Nigeria’s foreign exchange earnings face a new threat as the US Congress considers a 5% tax on diaspora remittances. The proposed bill, introduced by House Republicans, targets money transfers abroad and could reduce funds sent to countries like Nigeria.
The tax, payable by senders and collected quarterly by the US Treasury, exempts verified US citizens and remittances sent through authorized channels. A final House vote is expected before May 26.
The US remains the world’s top source of remittances, with $79 billion sent abroad in 2022. Nigeria received $20.1 billion, making it the ninth-largest recipient globally.
Analysts warn the tax could reduce remittance inflows, weaken the naira, and hurt Nigeria’s economy, where diaspora funds are the second-largest FX source after oil.
In 2024, remittances contributed 6% to Nigeria’s GDP, totaling $20.98 billion—a five-year high. The CBN also reported a 43.5% surge in inflows from money transfer operators.
CEO of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, cautioned that the tax would discourage remittances and negatively impact Nigeria’s FX inflows.
