BUSINESS: Sweeping U.S. legislation sends economic shockwaves through Africa

A landmark U.S. law, passed on July 4, 2025, is triggering far-reaching indirect consequences for African economies, investors, and policymakers.

Dubbed the One Big Beautiful Bill Act (OBBBA), the sweeping legislation signed by President Donald J. Trump extends domestic tax cuts, boosts defense and border enforcement, and scales back social and climate programs—while sending unmistakable signals about shifting U.S. global priorities.

Though the bill does not explicitly target Africa, its policy shifts are poised to reshape Africa’s engagement with U.S. markets, finance, and immigration regimes—raising critical questions as the African Growth and Opportunity Act (AGOA) nears expiration.

1. U.S. Pivot Away from Africa-Centric Trade Policy

The OBBBA makes no mention of AGOA, the cornerstone trade policy that has enabled duty-free exports from eligible African countries since 2000.

With AGOA set to expire by the end of 2025, its omission signals Washington’s clear turn inward.

Despite this, a White House Africa Summit held on July 9, 2025, hosted five African heads of state and emphasized U.S. interest in strategic sectors—particularly critical minerals.

Yet, these executive-led conversations remain outside OBBBA’s legislative architecture, lacking guaranteed funding or implementation mechanisms.

2. New U.S. Remittance Tax Could Drain Africa’s Informal Economy

Beginning January 1, 2026, the law imposes a 1% federal tax on all outbound remittances—including money transfers, wire transactions, and money orders sent from the United States abroad.

For Sub-Saharan Africa—recipient of over $54 billion in formal remittances in 2023, with half originating from the U.S.—this new tax is likely to slash inflows by up to $270 million annually, with downstream effects on household consumption, education, and small business development.

“This provision directly contradicts global efforts to reduce remittance costs and risks reversing years of progress in financial inclusion,” said a senior analyst at the African Development Bank.

As remittance costs to Africa already average 7.9%, the tax may push senders toward informal and unregulated channels, raising concerns around money laundering, loss of data, and reduced transparency.

3. Rising Global Borrowing Costs Threaten Africa’s Debt Sustainability

The Congressional Budget Office projects that OBBBA will add $3 trillion to the U.S. national debt over the next decade.

That surge is expected to drive up U.S. Treasury yields and global interest rates.

For African nations and businesses holding dollar-denominated debt, this signals a tougher borrowing environment ahead—risking higher servicing costs, limited fiscal space, and potential default risks.

4. U.S. Pullback on Climate Support Puts Africa’s Green Transition at Risk

The bill also repeals or shortens several clean energy incentives first introduced under the Inflation Reduction Act (IRA) of 2022, marking a stark reversal in America’s climate leadership:

Electric Vehicle Charger Tax Credit now ends mid-2026—six years early.

Residential Solar and Battery Credits expire in December 2025.

EV Purchase Incentives and Battery Manufacturing Credits are fully repealed.

Energy-Efficient Home Upgrades lose support from 2026 onward.

For Africa, the fallout could be severe:

Estimated loss of $3.5–$7 billion in U.S.-linked green financing over 5–7 years.

Renewable energy project costs could rise by 5–8%, straining infrastructure budgets.

Investment redirection to fossil fuels could undermine renewable development in countries like Nigeria, Angola, and Mozambique.

Currently, Africa attracts less than $20 billion annually for renewable energy—far short of the $100 billion needed each year to reach its 2030 target of 300 GW, up from 66 GW in 2024 (IRENA).

5. Tougher Immigration and Visa Policies for African Nationals

The OBBBA directs over $195 billion toward immigration enforcement by 2029, reinforcing a hardline stance.

It also introduces new visa and humanitarian application fees that disproportionately affect African travelers and migrants:

$250 Visa Integrity Fee for all non-immigrant U.S. visas

$1,000 fee for Humanitarian Parole applications

$5,000 apprehension fine for undocumented border crossers

New restrictions on federal benefits for legal migrants, including refugees and green card holders

Additionally, starting July 8, 2025, a separate policy from the U.S. Department of State limits visa validity for nationals from 31 African countries—reducing multiple-entry durations to three-month, single-entry status.

These restrictions are expected to cause a 30–50% decline in repeat travel for African business professionals, students, and diaspora families, notably from Nigeria, Ghana, Kenya, and Ethiopia.

6. What Africa Should Monitor Closely

EBII Group advises African governments and businesses to stay vigilant on the following fronts:

Visa and migration fee schedules, effective FY 2026

U.S.-Africa trade negotiations, especially around minerals and manufacturing

Global interest rate trends and their impact on African debt markets

Clean energy funding realignments, particularly U.S. involvement in African renewables

Importantly, a proposed digital tax enforcement clause (Section 899), which could have penalized African countries with unilateral digital taxes, was removed from the final bill.

EBII Group’s Call to Action

With the global policy landscape shifting rapidly, EBII Group Corp urges African leaders, investors, and civil society to adopt a proactive, coordinated response to these new dynamics.

"This bill may not have Africa in its crosshairs, but the collateral damage is significant. Our continent must engage decisively, not reactively,” said Dr. Ebi Ofrey, CEO of EBII Group.

As part of its engagement strategy, EBII will host the 2025 African Leaders & Partners (ALP) Forum on September 18–19 in Washington, D.C., under the theme: “De-risking Investment in Africa’s Strategic Sectors: Agriculture, Energy Transition, and Critical Minerals.”

ABOUT EBII GROUP

Headquartered in Washington, D.C., EBII Group Corp is a global advisory firm specializing in risk intelligence, public policy engagement, and market entry strategy across Africa, the U.S., and the UK.

The firm facilitates impactful partnerships through executive roundtables, diaspora engagement, regulatory navigation, and training initiatives.

Key Services Include:

Political & ESG risk advisory

Government affairs and policy strategy

Trade and compliance advisory

Strategic convenings and research

Executive education in partnership with U.S. universities

The One Big Beautiful Bill Act underscores an evolving global order in which U.S. domestic priorities may increasingly eclipse longstanding commitments to international development.

For Africa, the moment demands agility, strategic engagement, and regional cooperation.

As the clock ticks on AGOA and climate finance uncertainty grows, Africa must ensure its interests remain visible and vital in the next chapter of U.S. foreign and economic policy.

In other development, EBII GROUP AFRICAN LEADERS & PARTNERS FORUM 2025 ANNUAL SUMMIT: De-risking Investment in Africa's Strategic Sectors: Agriculture, Energy

Transition, and Critical Minerals is scheduled to come off from Sept 18-19, 2025; Washington, D. C

Story by: Joshua Kwabena Smith