1 00:00:02,520 --> 00:00:11,280 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. The US President wants 2 00:00:11,320 --> 00:00:14,960 Speaker 1: to tax money sent out of the US by non citizens. 3 00:00:15,480 --> 00:00:18,640 Speaker 1: Instead of taxing our citizens to enrich foreign nations, we 4 00:00:18,680 --> 00:00:23,439 Speaker 1: should be terrifing and taxing foreign nations to enrich our citizens. 5 00:00:23,440 --> 00:00:27,560 Speaker 1: Does that make sense? But with many Africans sending remittance 6 00:00:27,760 --> 00:00:30,960 Speaker 1: back to families in countries such as Nigeria, could this 7 00:00:31,080 --> 00:00:33,760 Speaker 1: policy force money transfers underground? 8 00:00:33,960 --> 00:00:37,040 Speaker 2: Global remittance or global payments is really a need, not 9 00:00:37,120 --> 00:00:40,159 Speaker 2: a want. The global worker is very resilient and so 10 00:00:40,520 --> 00:00:43,360 Speaker 2: as they are as we're going through this process, what 11 00:00:43,400 --> 00:00:45,599 Speaker 2: we find is that workers are moving around to make 12 00:00:45,600 --> 00:00:48,000 Speaker 2: sure that they work in best places to send money 13 00:00:48,000 --> 00:00:48,440 Speaker 2: back home. 14 00:00:48,760 --> 00:00:52,160 Speaker 1: On today's podcast, we're looking at the impact this tax 15 00:00:52,200 --> 00:00:55,040 Speaker 1: could have on people relying on this income and the 16 00:00:55,160 --> 00:00:58,240 Speaker 1: knock on impact it could have on Africans choosing to 17 00:00:58,320 --> 00:01:05,240 Speaker 1: work or study in America. I'm Jennifer's Abasaja and this 18 00:01:05,440 --> 00:01:08,759 Speaker 1: is the Next Africa Podcast, bringing you one story each 19 00:01:08,840 --> 00:01:12,080 Speaker 1: week from the continent driving the future of global growth 20 00:01:12,120 --> 00:01:18,040 Speaker 1: with the context only Bloomberg can provide. In a moment, 21 00:01:18,080 --> 00:01:20,960 Speaker 1: we'll hear from our Nigeria Bureau Chief Anthony jos Brown. 22 00:01:21,040 --> 00:01:25,039 Speaker 1: But first let's speak with doctor Lydia Kamuntu Bossire. She's 23 00:01:25,040 --> 00:01:28,640 Speaker 1: the founder of eight B Education Investments and she's based 24 00:01:28,680 --> 00:01:32,280 Speaker 1: in New York. So Lydia, thanks so much for joining us. 25 00:01:32,640 --> 00:01:35,880 Speaker 1: Your focus is on the higher education sector and you 26 00:01:35,959 --> 00:01:38,920 Speaker 1: work with a number of people who come from Africa 27 00:01:38,959 --> 00:01:42,120 Speaker 1: to study in the United States. How big of a 28 00:01:42,160 --> 00:01:46,240 Speaker 1: deal are remittances in this sector? How much if you 29 00:01:46,360 --> 00:01:49,800 Speaker 1: can quantify for us, how much are people actually sending 30 00:01:49,840 --> 00:01:50,320 Speaker 1: back home? 31 00:01:51,960 --> 00:01:57,840 Speaker 3: Missionss are the current story in large part because we've 32 00:01:57,920 --> 00:02:03,840 Speaker 3: seen h slashing of aid funding across the continent, initially 33 00:02:03,840 --> 00:02:07,440 Speaker 3: from USAID as well as from other dollars, and so 34 00:02:07,720 --> 00:02:11,600 Speaker 3: the discussion becomes where are the other sources of funding? 35 00:02:11,720 --> 00:02:17,919 Speaker 3: And it turns out that remittances have been significantly larger 36 00:02:17,919 --> 00:02:23,760 Speaker 3: than official development assistance for some time, depending on which 37 00:02:23,840 --> 00:02:26,919 Speaker 3: data you look at, and these numbers do vary depending 38 00:02:26,960 --> 00:02:29,679 Speaker 3: on if you know North Africa is being included in 39 00:02:30,680 --> 00:02:37,600 Speaker 3: that story. The remittances the most recent data, remittances are 40 00:02:37,680 --> 00:02:41,959 Speaker 3: about ninety billion dollars a year going to the African continent, 41 00:02:42,480 --> 00:02:45,560 Speaker 3: compared to something between thirty six billion to forty two 42 00:02:46,000 --> 00:02:52,600 Speaker 3: billion dollars of official development assistance for my constituency in particular, 43 00:02:53,080 --> 00:02:57,600 Speaker 3: already within my student population. We finance African students in 44 00:02:57,639 --> 00:03:02,679 Speaker 3: global universities, and they already are sending money home from 45 00:03:03,200 --> 00:03:09,680 Speaker 3: their compass work and other engagements. Our recent impact survey 46 00:03:09,800 --> 00:03:13,200 Speaker 3: shows that on average, they're sending about one hundred and 47 00:03:13,280 --> 00:03:16,480 Speaker 3: ninety five dollars a month our students, and seventy seven 48 00:03:16,520 --> 00:03:20,640 Speaker 3: percent of them already send remittances home. What happens is 49 00:03:20,680 --> 00:03:26,200 Speaker 3: that remittances are an outflow from what they asperans. The 50 00:03:26,240 --> 00:03:29,800 Speaker 3: students who have moved abroad send home, and when they 51 00:03:29,880 --> 00:03:32,160 Speaker 3: become workers, they send home even more. 52 00:03:32,240 --> 00:03:32,400 Speaker 4: So. 53 00:03:32,480 --> 00:03:36,000 Speaker 3: This is the trend that we contribute to and that 54 00:03:36,040 --> 00:03:37,360 Speaker 3: we see in Lydia. 55 00:03:37,480 --> 00:03:40,680 Speaker 1: Considering what you were mentioning there, what we've seen in 56 00:03:40,720 --> 00:03:44,080 Speaker 1: twenty twenty five, and again some of the students and 57 00:03:44,120 --> 00:03:47,520 Speaker 1: the constituency that you deal with on a day to 58 00:03:47,560 --> 00:03:50,880 Speaker 1: day basis in your work, what is the concern about 59 00:03:51,080 --> 00:03:55,360 Speaker 1: whether or not this new levee on remittances passes, especially 60 00:03:55,360 --> 00:03:58,640 Speaker 1: for some of these students who aren't even making a 61 00:03:58,680 --> 00:04:00,760 Speaker 1: lot of money yet aren't even worthy looking full time. 62 00:04:00,800 --> 00:04:01,560 Speaker 1: What's the concern. 63 00:04:02,040 --> 00:04:05,560 Speaker 3: The big concern is that this affects how much can 64 00:04:05,600 --> 00:04:11,920 Speaker 3: be sent home because remittances are really currently they finance consumption, right, 65 00:04:12,000 --> 00:04:15,960 Speaker 3: it is the cousin who needs skool fees that these 66 00:04:16,000 --> 00:04:22,040 Speaker 3: resources go to. And by taxing remittances, particularly from non citizens, 67 00:04:22,040 --> 00:04:25,359 Speaker 3: which seems to be where the focus will go, it 68 00:04:25,400 --> 00:04:30,640 Speaker 3: will make those flows lower than have been. My sense 69 00:04:30,960 --> 00:04:33,360 Speaker 3: is it will not discourage them. It will just take 70 00:04:33,400 --> 00:04:38,400 Speaker 3: them underground and enable the flows to happen in ways 71 00:04:38,400 --> 00:04:42,360 Speaker 3: that are harder to track and therefore perhaps harder to 72 00:04:42,839 --> 00:04:47,679 Speaker 3: drive into a more structured vehicle for organized development. Because 73 00:04:47,720 --> 00:04:50,559 Speaker 3: in fact, that is the big question, which is, given 74 00:04:50,640 --> 00:04:55,120 Speaker 3: the scale of remittances, what are the avenues by which 75 00:04:55,839 --> 00:05:01,680 Speaker 3: those resources can be channeled into programs that advance development 76 00:05:02,080 --> 00:05:07,640 Speaker 3: separately from or in addition to supporting consumption across families. 77 00:05:07,880 --> 00:05:10,279 Speaker 1: And we know that a number of governments have actually 78 00:05:10,320 --> 00:05:12,920 Speaker 1: been trying to do away with a lot of the 79 00:05:13,000 --> 00:05:16,560 Speaker 1: so called black markets or underground networks as you allude 80 00:05:16,600 --> 00:05:20,480 Speaker 1: to there Lydia. What's the link here to higher education 81 00:05:20,680 --> 00:05:23,599 Speaker 1: and potentially some of the trends that we've been seeing 82 00:05:24,400 --> 00:05:27,719 Speaker 1: as it pertains to African students and higher education in 83 00:05:27,760 --> 00:05:28,640 Speaker 1: the US. 84 00:05:29,760 --> 00:05:32,719 Speaker 3: So there's a number of headwinds facing higher education in 85 00:05:32,760 --> 00:05:36,760 Speaker 3: the US. As you know, the current administration has put 86 00:05:36,880 --> 00:05:41,800 Speaker 3: a pause in neil visa appointments for students, and this 87 00:05:41,880 --> 00:05:45,480 Speaker 3: is the season where o behalf of students who are 88 00:05:45,480 --> 00:05:50,400 Speaker 3: holding offers to US universities go for their appointments. Is 89 00:05:50,440 --> 00:05:53,080 Speaker 3: a lot of advocacy going on in the US to 90 00:05:54,040 --> 00:05:57,880 Speaker 3: get that window of visa appointments to be open again. 91 00:05:58,520 --> 00:06:03,440 Speaker 3: The challenge with visa appointments not being available is that 92 00:06:03,520 --> 00:06:06,479 Speaker 3: many students who hold offers in the US also hold 93 00:06:06,520 --> 00:06:10,159 Speaker 3: offers elsewhere, and so you're likely to see this massive 94 00:06:10,200 --> 00:06:14,240 Speaker 3: talent outflow that was initially distinct from to the US 95 00:06:14,640 --> 00:06:21,279 Speaker 3: head elsewhere. What also is happening globally is an awareness 96 00:06:21,360 --> 00:06:25,160 Speaker 3: of what's going on demographically, which is that Africa has 97 00:06:25,320 --> 00:06:29,320 Speaker 3: the largest number of college age students, fastest growing number 98 00:06:29,360 --> 00:06:32,160 Speaker 3: of college age students, and they're looking to take their 99 00:06:32,200 --> 00:06:35,280 Speaker 3: talents to places that welcome them. So we are likely 100 00:06:35,360 --> 00:06:38,320 Speaker 3: to see a decline, at least in the short term 101 00:06:38,680 --> 00:06:41,000 Speaker 3: of the numbers coming to the US, which will be 102 00:06:41,040 --> 00:06:44,640 Speaker 3: a shame because we had really started seeing African numbers 103 00:06:44,760 --> 00:06:47,800 Speaker 3: rising year after year. Having said that this is a 104 00:06:47,839 --> 00:06:50,839 Speaker 3: trend that there's nothing to be done about right. The 105 00:06:50,880 --> 00:06:56,039 Speaker 3: trend of African youth looking for opportunities globally is with us. 106 00:06:56,200 --> 00:06:59,800 Speaker 3: It's not going anywhere global university is particularly in the OIC. 107 00:07:00,040 --> 00:07:03,120 Speaker 3: You're facing a demographic cliff. They need these young people, 108 00:07:03,600 --> 00:07:06,880 Speaker 3: these young people looking for opportunities there. So the movement 109 00:07:06,920 --> 00:07:09,680 Speaker 3: will continue. It may be facing head winds right now, 110 00:07:09,720 --> 00:07:12,640 Speaker 3: but we do know that it will continue after the 111 00:07:12,680 --> 00:07:13,400 Speaker 3: current season. 112 00:07:13,800 --> 00:07:16,440 Speaker 1: Lydia, thanks so much for joining us and for sharing 113 00:07:16,480 --> 00:07:19,400 Speaker 1: those insights. It's great to have you. And let's turn 114 00:07:19,560 --> 00:07:23,720 Speaker 1: to Nigeria now. Anthony os Brown is joining us. Anthony, 115 00:07:23,840 --> 00:07:27,800 Speaker 1: so you oversee Nigeria, which is one of the largest 116 00:07:27,800 --> 00:07:31,720 Speaker 1: recipients of remittance money. Can you put into context just 117 00:07:31,800 --> 00:07:36,280 Speaker 1: how important these funds are for the economy and for Nigerians. 118 00:07:36,880 --> 00:07:42,360 Speaker 4: Relitiances are quite significant to the Nigerian economy. We get 119 00:07:43,080 --> 00:07:49,560 Speaker 4: totally somewhere around twenty to twenty five billion annually from remediances, 120 00:07:49,760 --> 00:07:52,520 Speaker 4: and a good chunk of this comes from the US. 121 00:07:52,800 --> 00:07:55,840 Speaker 4: I'm not too sure the exact percentage, but it could 122 00:07:55,840 --> 00:07:58,320 Speaker 4: be close to half of it coming from the US 123 00:07:58,320 --> 00:08:01,320 Speaker 4: because of the large nature and the esperate community in 124 00:08:01,360 --> 00:08:04,600 Speaker 4: the US, and a lot of this money going to 125 00:08:04,800 --> 00:08:08,640 Speaker 4: supporting very poor families. As you know, Nigeria has almost 126 00:08:08,800 --> 00:08:11,960 Speaker 4: half of this population that are very poor. So those 127 00:08:12,000 --> 00:08:14,760 Speaker 4: who are able to get out of the country send 128 00:08:14,960 --> 00:08:19,400 Speaker 4: bondly back home to their families to support them. Healthcare 129 00:08:19,480 --> 00:08:23,000 Speaker 4: is a big portion of remittance expenditures and then a 130 00:08:23,080 --> 00:08:27,400 Speaker 4: good part of it goes into real estate investments, support schooling, 131 00:08:27,800 --> 00:08:32,280 Speaker 4: education training, all forms of vocational training. A lot of 132 00:08:32,360 --> 00:08:36,200 Speaker 4: families depend on their people are brought to support, especially 133 00:08:36,240 --> 00:08:41,560 Speaker 4: the aged population, because there's no social security in Nigeria. 134 00:08:41,679 --> 00:08:45,200 Speaker 4: So yeah, so remitiancs is just plas a key role 135 00:08:45,240 --> 00:08:48,760 Speaker 4: in the ecadomy and another key role in places even 136 00:08:48,880 --> 00:08:50,800 Speaker 4: in supporting currency stability. 137 00:08:51,200 --> 00:08:54,840 Speaker 1: And and if you could explain that a bit more, 138 00:08:55,400 --> 00:09:00,920 Speaker 1: how remittances and potentially a decline and remittances would affect 139 00:09:01,040 --> 00:09:03,880 Speaker 1: the NYRA and the stability that we've seen over the 140 00:09:03,880 --> 00:09:05,080 Speaker 1: past few months. 141 00:09:05,480 --> 00:09:09,000 Speaker 4: The Central Bank sees remittances as a key part of 142 00:09:09,040 --> 00:09:12,880 Speaker 4: its foreigners change reserves accumulation policies. So last year I 143 00:09:12,960 --> 00:09:16,720 Speaker 4: set the target of at least getting remittances through the 144 00:09:16,800 --> 00:09:20,960 Speaker 4: official channels rising to about six hundred million currently to 145 00:09:21,000 --> 00:09:23,640 Speaker 4: about a billion dollars a month. Because a lot of 146 00:09:23,720 --> 00:09:27,839 Speaker 4: remediencies can also come introue on official sources. Has a 147 00:09:28,000 --> 00:09:32,560 Speaker 4: history of unofficial power market, foreigners change market, and because 148 00:09:32,600 --> 00:09:36,079 Speaker 4: of official policies, most of the money remittance money was 149 00:09:36,120 --> 00:09:39,040 Speaker 4: going through the power market. But now the Central Bank 150 00:09:39,080 --> 00:09:42,760 Speaker 4: has set a direct policy of trying to attract remittances 151 00:09:42,800 --> 00:09:46,360 Speaker 4: through the official market, and that basically is to use 152 00:09:46,400 --> 00:09:51,160 Speaker 4: it to support currency stability. So if remittences drop through 153 00:09:51,200 --> 00:09:54,400 Speaker 4: the official sources, you could see it possibly impacting on 154 00:09:54,760 --> 00:09:57,160 Speaker 4: currency neyrastability locally, So. 155 00:09:58,240 --> 00:10:00,760 Speaker 1: Not something they'll they'll want to have to deal with 156 00:10:00,920 --> 00:10:05,920 Speaker 1: after the past few years of relative instability and volatility. Anthony, 157 00:10:05,960 --> 00:10:08,400 Speaker 1: stick with us when we come back. We're going to 158 00:10:08,400 --> 00:10:10,760 Speaker 1: dig into more of the wider effects of some of 159 00:10:10,760 --> 00:10:14,840 Speaker 1: these policies on US Africa relations. We'll be right back. 160 00:10:20,800 --> 00:10:24,000 Speaker 1: Welcome back. Today we're looking at the proposed tax on 161 00:10:24,160 --> 00:10:29,480 Speaker 1: remittances and the impact it could have on countries across Africa. Anthony, 162 00:10:29,720 --> 00:10:33,920 Speaker 1: we've talked a lot on this podcast about the increasingly 163 00:10:34,040 --> 00:10:38,600 Speaker 1: fraught relations between the US and several countries across the continent. 164 00:10:39,320 --> 00:10:43,240 Speaker 1: How do you see this policy likely to change things, 165 00:10:43,400 --> 00:10:47,760 Speaker 1: especially considering some of those factors you pointed there remittance 166 00:10:47,840 --> 00:10:52,640 Speaker 1: is very important for the livelihoods for a number of Africans. 167 00:10:53,040 --> 00:10:57,319 Speaker 4: Yeah, I think this just adds to be increasingly negative 168 00:10:57,360 --> 00:11:00,480 Speaker 4: perception of the US. They just close down you said, 169 00:11:00,640 --> 00:11:03,640 Speaker 4: they just closed down Voice of America, which was a 170 00:11:03,800 --> 00:11:08,040 Speaker 4: key part of the media network, especially in northern Nigeria. 171 00:11:08,720 --> 00:11:12,360 Speaker 4: So US is a big destination for US and Nigeria 172 00:11:12,440 --> 00:11:17,160 Speaker 4: students who want to study abroad and even for people 173 00:11:17,160 --> 00:11:20,839 Speaker 4: who want to leave the country and everything. But increasingly 174 00:11:20,920 --> 00:11:23,400 Speaker 4: the latest policies from the art of the US has 175 00:11:23,440 --> 00:11:26,520 Speaker 4: made US less attractive for a lot of people. And 176 00:11:26,559 --> 00:11:29,400 Speaker 4: this just adds to it is the own fairness of 177 00:11:29,480 --> 00:11:34,000 Speaker 4: the whole process. The fact that the people who have 178 00:11:34,160 --> 00:11:38,240 Speaker 4: worked and are taxed, are already taxed officially, will be 179 00:11:38,360 --> 00:11:42,040 Speaker 4: taxed a second time. So that's that alone. Already they're 180 00:11:42,040 --> 00:11:45,520 Speaker 4: spending about six percent on an average cost to send 181 00:11:45,520 --> 00:11:47,520 Speaker 4: money locally. By the time you add this three point 182 00:11:47,520 --> 00:11:50,600 Speaker 4: five percent tax, you're looking at ten percent of So 183 00:11:50,679 --> 00:11:53,960 Speaker 4: anybody sending a thousand dollars is losing by one hundred dollars. 184 00:11:54,000 --> 00:11:57,240 Speaker 4: That will make the US a bit less attractive for 185 00:11:57,320 --> 00:12:01,080 Speaker 4: people who want to send money back home and students generally. 186 00:12:01,160 --> 00:12:04,439 Speaker 4: That makes it quite unattractive because most students while they're 187 00:12:04,720 --> 00:12:07,920 Speaker 4: schooling also work and send money back home. So it 188 00:12:08,080 --> 00:12:11,800 Speaker 4: just adds to the perception of US as less of 189 00:12:11,880 --> 00:12:17,640 Speaker 4: an attractive destination for Nigerians and even the country has 190 00:12:18,000 --> 00:12:20,560 Speaker 4: less influential in Nigerian affairs. 191 00:12:20,720 --> 00:12:24,000 Speaker 1: Have we heard anything from officials at this point, Anthony, 192 00:12:24,040 --> 00:12:26,240 Speaker 1: And do you expect will hear anything. 193 00:12:27,559 --> 00:12:31,200 Speaker 4: I don't think officially you hear anything. I don't think 194 00:12:32,080 --> 00:12:35,800 Speaker 4: the government will react in any way. The government will 195 00:12:35,840 --> 00:12:40,240 Speaker 4: want something different, but then if that's happening, they may 196 00:12:40,320 --> 00:12:43,640 Speaker 4: not officially take a stand. But I think what you 197 00:12:43,640 --> 00:12:48,200 Speaker 4: will see is people they average Nigeria looking for alternatives 198 00:12:48,320 --> 00:12:51,680 Speaker 4: on wa are to go to school on Europe is 199 00:12:51,800 --> 00:12:54,760 Speaker 4: likely to be a bigger destination going forward, and they 200 00:12:54,880 --> 00:12:58,760 Speaker 4: possibly even Asia. Increasingly Nigerians are looking at Asia and 201 00:12:58,840 --> 00:13:03,480 Speaker 4: alternatives for schooling. Most Nigerians prefer those who can afford 202 00:13:03,520 --> 00:13:06,280 Speaker 4: it at the higher level, mostly the middle income Nagerians 203 00:13:06,480 --> 00:13:09,280 Speaker 4: prefer their children's schooling outside the country, at least when 204 00:13:09,320 --> 00:13:13,040 Speaker 4: comes university and master's levels. So with these policies from 205 00:13:13,080 --> 00:13:16,760 Speaker 4: the US will likely see most of more Nigerians students 206 00:13:16,760 --> 00:13:20,360 Speaker 4: going towards Asia and possibly Europe. 207 00:13:21,559 --> 00:13:23,839 Speaker 1: Anthony. Thank you so much for joining us and for 208 00:13:23,920 --> 00:13:27,960 Speaker 1: your reporting, and thanks also to doctor Lydia kmunto Bossire 209 00:13:28,559 --> 00:13:32,080 Speaker 1: for speaking with us earlier. You can read all of 210 00:13:32,120 --> 00:13:36,280 Speaker 1: our coverage of President Trump's tax bill across Bloomberg platforms. 211 00:13:36,360 --> 00:13:41,680 Speaker 1: Now here's some of the other stories from the region 212 00:13:41,800 --> 00:13:46,920 Speaker 1: we've been following. This week, South Africa's National Assembly approved 213 00:13:47,000 --> 00:13:50,840 Speaker 1: the Treasury's fiscal framework, bringing the adoption of the annual 214 00:13:50,880 --> 00:13:54,720 Speaker 1: budget a step closer after months of wrangling over tax 215 00:13:54,760 --> 00:14:00,760 Speaker 1: increases and logistics. Giant DHL Group plans to vest about 216 00:14:00,800 --> 00:14:05,040 Speaker 1: five hundred and seventy five million dollars in healthcare services 217 00:14:05,040 --> 00:14:07,560 Speaker 1: in Africa and the Middle East over the next five 218 00:14:07,640 --> 00:14:12,679 Speaker 1: years to capitalize on China's push into the regents. You 219 00:14:12,720 --> 00:14:16,160 Speaker 1: can find these stories on Bloomberg platforms, including in the 220 00:14:16,200 --> 00:14:18,760 Speaker 1: Next Africa Newsletter. We'll put a link to that in 221 00:14:18,800 --> 00:14:25,560 Speaker 1: the show notes. This program was produced by Adrian Bradley 222 00:14:25,640 --> 00:14:28,640 Speaker 1: and Tiba Adebio. Don't forget to follow and review the 223 00:14:28,720 --> 00:14:33,040 Speaker 1: show wherever you usually get your podcasts. I'm Jennifer's Abasanta. 224 00:14:33,200 --> 00:14:35,560 Speaker 1: Thanks as always for listening. We'll see you next time.