Nairobi — Kenya is set to experience significant economic and social disruptions following the abrupt withdrawal of U.S. Agency for International Development (USAID) funding, according to a new report by Faida Bank.
The lender, in its 2025 Macroeconomic Outlook, warned that the funding cut, initially under the Trump administration, will have profound consequences on healthcare, agriculture, and employment across the country.
According to Faida Bank, in 2024 alone, US grants amounting to approximately Sh82.1 billion were crucial in sustaining key sectors such as health and agriculture.
The sudden freeze has already resulted in the loss of at least 35,000 jobs, both directly and indirectly, as numerous non-governmental organizations (NGOs) heavily depend on USAID-backed contracts.
Kenya's healthcare system is expected to bear the heaviest burden, with thousands of doctors, nurses, midwives, and community health workers facing unemployment. USAID had allocated Sh18.8 billion to HIV/AIDS programs, Sh7.6 billion to basic healthcare, and Sh5.8 billion to maternal and child health, including family planning.
The funding withdrawal now threatens the continuity of these programs, jeopardizing access to life-saving medications and essential health services.
The agricultural sector, which has benefited from USAID-funded subsidies on seeds and fertilizers, is another area likely to suffer.
The withdrawal of financial assistance places smallholder farmers in a precarious position, threatening food security, especially for low-income communities reliant on donor-backed support.
The Faida Bank report highlights the urgent need for alternative funding sources to mitigate the impact of the USAID withdrawal.
"If the government were to absorb the funding gap left by the USAID cuts in critical sectors including emergency response, HIV/AIDS, basic health, maternal and child health, and water supply and sanitation, it would require an additional KES 66.9 billion in the FY 2024/25 Supplementary II budget," read the report in part.
"This would further strain fiscal capacity and heighten concerns over debt sustainability."
President Donald Trump had last month signed an executive order to halt all USAID services, a factor that has dealt a blow to vulnerable countries, especially in Africa.
