Setback for Kenya as Trump Withdraws Funding for Haiti Mission

In Summary

1. Trump’s 90-day foreign aid freeze halts over $13 million for Haiti's international security mission, amid ongoing concerns over gang violence in Port-au-Prince.
2. The IFC is investing €15 million (Ksh2 billion) in AfricInvest’s private equity fund to support SMEs across Africa, aiming to raise €180 million (Ksh24 billion).
3. The Tax Appeals Tribunal ruled that banks must charge VAT on assets sold through auctions, including repossessed vehicles, reinforcing KRA’s stance on tax obligations.
4. Foreign investors continued selling shares at the Nairobi Securities Exchange in January, with net outflows totaling Ksh1.04 billion, though inflows in 2024 doubled compared to 2023.
5. A PSC report revealed unchecked office expansions in five key public institutions, inflating Kenya’s wage bill by Ksh136 billion over two years, further straining the economy.
6. Trump criticized South Africa’s land reform policy, claiming land confiscations and discrimination, igniting global debates on land ownership and apartheid-era legacies.

In a report by Reuters, Trump's 90-day freeze on foreign aid has halted over $13 million in U.S. funding for an international security mission in Haiti, threatening efforts to combat armed gangs controlling most of Port-au-Prince. The mission, which involves nearly 900 police and troops from countries including Kenya, El Salvador, and Jamaica, depends on voluntary contributions, with Canada being the largest donor. Kenya, a key participant, has pledged nearly 1,000 police officers. With over $110 million (Ksh14.1 billion) already contributed  to a UN trust fund for the mission, the freeze risks undermining peacekeeping efforts and could force Kenyan taxpayers to absorb the financial burden to maintain the country's commitment. This comes as Trump signals plans to dismantle USAID, potentially reshaping foreign assistance policies.

The International Finance Corporation (IFC) is investing €15 million (Ksh2 billion) in a private equity fund managed by AfricInvest to support small and medium-sized enterprises (SMEs) across Africa. The fund aims to raise €180 million (Ksh24 billion) and will target companies in sectors like retail, IT, manufacturing, agribusiness, healthcare, and education. Investments will focus on firms in countries where AfricInvest operates, including Kenya, Nigeria, and Egypt, with a cap on North African investments. IFC’s backing is expected to boost access to private equity capital for SMEs and strengthen Africa’s private equity market despite high interest rates making fundraising difficult as reported in the Business Daily.

The Tax Appeals Tribunal has ruled that banks must charge Value Added Tax (VAT) on assets seized from loan defaulters, including vehicles sold through auctions. KCB Bank had challenged this, arguing that auctioning repossessed assets was part of credit recovery, which is VAT-exempt. However, the Tribunal dismissed KCB’s appeal against KRA’s VAT assessment of Ksh1.2 billion, stating that the VAT Act does not exempt such sales. According to The Star the ruling establishes that banks act as sellers in these transactions and must fulfill tax obligations, reinforcing KRA’s stance that VAT applies to auctioned assets.

Foreign investors remained net sellers at the Nairobi Securities Exchange (NSE) in January, offloading shares worth Ksh1.04 billion and extending last year’s exit trend, which saw net outflows of Ksh2.3 billion in 2024. According to the Business Daily, the continued selloffs are attributed to capital repatriation driven by higher interest rates in developed markets and uncertainty in emerging economies. Despite this, foreign purchases in 2024 surpassed 2023 levels, signaling renewed investor confidence, with inflows doubling to Ksh44.8 billion. Analysts at AIB-AXYs Africa note that easing dollar shortages and the strengthening of the Kenyan shilling have made it easier for investors to repatriate returns. While foreign participation fell to a 21-month low of 35.49% in December, experts anticipate a rebound in 2025, supported by the shilling’s stability and Kenya’s increased presence in global investment indices.

In a report by the B.B.C, U.S. President Donald Trump has criticized South Africa’s land reform policy, claiming—without evidence—that the country is "confiscating land" and discriminating against "certain classes of people." His comments, echoed by Elon Musk, have reignited global debate on land ownership disparities dating back to apartheid. South African President Cyril Ramaphosa defended the policy, saying no land has been seized and that reforms aim to ensure fair access. The African National Congress (ANC) dismissed Trump's remarks as misinformation spread by right-wing lobby groups, while AfriForum, a group advocating for white landowners, has called for U.S. sanctions on South African leaders.

A new Public Service Commission (PSC) report has revealed that five key public institutions—State House, Kenya Ports Authority (KPA), Kenya Railways Corporation (KRC), Public Service Commission (PSC), and the State Department for Parliamentary Affairs—have been creating new offices without conducting workload analyses, significantly inflating Kenya’s public wage bill. Of the 4,749 new offices established over the past three financial years, a staggering 98.5% were created without proper assessment, with KPA and KRC leading in unchecked expansions. The wage bill has surged by Ksh136 billion in just two years, reaching Ksh1.17 trillion in 2023/24. While legal provisions require workload analysis before office creation, 88% of institutions ignored this rule, citing resource constraints and bureaucratic inefficiencies. The unchecked hiring spree highlights a major governance challenge, further straining taxpayers amid Kenya’s ongoing economic pressures as reported in the Business Daily.