BILATERAL RELATIONS

US channels over Sh300bn to Kenya annualy – report

Diaspora remittances at Sh54.9 billion annually

In Summary

•NGO activities by over 1,000 US-based NGOs in Kenya contributed $270 million (Sh28.7billion)per year.

•American tourists generate $190.7 million(Sh20.3 billion)  in annual revenues for Kenya annually.

US Ambassador Kyle McCarter
US Ambassador Kyle McCarter
Image: FILE

The United States’ relationship with Kenya delivers over $3 billion (Sh318.7 billion ) annually to the Kenyan people and economy, a report by Washington based—AidData indicates.

According to findings by the research lab at William & Mary’s Global Research Institute, the US government has given nearly $4.5 million (Sh478.1 million ) to combat Covid-19 in Kenya since March .

The country has also benefitted from $19 million(Sh2.02 billion) extended to Kenya, Ethiopia, and Somalia to fight East Africa’s worst outbreak of desert locusts in decades.

 
 
 

The data shared through the US Embassy, Nairobi, on Thursday indicates one out of every three dollars in the $3 billion per year valuation of the total US contribution to Kenya, comes from broad engagement with US society,in addition to Foreign Direct Investments.

Remittances (money sent home) by Kenyans living and working in the US is estimated at $517.6 million (Sh54.9 billion) annually.

NGO activities by over 1,000 US-based NGOs in Kenya contributed $270 million (Sh28.7 billion)per year.

Visiting American tourists generate $190.7 million(Sh20.3 billion) in annual revenues for Kenya, the report indicates.

This is about 12.4 per cent of the total 163.6 billion earned by the sector in 2019—Tourism Research Institute data, with US as the top market source for Kenya where arrivals totalled 245,437, up from 225,157 in 2018.

The seven largest US private foundations funded development activities emphasising health, food security, and good governance are worth $87.3 million (Sh9.2 billion) annually.

Americans also give $4.6 million (Sh488.8 million) annually in private donations and micro-loans for development projects in Kenya, the report indicates.

 
 
 

Despite this long-standing relationship, Kenyan leaders and the public do not have information readily available to assess the value of their country’s partnership with the US, notes Samantha Custer, AidData’s Director of Policy Analysis, and a co-author of the report.

“Past research focused narrowly on individual projects financed by the US government,” Custer said in a statement on Thursday.

Only a third of the total American contribution to Kenya—roughly $1 billion (Sh106.3 billion) annually—comes from foreign aid, the report finds.

The rest includes benefits emerging from favourable trade policies and broader engagement with US society.

The $3 billion per year is significant, given Kenya’s yearly GDP of $99 billion (Sh 10.518 trillion ) in 2019. 

In addition to large volumes of aid targeted towards Kenya's health sector, the United States has also been supporting Kenya on its security, peace building and conflict management priorities.

Between 2010 and 2018, the US government directed over $700 million (Sh74.3 billion) in total to peace and security efforts, such as strengthening Kenya’s ability to counter terrorist threats from groups like Al Shabab.

The US government also trained more than 3,400 Kenyan security officials over the same period.

Given the challenges of quantifying non-official investments and financial flows, the estimated $3 billion per year in tangible benefits to Kenya from the US-Kenya relationship are conservative estimates, notes Mihir Prakash, AidData Senior Research Analyst and a co-author of the report.

“The total contribution of the United States to Kenya’s growth and development may, in fact, be far greater,” Prakash said.

 Kenya is expected to benefit further from its relations with US from the planned preferential trade deal , whose talks are currently underway.

Kenya is East Africa’s largest business, financial, and transportation hub, with 80 per cent of East Africa’s trade flowing through Mombasa Port, according to the U.S Department of State.

Over the last two decades, Kenya increased its export revenues from the United States by over 285 per cent.

During the same period, the US passed the African Growth and Opportunity Act (AGOA), and is now the largest overseas market for Kenyan textiles and the third-largest importer of Kenyan exports across the board. 

Kenya is also fast becoming a destination for FDIs from US companies.

According to the report, American companies invested almost $300 million (Sh31.9 billion) in Kenya’s economy and created over 1,000 new jobs each year since2015.

 The report includes the perspectives of 133 Kenyan leaders in government agencies, universities, think tanks, and other prominent organizations, who were polled by AidData on how they view the U.S impact on Kenya’s development.

90 per cent reported the US is actively engaged in contributing to Kenya’s development.

80 per cent of these respondents felt that the US made a substantial contribution to helping Kenya achieve its development goals between 2010 and 2020.