Kenya Warns ‘Trump Effect’ Poses Threat to Its Economy
Africa nations worry U.S. may push for changes in trade pact
IMF facility not sufficient buffer against Trump policies
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