US plan to tax foreign transfers stirs concern for Africa
The new proposal by President Donald Trump's administration, introduced on Thursday, concerning a 5% tax on private foreign money transfers, will significantly impact the economies of African countries and migrant families. Each year, migrants living in the USA send approximately $13 (£9,6) billion to Africa, according to Agence Ecologique Financière.
The tax is part of a project known as the "Big Beautiful Bill," which was passed by the U.S. House of Representatives on Thursday. The bill, now moving to the Senate, aims to help President Trump fulfil his campaign promises by extending the tax cuts implemented during his first term.
According to financial analysts, these cuts could seriously increase the federal deficit. Therefore, to mitigate their impact on the budget, lawmakers have proposed, among other measures, implementing a tax on money transfers sent by migrants.
It will not apply to U.S. citizens, but to approximately 46 million migrants living in the United States, especially those residing there illegally. This group includes over 2 million African migrants who send part of their earnings to families back in Africa. In this way, in 2021, about $5.7 billion was sent from the USA to Nigeria, $1.8 billion to Egypt, and $1.2 billion to Kenya.
Billions of dollars derived from corruption and theft
Billions of dollars derived from corruption and theft are transferred from Africa to the United States, evidenced by an agreement made in January between the USA and Nigeria concerning the return of nearly $53 (£39) million to the Nigerian government's control, confiscated by the FBI from corrupt Nigerians.
This was only part of more than $100 (£74) million that was laundered in the United States and used to purchase luxury real estate in California and New York. It was also enough for Nigerians to buy a 65-metre yacht.
In its report last year, the international organisation Transparency International, which reveals and combats corrupt practices, reported nearly $4 (£3) billion being transferred out of Africa, including to the USA, noting that this figure only includes documented cases.
