By Yankuba Jallow with New Narratives
- U.S. law imposes new tax on diaspora money transfers
- Remittances vital to Gambia’s foreign currency reserves
- Families brace for financial shock amid U.S. crackdown
A controversial new law signed by President Donald J. Trump on 4 July has sparked anxiety in The Gambia, where nearly one in five households depends on money sent from abroad. Dubbed the “Big, Beautiful Remittance Act” by its Republican sponsors, the law imposes an additional 3.5 percent tax on all U.S. outbound money transfers to more than 80 countries, including The Gambia, in a sweeping crackdown tied to immigration enforcement.
The law, passed narrowly along partisan lines, is designed to fund enhanced border protection in the U.S. and put pressure on governments that fail to accept deported nationals. For The Gambia, it represents a looming economic headache.
According to data published by the Monetary Policy Committee (MPC) of the Central Bank of The Gambia on June 12, private remittance inflows reached $207.9 million in the first quarter of 2025, up from $187.2 million in the previous quarter. The U.S. remains the largest source, contributing 26.3 percent of total remittances during the period.
Earlier this year, on February 27, the MPC reported that annual private remittance inflows for 2024 totaled $775.6 million, compared to $746.8 million in 2023. Remittances continue to be “a major source of foreign currency supply,” the MPC emphasized, helping cushion the country’s balance of payments and fueling household spending on food, school fees, healthcare, and rent.
Remittances, along with tourism and agriculture, form the backbone of The Gambia’s foreign earnings. According to the Central Bank’s first quarter of 2025 balance of payments update, the country’s current account showed signs of improvement “on the back of stronger tourism receipts, steady remittances, and lower electricity imports.” A drop in remittance flows due to new transactional costs could therefore offset some of those recent gains.
Despite public reassurances by the Monetary Policy Committee, analysts warn that even a slight drop in remittances could destabilize low-income households and inflate the cost of living.
For low-income families in The Gambia, who rely on remittances to cover daily needs, the news couldn’t come at a worse time. The price of basic commodities remains high and the cost of basic services continues to rise.
“My brother in Atlanta helps me pay rent and take care of my children,” said Awa Camara, a resident of Serrekunda. “If this tax affects him, it affects all of us.”
The reporter has formally asked the Central Bank of The Gambia for its assessment of the short, medium, and long-term economic implications of the U.S. remittance tax bill on the country’s foreign exchange reserves, balance of payments, and overall macroeconomic stability. The letter inquires whether the Bank has conducted or commissioned any modeling or impact analysis to quantify potential remittance losses if the tax is enforced.
It also seeks information on what policy measures or contingency plans the Bank is considering to mitigate possible disruptions in formal remittance inflows, including risks related to increased reliance on informal money transfer systems.
Additionally, the reporter asked if the Central Bank is engaging regional partners such as the African Development Bank, ECOWAS, or the African Union to coordinate a collective response or diplomatic lobbying to address the bill at a multilateral level.
The letter questions what role digital financial platforms and fintech solutions might play in easing the cost burden on remitters and recipients if formal remittance channels become more expensive due to the new tax.
Finally, the reporter requested the Bank’s view on potential ripple effects on domestic consumption, inflation, or household debt should remittance volumes decline significantly as a consequence of the law. The national bank has promised to respond. Although the Central Bank acknowledged receipt of the inquiry and promised to respond, no official answers have been issued. For over a month, the National bank has still not responded.
A senior official said, “We are working on a comprehensive response,” but gave no details on the timeline. Insiders say the Bank is struggling to quantify the full effect and draft a coordinated policy approach amid economic uncertainties.
“My husband works two jobs in New York just to send us money,” said Awa Ceesay, a mother of three in Latrikunda. “If this tax makes it harder, I don’t know how we will survive. Everything is already expensive.”
Experts are already warning of a ripple effect.
“This tax will almost certainly discourage remittances or lead to people using informal channels,” said financial analyst Modou Cham. “Either way, households in The Gambia will feel the pinch. Less money coming in means higher vulnerability, especially for families already on the edge.”
The Central Bank’s balance of payments estimates for the first quarter of 2025 show an improved current account, driven by “stronger tourism receipts, steady remittances, and lower electricity imports.” That progress could now be undermined.
The new law not only threatens to reduce the volume of remittances but may also burden senders with higher transaction costs. With over 100,000 Gambians living abroad, mainly in the United States and Europe, the diaspora plays a key role in economic resilience.
“I send money every two weeks to my mother in Brikama. This tax means I’ll have to pay more or send less,” said Fatou Jagne, a Gambian nurse living in the U.S. “Either way, it’s the family back home that suffers.”
Families across the country are already bracing for the fallout. In Brikama, Fatoumatta Ceesay said her sister in the U.S. sends her D3,000 every two weeks to feed her four children and make other expenses. “Now, if she is taxed, we will receive less. We are already struggling.”
Others worry that the tax will drive remittance senders into the black market, making the system harder to regulate and more vulnerable to fraud. “People might resort to carrying cash through travelers or using informal networks,” warned a local forex bureau manager in Serrekunda. “This could create chaos.”
The law’s impact will also ripple across The Gambia’s financial sector, including banks, money transfer companies, mobile money operators, and microfinance institutions, many of which rely heavily on transaction fees from remittances. A sudden drop in volume could lead to liquidity shortfalls and job losses in the sector.
In the diaspora, Gambians have reacted with despair. “We send money not because we are rich, but because our families need it,” said Lamin Touray, an accountant in the U.S. “Now, we’re being penalized for helping our own people survive.”
Civil society groups are calling on the Gambian government to act urgently. Some have urged the Ministry of Foreign Affairs, Ministry of Finance, and the Embassy in Washington, D.C. to open diplomatic talks with U.S. lawmakers and development institutions. Others are demanding emergency subsidies or tax reliefs at home to support affected households.
“This is no longer just about the U.S. Congress. It’s about food security in The Gambia,” said Buba Ceesay, a Gambian based in the U.S.
Meanwhile, financial experts and diaspora members are already weighing in.
“This tax will drive people away from formal money transfer services, pushing them toward underground channels,” warned Modou Cham, a policy analyst now operating independently. “And if that happens, it becomes harder for the Central Bank to track inflows, which will affect macroeconomic planning.”
Cham further explained that even a moderate decline in remittance volume could ripple through the economy, shrinking household income and increasing demand for social welfare interventions. “It’s not just an economic issue; it’s a social one,” he said.
A former Central Bank staffer and now an independent financial consultant, urged Gambian authorities to move quickly: “This is a serious issue that calls for urgent government-to-government engagement. The Ministry of Finance and the Foreign Ministry must come up with a diplomatic strategy to advocate for exemptions or, at the very least, minimize the fallout.”
As the remittance tax takes effect in the United States, what happens next could reshape the nation’s economic trajectory and push thousands more families into deeper poverty—unless decisive action is taken.
With implementation of the law, households and businesses across The Gambia are bracing for the impact. Many fear the law could upend the country’s fragile economic progress and deepen vulnerabilities among already struggling families.
As the situation unfolds, all eyes remain on the Central Bank, financial regulators, and government officials to issue clear guidance and perhaps even launch policy interventions to protect one of the country’s most vital economic arteries. Gambian policymakers are now facing urgent questions about how to shield the economy from external shocks.
This story was a collaboration with New Narratives as part of the West Africa Justice Reporting Project.
