NAIROBI,Kenya-U.S. President Donald Trump has signed into law a controversial provision imposing a 1% excise tax on all money transfers from the United States to foreign countries,including Kenya.
The law, set to take effect on January 1, 2026, targets remittances sent by migrant workers and is expected to impact the flow of diaspora funds to developing nations.
The move is likely to have serious implications for Kenya, which depends heavily on remittances from its diaspora to support households, fund education, healthcare, and inject capital into small businesses.
According to the Central Bank of Kenya (CBK), Kenyans living in the U.S. sent home $2.63 billion (Sh341.9 billion) in 2024, accounting for more than half (53%) of the total diaspora inflows which stood at $4.95 billion (Sh 643.5 billion)
Experts warn that the new tax could cost Kenyan households an estimated Sh3.4 billion annually.
Analysts say this 1% levy, added to already existing transfer fees of between 6–10%, may push more remittance flows underground or force senders to cut back on support to families.
The Kenya National Bureau of Statistics (KNBS) reported that diaspora remittances reached Sh674.1 billion (approximately $4.8 billion) in 2024, surpassing earnings from tourism, horticulture, tea, and even foreign direct investment.
Remittances have emerged as Kenya’s top foreign exchange earner and accounted for nearly 4.6% of the country’s GDP last year.
“Remittances are Kenya’s top foreign exchange earner, supporting education, healthcare, and livelihoods across millions of households,” stated the KNBS in its latest economic performance review.
The Bureau also cautioned that even a marginal increase in transfer costs could significantly impact the volume of formal remittance flows, as many senders may turn to informal channels or reduce the amount sent altogether.
A 1% increase in cost is estimated to reduce formal remittance flows by up to 1.6%, translating into real losses for families back home and a strain on Kenya’s dollar reserves.
