On Monday, Donald Trump, the 47th President of the United States of America made a flurry of decisions, ranging from international trade, immigration and health, with huge spiral effect on mostly developing countries, Kenya included.
Although various institutions are still tabulating the expected economic value of those executive orders, independent economists in Kenya are projecting them to slush the country’s economic growth by almost a percent, from five per cent estimated by the National Treasury.
“The US accounts for over 50 per cent of Kenya’s diaspora remittances, the country’s top foreign exchange earner. It also contributes up to an eighth of the World Health Organization’s budget, which supports essential health needs in the country. When you add that to what the country receives in donations, Trump’s decisions will leave a huge financing gap,’’ an economist Antony Kimoli told the Star.
For instance, Trump’s executive order freezes the disbursement of all US foreign development assistance for 90 days pending a review of “programmatic efficiencies” and ensuring that disbursements are “aligned with the country’s foreign policy.
Trump argues that foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values.
Under the executive order, all department and agency heads with responsibility for the US foreign development assistance programmes shall immediately pause new obligations and disbursement of development assistance funds to foreign countries and implementing non-governmental.
According to OECD statistics of Official Development Assistance, the US is the biggest foreign aid donor, distributing $48 billion in 2021, with about a third of that sum going to sub-Saharan Africa.
Over the 2023/2024 financial year, the US said it had donated almost $3.7 billion.
According to Kimoli, it’s hard to say what conclusions and potential changes the Trump administration’s assessment of foreign development assistance will result in but anticipates many NGOs in Kenya to close shops, leading to loss of tax revenue and jobs.
He adds that this is coming a challenging time, as European donors who collectively are more important for Africa than the US, is spending a higher share of their aid budgets on so-called in-country assistance – on hosting refugees – and have reprioritised some aid towards supporting Ukraine rather than African partners. Under his America First Trade Policy, Trump announced plans to establish an External Revenue Service with a broader plan of using it to collect tariffs, duties and other foreign trade-related revenue.
According to the Institute for Economic Justice (IEJ), this move to impose tariffs and taxes on other countries could disrupt international trade and further complicate the already complex global tax system.
Trump’s memo to the federal agencies to explore the use of a global supplemental tariff to close US trade deficits and the actual imposition of broad-based tariffs will impact the types of goods Africa exports to the US.
Most of these are primary goods,’’ IEJ says in its analysis. Only a few countries like South Africa make and export the kinds of things, like cars, that are in the crosshairs of the Trump turn-in policy.
The analysis adds that if Trump decides to undermine AGOA, there would be an impact as there are countries with sectors such as textiles that do see the US as a major growth market “Trump did not give an indication on the campaign trail that he would, and, so far, he appears to be sticking to the campaign script.” The US and Kenya announced a trade and investment partnership in July 2022.
Talks have been progressing on the way forward in nine areas, including agriculture, anti-corruption, digital trade, environment and climate change action, and workers’ rights and protections.Trump’s announcement that he would withdraw the US from the World Health Organisation solidifies his disapproval of the WHO and its leadership. The US is the WHO’s top donor and partner, contributing $1.284 billion during the 2022–2023 biennium.
The withdrawal of US funding will
negatively impact the WHO and its
partners to identify and respond to
emergencies across the world and
advance other key global health priorities.