By Billy Mijungu
Donald Trump returned to the White House and reignited self-imposed tariff wars, the United States could very well have triggered a crash of the US dollar.
For many, this would spell global economic anxiety but for Kenya and much of Africa, it may just present a rare financial lifeline.
Kenya’s external debt, currently standing at KES 5 trillion and denominated almost entirely in US dollars, would become significantly cheaper to service when the dollar weakens.
The falling value of the greenback means that fewer shillings are needed to repay every dollar borrowed a short window of relief for a country that spends billions each year on interest and principal payments.
This creates a strategic opportunity. The government can accelerate the repayment of dollar-denominated debt before the market corrects.
John Mbadi and his Treasury officials should be closely watching forex trends and act decisively buying dollars when they’re cheapest, and paying down chunks of external liabilities that have long weighed down our fiscal health.
At the same time, Kenya could explore refinancing options, approaching multilateral lenders and bilateral partners to restructure existing loans or swap high-interest commercial debt with more favorable terms.
A temporary dip in the dollar is also a perfect chance to consider sovereign bond buy-backs purchasing Kenya’s own Eurobonds in the secondary market at discounted prices, thereby reducing long-term obligations with smart, timely moves.
Beyond debt, a weaker dollar has trade advantages. Kenyan exports, from tea to flowers to avocados, would become more competitive, earning more in shillings for every dollar brought in.
Diaspora remittances already a leading source of forex would carry even more weight. That additional foreign exchange can be used to shore up reserves or directly service debt.
On the domestic front, with internal debt climbing to KES 5.8 trillion, the government could issue long-term infrastructure bonds to restructure local borrowing swapping short-term, high-interest T-bills with affordable instruments that offer sustainable yields.
A “Shilling Sovereign Bond,” targeted at local and diaspora investors, could serve both to reduce pressure and increase national ownership of debt.
Ironically, Trump’s aggressive economic nationalism is not just about American jobs or trade surpluses—it is also aimed at preserving the dollar’s global dominance. With the BRICS bloc (Brazil, Russia, India, China, and South Africa) pushing toward the creation of a new alternative currency to challenge the dollar’s supremacy in international trade, Trump’s proposed tariff walls serve a double purpose.
By making it more expensive for goods to enter the U.S., he not only pressures trading partners into submission, Europeans who were headstrong are already breaking, but also dampens global trade volumes effectively weakening the very foundation upon which a new BRICS currency could thrive.
A trade squeezed world economy is unlikely to support a fledgling reserve currency built on the hopes of multipolar cooperation.
So while Trump seeks to cripple the competition before it matures, his policies may end up weakening the dollar in the short term. And in that moment of weakness lies Kenya’s chance.
It’s also timely for those keeping the Dollars to sell off because it’s bound to be significantly cheaper. In the short or medium term, holding onto Dollars is a Risk.
A rare alignment of global politics and market dynamics gives us the opening to reduce our external debt, strengthen our currency, and build economic resilience.
This moment calls for boldness, not business-as-usual. Kenya, like many African countries, has long been shackled by the weight of dollarized borrowing. If the global order shifts and the dollar declines, that might be the very storm that sets us free. We must not wait to see how the winds blow we must set our sails now.
