Uncertainty surrounding U.S. policies on trade and immigration poses a major external threat to East Africa’s biggest economy, Central Bank of Kenya Governor Patrick Njoroge said.
While Kenya has sufficient buffers, including a $1.5 billion standby loan facility with the International Monetary Fund to cushion its economy in times of externally induced shocks, there isn’t adequate insurance against a “Trump effect,” Njoroge said, referring to U.S. President Donald Trump’s inclination towards protectionist trade policy and his stance on immigration.
“There could be some headwinds; the most significant ones still remain the extern
Kenya is worried that Trump may suddenly cancel a 16-year-old trade pact known as the African Growth and Opportunity Act, or AGOA. The treaty enacted in 2000 allows dozens of sub-Saharan African countries to export certain goods to the U.S. duty-free. It expires in 2025.
“What would happen if suddenly somebody blows out AGOA or there is a slowdown in remittances,” he said. “The concern is not for just Kenya alone, the concern is worldwide.”
Remittances are the biggest source of foreign currency for the $69.2 billion economy, followed by agricultural exports such as cut flowers and black tea.READ MORE