Trump’s 3.5% remittance tax looms: will Africa’s GDP pay the price?

The looming 3.5% remittance tax proposed under former President Trump’s administration has sparked concern across Africa, where diaspora remittances form a critical part of many countries’ GDP.

If enacted, the tax could significantly reduce the inflow of funds sent by Africans living abroad, potentially harming economic growth and development in recipient nations.

"If passed into law, the 3.5% tax could severely dent the GDP of many nations, for whom diaspora remittances are a huge contribution," experts warn.

This economic threat comes amid broader tensions, including travel restrictions to the US from African countries. Political analyst Mikhail Nyamweya noted that these bans "bring about a pattern of exclusion" and "may also institutionalise a perception of Africans as outsiders in the global order."

Critics argue that such policies deepen inequality and perpetuate harmful stereotypes. Abby Maxman, president and CEO of Oxfam America, condemned the bans, saying they "deepens inequality and perpetuates harmful stereotypes, racist tropes and religious intolerance."

For many Africans, the US has long been seen as a land of opportunity. Lomé-based architect Essi Farida Geraldo lamented losing access to the US, calling it "the Togolese’s El Dorado."

The combination of travel restrictions and the proposed remittance tax threatens to undermine economic and social ties between Africa and its diaspora, with potentially far-reaching consequences for development and inclusion.

A proposed 3.5% remittance tax under Trump’s administration threatens to reduce GDP in African nations heavily reliant on diaspora funds. The tax, currently under parliamentary review, raises fears of economic harm amid ongoing travel restrictions that many Africans view as exclusionary and perpetuating inequality.