In a week that could redefine the future of cross-border financial flows, two of Africa’s most important remittance corridors — the United States and the United Kingdom — have proposed sweeping legislative changes that could drastically alter the economics of sending money home. For the fintech firms that have built sleek apps and billion-dollar dreams on the back of diaspora transfers, the message from Washington and Westminster is clear: the honeymoon may be over.
In Washington, the House Ways and Means Committee has unveiled its draft of what it dubs “the one, big, beautiful bill” — a 300+ page tax plan that, buried deep on page 327, proposes a 5% levy on all international remittance transfers from the U.S., with a few patriotic exceptions for U.S. citizens. That’s right: sending money to your family abroad may soon cost not just a transaction fee, but a tax, because nothing says fiscal responsibility quite like taxing the wages of immigrants wiring $100 to their grandmother in Lagos.
Meanwhile in London, the UK government has released its long-awaited immigration white paper, “Restoring Control over the Immigration System” — an epic bureaucratic reconfiguration of how migrants are welcomed, monitored, and (when politically convenient) told to leave. Among its many targets are international students, foreign care workers, and, critically for African economies, the migrants who form the backbone of the remittance economy.
When Governments Attack: Remittances in the Firing Line
Remittances have long been the unsung hero of Africa’s financial story — steady, dependable, and largely underappreciated in policy circles. In 2023, Africans in the diaspora sent an estimated $100 billion home, far outstripping foreign direct investment and official aid combined. In countries like Nigeria, Ghana, Egypt, and Morocco, remittance inflows are not a nice-to-have — they are a macroeconomic pillar.
According to the World Bank, the U.S. remains the largest sender of remittances globally, with $93 billion wired out in 2023 alone. A healthy chunk of this ends up in African economies, financing everything from school fees to startup capital. “It’s not just charity,” says Paul Vaaler, a professor at the University of Minnesota. “That $100 can buy a pickup truck, which runs a farm by day and becomes a taxi by night. It’s the informal economy’s VC funding.”
Enter Congress, stage right, with its 5% tax proposal. Supporters argue it could help fund immigration enforcement or border security. Detractors — which include just about everyone who has ever sent or received a remittance — warn it will drive money underground. José Iván Rodríguez-Sánchez of Rice University warns: “People aren’t going to send $95 when they meant to send $100. They’ll find another way — formal or not.”
Indeed, taxing remittances to solve immigration is like taxing umbrellas to solve rain. The likely outcome? Reduced formal flows, a boost to black-market channels, and financial exclusion for families in need.
UK Migration Policy: Now with More Bureaucracy (and Fewer Remittances)
Across the Atlantic, Britain has decided that the best way to manage migration is with more paperwork and longer queues. The UK’s new immigration blueprint is a labyrinthine restructuring of visa categories, salary thresholds, and settlement timelines. Key among the reforms: closing the social care visa route (a lifeline for many African migrants), tightening student visa access, and doubling the timeline for Indefinite Leave to Remain to ten years for most categories.
This is not just immigration policy by spreadsheet — it’s economic policy with unintended consequences. The African diaspora in the UK sends billions home each year. From the care workers in East London wiring money to Nairobi, to students from Lagos moonlighting part-time while funding degrees, these migrants are not just living in Britain; they are sustaining entire communities across Africa.
By making migration harder, more expensive, and less predictable, the UK risks choking off a vital artery of financial flows. “Higher income thresholds, more compliance hoops, and fewer job categories eligible for visas — it’s a death by a thousand cuts,” says an immigration solicitor in London who asked not to be named. “It’s not just about who gets in — it’s about who stays and what they send home.”
Fintechs on the Front Line
At the heart of this looming disruption are Africa’s remittance-focused fintechs — from TapTap Send and Chipper Cash to Flutterwave and LemFi— who have built their business models on making it faster, cheaper, and easier for diaspora workers to send money back home. They offer competitive fees, instant transfers, and slick apps with better UX than most banks have managed in decades.
And for a while, it worked. In Nigeria, formal remittances rose 43.5% in 2024 to $4.73 billion through licensed operators. Morocco pulled in $12 billion last year, and Egypt consistently ranks among the world’s top five recipients. These flows have helped buffer currencies, finance consumption, and support millions of households.
But fintechs face a new reality: their core users are being squeezed at both ends. In sending countries like the U.S. and UK, tighter migration policies and potential remittance taxes threaten the volume and regularity of transfers. On the receiving end, regulatory pressure from African central banks is rising, with tighter exchange controls, compliance demands, and mandatory licensing requirements.
Even the much-touted “digital disruption” has its limits. In countries where mobile money penetration is high, like Ghana or Kenya, fintechs still need banking partners and regulatory clearance. And while players like Flutterwave are expanding remittance services across West Africa, success depends on stable corridors — and predictable policy environments.
The Risk of a Two-Tier Remittance System
If the U.S. remittance tax is implemented — and if the UK’s immigration reforms reduce the number of African migrants with legal status — we could see a bifurcation of the remittance market: a formal, taxed, heavily regulated system used by middle- and upper-income senders; and a shadow market of cash couriers, crypto channels, and informal networks used by everyone else. To put the scale of the challenge in perspective: licensed remittance firms in Nigeria processed just 23% of the country’s $20.93bn in remittance inflows in 2024. With new compliance crackdowns from the West, that figure could fall even further — pushing many fintechs to the edge.
That’s bad news for transparency, financial inclusion, and state revenues. And it undermines the very fintechs that have helped formalise and digitise remittances in the first place.
Final Transfer: Who Really Pays?
It is, perhaps, the ultimate irony. While policymakers in Washington and Westminster claim to be restoring order or plugging budget deficits, the ones who will foot the bill are not the elites — but migrant nurses in Wolverhampton, Uber drivers in the Bronx, and their families in Kumasi or Kano.
For African remittance fintechs, the future now hinges not just on innovation, but on navigating geopolitics, whether from the US or the UK. Disruption, it seems, isn’t always digital.