June 12, 2025 • 14 mins
US President Donald Trump is proposing a 3.5% tax on remittances by non-citizens as part of the Republican tax bill currently working through the Senate.
On today’s episode of the Next Africa podcast we look at why this proposal could have major repercussions for African economies, particularly Nigeria, one of the world’s biggest recipients of remittances.
Jennifer Zabasajja is joined by Dr Lydiah Kemunto Bosire, the founder of New York based 8B Education Investments, and hears how this makes America less attractive to Africa’s brightest students, and Nigeria Bureau Chief Anthony Osae Brown explains how reliant Nigeria is on remittances especially ofF the back of USAID cuts.
For more stories from the region, subscribe to the Next Africa newsletter here
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. The US President wants
to tax money sent out of the US by non citizens.
Instead of taxing our citizens to enrich foreign nations, we
should be terrifing and taxing foreign nations to enrich our citizens.
(00:23):
Does that make sense? But with many Africans sending remittance
back to families in countries such as Nigeria, could this
policy force money transfers underground?
Speaker 2 (00:33):
Global remittance or global payments is really a need, not
a want. The global worker is very resilient and so
as they are as we're going through this process, what
we find is that workers are moving around to make
sure that they work in best places to send money
back home.
Speaker 1 (00:48):
On today's podcast, we're looking at the impact this tax
could have on people relying on this income and the
knock on impact it could have on Africans choosing to
work or study in America. I'm Jennifer's Abasaja and this
is the Next Africa Podcast, bringing you one story each
(01:08):
week from the continent driving the future of global growth
with the context only Bloomberg can provide. In a moment,
we'll hear from our Nigeria Bureau Chief Anthony jos Brown.
But first let's speak with doctor Lydia Kamuntu Bossire. She's
the founder of eight B Education Investments and she's based
in New York. So Lydia, thanks so much for joining us.
(01:32):
Your focus is on the higher education sector and you
work with a number of people who come from Africa
to study in the United States. How big of a
deal are remittances in this sector? How much if you
can quantify for us, how much are people actually sending
back home?
Speaker 3 (01:51):
Missionss are the current story in large part because we've
seen h slashing of aid funding across the continent, initially
from USAID as well as from other dollars, and so
the discussion becomes where are the other sources of funding?
And it turns out that remittances have been significantly larger
(02:17):
than official development assistance for some time, depending on which
data you look at, and these numbers do vary depending
on if you know North Africa is being included in
that story. The remittances the most recent data, remittances are
about ninety billion dollars a year going to the African continent,
(02:42):
compared to something between thirty six billion to forty two
billion dollars of official development assistance for my constituency in particular,
already within my student population. We finance African students in
global universities, and they already are sending money home from
(03:03):
their compass work and other engagements. Our recent impact survey
shows that on average, they're sending about one hundred and
ninety five dollars a month our students, and seventy seven
percent of them already send remittances home. What happens is
that remittances are an outflow from what they asperans. The
(03:26):
students who have moved abroad send home, and when they
become workers, they send home even more.
Speaker 4 (03:32):
So.
Speaker 3 (03:32):
This is the trend that we contribute to and that
we see in Lydia.
Speaker 1 (03:37):
Considering what you were mentioning there, what we've seen in
twenty twenty five, and again some of the students and
the constituency that you deal with on a day to
day basis in your work, what is the concern about
whether or not this new levee on remittances passes, especially
for some of these students who aren't even making a
(03:58):
lot of money yet aren't even worthy looking full time.
What's the concern.
Speaker 3 (04:02):
The big concern is that this affects how much can
be sent home because remittances are really currently they finance consumption, right,
it is the cousin who needs skool fees that these
resources go to. And by taxing remittances, particularly from non citizens,
(04:22):
which seems to be where the focus will go, it
will make those flows lower than have been. My sense
is it will not discourage them. It will just take
them underground and enable the flows to happen in ways
that are harder to track and therefore perhaps harder to
(04:42):
drive into a more structured vehicle for organized development. Because
in fact, that is the big question, which is, given
the scale of remittances, what are the avenues by which
those resources can be channeled into programs that advance development
separately from or in addition to supporting consumption across families.
Speaker 1 (05:07):
And we know that a number of governments have actually
been trying to do away with a lot of the
so called black markets or underground networks as you allude
to there Lydia. What's the link here to higher education
and potentially some of the trends that we've been seeing
as it pertains to African students and higher education in
the US.
Speaker 3 (05:29):
So there's a number of headwinds facing higher education in
the US. As you know, the current administration has put
a pause in neil visa appointments for students, and this
is the season where o behalf of students who are
holding offers to US universities go for their appointments. Is
(05:50):
a lot of advocacy going on in the US to
get that window of visa appointments to be open again.
The challenge with visa appointments not being available is that
many students who hold offers in the US also hold
offers elsewhere, and so you're likely to see this massive
talent outflow that was initially distinct from to the US
(06:14):
head elsewhere. What also is happening globally is an awareness
of what's going on demographically, which is that Africa has
the largest number of college age students, fastest growing number
of college age students, and they're looking to take their
talents to places that welcome them. So we are likely
(06:35):
to see a decline, at least in the short term
of the numbers coming to the US, which will be
a shame because we had really started seeing African numbers
rising year after year. Having said that this is a
trend that there's nothing to be done about right. The
trend of African youth looking for opportunities globally is with us.
(06:56):
It's not going anywhere global university is particularly in the OIC.
You're facing a demographic cliff. They need these young people,
these young people looking for opportunities there. So the movement
will continue. It may be facing head winds right now,
but we do know that it will continue after the
current season.
Speaker 1 (07:13):
Lydia, thanks so much for joining us and for sharing
those insights. It's great to have you. And let's turn
to Nigeria now. Anthony os Brown is joining us. Anthony,
so you oversee Nigeria, which is one of the largest
recipients of remittance money. Can you put into context just
how important these funds are for the economy and for Nigerians.
Speaker 4 (07:36):
Relitiances are quite significant to the Nigerian economy. We get
totally somewhere around twenty to twenty five billion annually from remediances,
and a good chunk of this comes from the US.
I'm not too sure the exact percentage, but it could
be close to half of it coming from the US
(07:58):
because of the large nature and the esperate community in
the US, and a lot of this money going to
supporting very poor families. As you know, Nigeria has almost
half of this population that are very poor. So those
who are able to get out of the country send
bondly back home to their families to support them. Healthcare
(08:19):
is a big portion of remittance expenditures and then a
good part of it goes into real estate investments, support schooling,
education training, all forms of vocational training. A lot of
families depend on their people are brought to support, especially
the aged population, because there's no social security in Nigeria.
(08:41):
So yeah, so remitiancs is just plas a key role
in the ecadomy and another key role in places even
in supporting currency stability.
Speaker 1 (08:51):
And and if you could explain that a bit more,
how remittances and potentially a decline and remittances would affect
the NYRA and the stability that we've seen over the
past few months.
Speaker 4 (09:05):
The Central Bank sees remittances as a key part of
its foreigners change reserves accumulation policies. So last year I
set the target of at least getting remittances through the
official channels rising to about six hundred million currently to
about a billion dollars a month. Because a lot of
remediencies can also come introue on official sources. Has a
(09:28):
history of unofficial power market, foreigners change market, and because
of official policies, most of the money remittance money was
going through the power market. But now the Central Bank
has set a direct policy of trying to attract remittances
through the official market, and that basically is to use
it to support currency stability. So if remittences drop through
(09:51):
the official sources, you could see it possibly impacting on
currency neyrastability locally, So.
Speaker 1 (09:58):
Not something they'll they'll want to have to deal with
after the past few years of relative instability and volatility. Anthony,
stick with us when we come back. We're going to
dig into more of the wider effects of some of
these policies on US Africa relations. We'll be right back.
(10:20):
Welcome back. Today we're looking at the proposed tax on
remittances and the impact it could have on countries across Africa. Anthony,
we've talked a lot on this podcast about the increasingly
fraught relations between the US and several countries across the continent.
How do you see this policy likely to change things,
(10:43):
especially considering some of those factors you pointed there remittance
is very important for the livelihoods for a number of Africans.
Speaker 4 (10:53):
Yeah, I think this just adds to be increasingly negative
perception of the US. They just close down you said,
they just closed down Voice of America, which was a
key part of the media network, especially in northern Nigeria.
So US is a big destination for US and Nigeria
students who want to study abroad and even for people
(11:17):
who want to leave the country and everything. But increasingly
the latest policies from the art of the US has
made US less attractive for a lot of people. And
this just adds to it is the own fairness of
the whole process. The fact that the people who have
worked and are taxed, are already taxed officially, will be
(11:38):
taxed a second time. So that's that alone. Already they're
spending about six percent on an average cost to send
money locally. By the time you add this three point
five percent tax, you're looking at ten percent of So
anybody sending a thousand dollars is losing by one hundred dollars.
That will make the US a bit less attractive for
people who want to send money back home and students generally.
(12:01):
That makes it quite unattractive because most students while they're
schooling also work and send money back home. So it
just adds to the perception of US as less of
an attractive destination for Nigerians and even the country has
less influential in Nigerian affairs.
Speaker 1 (12:20):
Have we heard anything from officials at this point, Anthony,
And do you expect will hear anything.
Speaker 4 (12:27):
I don't think officially you hear anything. I don't think
the government will react in any way. The government will
want something different, but then if that's happening, they may
not officially take a stand. But I think what you
will see is people they average Nigeria looking for alternatives
(12:48):
on wa are to go to school on Europe is
likely to be a bigger destination going forward, and they
possibly even Asia. Increasingly Nigerians are looking at Asia and
alternatives for schooling. Most Nigerians prefer those who can afford
it at the higher level, mostly the middle income Nagerians
prefer their children's schooling outside the country, at least when
(13:09):
comes university and master's levels. So with these policies from
the US will likely see most of more Nigerians students
going towards Asia and possibly Europe.
Speaker 1 (13:21):
Anthony. Thank you so much for joining us and for
your reporting, and thanks also to doctor Lydia kmunto Bossire
for speaking with us earlier. You can read all of
our coverage of President Trump's tax bill across Bloomberg platforms.
Now here's some of the other stories from the region
(13:41):
we've been following. This week, South Africa's National Assembly approved
the Treasury's fiscal framework, bringing the adoption of the annual
budget a step closer after months of wrangling over tax
increases and logistics. Giant DHL Group plans to vest about
five hundred and seventy five million dollars in healthcare services
(14:05):
in Africa and the Middle East over the next five
years to capitalize on China's push into the regents. You
can find these stories on Bloomberg platforms, including in the
Next Africa Newsletter. We'll put a link to that in
the show notes. This program was produced by Adrian Bradley
(14:25):
and Tiba Adebio. Don't forget to follow and review the
show wherever you usually get your podcasts. I'm Jennifer's Abasanta.
Thanks as always for listening. We'll see you next time.
Bloomberg Audio Studios, Podcasts, radio News. The US President wants
to tax money sent out of the US by non citizens.
Instead of taxing our citizens to enrich foreign nations, we
should be terrifing and taxing foreign nations to enrich our citizens.
(00:23):
Does that make sense? But with many Africans sending remittance
back to families in countries such as Nigeria, could this
policy force money transfers underground?
Speaker 2 (00:33):
Global remittance or global payments is really a need, not
a want. The global worker is very resilient and so
as they are as we're going through this process, what
we find is that workers are moving around to make
sure that they work in best places to send money
back home.
Speaker 1 (00:48):
On today's podcast, we're looking at the impact this tax
could have on people relying on this income and the
knock on impact it could have on Africans choosing to
work or study in America. I'm Jennifer's Abasaja and this
is the Next Africa Podcast, bringing you one story each
(01:08):
week from the continent driving the future of global growth
with the context only Bloomberg can provide. In a moment,
we'll hear from our Nigeria Bureau Chief Anthony jos Brown.
But first let's speak with doctor Lydia Kamuntu Bossire. She's
the founder of eight B Education Investments and she's based
in New York. So Lydia, thanks so much for joining us.
(01:32):
Your focus is on the higher education sector and you
work with a number of people who come from Africa
to study in the United States. How big of a
deal are remittances in this sector? How much if you
can quantify for us, how much are people actually sending
back home?
Speaker 3 (01:51):
Missionss are the current story in large part because we've
seen h slashing of aid funding across the continent, initially
from USAID as well as from other dollars, and so
the discussion becomes where are the other sources of funding?
And it turns out that remittances have been significantly larger
(02:17):
than official development assistance for some time, depending on which
data you look at, and these numbers do vary depending
on if you know North Africa is being included in
that story. The remittances the most recent data, remittances are
about ninety billion dollars a year going to the African continent,
(02:42):
compared to something between thirty six billion to forty two
billion dollars of official development assistance for my constituency in particular,
already within my student population. We finance African students in
global universities, and they already are sending money home from
(03:03):
their compass work and other engagements. Our recent impact survey
shows that on average, they're sending about one hundred and
ninety five dollars a month our students, and seventy seven
percent of them already send remittances home. What happens is
that remittances are an outflow from what they asperans. The
(03:26):
students who have moved abroad send home, and when they
become workers, they send home even more.
Speaker 4 (03:32):
So.
Speaker 3 (03:32):
This is the trend that we contribute to and that
we see in Lydia.
Speaker 1 (03:37):
Considering what you were mentioning there, what we've seen in
twenty twenty five, and again some of the students and
the constituency that you deal with on a day to
day basis in your work, what is the concern about
whether or not this new levee on remittances passes, especially
for some of these students who aren't even making a
(03:58):
lot of money yet aren't even worthy looking full time.
What's the concern.
Speaker 3 (04:02):
The big concern is that this affects how much can
be sent home because remittances are really currently they finance consumption, right,
it is the cousin who needs skool fees that these
resources go to. And by taxing remittances, particularly from non citizens,
(04:22):
which seems to be where the focus will go, it
will make those flows lower than have been. My sense
is it will not discourage them. It will just take
them underground and enable the flows to happen in ways
that are harder to track and therefore perhaps harder to
(04:42):
drive into a more structured vehicle for organized development. Because
in fact, that is the big question, which is, given
the scale of remittances, what are the avenues by which
those resources can be channeled into programs that advance development
separately from or in addition to supporting consumption across families.
Speaker 1 (05:07):
And we know that a number of governments have actually
been trying to do away with a lot of the
so called black markets or underground networks as you allude
to there Lydia. What's the link here to higher education
and potentially some of the trends that we've been seeing
as it pertains to African students and higher education in
the US.
Speaker 3 (05:29):
So there's a number of headwinds facing higher education in
the US. As you know, the current administration has put
a pause in neil visa appointments for students, and this
is the season where o behalf of students who are
holding offers to US universities go for their appointments. Is
(05:50):
a lot of advocacy going on in the US to
get that window of visa appointments to be open again.
The challenge with visa appointments not being available is that
many students who hold offers in the US also hold
offers elsewhere, and so you're likely to see this massive
talent outflow that was initially distinct from to the US
(06:14):
head elsewhere. What also is happening globally is an awareness
of what's going on demographically, which is that Africa has
the largest number of college age students, fastest growing number
of college age students, and they're looking to take their
talents to places that welcome them. So we are likely
(06:35):
to see a decline, at least in the short term
of the numbers coming to the US, which will be
a shame because we had really started seeing African numbers
rising year after year. Having said that this is a
trend that there's nothing to be done about right. The
trend of African youth looking for opportunities globally is with us.
(06:56):
It's not going anywhere global university is particularly in the OIC.
You're facing a demographic cliff. They need these young people,
these young people looking for opportunities there. So the movement
will continue. It may be facing head winds right now,
but we do know that it will continue after the
current season.
Speaker 1 (07:13):
Lydia, thanks so much for joining us and for sharing
those insights. It's great to have you. And let's turn
to Nigeria now. Anthony os Brown is joining us. Anthony,
so you oversee Nigeria, which is one of the largest
recipients of remittance money. Can you put into context just
how important these funds are for the economy and for Nigerians.
Speaker 4 (07:36):
Relitiances are quite significant to the Nigerian economy. We get
totally somewhere around twenty to twenty five billion annually from remediances,
and a good chunk of this comes from the US.
I'm not too sure the exact percentage, but it could
be close to half of it coming from the US
(07:58):
because of the large nature and the esperate community in
the US, and a lot of this money going to
supporting very poor families. As you know, Nigeria has almost
half of this population that are very poor. So those
who are able to get out of the country send
bondly back home to their families to support them. Healthcare
(08:19):
is a big portion of remittance expenditures and then a
good part of it goes into real estate investments, support schooling,
education training, all forms of vocational training. A lot of
families depend on their people are brought to support, especially
the aged population, because there's no social security in Nigeria.
(08:41):
So yeah, so remitiancs is just plas a key role
in the ecadomy and another key role in places even
in supporting currency stability.
Speaker 1 (08:51):
And and if you could explain that a bit more,
how remittances and potentially a decline and remittances would affect
the NYRA and the stability that we've seen over the
past few months.
Speaker 4 (09:05):
The Central Bank sees remittances as a key part of
its foreigners change reserves accumulation policies. So last year I
set the target of at least getting remittances through the
official channels rising to about six hundred million currently to
about a billion dollars a month. Because a lot of
remediencies can also come introue on official sources. Has a
(09:28):
history of unofficial power market, foreigners change market, and because
of official policies, most of the money remittance money was
going through the power market. But now the Central Bank
has set a direct policy of trying to attract remittances
through the official market, and that basically is to use
it to support currency stability. So if remittences drop through
(09:51):
the official sources, you could see it possibly impacting on
currency neyrastability locally, So.
Speaker 1 (09:58):
Not something they'll they'll want to have to deal with
after the past few years of relative instability and volatility. Anthony,
stick with us when we come back. We're going to
dig into more of the wider effects of some of
these policies on US Africa relations. We'll be right back.
(10:20):
Welcome back. Today we're looking at the proposed tax on
remittances and the impact it could have on countries across Africa. Anthony,
we've talked a lot on this podcast about the increasingly
fraught relations between the US and several countries across the continent.
How do you see this policy likely to change things,
(10:43):
especially considering some of those factors you pointed there remittance
is very important for the livelihoods for a number of Africans.
Speaker 4 (10:53):
Yeah, I think this just adds to be increasingly negative
perception of the US. They just close down you said,
they just closed down Voice of America, which was a
key part of the media network, especially in northern Nigeria.
So US is a big destination for US and Nigeria
students who want to study abroad and even for people
(11:17):
who want to leave the country and everything. But increasingly
the latest policies from the art of the US has
made US less attractive for a lot of people. And
this just adds to it is the own fairness of
the whole process. The fact that the people who have
worked and are taxed, are already taxed officially, will be
(11:38):
taxed a second time. So that's that alone. Already they're
spending about six percent on an average cost to send
money locally. By the time you add this three point
five percent tax, you're looking at ten percent of So
anybody sending a thousand dollars is losing by one hundred dollars.
That will make the US a bit less attractive for
people who want to send money back home and students generally.
(12:01):
That makes it quite unattractive because most students while they're
schooling also work and send money back home. So it
just adds to the perception of US as less of
an attractive destination for Nigerians and even the country has
less influential in Nigerian affairs.
Speaker 1 (12:20):
Have we heard anything from officials at this point, Anthony,
And do you expect will hear anything.
Speaker 4 (12:27):
I don't think officially you hear anything. I don't think
the government will react in any way. The government will
want something different, but then if that's happening, they may
not officially take a stand. But I think what you
will see is people they average Nigeria looking for alternatives
(12:48):
on wa are to go to school on Europe is
likely to be a bigger destination going forward, and they
possibly even Asia. Increasingly Nigerians are looking at Asia and
alternatives for schooling. Most Nigerians prefer those who can afford
it at the higher level, mostly the middle income Nagerians
prefer their children's schooling outside the country, at least when
(13:09):
comes university and master's levels. So with these policies from
the US will likely see most of more Nigerians students
going towards Asia and possibly Europe.
Speaker 1 (13:21):
Anthony. Thank you so much for joining us and for
your reporting, and thanks also to doctor Lydia kmunto Bossire
for speaking with us earlier. You can read all of
our coverage of President Trump's tax bill across Bloomberg platforms.
Now here's some of the other stories from the region
(13:41):
we've been following. This week, South Africa's National Assembly approved
the Treasury's fiscal framework, bringing the adoption of the annual
budget a step closer after months of wrangling over tax
increases and logistics. Giant DHL Group plans to vest about
five hundred and seventy five million dollars in healthcare services
(14:05):
in Africa and the Middle East over the next five
years to capitalize on China's push into the regents. You
can find these stories on Bloomberg platforms, including in the
Next Africa Newsletter. We'll put a link to that in
the show notes. This program was produced by Adrian Bradley
(14:25):
and Tiba Adebio. Don't forget to follow and review the
show wherever you usually get your podcasts. I'm Jennifer's Abasanta.
Thanks as always for listening. We'll see you next time.
Host
Jennifer Zabasajja
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