough investment had been made over the years into our educational system and our schools were competing on the world stage, a situation where a federal university takes months to process transcripts that are done in minutes abroad due to appropriate investment in IT infrastructure. Imagine if foreign students came back to Nigeria the way they used to come and learn at the University of Ibadan and Obafemi Awolowo University back in the days. Imagine if more buildings are being erected as hostels for students in various tertiary institutions and the jobs that would create in the economy, I can only imagine.

To the United Kingdom, I say God save the Queen, may your vision and strategy to attract the right talents and grow your homeland after Brexit and Covid continue to yield good fruits, I look forward to my OBE someday.

Sincerely

FOJ