Wetin di new US tax mean for money wey pipo for abroad dey send to family and friends back home

BBC News

5 hours ago

Di One Big Beautiful Act wey don dey signed into law by di U.S. President Donald Trump dey impose a 1% tax on certain types of cross-border money transfers.
Dis go cause worry among African migrants and dia families wey dey rely on cash wey dem dey send give dem from obodoyinbo.
For 2024, at least $12 billion bin flow from di United States to African families through remittances.
But dis newly approved 1% tax on informal money transfers fit comot millions from dat stream.
Di US President Trump budget mega-bill become law afta e pass a final vote for di House of Representatives and afta Congress bin debate di package for days, as members of both di House and Senate also work overnights for di Capitol.
Join Pidgin WhatsApp Channel for similar tori dem.
However, while di final tax rate dey far lower dan di 3.5% wey dem first propose, di law dey target specific remittance channels.
E also apply to transfers wey dem dey make through cash, money orders, or cashier cheques, wit exemptions for transactions wey dem dey send through bank accounts or U.S.-issued debit and credit cards.
'Dis na tax on progress'
A Nigerian-born professor wey base for Minnesota, wey no wan make we mention im name, tell di BBC say di tax go directly affect how e dey send money to relatives for Enugu.
"I dey build a retirement home for my village and dis require me to send money evritime for di project. I also send money to support my mama back home," e tok.
Dis week alone, e don send $700 for building materials.
"E fit look like just $7 on evri $700 wey we send, but dis na tax on progress, care, and support. Di emotional cost dey bigger dan di financial one."
Though e prefer to use banks, e admit say cash apps dey faster, especially during emergencies.
"No be evrione wey we support back home get a bank account. Many dey rely on pickup centres or cash agents. Dis law be like say e blind to dat reality."
Di law dey scheduled to take effect on January 1, 2026 as part of a broader effort to boost federal revenues.
Di tax dey aimed to tightening oversight of informal cross-border transfers, a category wey include many of di ways African migrants dey send money home.
But for millions of African families, dis informal channels no just common, dem dey essential.
For Yasmine Atim, a 22-year-old Ugandan computer science student for Texas, di tax go force her to retink how she dey send money to her younger siblings for Central Uganda.
"I no dey work full-time, but I try to send $100, $150, or $200 wen I fit," she tok.
"Even if na just $1, dat na di money my brother fit use to get a textbook or transport to school."
Yasmine dey use a mix of cash apps.
"I try to set up a wire transfer once, but my bank no allow international transactions from a student account."
For her, remittances no be just about money but about to stay emotionally connected to home.
"Sometimes, di only way I fit show up for my family na to send dat money. E dey hurt to tink say di govment want a piece of dat.
I fit try make I no send big amounts to reduce di number of transactions wey dem go tax. But dat no go make sense. Family need help wen dem need am."
Wetin e mean for Africa
Di final text of di law tok say, "we hereby impose on any remittance transfer a tax wey equal 1% of di amount of such transfer. Na di sender go pay di tax."
While exemptions exist for transfers through U.S. financial institutions or dose wey dey funded by U.S.-issued debit or credit cards, many African migrants still dey depend on informal channels.
Wit foreign aid to Africa wey dey reduce, remittances don become a lifeline. According to World Bank data, remittance flows into Africa bin pass $92 billion (€81 billion) for 2024, wit at least $12 billion wey dey come from di United States.
Di U.S. remain di biggest origin kontri for global remittances wey dey account for ova $656 billion for2023 alone.
Top African Remittance Recipients (2024)
Kontri Remittances ($)
Egypt 22.7 Billion
Nigeria 19.8 Billion
Morocco 12.0 Billion
Kenya 4.8 Billion
Ghana 4.6 Billion
Senegal 3.0 Billion
Zimbabwe 3.0 Billion
Zambia 2.8 Billion
Uganda 1.49 Billion
DR Congo 1.3 Billion
Source: World Bank, 2024
According to di Africa Finance Corporation 2025 State of Africa Infrastructure Report, remittances don consistently pass foreign direct investment, portfolio flows, and official development assistance.
Dis make am di most stable and dependable source of external finance from Africa.
"Remittances dey more dan money," di professor for Minnesota tok.
"Dem be infrastructure, education, medical care, food, and dignity. To tax am na like to tax veri engine of development for many African homes."