African Countries Could See Dramatic Decrease In U.S. Aid Under Trump Administration

Photo: East African Business Week
(file photo)

Kenya and Tanzania are among African countries likely to face a drop in foreign aid as the new U.S. administration cuts spending to create room for increased infrastructure expenditure, according to a new report.

The report by the Institute of Chartered Accountants in England and Wales says the Trump presidency raises the risk of the U.S. rolling back development aid, thus affecting dependent countries such as Kenya, Tanzania, Ethiopia, Nigeria and the Democratic Republic of Congo.

The accountancy and finance body said that signs of an expansionary fiscal stance under the Trump administration, coupled with spending cuts to build dollar reserves for infrastructure development, are likely to lead to a decrease in aid to African countries.

“Aid is probably the main channel through which a change in U.S. policy under a new president could impact Africa,” states the fourth quarter (2016) report commissioned by ICAEW and produced by partner and forecaster Oxford Economics.

“Policymakers and businesses across the continent will be keen to see President-elect Trump’s plans for development policies once he takes office,” the report adds.

Donald Trump is expected to be formally inaugurated as the country’s 45th president on Jan. 20, 2017.

According to the report, and drawing on insights from the Organization for Economic Co-operation and Development, the U.S. is sub-Saharan Africa’s major donor in bilateral official aid, with over $9 billion distributed to the region to date.

It is followed by the United Kingdom, with just under $4 billion distributed, and France with just over $2 billion.

In terms of official development aid receipts in East Africa, Ethiopia received the largest amount at over $3.5 billion, followed by Kenya and Tanzania with over $2.5 billion each and Uganda with over $1.5 billion.

Doing business

According to the report, the change in the U.S. administration also will affect Africa’s trade and investment prospects. It states that steady progress is being made in the continent’s business environment, with Mauritius ranked 49th out of 190 countries globally in terms of the ease of doing business.