A proposed U.S. bill to impose a 5% tax on all outbound remittance transfers from non-citizens could divert as much as $2.8 billion from Sub-Saharan African economies in 2025, threatening one of the region’s most stable sources of foreign exchange. Nigeria, Ghana, and Kenya stand to be among the hardest hit.
“The One Big Beautiful Bill,” backed by President Donald Trump, would apply a 5% levy on international money transfers made by all non-citizens in the U.S., including green card holders and temporary visa holders. U.S. citizens would be exempt. The bill, now advancing in the House of Representatives, is expected to be voted on May 26, with a possible signing into law by July 4, 2025.
The proposed tax will be deducted at the point of transfer and remitted quarterly to the U.S. Treasury. Under this policy, a $400 remittance transfer would be subject to a $20 withholding fee. For individuals sending $400 each month, this tax would add up to $240 over a year.
For African countries, where remittances fund education, healthcare, and business investments, the proposed fee could trigger a ripple effect across economies already struggling with high inflation and low foreign direct investment.
Who is most affected?
African nations, particularly those with large diaspora communities in the United States, will be significantly affected by this proposal. The U.S. Census Bureau data released in April 2024 says the U.S. hosts about 46.2 million immigrants, which makes up almost 14% of the U.S. population. Sub-Saharan African immigrants make up over 5% of the U.S. immigrant population, with Nigeria having the largest number as of 2019, with countries like Ethiopia, Ghana, Kenya, and Somalia. These communities rely heavily on remittances from their overseas populations to support household incomes, fund education, and drive local investments.
For instance, Nigeria’s remittance received in 2024 reached nearly $20 billion-making remittances one of the country’s most stable sources of foreign exchange. Nigeria’s economy is highly dependent on these inflows, which often surpass foreign direct investment. Egypt has the highest remittances, however most of them come from the gulf countries, as most of its diasporan population is based there.
Broader implications
Kahuna, a Tanzanian living in the U.S., told that if the bill is applied, she foresees reduced remittance flows with U.S. diasporan communities sending less money home due to the added cost on top of transfer fees. For example, Western Union fees range from $5 to $20, with faster transfers costing more. These additional fees will force many migrants to opt for illegal, informal channels.
“It should be interesting to see how this evolves, but by the way things are, it may likely pass,” Kahuna, who asked to be identified by her first name, said.
“The changes that have been happening in the U.S. as of late have forced us to question our roles as Africans,” said Joy, a Nigerian living in the U.S. “If this remittance Bill is passed, we will have to find more alternatives of sending money home or even just invest in businesses that would generate cashflow for family support.”
Yavi Madurai, the President of African Prosperity Fund, an infrastructure initiative sponsored by the African Continental Free Trade Area (AfCFTA) Secretariat, told that the proposed tax on remittances threatens to disrupt a crucial financial lifeline for millions of African families. While the policy targets U.S. domestic concerns, its ripple effects could undermine economic resilience and financial inclusion across Africa.
“These funds are more than just income; they support education, health care, housing, and small business development,” she said. “They serve as social safety nets in many communities across Africa.”
Sub-Saharan Africa is projected to receive approximately $54 billion in remittances in 2025, and a 5% tax could divert up to $2.8 billion away from recipient households if a significant share comes from non-citizen US residents. Madurai noted that many small businesses in Africa are financed through remittances. A decrease in these funds could slow entrepreneurship and job creation.
“Blanket remittance tax risks decreasing transfer volumes, increasing informality, and disproportionately affecting low-income households,” she said. “The poor are going to be impacted the most. Moreover, it undermines global commitments to reduce remittance costs under SDG 10.”
Remittance startups like NALA and LemFi may face increased regulatory burdens, as they would be required to verify the citizenship status of senders before processing transactions. This could lead to higher operational costs and potential disruptions in remittance services, further complicating the financial landscape for migrant workers.
The policy—part of Trump’s broader campaign to restrict immigration—could open new diplomatic rifts between Washington and African capitals. Analysts say the African Union and affected governments must engage U.S. lawmakers urgently.
Madurai noted that African governments should urgently initiate a coordinated diplomatic response through the African Union and engage US lawmakers to seek exemptions or waivers for least developed or heavily remittance-dependent countries. Simultaneously, they should work on regional remittance harmonisation and strengthen financial sovereignty through digital financial innovation.
“Now is the time to access the talent and technological advancements we have on the continent,” said Madurai.
The bill’s progress will be closely watched over the coming weeks.
