It started small decades ago, but a steady rise in the number of Kenyans seeking greener pastures abroad has today turned remittances from the diaspora one of Kenya’s fastest-growing foreign exchange earners.
For example, data from the Central Bank of Kenya (CBK) shows that remittances from the diaspora were a record Sh666.7 billion in 2024, reflecting the gains of consistent growth in recent years and largely beating forecasts.
This fairytale, however, now stands threatened by an expanding series of policy measures in prime source markets for Kenya, including the US and Nigeria.
In the US, President Donald Trump has shaken the job market with migration controls, deportations, and a new tax on remittances —the money migrants send home to their families from abroad.
President Trump’s ‘Big Beautiful Bill’, which the US Senate passed in July, imposed a one percent tax on remittances, effective January 1, 2026.
The US remains the biggest source of diaspora cash inflows into Kenya, accounting for more than half of the remittances. Kenyans in the US sent home $1.35 billion (Sh174.47 billion) in the first six months of 2025, a 7.7 percent rise from $1.25 billion (Sh161.55 billion) in the first half of 2024.
Analysts have projected that the new tax by the US would likely reduce remittances sent home through formal channels such as banks and money transfer operators in two ways: by reducing the amount sent, as a portion is diverted towards the tax; and by discouraging remittances altogether.
President Trump’s administration has also shaken up the H1B Visas, which allow American employers to employ foreign nationals and immigrants.
Proposals by the US Department of Homeland Security indicate that the Trump administration would shift the H-1B selection system to favour higher-paid jobs.
Presently, employers must pay either the prevailing wage for a role or the actual wage for similar employees–whichever is higher.
But under the proposed rules, wages would take on even greater importance. This could transform the H-1B into primarily benefiting high-salary roles at deep-pocketed companies, especially in high-demand segments such as artificial intelligence.
Kenyan workers in Nigeria also face some form of disruption due to policy changes on personal income.
On June 26, 2025, President Bola Ahmed Tinubu signed the Nigeria Tax Act (NTA) into law, introducing a raft of changes on corporate and personal income tax effective January 1, 2026.
Starting January 1, 2026, all foreigners working in Nigeria earning above $521 or Sh67,473.35 or 800,000 naira will pay an annual 20 percent personal income tax (PIT).
The West African nation remains a key market for Kenyan workers, with data showing that Kenyans working in Nigeria sent back home $7,214,000 (Sh932,275,499.95) in 2024 alone.
This is the highest since 2021, when they sent back $8 million (Sh1.034 billion)—using the current exchange rate, but its real value at the time was Sh904.23 million.
“If a Kenyan expatriate earns income from Nigeria in respect of an employment duty wholly or partially performed in Nigeria, the expatriate will be liable to personal income tax in Nigeria at a graduated rate from 0 percent to 25 percent, depending on the amount of the income,” Olajide Omosebi, a Global Tax Policy Expert based in the US, told the Business Daily.
“Any person who derives income from Nigeria will be affected, except for some specific employment income that is exempt under Section 13 of the Act.”
Robert Waruiru, Partner at Ichiban Tax & Business Advisory LLP, told the Business Daily that these changes, which are progressive, consolidated and aligned various tax laws, including subjecting foreign employees to income tax.
Workers earning 800,000 naira and below are exempt from PIT.
Diplomatic expats are equally exempt from PIT. Diplomatic expats, according to the Federal Inland Revenue Service, refer to a non-Nigerian professional residing in Nigeria for work purposes (normally in an NGO), often under a formal arrangement facilitated by a work visa or expatriate quota issued by the Nigerian Ministry of Interior.
“Typically, non-residents are only taxed on Nigerian-sourced income. Therefore, expats will pay tax on Nigerian-sourced income. To the extent that a Kenyan expat working in Nigeria pays this tax, they can claim a unilateral tax credit from the Kenya Revenue Authority when filing his/her tax return in Kenya,” said Mr Waruiru.
The knock-on effect will be that diaspora remittances from Nigeria may take a hit in the 2026 reporting period.
