Nigeria: When Lifelines Are Taxed

Asari Ndem (Lead writer)

There is the quiet fear creeping into many Nigerian households, after the United States government passed a sweeping new economic reform bill that includes a 1% tax on all remittances sent abroad. While this may sound like a marginal policy change in America, its implications for health in low- and middle-income countries like Nigeria are profound.

For years, remittances, the money Nigerians abroad send home, have functioned as an informal but critical health safety net for many. They help families pay for everything from routine health check-ups to life-saving surgeries, as well as basic needs like food and school fees. At the same time, systemic support from international donors, notably the U.S government, has underpinned key public health programmes in the country. Today, both lifelines are under threat.

The new tax and why it matters

Under the Trump administration’s “Big Beautiful Bill,” the U.S introduced a 1% remittance tax. Initially proposed at 5%, the tax was scaled back but still applies to all senders, including American citizens. Experts estimate the measure will reduce global remittance flows by 1.6%, not only because of the tax itself, but because it could potentially reduce or discourages remittance sending overall.

For context, global remittances reached $656 billion in 2023, far outstripping official development assistance. Nigeria alone received an estimated $20.5 billion in 2022, making it one of the top remittance destinations globally. Even a modest 1.6% decline could translate into a loss of ₦147 billion, a figure that could cover critical health needs for millions of households.

With fewer than 10% of Nigerians covered by any form of health insurance, over 70% of healthcare expenditure is paid out-of-pocket.For many families, remittances help to bridge the gap between illness and care, covering the cost of antenatal care and childbirth expenses, emergency surgeries or hospital bills, and managing health crises like cancer or dialysis.

In rural communities and other hard-to-reach areas where health financing options are limited, remittances often mean the difference between timely treatment and preventable death.

The first blow: foreign aid cuts

This new tax does not exist in a vacuum. It follows a series of reductions in official development assistance, particularly in health. Notably,, in September 2024, France announced that it was significantly reducing its foreign aid budget in a draft budget published that month. This reduction included cuts to both bilateral and multilateral health programmes like the Global Fund, Unitaid and others.

In a similar manner, on January 2o, 2025, the US issued an Executive Order for a 90-day pause and assessment of U.S foreign aid awards which eventually led to the shutdown of USAID in March 2025.

In addition, the United Kingdom (UK) announced a reduction in spending on foreign aid from 0.5% of gross national income to 0.3% from 2027. Other countries like Germany, the Netherlands, Belgium and Switzerland have either announced or are looking into cutting spending on foreign aid as they look to increase funding for domestic needs.

Ripple effects on Nigeria’s health system

The implications of reduced remittances go beyond individual households. They are likely to emerge across the country’s health system in several ways, including straining public hospitals as more people will no longer be able to afford private care. Without as much money from family members abroad, people will be negatively impacted if out-of-pocket health costs rise.

Another effect on the health system will be a disruption of free health outreaches that provide medical assistance to various underserved communities nationwide. Many diaspora charities fund free medical missions, offering services such as cataract surgeries, basic screenings, and maternal health checks. These may not be sustainable solutions, but for thousands in rural communities, they are the only access point to care. Reduced remittance flows could lead to fewer outreaches and more untreated illnesses.

Wider public health risks include interruptions in medication adherence for HIV, TB, and other chronic illnesses which could increase complications and mortality. Preventive care delays will raise long-term treatment costs.

Cushioning the blow: A call for Nigerian leadership

Nigeria cannot afford to treat this as a distant policy issue. Its impact will be felt in clinics, pharmacies, and homes across the country, and the government must act decisively to cushion this blow. But what can be done?

Some steps to consider include creating protected channels for health-linked remittances, where tax-free health remittance schemes or bonds are dedicated to medical support. In 2019, PharmAccess Nigeria, in partnership with CarePay and Lagos State Health Agency, (LASCHMA) presented the HealthConnect Diaspora App to enable direct remittances into a “health wallet.” Funds can be used by recipients to pay premiums or access care at SafeCare-certified clinics in Nigeria.

Similar channels can be developed by engaging the diaspora and supported by policies such as the National Digital Economy Policy and the Nigeria Digital in Health Initiative.

Another step could be expanding health insurance and subsidies. Here, there can be an accelerated rollout of community-based health insurance and subsidies for essential medicines for vulnerable groups as provided for in the Basic Health Care Provision Fund. These measures will not fully replace lost remittances or foreign aid, but they can mitigate the worst effects and signal Nigeria’s commitment to safeguarding health security.

The remittance tax may have been introduced as a domestic revenue measure for the U.S, but its ripple effects highlight a critical vulnerability: our dependence on external financial flows, both aid and remittances, to sustain our health system.

When these external streams falter, the consequences are immediate and severe. In health, as in other sectors, Nigeria must chart a path toward self-sufficiency. This means building a health financing system that does not collapse when donor priorities shift or global policies change.

Investing in domestic resource mobilisation, expanding health insurance coverage, and strengthening primary health care needs to be prioritised. External shocks will come and go; resilience must be homegrown.

Health should never be the first casualty of global politics and it should not be left at the mercy of policies made thousands of miles away.