Aid in retreat: The Impact of US and European Aid Cuts on Sub-Saharan Africa

Kohnert, Dirk (2025): Aid in retreat: The Impact of US and European Aid Cuts on Sub-Saharan Africa.

Abstract

On 28 March 2025, the Trump administration formally notified Congress of its intent to dismantle nearly all remaining positions within the United States Agency for International Development (USAID), including the US President’s Emergency Plan for AIDS Relief (PEPFAR). This decision effectively terminates the operations of a key foreign aid institution, concluding over six decades of purported humanitarian and development engagement. USAID has long been a focal point of criticism for both the Trump administration and Elon Musk’s Department of Government Efficiency (DOGE). However, the role of US and European aid in Africa has been fraught with contradictions. While framed as a mechanism for development, such assistance has frequently served geopolitical and neo-colonial interests rather than fostering sustainable, autonomous growth. Under the guise of economic liberalisation, aid has been instrumentalised to impose privatisation and deregulation policies, often to the detriment of local economies. USAID, in concert with the International Monetary Fund (IMF) and World Bank (WB), has prioritised large-scale agribusiness and monoculture production systems, undermining indigenous food sovereignty and displacing traditional agrarian practices. Consequently, African peasants have become increasingly dependent on imported seeds, chemical fertilisers, and industrial farming techniques, a paradigm that disproportionately benefits Western agribusiness conglomerates while exacerbating food insecurity across the continent. Compounding these challenges, concurrent reductions in aid budgets by the UK and EU, driven by militarisation priorities, threaten to inflict severe humanitarian consequences, particularly upon Africa’s most marginalised populations. Sub-Saharan Africa (SSA) stands to bear the brunt of these cuts, as critical prevention initiatives, including condom distribution and pre-exposure prophylaxis (PrEP) programs, face imminent discontinuation. The repercussions could reverse decades of progress, particularly in curbing mother-to-child HIV transmission and reducing paediatric HIV mortality. Yet, this crisis also presents a pivotal opportunity: the potential for Africa to reclaim agency over its developmental trajectory, unshackled from external conditionalities and structural dependencies. This juncture could catalyse an era of self-reliance, marked by regional collaboration, endogenous innovation, and economic sovereignty—principles embodied by initiatives such as the African Continental Free Trade Area (AfCFTA). However, the feasibility of such measures remains precarious, given entrenched elite capture and systemic corruption within many SSA governance structures. The subsequent analysis will demonstrate, drawing upon case studies from South Africa, Nigeria, Zambia, and Ethiopia, the political economy of aid withdrawal often renders transformative alternatives unviable, as ruling elites prioritise self-enrichment over structural reform.

• Item Type: MPRA Paper
• Language: English
• Keywords: ODA; Development aid; USAID; NGOs; sub-Sahara Africa; trade policy; health policy; HIV; tuberculosis; protectionism; nationalism; self-reliance; import substitution; AfCFTA; Uganda; South Africa; Nigeria; Zambia; Ethiopia
• Subjects: D - Microeconomics > D0 - General > D04 - Microeconomic Policy: Formulation, Implementation, and Evaluation; D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; D - Microeconomics > D1 - Household Behavior and Family Economics > D18 - Consumer Protection; D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; D - Microeconomics > D6 - Welfare Economics > D62 - Externalities; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E26 - Informal Economy ; Underground Economy; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F3 - International Finance > F35 - Foreign Aid; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F52 - National Security ; Economic Nationalism; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F54 - Colonialism ; Imperialism ; Postcolonialism; H - Public Economics > H4 - Publicly Provided Goods > H42 - Publicly Provided Private Goods; H - Public Economics > H5 - National Government Expenditures and Related Policies > H51 - Government Expenditures and Health; H - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit ; Surplus; I - Health, Education, and Welfare > I1 - Health > I14 - Health and Inequality; I - Health, Education, and Welfare > I1 - Health > I15 - Health and Economic Development; J - Labor and Demographic Economics > J1 - Demographic Economics > J16 - Economics of Gender ; Non-labor Discrimination; N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy > N37 - Africa ; Oceania; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

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