From 'aid trap' to 'brutal' cuts: African leaders confront a new reality

Official development assistance is in freefall. Major donors such as France, Germany, the United Kingdom, and the United States all cut their aid budget recently, and plan to cut further in 2025. It’s a historic moment: For the first time in decades, all four are pulling back at the same time, leaving many developing countries facing steep declines in support. The pain will be felt unevenly, but sub-Saharan Africa is in the bullseye. Countries such as Ethiopia, Nigeria, South Sudan, and the Democratic Republic of Congo have long been among the largest aid recipients. And with USAID, once the world’s biggest aid agency, now dismantled, longstanding channels of assistance are breaking down even further. The way the U.S. aid reductions were delivered — abruptly, with little coordination with national governments or implementing partners and NGOs — was undeniably brutal. But it’s also sparking a different conversation — one that’s surprisingly pragmatic. While many in the aid industry reacted to the cuts with alarm, some African leaders and analysts saw a silver lining: A chance, however painful, to break free of old dependencies and push governments to finally set their own priorities. Former Kenyan President Uhuru Kenyatta captured that mood with candid remarks back in January at a regional health summit in Mombasa. “I saw some people the other day, crying — ‘Oh, I don’t know, Trump has removed money,’” he said through chuckles. “Why are you crying? It’s not your government, it's not your country. He has no reason to give you anything. You don’t pay taxes in America! He is appealing to his people. This is a wakeup call for you to say: ‘OK, what are we going to do to help ourselves?’” The crowd’s laughter and applause suggested this wasn’t an unpopular view. Across the region, many leaders and analysts said the cuts are forcing a long-overdue reckoning. There’s growing agreement that the status quo wasn’t sustainable, and that the aid crisis might finally push countries and donors alike to rethink how development is financed and who should take the lead. The aid-dependence trap One theme comes up again and again in conversations about the cuts: Aid has arguably done good, but after decades of massive spending, have the results really matched expectations? And to what extent have countries become dependent — ceding sovereignty over their own priorities in the process? Development aid expanded rapidly in the 1960s as newly independent African states sought support to build infrastructure, health systems, and economies, with donors and former colonial powers formalizing large-scale programs and partnerships. “You know, the whole point of independence struggle here is to be able to charter one’s course in terms of planning and management, finance, and all of that,” January Makamba, a Tanzanian member of Parliament for Bumbuli constituency, told Devex. “But immediately after independence, there came a new thing called development partnership, which led to global development. Which became its own monster industry,” he explained. But dependence on aid, Makamba said, has created a situation “in which decision making in terms of priorities, in terms of planning, are more or less outsourced. You had people on the continent that felt that — yes, we got independence, but really we still are not able to charter our own course.” This sentiment is echoed in Somalia, one of the world’s most aid-dependent states: In 2023, it received $1.8 billion in ODA compared to its gross national income of $10.4 billion, which gave it a 17.6% ODA percentage to GNI — the highest in a recent Devex analysis. “There has been an aid trap — a perpetual cycle of project after project, where rather than solving the root causes of the problem, there’s only a surface solution,” Abdihakim Ainte, a senior adviser to Somalia’s interior minister, told Devex. “We've been caught in this trap, where we have been waiting and dependent on money after money. And the more money we receive, the more pervasive our addiction becomes.” “It has in many ways denigrated our people into this trap. It’s very much like an opium,” he said. Long-term gains This dependency and outsourcing of what should be core government functions has ultimately weakened institutions, experts argue. “You have entire bureaucracies whose activities have been entirely outsourced to foreign actors. Health sectors. I think Malawi would have to be the worst example. It's where the entire country almost seems to run on foreign aid,” said Ebenezer Obadare, senior fellow for Africa studies at the Council on Foreign Relations. About 54% of Malawi’s health care budget comes from foreign donors. “And it's always with this expectation that, OK, the next years and the next five years, next seven years, things are going to wind down and these countries can pick the baton and do this thing for themselves. And that never happens. That's wrong.” Still, experts and policymakers warn against imagining an easy fix. While the aid model has created deep dependency, they argue that sharp, sudden reductions of ODA — and the abrupt closure of an institution such as USAID — comes at a high cost. “To see such a gung-ho, almost happy heroic decimation of USAID and staff and money overnight, it was a shock,” said Makamba. “It was brutal.” “There will be short-term pain, but in the long run, it will discipline us to really reevaluate and rethink how we work,” said Ainte. Makamba put it this way: “There'll be pain. But we think it's a necessary pain. I think it's a pain, not death pain, but birth pain.” So what happens next? There’s no shortage of lofty declarations that these aid cuts could be good in the long term — forcing hard choices and sparking reforms. But what about right now? How will African countries fill the gap? Where will the money come from? Governments are tackling that question in different ways. Immediately after USAID’s shutdown, for example, the Nigerian government announced it would absorb health workers previously funded by the agency — the U.S. in 2023 provided around one-fifth of Nigeria’s health budget. But the fate of health workers in other countries whose health systems relied on USAID funding is less clear. Some argue governments can cover more than they claim — even for critical needs such as HIV treatment, much of which was funded by the President’s Emergency Plan for AIDS Relief, or PEPFAR. “When you look at the cost of ARVs and we look at some of our expenditures here and you say we can manage,” said Makamba. Still, governments need reliable resources to replace the aid that is used to fund so many basic needs. Some are scrambling for short-term stopgaps while also looking for ways to strengthen long-term financing. In Somalia, officials are looking to Gulf countries like Qatar and Saudi Arabia for immediate support, while emphasizing the need for longer-term solutions such as diversifying revenue sources, reforming the tax system, and building a more self-sustaining economy, Ainte said. This conversation about domestic resource mobilization has become increasingly urgent in speeches by finance ministers around the continent. Uganda’s finance minister a few weeks ago introduced the 2025-2026 budget. Compared to 2024/2025, it places a much stronger emphasis on domestic resource mobilization and includes a more clearly delineated strategy for achieving it. This includes broadening the tax base, eliminating corruption, and combating cross-border smuggling. Other countries are looking at filling the gap head-on through targeted legislation. In Ethiopia, for example, lawmakers in March introduced a new tax aimed at channeling revenue into an Ethiopian Disaster Risk Response Fund to support projects that had relied on USAID funding. Whether similar measures will be politically feasible elsewhere remains to be seen. In places such as Kenya, where tax hikes last year fueled intense youth protests, pushing through new taxes may be far more difficult. This scramble for alternatives was a major theme at the African Development Bank’s annual meetings in May, where the African Economic Outlook report argued that closing the Sustainable Development Goals financing gap is feasible if countries can curb losses from illicit financial flows, profit-shifting, and corruption, estimated at $90 billion, $275 billion and $148 billion (about 25% of gross domestic product) annually, respectively — far less than ODA. Another major topic was remittances, which already outstrip foreign aid. The report and panel discussions repeatedly raised the question of how governments can better capture and leverage these flows to fund development. Ideas included securitizing remittances to unlock larger sums of financing and even the possibility of introducing a diaspora income tax. Systemic reforms But even as countries look for new resources, many insist that real change will require structural reforms. A key focus is debt — specifically, the high cost of borrowing driven by flawed credit assessments. “There's a massive rating bias that exists. And there is a massive and skewed risk assessment and profiling. So we end up taking a necessarily costly debt,” said Makamba. This issue has become a central theme in development discussions. A recent Devex opinion piece by three AfDB presidential candidates — including Sidi Ould Tah, who later emerged as the winner — framed it bluntly: “African nations are being punished by a global financial system that systematically overprices the risk of investing in their economies. The result: Governments are paying up to five times more to borrow from capital markets than they would through concessional financing. For many, the choice is stark — repay creditors or invest in schools, hospitals, and clean water.” The authors argued that the international community has a crucial role to play in lowering Africa’s borrowing costs. They call on the Group of 20 leading economies and development banks to fix biased risk perceptions in credit ratings, expand credit guarantees to attract private capital, reform global financial regulations that discourage investment in Africa, and support African governments in strengthening local financial systems. ‘Trade not aid’ Some also point to the promise — and limits — of trade as a path forward. The Trump administration, for example, has recently started to promote its vision of “trade, not aid” for Africa. But critics say it’s not so simple in practice. Ghana, for example, is the world’s second-largest producer of cocoa, yet almost all of what it exports remains raw beans, with the value added elsewhere. At the AfDB meetings, Ghana President John Mahama highlighted the challenges to local processing: “We can increase processing overnight, but you have non-tariff barriers in exporting into some of the markets. Unless they bring a processor from outside, from Europe, who comes and sets up a processing plant. That's why sometimes you notice that the world economic order is rigged against Africa.” And even if trade barriers are removed, there’s no guarantee countries can immediately take advantage. “Trade requires that you have something to sell,” said Makamba. “If say, you give Togo tariff-free everything to the United States, or Madagascar, will they use it? Of course not. Because we don't have anything to sell,” Makamba said. Effective trade partnerships require countries to be productive, competitive, and able to manufacture products that appeal to global consumers. “Otherwise, it's still going to be primary goods, just as it's been since colonial times,” Makamba said. Industrial policy is clearly something African governments themselves control — and many experts argue it should have been a higher priority. But even that failure, they say, is closely linked to broader governance challenges and the way aid has sometimes enabled poor accountability. Obadare argued that development aid can end up entrenching authoritarian rule by making it harder to hold governments accountable. Critics say aid has too often become an end in itself rather than a path to true development. Once people become invested in the aid industry, they stop asking whether it’s actually building the institutions and capacity it promised to, he said. “The fact that none of that appears to have happened after 40, 50 years has created a lot of disaffection,” Obadare said.