By Amadou Manjang
The United States is currently considering a proposal to impose a 5% levy on all international remittance outflows, a move that could have far-reaching consequences for countries that are heavily reliant on remittance inflows, like The Gambia, economist Foday Joof warns.
The proposed bill, titled “The One Big Beautiful Bill,” was introduced on May 12, 2025, and seeks to tax money transfers made by non-citizens or foreign workers to their families abroad. Should the bill be enacted, it would impact millions of recipients in developing countries, including The Gambia.
According to the United Nations Network on Migration, around 10% of The Gambia’s population lived abroad in 2023 in pursuit of better opportunities. Over the past decade, remittances have been critical in sustaining the country’s economy and households.
Data from the Central Bank of The Gambia (CBG) reveals that official remittance inflows rose from US$174.1 million in 2009 to US$329.8 million in 2019 — equivalent to 12% and 18% of GDP, respectively. In 2020, remittance inflows surged to US$589.8 million, a staggering 78.8% increase from the previous year. By 2024, the total had reached US$775.4 million.
These figures place The Gambia among the top remittance-dependent countries in Sub-Saharan Africa, relative to the size of its economy. However, these statistics only account for funds transferred through formal financial channels. A significant portion of diaspora money is believed to flow through informal routes that are not captured by official data.
Remittances not only support household consumption but also serve as a vital source of foreign exchange, helping to stabilise the country’s balance of payments. Consequently, any policy that disrupts this flow could have serious macroeconomic implications.
In an interview with Foroyaa, economist Foday Joof warned that the proposed U.S. levy could discourage the use of formal remittance services due to the increased cost of sending money.
“The immediate impact would likely be a decline in the volume of remittances sent through official channels,” Joof said. “This, in turn, could push more remitters toward informal and unregulated channels to avoid the levy, leading to reduced foreign exchange inflows.”
He explained that funds sent informally are less likely to enter the formal banking system, resulting in diminished foreign currency reserves and potentially greater volatility in the exchange rate.
“Given that The Gambia is an import-dependent economy, a reduction in foreign exchange inflows could lead to further depreciation of the dalasi and heighten inflationary pressures,” he added.
Joof noted that diaspora Gambians might resort to hawala systems, personal couriers, or unregulated digital platforms, which, while cost-effective, pose transparency challenges.
“These informal channels are hard to monitor. They create data gaps and reduce the accuracy of remittance statistics, making it harder for policymakers to design effective economic interventions,” he said.
To mitigate the potential fallout, Joof recommended that the Gambian government and the Central Bank partner with fintech firms to develop low-cost and accessible remittance platforms capable of competing with informal systems.
He also advised a strategic shift toward expanding export-oriented sectors to lessen the country’s dependency on remittances as its primary source of foreign exchange.
