Naira in Trouble as US Moves Cut Foreign Remittances to Nigeria, Other Countries With New Law

• The US House of Representatives has passed a law imposing a 3.4% tax on remittances to other countries from the US
• Data shows that there are 40 million non-US citizens, including green card holders, temporary workers, and undocumented migrants
• Experts have said that Nigeria stands to lose about $215 million in remittances if the bill crosses all the major hurdles

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The United States government is proposing a bill to tax remittances sent from the country to other countries, including Nigeria, which experts say may pose a setback for the affected countries.

The bill seeks to impose a 3.5% tax on remittances and the money sent by migrants to their home countries and might affect about 40 million non-US citizens, including green card holders, temporary workers and undocumented immigrants.

Nigeria to lose $215m in remittances

According to reports, the bill has passed the US House of Representatives, and if implemented, Nigeria will lose about $215 million in remittances from the US.

The Guardian reports that migrants in other countries globally, including the US, often send remittances to their home countries.

These remittances usually come in the form of cash or electronic transfers through formal or informal channels.

Foreign remittances swell Nigeria’s FX inflows

Nigeria and other African countries depend on these remittances as a source of FX inflow, contributing to their GDPs.

According to data from the Central Bank of Nigeria (CBN), Nigeria recorded over $20 billion in remittances in 2023.

In 2024, Nigeria reportedly received approximately $20 billion in foreign remittances, representing nine per cent of the $19.5 billion recorded the previous year and was the highest in five years.

The Guardian reports that remittance inflows continue, with Nigeria recording $325.76 million in the first quarter of 2025.

The CBN aims to increase monthly remittance inflows to about $1 billion with the introduction of the Non-Resident Bank Verification Number (NRBVN).

Experts predict doom for the naira

Financial analysts say the new bill could negatively affect the naira’s performance in the foreign exchange market.

According to them, foreign remittances are a significant contributor to the Nigerian Foreign Exchange Market (NFEM) and are often used as a buffer against currency fluctuations and volatility.

“If the bill passes all the hurdles, not only will it impact dollar inflows from the US, but it will hurt the naira’s performance.” Janet Ogochukwu, a senior banker and an economist, said.

She disclosed that foreign remittances are an intricate part of Nigeria’s FX inflows and a key contributor to currency stability in Nigeria.

“Now that the naira is on the rise against the dollar, the move could spell doom if not properly handled. But, I believe the CBN is up to the task and will put measures in place to mitigate it,” she said.

World Bank lists African countries with the highest remittance

Legit.ng earlier reported that the World Bank has released the global remittance report, ranking India as the country with the most diaspora remittance in 2023, with about $120 billion.

The global lender said Africa's top 10 recipient countries got about $72.5 billion.

The bank disclosed that there were slightly fair representations of the different regions among the top recipients on the continent, with North African countries ranking among the top 10.

Source: Legit.ng