The recent withdrawal of US government funding has opened a major financing gap in Kenya’s health sector, threatening healthcare delivery and outcomes while exposing the country’s deep dependence on external aid, a new report reveals.

The new report, 'Immediate Impact of External Funding Withdrawal on Kenya’s Health Sector', by the Centre for Epidemiological Modelling and Analysis, University of Nairobi, provides a comprehensive analysis of the external funding landscape and tracks the funds within the healthcare system, highlighting the areas that are most affected.

Kenya’s health system is financed through the government, the private sector and external funders. In 2018-19, external funders contributed 18 per cent of total health expenditure, with the US government accounting for over 60 per cent of all external funding to the overall health sector.

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Dr David Khaoya, lead author and senior research fellow at CEMA, said, “External funding has long played a significant role in Kenya’s health sector, but it is unpredictable and unsustainable.”

“This funding shock is a wake-up call. While the challenges are significant, Kenya and other African countries now have an opportunity to rethink how health systems are financed and build long-term resilience. Increasing domestic investment, strengthening national ownership, and reducing overreliance on external aid are essential if we are to protect health outcomes in the future,” he added.

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To arrive at its findings, the report authors assembled data from the Kenya Ministry of Health approved budgets, commodity quantification reports, human resources budgets, donor-specific annual reports and development partners’ operational and grant reports. Their focus was mainly on service disruptions, equity in service access, workforce implications, and impact on the commodity supply chain and infrastructure.

Key report findings are that external funding for health fell significantly from Sh126 billion to Sh54 billion in the 2025-26 financial year, following the withdrawal of US government support and the decline in government funding.

In the 2025-26 financial year, reproductive, maternal, neonatal and child health was the most funded programme by external sources, receiving Sh5.85 billion, up from Sh1.04 billion in the 2024-25 financial year. However, the government contribution was reduced from Sh1.04 billion for 2024-25 to Sh0.54 billion for 2025-26, suggesting a crowding-out effect of external funding.

The report details that there was a decline in external and government funding for HIV, TB and malaria, while both external funding from the Global Fund and the government towards the HIV budget declined in 2025-26.

The external funding from the Global Fund for TB reduced substantially, from Sh4 billion in the 2024-25 budget to Sh1.74 billion in 2025-26. 

The Global Fund budgeted Sh1.53 billion for malaria in 2025-26, down from Sh4.25 billion.

The commodity funding gap widened to Sh34.655 billion in 2025-26. The report indicates that counties would need Sh47.8 billion annually to absorb all the 41,170 PEPFAR-supported staff, the majority of whom are deployed in high HIV burden counties.

Health information systems used to collect, analyse and disseminate health information in Kenya are highly dependent on external funding.

Vulnerable populations, including pregnant women, children, adolescents and adolescent girls and young women, are likely to be disproportionately affected, widening inequities in access to HIV prevention and treatment services.

In addition, multilateral external funders are also affected by the change in the US government's foreign aid policy. Global Fund, World Bank, WHO and Gavi are recipients of the US government funding. A cut in their global budgets may lead to a reprioritisation of their interventions in the country to fit within their resource envelopes.

While the withdrawal of external funding poses serious risks to health service delivery, the report argues it also presents a critical opportunity for Kenya to reset and build a more self-reliant, resilient health system.

A long-term impact analysis of this withdrawal is currently underway and will be released when completed.