Trump’s 5% remittance tax proposal raises alarm across Africa

A new proposal from the Trump administration suggests a 5% tax on international remittances. This has raised concerns among African communities and financial analysts. They warn of potential economic shocks in countries that rely on diaspora funds.

The plan, introduced by Republican lawmakers, targets money transfers by non-U.S. citizens. This includes green card and visa holders. U.S. citizens would not be affected, but many legal residents could be impacted. The tax would be collected from the sender and paid quarterly to the U.S. Treasury.

Remittances are crucial for millions of households across Africa. In 2023, African nations received about $100 billion in remittances. This amount represents roughly 6% of the continent’s GDP.

Countries like Ghana, Nigeria, and Kenya are particularly vulnerable to disruptions in these funds. Families depend on remittances for basic needs such as education, healthcare, rent, and food.

Critics argue that the tax may push senders to use informal channels to avoid costs. This could undermine financial transparency and increase fraud risks. Analysts also worry that it might push vulnerable migrant families into financial distress. Some fear it could lead to more undocumented migration as people seek ways to support relatives back home.