Kenya Pushes for an Extension of Trade Deal Amid Uncertainty

In Summary

• Kenya is pushing for the extension of AGOA to protect over Ksh50 billion in exports as new US tariffs threaten thousands of jobs amid uncertainty around the trade deal.
• Kenya has secured a new fuel deal with three Gulf firms that will see diesel prices drop by up to 14% per tonne, potentially lowering pump prices for consumers.
• The Auditor General's report reveals that millions in bursaries from the National Government-Constituency Development Fund remain unaccounted for due to missing documentation.
• The U.S. has cancelled all visas for South Sudanese nationals in protest over the country's refusal to accept deported citizens.
• Experts warn that the 2025/26 budget could worsen poverty, increase the cost of living, and hinder vital healthcare reforms.
• Lack of budgetary allocation has stalled the government’s resettlement plans, leaving Coast squatters in limbo as disputes over land ownership intensify.

Kenya is banking on the African Union to help secure an extension of the African Growth and Opportunity Act (AGOA), which allows selected goods duty-free access to the US market, following new US tariffs that have raised doubts over the future of the trade deal, as reported by The Business Daily. The framework, set to expire in September 2025, supports Kenya’s textile and agriculture exports and has helped generate over Ksh50 billion in trade and created more than 58,000 direct jobs. Concerns have grown among local exporters as the U.S. has yet to confirm whether it will renew AGOA, with some businesses scaling back due to the uncertainty. Kenya is also pursuing a bilateral trade deal with the U.S., though talks have slowed since 2018. The government remains hopeful for a 16-year extension and plans to double cotton farming to feed the textile industry, which has been the biggest beneficiary of AGOA.

The United States has revoked all visas held by South Sudanese passport holders and halted new issuances, accusing South Sudan of refusing to accept the return of its repatriated citizens. According to Reuters, U.S. Secretary of State Marco Rubio stated the move was in line with the country’s policy to penalise nations that do not cooperate with deportation efforts. The decision comes amid rising fears of a new civil war in South Sudan, following the house arrest of First Vice President Riek Machar, a key figure in the 2013–2018 conflict that killed hundreds of thousands. Tensions have escalated between President Salva Kiir’s government and Machar’s allies, with fighting reported in the Upper Nile region. African Union mediators are currently in Juba for talks to prevent renewed violence.

The Auditor General's report for the year ending June 2024 has revealed that several constituencies failed to account for millions of shillings in bursary payments, as reported by The People’s Daily. The report flags instances where bursaries, amounting to millions, were disbursed to secondary schools and tertiary institutions without providing essential supporting documents, such as beneficiary lists, acknowledgement receipts, and application forms. For example, in Mbeere South, over Ksh56.7 million was spent on bursaries, but lacked proper documentation. Similar issues were reported in constituencies like Baringo Central, Balambala, and Nyakach, where bursary payments totalling millions were not supported by required paperwork, raising concerns about the accuracy and proper utilisation of the funds. The report highlights serious issues of non-compliance with regulations, leaving many bursary disbursements unverified and in breach of public finance laws.

Kenya’s 2025/26 budget, which includes proposed tax hikes and subsidy cuts, is expected to push an additional two million people into poverty, according to experts, as the country already grapples with a 16.5 per cent inflation rate. The Tax Justice Network estimates that the expansion of VAT on basic goods by 18 per cent could erode eight per cent of purchasing power for low-income households, deepening the divide between rising taxes, stagnant wages, and neglected sectors like agriculture. The Parliamentary Budget Office (PBO) warns that the budget will leave vulnerable families with even less hope for a better future, with inflation and tax increases contributing to a steady decline in real wages. Despite a projected revenue increase, experts express concern over the government’s spending priorities, with Ksh3.22 trillion allocated to recurrent expenditure and only Ksh676.7 billion set aside for development projects. The PBO also highlights the lack of clarity regarding funding for essential healthcare reforms, which could further jeopardise access to medical care for millions of Kenyans. With mounting debt and an uncertain fiscal future, the budget risks deepening the country’s economic crisis, as reported by The Standard.

In a report by The Business Daily, three Gulf State-owned firms—Saudi Aramco, Abu Dhabi National Oil Company, and Emirates National Oil Company—have agreed to reduce diesel prices for Kenya by up to 14 percent per tonne under an extended supply deal running until 2027. Kenya will now purchase diesel at Ksh10,080.72 per tonne, down from Ksh11,373, offering potential relief for fuel consumers. 

Thousands of squatters along Kenya’s Coast face uncertainty after the Senate Land Committee revealed that no money was set aside in the latest supplementary budget for land purchase, despite President William Ruto’s earlier announcement that Ksh1.5 billion had been allocated for their resettlement. According to The Standard, during a Senate hearing in Mombasa, it emerged that the government’s promise remains a verbal commitment, with committee chair Mohamed Faki stating that not a single shilling had been budgeted for acquiring land. This has raised concerns over the fate of squatters from areas like Mwembe Kuku, Bondeni, Thatini, and Waitiki Farm, who continue to face eviction threats and high land prices of between Ksh4 million and Ksh10 million per plot. Senators and the National Land Commission (NLC) heard multiple petitions and have now halted any ongoing land transactions pending the resolution of disputes. Meanwhile, the NLC cited limited funding as a key reason for delays in addressing 56 cases of historical land injustices. The Senate also plans to summon absentee landlords, including descendants of former Mombasa Liwalis in Oman, to clarify ownership issues and prevent potential violence over disputed land sales.