Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. The US President wants
Speaker 1: to tax money sent out of the US by non citizens.
Speaker 1: Instead of taxing our citizens to enrich foreign nations, we
Speaker 1: should be terrifing and taxing foreign nations to enrich our citizens.
Speaker 1: Does that make sense? But with many Africans sending remittance
Speaker 1: back to families in countries such as Nigeria, could this
Speaker 1: policy force money transfers underground?
Speaker 2: Global remittance or global payments is really a need, not
Speaker 2: a want. The global worker is very resilient and so
Speaker 2: as they are as we're going through this process, what
Speaker 2: we find is that workers are moving around to make
Speaker 2: sure that they work in best places to send money
Speaker 2: back home.
Speaker 1: On today's podcast, we're looking at the impact this tax
Speaker 1: could have on people relying on this income and the
Speaker 1: knock on impact it could have on Africans choosing to
Speaker 1: work or study in America. I'm Jennifer's Abasaja and this
Speaker 1: is the Next Africa Podcast, bringing you one story each
Speaker 1: week from the continent driving the future of global growth
Speaker 1: with the context only Bloomberg can provide. In a moment,
Speaker 1: we'll hear from our Nigeria Bureau Chief Anthony jos Brown.
Speaker 1: But first let's speak with doctor Lydia Kamuntu Bossire. She's
Speaker 1: the founder of eight B Education Investments and she's based
Speaker 1: in New York. So Lydia, thanks so much for joining us.
Speaker 1: Your focus is on the higher education sector and you
Speaker 1: work with a number of people who come from Africa
Speaker 1: to study in the United States. How big of a
Speaker 1: deal are remittances in this sector? How much if you
Speaker 1: can quantify for us, how much are people actually sending
Speaker 1: back home?
Speaker 3: Missionss are the current story in large part because we've
Speaker 3: seen h slashing of aid funding across the continent, initially
Speaker 3: from USAID as well as from other dollars, and so
Speaker 3: the discussion becomes where are the other sources of funding?
Speaker 3: And it turns out that remittances have been significantly larger
Speaker 3: than official development assistance for some time, depending on which
Speaker 3: data you look at, and these numbers do vary depending
Speaker 3: on if you know North Africa is being included in
Speaker 3: that story. The remittances the most recent data, remittances are
Speaker 3: about ninety billion dollars a year going to the African continent,
Speaker 3: compared to something between thirty six billion to forty two
Speaker 3: billion dollars of official development assistance for my constituency in particular,
Speaker 3: already within my student population. We finance African students in
Speaker 3: global universities, and they already are sending money home from
Speaker 3: their compass work and other engagements. Our recent impact survey
Speaker 3: shows that on average, they're sending about one hundred and
Speaker 3: ninety five dollars a month our students, and seventy seven
Speaker 3: percent of them already send remittances home. What happens is
Speaker 3: that remittances are an outflow from what they asperans. The
Speaker 3: students who have moved abroad send home, and when they
Speaker 3: become workers, they send home even more.
Speaker 4: So.
Speaker 3: This is the trend that we contribute to and that
Speaker 3: we see in Lydia.
Speaker 1: Considering what you were mentioning there, what we've seen in
Speaker 1: twenty twenty five, and again some of the students and
Speaker 1: the constituency that you deal with on a day to
Speaker 1: day basis in your work, what is the concern about
Speaker 1: whether or not this new levee on remittances passes, especially
Speaker 1: for some of these students who aren't even making a
Speaker 1: lot of money yet aren't even worthy looking full time.
Speaker 1: What's the concern.
Speaker 3: The big concern is that this affects how much can
Speaker 3: be sent home because remittances are really currently they finance consumption, right,
Speaker 3: it is the cousin who needs skool fees that these
Speaker 3: resources go to. And by taxing remittances, particularly from non citizens,
Speaker 3: which seems to be where the focus will go, it
Speaker 3: will make those flows lower than have been. My sense
Speaker 3: is it will not discourage them. It will just take
Speaker 3: them underground and enable the flows to happen in ways
Speaker 3: that are harder to track and therefore perhaps harder to
Speaker 3: drive into a more structured vehicle for organized development. Because
Speaker 3: in fact, that is the big question, which is, given
Speaker 3: the scale of remittances, what are the avenues by which
Speaker 3: those resources can be channeled into programs that advance development
Speaker 3: separately from or in addition to supporting consumption across families.
Speaker 1: And we know that a number of governments have actually
Speaker 1: been trying to do away with a lot of the
Speaker 1: so called black markets or underground networks as you allude
Speaker 1: to there Lydia. What's the link here to higher education
Speaker 1: and potentially some of the trends that we've been seeing
Speaker 1: as it pertains to African students and higher education in
Speaker 1: the US.
Speaker 3: So there's a number of headwinds facing higher education in
Speaker 3: the US. As you know, the current administration has put
Speaker 3: a pause in neil visa appointments for students, and this
Speaker 3: is the season where o behalf of students who are
Speaker 3: holding offers to US universities go for their appointments. Is
Speaker 3: a lot of advocacy going on in the US to
Speaker 3: get that window of visa appointments to be open again.
Speaker 3: The challenge with visa appointments not being available is that
Speaker 3: many students who hold offers in the US also hold
Speaker 3: offers elsewhere, and so you're likely to see this massive
Speaker 3: talent outflow that was initially distinct from to the US
Speaker 3: head elsewhere. What also is happening globally is an awareness
Speaker 3: of what's going on demographically, which is that Africa has
Speaker 3: the largest number of college age students, fastest growing number
Speaker 3: of college age students, and they're looking to take their
Speaker 3: talents to places that welcome them. So we are likely
Speaker 3: to see a decline, at least in the short term
Speaker 3: of the numbers coming to the US, which will be
Speaker 3: a shame because we had really started seeing African numbers
Speaker 3: rising year after year. Having said that this is a
Speaker 3: trend that there's nothing to be done about right. The
Speaker 3: trend of African youth looking for opportunities globally is with us.
Speaker 3: It's not going anywhere global university is particularly in the OIC.
Speaker 3: You're facing a demographic cliff. They need these young people,
Speaker 3: these young people looking for opportunities there. So the movement
Speaker 3: will continue. It may be facing head winds right now,
Speaker 3: but we do know that it will continue after the
Speaker 3: current season.
Speaker 1: Lydia, thanks so much for joining us and for sharing
Speaker 1: those insights. It's great to have you. And let's turn
Speaker 1: to Nigeria now. Anthony os Brown is joining us. Anthony,
Speaker 1: so you oversee Nigeria, which is one of the largest
Speaker 1: recipients of remittance money. Can you put into context just
Speaker 1: how important these funds are for the economy and for Nigerians.
Speaker 4: Relitiances are quite significant to the Nigerian economy. We get
Speaker 4: totally somewhere around twenty to twenty five billion annually from remediances,
Speaker 4: and a good chunk of this comes from the US.
Speaker 4: I'm not too sure the exact percentage, but it could
Speaker 4: be close to half of it coming from the US
Speaker 4: because of the large nature and the esperate community in
Speaker 4: the US, and a lot of this money going to
Speaker 4: supporting very poor families. As you know, Nigeria has almost
Speaker 4: half of this population that are very poor. So those
Speaker 4: who are able to get out of the country send
Speaker 4: bondly back home to their families to support them. Healthcare
Speaker 4: is a big portion of remittance expenditures and then a
Speaker 4: good part of it goes into real estate investments, support schooling,
Speaker 4: education training, all forms of vocational training. A lot of
Speaker 4: families depend on their people are brought to support, especially
Speaker 4: the aged population, because there's no social security in Nigeria.
Speaker 4: So yeah, so remitiancs is just plas a key role
Speaker 4: in the ecadomy and another key role in places even
Speaker 4: in supporting currency stability.
Speaker 1: And and if you could explain that a bit more,
Speaker 1: how remittances and potentially a decline and remittances would affect
Speaker 1: the NYRA and the stability that we've seen over the
Speaker 1: past few months.
Speaker 4: The Central Bank sees remittances as a key part of
Speaker 4: its foreigners change reserves accumulation policies. So last year I
Speaker 4: set the target of at least getting remittances through the
Speaker 4: official channels rising to about six hundred million currently to
Speaker 4: about a billion dollars a month. Because a lot of
Speaker 4: remediencies can also come introue on official sources. Has a
Speaker 4: history of unofficial power market, foreigners change market, and because
Speaker 4: of official policies, most of the money remittance money was
Speaker 4: going through the power market. But now the Central Bank
Speaker 4: has set a direct policy of trying to attract remittances
Speaker 4: through the official market, and that basically is to use
Speaker 4: it to support currency stability. So if remittences drop through
Speaker 4: the official sources, you could see it possibly impacting on
Speaker 4: currency neyrastability locally, So.
Speaker 1: Not something they'll they'll want to have to deal with
Speaker 1: after the past few years of relative instability and volatility. Anthony,
Speaker 1: stick with us when we come back. We're going to
Speaker 1: dig into more of the wider effects of some of
Speaker 1: these policies on US Africa relations. We'll be right back.
Speaker 1: Welcome back. Today we're looking at the proposed tax on
Speaker 1: remittances and the impact it could have on countries across Africa. Anthony,
Speaker 1: we've talked a lot on this podcast about the increasingly
Speaker 1: fraught relations between the US and several countries across the continent.
Speaker 1: How do you see this policy likely to change things,
Speaker 1: especially considering some of those factors you pointed there remittance
Speaker 1: is very important for the livelihoods for a number of Africans.
Speaker 4: Yeah, I think this just adds to be increasingly negative
Speaker 4: perception of the US. They just close down you said,
Speaker 4: they just closed down Voice of America, which was a
Speaker 4: key part of the media network, especially in northern Nigeria.
Speaker 4: So US is a big destination for US and Nigeria
Speaker 4: students who want to study abroad and even for people
Speaker 4: who want to leave the country and everything. But increasingly
Speaker 4: the latest policies from the art of the US has
Speaker 4: made US less attractive for a lot of people. And
Speaker 4: this just adds to it is the own fairness of
Speaker 4: the whole process. The fact that the people who have
Speaker 4: worked and are taxed, are already taxed officially, will be
Speaker 4: taxed a second time. So that's that alone. Already they're
Speaker 4: spending about six percent on an average cost to send
Speaker 4: money locally. By the time you add this three point
Speaker 4: five percent tax, you're looking at ten percent of So
Speaker 4: anybody sending a thousand dollars is losing by one hundred dollars.
Speaker 4: That will make the US a bit less attractive for
Speaker 4: people who want to send money back home and students generally.
Speaker 4: That makes it quite unattractive because most students while they're
Speaker 4: schooling also work and send money back home. So it
Speaker 4: just adds to the perception of US as less of
Speaker 4: an attractive destination for Nigerians and even the country has
Speaker 4: less influential in Nigerian affairs.
Speaker 1: Have we heard anything from officials at this point, Anthony,
Speaker 1: And do you expect will hear anything.
Speaker 4: I don't think officially you hear anything. I don't think
Speaker 4: the government will react in any way. The government will
Speaker 4: want something different, but then if that's happening, they may
Speaker 4: not officially take a stand. But I think what you
Speaker 4: will see is people they average Nigeria looking for alternatives
Speaker 4: on wa are to go to school on Europe is
Speaker 4: likely to be a bigger destination going forward, and they
Speaker 4: possibly even Asia. Increasingly Nigerians are looking at Asia and
Speaker 4: alternatives for schooling. Most Nigerians prefer those who can afford
Speaker 4: it at the higher level, mostly the middle income Nagerians
Speaker 4: prefer their children's schooling outside the country, at least when
Speaker 4: comes university and master's levels. So with these policies from
Speaker 4: the US will likely see most of more Nigerians students
Speaker 4: going towards Asia and possibly Europe.
Speaker 1: Anthony. Thank you so much for joining us and for
Speaker 1: your reporting, and thanks also to doctor Lydia kmunto Bossire
Speaker 1: for speaking with us earlier. You can read all of
Speaker 1: our coverage of President Trump's tax bill across Bloomberg platforms.
Speaker 1: Now here's some of the other stories from the region
Speaker 1: we've been following. This week, South Africa's National Assembly approved
Speaker 1: the Treasury's fiscal framework, bringing the adoption of the annual
Speaker 1: budget a step closer after months of wrangling over tax
Speaker 1: increases and logistics. Giant DHL Group plans to vest about
Speaker 1: five hundred and seventy five million dollars in healthcare services
Speaker 1: in Africa and the Middle East over the next five
Speaker 1: years to capitalize on China's push into the regents. You
Speaker 1: can find these stories on Bloomberg platforms, including in the
Speaker 1: Next Africa Newsletter. We'll put a link to that in
Speaker 1: the show notes. This program was produced by Adrian Bradley
Speaker 1: and Tiba Adebio. Don't forget to follow and review the
Speaker 1: show wherever you usually get your podcasts. I'm Jennifer's Abasanta.
Speaker 1: Thanks as always for listening. We'll see you next time.