US funding withdawal leaves Sh72bn hole in health budge

The withdrawal of US government funding has opened a major financing gap in Kenya’s health sector, threatening healthcare delivery and outcomes.

A new report shows the US move has also exposed Kenya’s deep dependence on external aid.

The report dubbed Immediate Impact of External Funding Withdrawal on Kenya’s Health Sector was compiled by the Centre for Epidemiological Modelling and Analysis (CEMA) and the University of Nairobi.

It sought to provide a comprehensive analysis of the external funding landscape and track funds within the health care system while also highlighting 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 sector.

The report authors collected data from the Health ministry's approved budgets, commodity quantification reports, human resources budgets, donor-specific annual reports, and development partners’ operational and grant reports. The focus was mainly on service disruptions, equity in service access, workforce implications, and impact on the commodity supply chain and infrastructure.

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

Reproductive, maternal, neonatal, and child health (RMNCH) was the most funded program by external sources, receiving Sh5.85 billion, up from Sh1.04 billion in the previous year.

However, the government contribution was reduced from Sh1.04 billion in 2024/25 to Sh0.54 billion in the 2025/26 financial year, suggesting a crowding-out effect of external funding.

“There was a decline in external and government funding for HIV, malaria and TB. Both external funding from the Global Fund and the government towards the HIV budget declined in the 2025/26 financial year. The external funding from the Global Fund for TB reduced substantially from Sh4 billion in the year 2024/25 budget to Sh1.74 billion in 2025/26 budget,” the report says.

It indicated that the Global Fund budgeted for Sh1.53 billion for malaria in 2025/26, down from Sh4.25 billion the previous year.

The commodity funding gap widened to Sh34.655 billion in the current budget. 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, and that vulnerable populations, including pregnant women, children, adolescents, and adolescent girls and young women are likely to be disproportionately affected,” the report said.

The multilateral external funders are also affected by the change in the US government's foreign aid policy.

Dr. David Khaoya who is the lead author and Senior Research Fellow at CEMA says Global Fund, World Bank, WHO, and GAVI are recipients of the US government funding, and a cut in their global budgets may lead to a reprioritization 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 pointed out that it also presents a critical opportunity for Kenya to reset and build a more self-reliant, resilient health system.

Khaoya 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,” he said.

“Increasing domestic investment, strengthening national ownership, and reducing over-reliance on external aid are essential if we are to protect health outcomes in the future.”

He added that a long-term impact analysis of this withdrawal is currently underway and will be released in due course.