Exit USAID enter G2G: What new funding model means for health sector

“Stop work order meant stopping everything. Switch off computers and care. Patients went to clinics where they were used to collecting their ARVs and attending reviews, only to find the doors shut,” recalls Dr Allan Pamba, Executive Vice-President for Diagnostics in Africa at Roche.

“Things literally stopped. This is a reality for many Kenyans. It is silent but deadly, and lives have been lost because of it,” he adds.

The abrupt change in health financing came after the exit of the United States Agency for International Development (USAID), which had been a key funder of the country’s health sector.

Although funding later resumed for essential commodities, treatment, and diagnostics, some services did not fully recover.

The sudden disruption in support when President Donald Trump returned to office in January 2025, left Kenya with a health funding gap of Sh30.9 billion.

In response, Kenya has entered into a five-year cooperation framework worth $2.5 billion (Sh325 billion) with the US, aimed at saving lives and strengthening the country’s health system.

Under the deal, the US will contribute $1.6 billion (Sh207 billion), while Kenya will provide $850 million (Sh110 billion) in co-financing.

Proponents argue that the Government-to-Government (G2G) funding model fosters national ownership and strengthens accountability through joint financing.

Experts describe the agreement as one of the most significant health deals ever signed between the two countries, committing both governments to accelerate Kenya’s digital health transformation in support of Universal Health Coverage (UHC).

The framework focuses on six key pillars: surveillance and outbreak response, laboratory systems, commodities and supply chains, data systems, the health workforce, and strategic technical interventions.

Under the deal, the US will provide $1.104 billion (Sh142.7 billion) over five years to support Kenya’s commodity needs, including HIV treatment, rapid diagnostic tests, TB preventive therapy, malaria testing and treatment, insecticide-treated mosquito nets, and selected maternal and child health commodities.

In an exclusive interview with The Standard, Health Cabinet Secretary Aden Duale explained that, under the new model, US resources will flow directly to the Kenyan government instead of implementing partners.

The funds will be managed through Kenya’s public financial management systems, channelled via The National Treasury, and implemented based on agreed work plans, budgets, and performance milestones.

“It is designed to strengthen government systems so they can sustainably deliver services to Kenyans, while ensuring transparency, accountability, and alignment with national health priorities,” says Duale.

Health economist and public policy expert Beatrice Kairu, however, warns that the shift requires strong safeguards against misuse of public resources.

“Shifting billions into systems plagued with inefficiencies, opacity, and procurement scandals without reform invites leakage and undermines service delivery,” she observes.

Historically, USAID committed about Sh32.3 billion annually to Kenya’s health sector, supporting county services, HIV/AIDS programmes, malaria control, and maternal and child health initiatives.

In the 2024/25 funding cycle, the US flagship HIV initiative—the President’s Emergency Plan for AIDS Relief (PEPFAR) delivered about $322 million (Sh43 billion), largely through USAID and partner organisations.

This funding supported HIV testing, antiretroviral treatment for more than 1.3 million people, supply chains, laboratories, and tens of thousands of frontline health workers.

Duale says Kenya already has robust public financial management systems that will underpin oversight.

Funds will be tracked through the Integrated Financial Management Information System (IFMIS), audited by the Office of the Auditor-General, and scrutinised by parliamentary oversight committees, alongside joint reviews with the US government.

“One of the key lessons we have learned over the years is the importance of strengthening national systems rather than bypassing them. This model reinforces Kenya’s sovereign accountability structures while ensuring transparency in the use of public resources,” he says.

The five year framework places strong emphasis on digital health.

For example, US will support enhancements to Kenya’s TaifaCare Health Management Information System (HMIS) by 2026, integrating laboratory and pharmacy systems and onboarding stand-alone platforms such as the National Logistics Management Information System (NLMIS) and surveillance systems.

“Over the course of this framework, the US plans to fund HMIS enhancements and maintenance, including Kenya Electronic Medical Records systems, and to develop one comprehensive laboratory information management system,” the agreement states.

It also includes support for digitising emergency operations, surveillance, outbreak response, and inventory management systems.

The US plans to invest $175 million (Sh22.6 billion) in data systems over five years, while Kenya continues expanding its digital infrastructure.

Both governments will jointly define covered data systems, including the type of data, authorised users, access levels, and permitted reports.

“The Government of Kenya shall provide data derived from health programmes in the form of aggregate-level data from dashboards, reporting tools, and other aggregate systems,” reads the data-sharing preamble.

Data sharing according to the framework will comply with the Data Protection Act (2019), the Digital Health Act (2023), and other regulations to ensure Kenya’s health information remains secure. Currently, Kenya has deployed TaifaCare HMIS in about 1,500 public health facilities, with ongoing rollout of eCHIS integrated with the national health information exchange.

Under the surveillance pillar, the US will fund annual training of 250 Kenyan personnel in disease detection, notification, response, and field epidemiology, with Kenya allowing emergency use authorisation by the US Food and Drug Administration (FDA) for medical countermeasures during disease outbreaks.

But the actualisation of the deal has been halted following a court case challenging the framework, citing data-sharing and national sovereignty concerns.

Petitioners, including Busia Senator Okiya Omtatah, argue the deal could expose citizens to privacy violations, stigma, and misuse of sensitive health information.

Insiders, however, say only aggregated data will be shared with American government.

“Data is critical for accountability. What the US needs to know is how many women benefited from maternal services or how many children have been immunised. It is not personal data such as ‘David has HIV and is taking ARVs,” says an insider.

The data, according to insiders, shall be used to evaluate programmes, determine funding priorities and ensure continuity of services.

“Data enhances accountability to US taxpayers. If we say Kenyans need ARVs, this must be supported by numbers. We need to know how many people, for budgetary allocation reasons, and analyse impact of the funding,” adds the insider.

Even with the sharing arrangement, Kenya will remain the sovereign owner of the data.

During the stop-work order, Kenya faced a Sh140 million gap for health data systems previously funded by USAID.

Critical digital platforms including ChanjoKE, Damu, Tibu, and Kenya EMR were consolidated and are now owned by the government.

However, with the court case, experts warn the delay in actualisation of the framework could strain the health system.

“If the framework is not implemented by July, HIV testing will suffer. Laboratories will suffer, although treatment may still be available,” warns Nelson Otwoma, executive director of the National Empowerment Network of People Living with HIV/AIDS in Kenya (NEPHAK).

The sentiments are echoed by Pamba: “If the court case continues and the government does not step in, patients could end up without care, particularly for malaria, HIV/AIDS, and tuberculosis.”

At the moment, some programmes continue under existing mechanisms, including PEPFAR, the Global Fund and government allocations.

Temporary bridge funding has kept essential services running, but the PEPFAR funding, part of the $1.6 billion US package, is set to end this month.

But Duale maintains that the agreement will be operationalised once both governments formally complete the signing process.

“This process is expected to be substantially completed by July 2026, after which the programme will progressively scale up with performance-linked disbursements,” notes the Health CS.

NEPHAK supports the G2G model, seeing it as a gradual transition to Kenya’s ownership of health programmes previously funded by the US.

“By 2028, the government is expected to absorb 13,808 health workers, including 515 laboratory personnel, into the public payroll,” says NEPHAK boss.

Kenya was the first African country to sign the US deal.

At least 16 other countries including Rwanda, Liberia, Uganda, Lesotho, Eswatini, Mozambique, Cameroon, Nigeria, Madagascar, Sierra Leone, Botswana, Ethiopia, Côte d’Ivoire, Burkina Faso, Niger, and the Democratic Republic of the Congo have followed suit.

Zambia and Zimbabwe remain hesitant to the deal.

In Zambia, negotiations stalled over conditions tied to the country’s mineral resources, while in Zimbabwe, data-sharing concerns halted a $367 million agreement.

However, G2G according to experts is not a solution to Kenya’s health financing, raising the need for domestic health financing mechanisms.

“There must be a shift in mindset, from relying on donors to believing ‘we can do it ourselves.’ We cannot wait for a donor to fix a leaking roof, provide ambulances, or fund screening tests,” observes Dr Pamba.

Key domestic financing elements according to the Ministry of Health include SHA, integration of HIV and other vertical programmes into primary healthcare, national procurement reforms, digital efficiency, and private sector partnerships.

Kenya is among African states are yet to meet the Abuja Declaration target of allocating at least 15 per cent of the national budget to health. Only South Africa, Botswana, Rwanda, and Cape Verde have met the target.

“G2G funding is a step toward sovereignty. It is baby steps toward ownership. Donor support should be tied to co-financing commitments,” adds Dr Pamba.

On sustainable financing, Duale notes progressive domestic investment will safeguard long-term stability and national ownership, adding that the goal is to maintain control of key diseases while gradually increasing domestic financing and health sovereignty.