3 May 2017

East Africa: For Uganda and Ethiopia, It's $200m Less in Us Aid

Photo: U.S. Department of Homeland Security (DHS).
U.S. President Trump speaking with Vice President Mike Pence and Secretary of Homeland Security John F. Kelly (file photo).

Uganda and Ethiopia will be the biggest losers in the region in the US President Donald Trump administration proposal to do away with all funding through the development assistance account, instead channelling these monies towards economic assistance.

According to a State Department budget document seen by The EastAfrican, the 2017/18 budget proposes a 30.8 per cent cut to overall foreign aid. In Africa, Washington is looking at saving $777.1 million from the proposed budget cuts prepared early this month.

Within the region, while Somalia will get an increase in funding of about $36.1 million, Ethiopia will suffer the biggest cut at $132.1 million followed by Uganda at $67.8 million. Rwanda and Tanzania will suffer a cut of $50.7 million each while Kenya will see a funding cut of $11.78 million, South Sudan $10.6 million and Burundi $9.4 million.

The proposed budget data also shows that Kenya, Ethiopia, Rwanda, Tanzania and Uganda will continue to receive economic support aid of $201 million with only South Sudan seeing an increase of $10.6 million. It is only Burundi and the African Union that have seen this support -- at $1.65 million -- withdrawn completely.

The US uses the economic assistance fund to promote economic and political stability where it has strategic interests. The fund has been used in anti-extremism funding, improvements to judicial processes and training to the private sector in economic development.

The proposed measures will do away with development aid across the region. Tanzania and Ethiopia will be the biggest losers as they have annually received more than $96 million from Washington as development aid. Kenya will also have to plug the $83 million cut, as will Uganda at $58 million and Rwanda at $49 million. Burundi, Somalia and South Sudan do not receive any development aid from the US.

Data from the non-profit Security Assistance Monitor shows that Tanzania, Kenya, Ethiopia, and Nigeria were among the top five countries to receive the most aid from the US in the past two years.

Tanzania is expected to take a hit, as it has struggled to fill the gaps left after aid was withheld, affecting its budgets over the past two years. It was the first African country to qualify for US development funding under the Millennium Challenge Corporation (MCC), bagging more than $700 million for its energy and road projects.

In February, Finance Minister Philip Mpango sounded the alarm over missed targets for the 2016/17 budget, revealing that the government had only met 37 per cent of the development budget by then.

Last month, at the signing of a five-year $199.74 million grant agreement with the European Union, Permanent Secretary for Finance James Dotto said that the government had a working relationship with Western donors that would see the funding tap reopened.

Interestingly, this was one of the major deals Tanzania had bagged in recent times since the freezing of aid three years ago following the $443.2 million Tegeta Escrow scandal.

Last month, President Trump proposed massive cuts in allocations to the United Nations and America's aid agency USAid in his new budget. In the budget proposal, titled "America First: A Budget Blueprint to Make America Great Again," President Trump planned to increase military spending by $54 billion by reducing allocations to other areas.

The budget for the State Department would be cut by $10.9 billion (28 per cent), from the current $38 billion, to $27.1 billion. He has also proposed to end the $28.2 million funding to the African Development Foundation, a US agency that gives grants of up to $250,000 to communities and small businesses in sub-Saharan Africa.

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