How Trump's migration freeze may cut off billions in diaspora remittances

The announcement last week by US President Donald Trump that the country would freeze migration from all third world countries is the latest in a series of hits that could have a major impact on Kenya. 

The move is expected to make the American dream even more elusive, limiting the new number of Kenyans going to the US and in turn deal a blow to President William Ruto’s regime that has been pushing a labour export agenda. 

It could with time reduce the amount of foreign exchange inflows to Kenya which has key in stabilising the local currency for the country that is a net importer. 

The US is the largest source of diaspora remittances for Kenya. According to data by the Central Bank of Kenya, inflows from Kenyans working in the US accounted for more than half of diaspora remittances last year. In 2024, Kenyans working abroad remitted Sh642.88 billion ($4.95 billion) in 2024, with remittances from the US accounting for 53.2 per cent at Sh341.9 billion ($2.63 billion). 

Remittances from the US have consistently grown over the years while at the same time the country has maintained its position as the largest single source of remittances to Kenya. This has largely been on account of the growing number of Kenyans working in the US and enjoying relatively better economic conditions. 

This is, however, likely to change as Trump charges at migrants. 

“I will permanently pause migration from all Third World countries to allow the US system to fully recover, terminate all the millions of (former President Joe) Biden illegal admissions,” said Trump, adding that he would remove anyone who is not a net asset to the US. 

Remittances have surpassed the traditional foreign exchange of earners such as tea, horticulture and coffee. President William Ruto in a recent address noted that remittances earn Kenya more than these sectors combined.  

Last year, tea earnings stood at Sh215.21 billion, while horticulture raked in Sh136.8 billion and coffee earned Sh39.9 billion. Tourism, the other major foreign exchange earner, brought in Sh452 billion in 2024. While these traditional forex earners have in the past experienced shocks that saw earnings dip, diaspora have remained largely resilient and posted consistent growth. 

The move by Trump could also in part hurt the government's export of Kenyan labour. President Ruto’s administration has been pushing a labour migration policy, which has however been criticised for failure to provide jobs at home. The regime has defended the move as "brain gain", noting that aside from the remittances today, Kenyans working abroad would in later years bring the experience gained and help in nation building. 

“As a country, the biggest asset that we have is the human capital… it is bigger than any mineral that we can find,” said Ruto last month, terming Kenyans as premium human capital globally. 

“The resources that we get from Kenyans working outside Kenya is upwards of $5.1 billion every year. It is higher than what we get from tea, coffee, horticulture.. all of it combined. We still make more money from the export of human capital than export of any crop or any commodity. 

“Many people look at it as brain drain but in my honest opinion, it is brain gain because the more Kenyans work outside, the get exposure and the more they bring back to our country.” 

While the US and other developed countries have largely been the go-to markets for many Kenyans looking for greener pastures, these markets, including some in the European Union, have been increasingly pushing away migrants as more conservative and far-right parties take power and promise to enact anti-migrant policies. Some of the countries have even offered migrants cash to incentivise them to voluntarily return to their home countries.  

Other than the developed markets that are looking at migrants as a nuisance, other countries including some in the Middle East that Kenya is looking to as destination markets for its labour have been accused by rights organisations for at times subjecting migrant workers to inhumane treatment. Reports have accused the Kenyan government of neglect, failing to act on reports of abuse by employers, which have in some instances resulted in deaths. 

Other than the plan to freeze migration to the US, the Trump administration abandoned negotiations on the Strategic Investment and Trade Partnership (STIP) that had taken place for over two years during former President Joe Biden’s administration.  

The two countries had, however, not signed a deal by the time Biden left office. Trump was not keen to conclude the negotiations and in August, Kenya and the US started negotiating a new pact.  

At the time, Trade, Industry and Investment ministry said the country was looking to start talks on a reciprocal trade agreement that would be critical in securing continued access for Kenyan goods to the US.  

“Kenya is deeply interested in the commencement of formal negotiations with the US government. A reciprocal trade agreement is crucial for securing long-term access to the US market for Kenyan products and will provide the stability needed to unlock new investments,” said CS Lee Kinyanjui in August.  

“A number of US firms have expressed strong interest in establishing or expanding their operations in Kenya and this framework will be a key enabler for that growth.” 

It is yet to be seen the direction that the talks will take.  

This is even as the Africa Growth and Opportunity Act (Agoa) expired on September 30, with the Trump administration largely veering away from committing to extend it. Agoa has for more than two decades offered duty free access for goods from Kenya and other African countries to the US market.  

Analysts have in the past noted that the US may be keener in pursuing bilateral agreements with specific countries.  

In its bid to get a bilateral agreement, Kenya is looking to secure the US market for its products, with the US being one of the largest export markets for the country. Kenya exported goods valued at Sh88.86 billion to the US in 2024, which made it the third largest export market after Uganda (Sh125.9 billion) and the United Arab Emirates (Sh101 billion), according to data by the Kenya National Bureau of Statistics. 

On assuming office last year, Trump issued an executive order halting all foreign development assistance, which cut funding to numerous projects funded by the US government in Kenya. The country had been funding many projects varying from health (including HIV and AIDS), to security, energy, agriculture and startups in Kenya through its agencies including  the US Agency for International Development (USAid), which was shut down after the government ended about 80 per cent of its projects and transferred the remaining ones to the State Department. 

Data by the US shows that it disbursed to Kenya Sh84 billion ($647.2 million) in 2024 in foreign assistance, which is largely aid and grants. This was however a reduction from Sh115.32 billion ($887.08 million) that was disbursed in 2023. The bulk of the funds disbursed last year was channeled to emergency response including emergency food assistance at Sh29.5 billion ($227 million), HIV and AIDS Sh24.36 billion ($187.4 million) and basic health Sh7.4 billion ($56.82 million). A majority of these projects were managed by USAid.