Presented by International Monetary Fund
The development world is preparing for potential foreign aid upheavals under another Donald Trump presidency. Key areas such as reproductive health and climate could face cuts, while emergency response and digital infrastructure may see boosts.
Also in today’s edition: We look at how tech startups are turning to health, and the EBRD’s take on industrial policies in Nigeria, Kenya, and Ghana.
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Bracing for impact
The development community is steeling itself for Trump’s comeback. But what would actually change? History offers some clues.
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During his first term, Trump made big moves in foreign aid, with budgets reflecting shifting priorities. While USAID funding increased overall, areas such as reproductive health and climate took a hit. Yet bipartisan support for programs such as PEPFAR kept some initiatives intact. This time, with the Republican Party having been shaped by the Trump agenda for nearly a decade, Trump may have even more freedom to do what he likes. Under Trump, funding surged for some unexpected countries, such as North Korea, while others, such as Bolivia and Sudan, saw cuts.
Sector-wise, the U.S. under Trump deprioritized areas like maternal health and family planning but increased funding for emergency response and digital infrastructure. When Trump returns, many expect these trends to intensify, particularly in areas aligning with Republican priorities.
Read: How US aid spending changed over time - from Obama to Trump to Biden (PRO)
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Swap right now, thank you very much
The Caribbean island of Barbados completed a “debt-for-climate resilience” swap, a mechanism that allows the country to trade in some of its debt for more favorable financing. The new deal will generate $125 million for water infrastructure, more resilient sewage treatment plants, and food security.
Debt-for-nature swaps already exist to free up cash that can be invested into nature conservation. However, Barbados and the Inter-American Development Bank say that this is the first debt-for-climate resilience swap. Devex climate reporter Jesse Chase-Lubitz tells me that the model could help free up funding for climate adaptation without increasing the debt burden.
“This groundbreaking transaction serves as a model for vulnerable states, delivering rapid adaptation benefits for Barbados,” says Barbados Prime Minister Mia Mottley, whose Bridgetown Initiative has been hugely influential on the climate conversation. "With upfront funding from our partners, we are building a state-of-the-art facility to boost water management, food security, and resilience—showcasing how innovation and cooperation drive environmental and fiscal gains.”
CIBC Caribbean, a financial services company in the region, arranged the loan, which is backed by $300 million in guarantees provided by the IDB and European Investment Bank. IDB and the Green Climate Fund provided upfront money of $110 million to help start up the program, including a $40 million grant from GCF.
The mechanism is structured as a Sovereign Sustainability-Linked Loan, or SSLL. The plan lays out targets tied to the volume and quality of water generated by a repurposed plant. If the water targets are not met, the government has to pay a penalty, which will go into the Barbados Environmental Sustainability Fund, a trust for environmental investments.
Watch: Debt-for-climate or nature swaps explained
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Food for thought
At a city center warehouse in Santiago, staff sort through surplus boxes of juice, biscuits, and fruit that have been dropped off by more than 200 companies, putting together bundles that will be picked up by hundreds of organizations running food banks or deliveries in Chile’s capital.
Similar scenes are found across the world, of course — but nowhere near often enough according to the nonprofit Global FoodBanking Network, or GFN, which believes such assistance is a hugely neglected tool in the battle against hunger, despite massive growth alongside the COVID-19 pandemic.
Every day more than 1 billion meals end up in trash cans around the world, when smarter redistribution could feed the 733 million people without enough to eat and cut both food waste and greenhouse gas emissions all at the same time, Devex contributing reporter Rebecca Root writes.
“Sadly, in most of the world it is much cheaper and easier to send safe, healthy food to a landfill than to donate it to a food bank,” explains GFN’s president and CEO Lisa Moon, arguing that boosting the current miserable 1% recovery rate of lost and wasted food to just 5% would have “a tremendous impact.”
However, she admits that food banks have a huge and complex task, juggling relationships with manufacturers, farmers, and restaurants while ensuring food safety and dealing with the legal consequences of getting that wrong.
Read: Are food banks an ‘underutilized’ solution to hunger?
The business of saving lives
For decades, health care in Africa was seen as the domain of governments and charities, but a new wave of health tech startups is attempting to rewrite that script. Yet skepticism persists: Can saving lives really be profitable?
In 2015, Michael Moreland co-founded Field Intelligence to address unreliable access to essential medicines in underserved communities. By digitizing Africa’s fragmented pharmaceutical supply chains, Field has halved stock shortages in some areas and doubled access to critical medications such as antimalarials, earning Field Intelligence a spot on the Financial Times’ list of Africa’s fastest-growing companies in 2022.
Backed by private investment rather than grants, Field now supports 40,000 care points and 6,000 pharmacies, with tools such as the Shelf Life app helping pharmacies optimize supply chains and avoid shortages.
However, health tech startups face unique funding challenges. Unlike fintech, which dominates African startup investment, health tech struggles to attract private capital — instead, it’s seen as the province of philanthropy and grants. Still, increased demand for health tech and an expanding middle class could be a boon to the sector, even as founders tell Devex they’ve struggled with the perception that their work must be both charitable and financially self-sustainable.
Read: Can saving lives be profitable? These African health startups think so
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A double-edged sword
In the early 2010s, industrial policy in countries such as Ghana, Kenya, and Nigeria was nearly nonexistent. By 2022, however, the landscape had shifted dramatically, with Ghana adopting 23 such policies, Kenya 38, and Nigeria a staggering 84. These measures, often geared toward job creation in sectors such as agribusiness, mirror a global resurgence in industrial policy, as seen in the U.S., China, and Europe. But is this surge a cause for celebration or concern?
In a new study, the European Bank for Reconstruction and Development warns of significant risks, especially for lower-income nations. Unlike wealthy countries, which can support industries through subsidies or R&D investments, lower-income nations often rely on blunt tools such as trade bans and licensing requirements. EBRD Chief Economist Beata Javorcik tells my colleague Rob Merrick that these “cheap and easy” policies are highly distortive and prone to corruption, reducing their chances of success.
The report could have particular import for the six sub-Saharan countries, including Ghana and Nigeria, that are pursuing EBRD membership. While these economies have shown gains in competitiveness and resilience, their openness to trade and investment has declined. Exports, imports, and foreign direct investment have all dropped as a share of gross domestic product in several cases, highlighting a troubling trend of economic isolation.
Read: Industrial policy's rebirth could endanger emerging economies, warns EBRD
In other news
The International Court of Justice has started to hear oral statements as part of a landmark case to determine governments’ obligations regarding climate change and its effects. [BBC]
U.K. Prime Minister Keir Starmer dismissed suggestions that the U.K. must choose between the U.S. and the EU when Trump returns, affirming his government's commitment to a partnership with the U.S. while also pledging to deepen ties with Europe. [BBC]
An estimated 3 billion people around the world suffer the negative impacts of land degradation. [UN News]
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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.
