Treasury Cabinet Secretary John Mbadi has disclosed that Kenya will experience a budgetary shortfall of approximately Sh52.3 billion following a reduction in financial support from the United States.
While addressing senators, Mbadi explained that the funds were allocated to various programs across key sectors, including health, economic growth, water, and environmental conservation.
“The estimated amount for these programs is approximately USD 158.9 million, while the total assistance from USAID for the 2024/25 financial year stands at around USD 405.4 million,” he stated.
The CS clarified that despite the significance of USAID’s support, the funds were not directly included in the national budget since they were managed by non-state actors and private sector partners contracted by the agency.
“USAID funding supplements government investments but is not disbursed or accounted for through government financial systems. The National Treasury only facilitates tax exemptions related to these programs,” Mbadi explained.
He was responding to queries raised by Kakamega Senator Boni Khalwale regarding the impact of the funding cut.
To cushion the country from the effects of the funding reduction, the Treasury is reviewing existing budget allocations to prioritize critical areas such as healthcare, education, governance, and food security.
“We are conducting a review of budget allocations to ensure that key services remain funded. These adjustments will be included in Budget Estimates Supplementary III,” he noted.
Additionally, Mbadi urged county governments to take similar measures to ensure essential services remain uninterrupted.
The government is also engaging with other development partners to explore alternative funding and technical assistance, particularly for initiatives previously supported by USAID.
“For instance, in the universal healthcare program under the Social Health Authority (SHA), we are ensuring that vulnerable populations continue to access essential services such as screenings, dialysis, transplants, medication, and critical medical equipment,” he added.
Mbadi further emphasized that the government is working towards reducing dependency on external aid by strengthening local revenue streams and improving financial sustainability.
The decision by the US to reduce aid follows policy shifts introduced during former President Donald Trump’s administration, which led to significant changes in USAID programs globally.
Analysts warn that the funding cut could have far-reaching economic and social consequences, particularly in developing nations where USAID plays a crucial role in food security, healthcare, and poverty alleviation.
