Today for Devex Pro Week, we ask if global aid is at a crossroads, with traditional donors like the United States and Europe pulling back while emerging players such as China, the Persian Gulf States, Brazil, and India step in. At the same time, overall official development assistance is declining, sparking debate over whether this is just another dip or a true turning point.
Also in today’s edition: How close is DFC reauthorization?
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Due south-south
The global donor map is shifting. With the U.S. pulling back and Europe prioritizing defense over ODA, eyes are on China and the Persian Gulf States to fill the gaps left by USAID and other traditional donors. But these new players aren’t handing out blank checks — they’re cautious, commercial, and focused on blended finance.
China hasn’t published comprehensive aid data since 2018, but a 2024 Ministry of Commerce report still showed $2.85 billion in foreign aid. The bigger story: $6.1 billion in new sovereign loans last year and $121.8 billion for projects under the Belt and Road initiative across 149 countries. “China is an extremely critical and valuable player in the ecosystem,” says Bright Simons, president of mPedigree. Still, critics argue that too much value stays with Chinese firms, while others push back on the “predatory lending” label. “There’s a lot of hyperbole,” says ODI Global’s Yunnan Chen, pointing instead to Africa’s earlier debt boom from cheap global credit.
The Persian Gulf States are pursuing their own model — massive investment paired with what’s been dubbed bailout diplomacy. Saudi Arabia gave $5.2 billion in ODA in 2023, and the United Arab Emirates granted $1.7 billion in 2024. Together, the Gulf States have invested more than $100 billion in Africa, with Sudan a flashpoint for both aid and geopolitical maneuvering. Bailouts — fast cash, fuel, or concessional loans — stabilize governments without IMF-style reforms but often serve strategic ends. “With bailout aid, there is a clear correlation with geopolitical interests,” says Hasan Alhasan of International Institute for Strategic Studies. And Gulf leaders now admit the no-strings era is over.
Brazil and India are also stretching beyond their regions. Brazilian President Luiz Inácio Lula da Silva has reopened African embassies and pledged $1.8 billion in investment, while India has extended $48 billion in aid since 2000, a third of it to Africa, often linked to agriculture and health.
Unlike Western donors, emerging players often channel funds through governments, not NGOs. As George Mason University’s Agnieszka Paczyńska explains, their model of localization is really about “strengthening state capacity.” For Africa, that means adapting fast. As Simons puts it, countries must “build our own complexes” with these donors — and avoid repeating some of the entrenched dynamics of their relationships with Western countries.
Read: From China to the Gulf — emerging donors’ growing role in global development (Pro)
Funding cuts, shifting models
ODA is slipping for the first time in years — to $207.6 billion in 2024 from a peak of $223.45 billion in 2023, with the OECD predicting further drops. The biggest shock is in the U.S., where President Donald Trump has moved to decimate the aid budget, but other donors are cutting back too.
Is this the end of aid? Not quite. “The claims for the ‘end of aid as we know it’ are overblown,” says Lee Crawfurd of the Center for Global Development. Even with cuts, “it may be less money but it’s clearly not nothing.” Still, OECD projections suggest ODA could fall 20% by 2027, back to 2020 levels. For Crawfurd, the driver is economic stagnation and populist politics: “It’s harder to be generous when people feel pinched.”
Others see an inflection point. “This is more than a blip … this is an existential moment for the sector itself,” says Nilima Gulrajani of ODI Global. Aid once enjoyed a broad consensus; now, in places such as the United Kingdom, portions of the slimmed-down aid funding that’s still available are redirected to domestic issues.
Looking forward, other flows will have to take center stage, writes Devex contributor Jessica Abrahams. And some sources tell her this could mean low-income countries having more control over their own development, via remittances and economic growth.
In the meantime, the fallout is real: food left rotting in ports, medical supplies cut off, and, despite U.S. Secretary of State Marco Rubio’s claim that “no one has died because of USAID [cuts],” researchers say millions of lives are at risk.
Read: Is this the end of aid as we know it? (Pro)
Background reading: How do we fix aid? (Pro)
Ticking clock
The U.S. International Development Finance Corporation is racing toward its Oct. 6 expiration date, and lawmakers are scrambling to reauthorize it in time. Sen. James Risch, a Republican from Idaho and chair of the Senate Foreign Relations Committee, has introduced the DFC Modernization and Reauthorization Act of 2025 as part of the must-pass defense bill.
Created by the 2018 BUILD Act, the DFC got a seven-year mandate. Now, the Risch plan overlaps with the Trump administration’s proposal but also highlights key differences — especially over oversight and development priorities.
The Senate bill would boost the agency’s maximum liability to $240 billion and allow investments in more countries, including high-income ones. But the bill would cap DFC’s contribution to any project in rich countries at 25% of total project costs and limit such investments to 8% of the agency’s overall portfolio or maximum contingent liability. As the bill puts it: “The corporation shall prioritize the provision of support … in less developed countries.”
Every two years, DFC would need a strategic plan, with guidance from a new Congressional Strategic Advisory Group. For the next cycle, the focus is critical minerals, telecom, and new overseas offices, writes Devex Senior Reporter Adva Saldinger.
Equity remains thorny. Current scoring rules make it tough for DFC to scale, so the Senate wants a $3 billion revolving equity fund — something the Trump team also supports. But unlike the administration, the Senate keeps oversight tight, requiring Congress to be notified of projects over $10 million, not $100 million.
Other provisions include bans on investments in “countries of concern,” stronger transparency rules, a public project database, and a beefed-up accountability mechanism.
Read: A Senate plan for DFC reauthorization
Related: Trump has big plans for DFC as reauthorization deadline looms
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Can cash grow on trees?
Brazil has unveiled the third draft of its Tropical Forest Forever Facility, a $125 billion fund that could that could generate up to $4 billion in payouts per year to tropical rainforest nations that keep their trees standing. Slated to launch at the 30th U.N. Climate Change Conference, or COP30, in Belém this November, the scheme now includes stricter eligibility rules, a guarantee that 20% of payouts go directly to Indigenous peoples and local communities, and explicitly states that there will be no investment in fossil fuel companies.
The World Bank is expected to host the fund, but Andrew Deutz of the World Wildlife Fund, who’s been in the room for the negotiations, tells my colleague Jesse Chase-Lubitz that the bank “seems to be wanting to keep the secretariat function and its hosting responsibilities as minimal as possible. I think they see this as a big new experiment, and so they want to limit their institutional investment,” he says.
Experts say that the success of the facility will be a litmus test for the success of Brazil’s COP30 presidency, so it’s worth keeping an eye on.
Read: Brazil's forest finance plan takes shape ahead of COP30
Background reading: Brazil hammers out details of forest fund ahead of COP30
In other news
Some 2.1 billion people still lack access to safe drinking water, while an estimated 1.7 billion don’t have basic hygiene facilities at home. [UN News]
The U.S. Justice Department has filed an emergency appeal asking the Supreme Court to block a lower court order requiring the Trump administration to spend billions in congressionally approved foreign aid. [Politico]
The Gates Foundation has quietly stopped funding nonprofit networks managed by Arabella Advisors, an organization closely linked to the Democratic Party. [The New York Times]
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About the author
Helen Murphy
Helen is an award-winning journalist and Senior Editor at Devex, where she edits coverage on global development in the Americas. Based in Colombia, she previously covered war, politics, financial markets, and general news for Reuters, where she headed the bureau, and for Bloomberg in Colombia and Argentina, where she witnessed the financial meltdown. She started her career in London as a reporter for Euromoney Publications before moving to Hong Kong to work for a daily newspaper.
