Uganda, a major recipient of America’s foreign aid, could find herself in a tough position after the 47th President of the United States of America, Donald Trump issued an executive order halting all foreign development assistance pending review in a manner that aligns, and is consistent with Trump’s new government priorities.
“The United States foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values. They serve to destabilize world peace by promoting ideas in foreign countries that are directly inverse to harmonious and stable relations internal to and among countries,” the executive order reads in part.
President Trump has therefore ordered all department and agency heads with responsibility for United States foreign development assistance programs to immediately pause new obligations and disbursements of development assistance funds to foreign countries and implementing non-governmental organizations, international organizations, and contractors pending reviews of such programs for programmatic efficiency and consistency with United States foreign policy.
“The Office of Management and Budget (OMB) shall enforce this pause through its apportionment authority. The responsible department and agency heads, in consultation with the Director of OMB, will make determinations within 90 days of this order on whether to continue, modify, or cease each foreign assistance program based upon the review recommendations, with the concurrence of the Secretary of State,” the Order reads.
President Trump also noted that the new obligations and disbursements of foreign development assistance funds will resume for a program prior to the end of the 90-day period if a review is conducted, and the Secretary of State or his designee, in consultation with the Director of OMB, decide to continue the program in the same or modified form.
President Trump has also recalled U.S membership and contractors, including U.S staff from the World Health Organisation (WHO), and also paused the future transfer of any United States Government funds, support, or resources to the WHO. U.S funding to WHO is estimated USD 1.2 billion per year.
The World Health Organisation remains a major implementing in Uganda, especially in identifying and responding to emergencies, stopping disease threats from spreading across borders and advancing other key public health priorities.
President Trump has also made an order to immediately cease or revoke any purported financial commitment made by the United States under the United Nations Framework Convention on Climate Change, and global climate actions.
It is not immediately clear how the funding order will affect Uganda which receives a substantial amount of U.S development assistance. The CEO Magazine is following up this new development with the U.S Embassy in Uganda and government, and will keep you updated.
The United States through her 13 government agencies that comprise the U.S Embassy in Uganda invests almost $1 billion (Shs 3.7 trillion) annually in Ugandan communities.
This is largely through more than 100 implementing partners and civil society organizations, according to the U.S. Mission in Uganda’s 2022 Report to the Ugandan People.
Currently, much of the U.S. government’s foreign assistance in Uganda focuses on health, governance and activities to improve food security; develop and implement policies to improve marketing and trade; and create an enabling environment for the private sector to invest.
Ugandan Economists weigh in
Uganda is already experiencing significant budget cuts after Finance State Minister Henry Musasizi announced a reduced budgeting funding for the 2025/26 Financial Year by UGX 15 trillion from the current UGX 72 trillion.
John Walugembe, the Oxford-trained Economist and Executive Director of Federation of Small and Medium-sized Enterprises – Uganda (FSME) said, Uganda is still dependent on U.S aid in certain sectors especially the health budget, and other aspects of private sector development.
“All these areas are still dependent on U.S support and aid. So, it will definitely be negative thing to us. But at the same time, the U.S itself will lose because a lot of this money goes back to the U.S economy through purchase of drugs from the US pharmaceutical companies.” Mr. Walugembe noted.
Mr Walugembe suggest that it is likely the President Trump could be sending a political message through supporting the America first policy.
Mr Julius Mukunda, the Executive Director, Civil Society Budget Advocacy Group (CSBAG) echoes Mr. Walugembe’s expert thoughts, noting that with the U.S government investing close to a trillion shillings in in key areas such as funding for HI/AIDS, refugee programs, nutrition, disease control; an indication that the halt for 90 days could cause a lot of disruptions.
“We hope that this revision should not take longer than this, otherwise it will be a big threat interms of our economic prospects,” Mr. Mukunda said.
From an economic perspective, Stephen Kaboyo, the Managing Director at Alpha Capital Partners says, since Trump’s win in November last year, the US dollar has been on upward trajectory, strengthening against major world and emerging market currencies, underpinned by Trump’s pro- growth and inflationary policies. The effects of sustained dollar strength are already manifesting by pressurizing other currencies as investors flow back into the US market.
Kaboyo argues that the major risk therefore is the contagion effect from the dollar bullish stance, high inflation, and an increasingly complex geostrategic landscape that will cause a knock on effect on global economic growth. It is also expected that soon the Federal Reserve will begin raising interest rates again.
“Foreign aid is an important component of Uganda’s fiscal system. Donor aid provide the necessary resources to fill gaps in key sectors that are not adequately funded through the main budget. Any disruption in donor aid flow is likely to cause shocks in fiscal planning where government cash position is already constrained,” Kaboyo sums up.
This is a developing a story….