The global landscape of donors and lenders is undergoing a profound shift. With the United States pulling back and Europe prioritizing defense spending over official development assistance, or ODA, attention is increasingly turning to nontraditional lenders such as China and the Gulf States. The key questions now: Will these players step up to fill the gaps left behind by the dismantling of the U.S. Agency for International Development and aid cuts across other historically generous donors? And whether they do or not, what does their growing role mean for least developed countries?
As aid from traditional partners declines, monetary flows from other sources are rising. But across the board, these emerging donors are behaving with caution, seeking to spend judiciously and maximize returns on their development outlays. From China to the Gulf, there is a clear turn toward blended finance and more commercially oriented approaches.
The rise of these donors also carries distinct implications for development goals. China’s pragmatic infrastructure emphasis, or the Gulf’s use of financing to advance geopolitical interests, illustrates how strategic priorities shape aid flows. A subtler but important distinction is how they approach localization. Unlike traditional donors, for whom working with local civil society has become a central priority, emerging partners tend to channel resources through governments and emphasize nationally led agendas. As George Mason University’s Agnieszka Paczyńska noted, their idea of localization is more about strengthening state capacity than partnering directly with local NGOs. In her study on emerging donors, Paczyńska found that the term “localization” does not appear in key documents and that aid is framed instead as “south to south” cooperation.