After years of big increases in official development assistance, funding suddenly started to fall last year. Next year, driven by politics in the U.S. and budget pressures in Europe, it’s likely to fall further. But by how much?
Also in today’s edition: African countries are looking at whether they can build their tax bases to replace aid cuts, and the African Development Bank gets a new leader.
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Guestimate list
Aid is falling fast, and it could drop by up to $35 billion this year, and by billions more in the coming year.
That’s the top-level conclusion in projections from the Organisation for Economic Co-operation and Development, which has already reported a fall of $15.85 billion in 2024.
The projections for 2025 and for future years come with a high degree of uncertainty, largely because of a lack of clarity from the United States, which has in theory said it will spend around $60 billion on aid in the year but is definitely not on track to do so.
My colleague Miguel Antonio Tamonan has looked in depth at figures from the OECD and from the aid website Donor Tracker, which has carried out detailed projections, to try to understand what happens next.
Read: How much will donors spend on aid in the coming years? (Pro)
Watch: Is ODA really ‘on a very fast path to death’? (Pro)
Tomorrow at 11 a.m. ET (5 p.m. CET), I’ll be speaking with Aileen Lee, chief program officer at the Gordon and Betty Moore Foundation, about her organization’s strategy. Register for the event here.
And on Thursday, also at 11 a.m. ET, I’ll be speaking with Jordana Barrack, executive director of the Mighty Arrow Family Foundation, about listening to grantee feedback. Register here.
Funding activity
We publish tenders, grants, and other funding announcements on our Funding Platform. Here are those viewed the most in the past 10 days.
The Asian Development Bank has approved $106.9 million in funding to improve health systems in Sri Lanka.
The World Bank has announced $105 million in funding to expand access to education in Cambodia.
The government of Japan has provided $2 million to support humanitarian food assistance in Madagascar.
The United Nations is seeking a qualified firm to design and implement comprehensive training programs to strengthen capacity development initiatives in Belarus.
The African Development Bank is inviting consulting firms to provide auditing services for an energy procurement project in Niger.
The Japan International Cooperation Agency is looking for companies to strengthen institutional capacity for inspection of dairy products in Kosovo.
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Rescission division
Last week, the doors at USAID were officially closed after 64 years, with the last staff stepping down on Sept. 2. Responsibility for U.S. foreign assistance has transferred to the State Department. It’s been a bleak time for many former staffers, who are still looking for work, but it also remains an extremely turbulent time for assistance funding, and the many organizations which deliver it.
Mixed messages are emerging over the scope of foreign aid funding in 2025, with Congress making very different proposals to those emerging from the White House. Meanwhile, the State Department still lacks capacity to disburse the funding it’s mandated to provide, and what’s known as a “pocket rescission” is in front of Congress and the courts, as the administration tries to hand back almost $5 billion unspent. The first court ruling on the subject found that this is not legal, but it will doubtless be subject to further challenge.
Read: Laid-off USAID workers struggle to find work as new job cuts approach
ICYMI: How Trump broke the foreign aid budget process
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In with the Ould
A new president has started work at the African Development Bank. Sidi Ould Tah, a Mauritanian economist, started work last week, replacing Akinwumi Adesina, the popular, bow-tied leader who tripled the bank’s size in a decade. Tah, who appears a less-flamboyant character than his predecessor, laid out a vision for the bank during his election campaign.
“My top priority is job creation, because Africa has the youngest population worldwide, and in the next 25 years, one person out of four on Earth will be African,” Tah told ODI Global before the vote. “It is critical for Africa and for AfDB to create more jobs for African youth.”
Read: New AfDB president inherits a bigger bank — and tougher challenges
ICYMI: The bow tie bows out — Adesina’s 10 years at AfDB
DRM roll please
Aid for development is falling, and, as we’ve seen above, it’s likely to continue falling. One of the interesting things about the fall has been the sangfroid with which much of the African continent has reacted. Many African leaders, it appears, were not especially fond of aid, and many seem content to try to balance the books without it.
So how to balance the books? One answer is to increase tax collection — a process often referred to as domestic resource mobilization. The recent cuts, along with other developments, have led many governments to assess how they can strengthen these systems, but there is significant progress still to be made. My colleague Jesse Chase-Lubitz has taken a look at the current state of play.
Read: Between aid cuts and debt crises, Africa bets on its own tax systems (Pro)
International Cooper-ation
The United Kingdom has a new foreign minister, and she’s largely an unknown quantity.
Following a reshuffle of responsibilities caused by a tax scandal, Yvette Cooper, who was previously home secretary, becomes foreign secretary, replacing David Lammy, who becomes deputy prime minister, in a move which sounds like a promotion but potentially isn’t.
While the foreign secretary holds the top job at the Foreign, Commonwealth and Development Office, the U.K. aid department, they have many responsibilities beyond development. Direct responsibility lies with a more junior minister, Jenny Chapman, who so far is staying put.
During his time at FCDO, Lammy was an active figure in development, and was in the middle of organizing a summit on the future of aid. It remains to be seen whether that summit will still go ahead.
Cooper, on the other hand, is new to the brief. She’s not held any aid-related roles previously, and has barely spoken on the subject. That’s hardly a heartening start, but it does offer a new chance for the embattled U.K. aid community to make its case.
Related: UK foreign secretary strengthens his push for aid reform
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About the author
David Ainsworth@daveainsworth4
David Ainsworth is business editor at Devex, where he writes about finance and funding issues for development institutions. He was previously a senior writer and editor for magazines specializing in nonprofits in the U.K. and worked as a policy and communications specialist in the nonprofit sector for a number of years. His team specializes in understanding reports and data and what it teaches us about how development functions.
