Aid Is Falling Fast. What Can African Countries Do?

IMF News, June 22, 2026

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In 2025, bilateral aid to the region fell sharply, with early estimates pointing to cuts of about 26 percent in a single year.
Sub-Saharan Africa had the highest aid dependency globally in 2024, with aid accounting on average for 3 percent of GDP at the regional level.
The recent aid decline is broad, driven by donor decisions, and coincides with multilateral institutions projecting sizeable budget reductions.

Aid often finances essential services: about half of aid was used to finance health, education, and humanitarian assistance.
In low-income countries and fragile states, aid often reached the equivalent of 6 percent of GDP or more, and in some cases far higher.
Aid supports delivery capacity: development partners and NGOs frequently deliver services directly, and cuts can curtail systems relied on for crisis responses (examples cited include Ebola responses in the Democratic Republic of the Congo and Uganda, displacement needs, and drought response in the Horn of Africa).

Recent cuts are:
- Large and broadly simultaneous across countries.
- Driven by donor decisions rather than changes in recipient economies.
Traditional cushions are weaker:
- Multilateral institutions and NGOs that previously cushioned declines are themselves facing funding constraints.
- Non-traditional donors (such as China and the Gulf States) have grown their presence but "the magnitudes are not able to cover the reduction in traditional donors."
Timing compounds difficulty:
- Cuts follow six years of successive shocks—including the pandemic, tighter global financial conditions, and food and energy crises—that have already eroded fiscal space.

Four broad policy responses observed:
- Some governments are not replacing lost aid, allowing programs to lapse (limits immediate fiscal strain; high social costs).
- Many are reprioritizing spending, often cutting public investment (easier politically; damaging to future growth).
- Others are borrowing more, including domestically (increases debt risks).
- Some are stepping up revenue mobilization (though results take time).
Trade-offs summarized:
- Replacing lost aid can protect services and growth but widens deficits and external imbalances.
- Not replacing aid stabilizes budgets and protects debt sustainability but risks lasting damage to human capital and development.
- "There are no easy choices."

Priority 1 — Protect and target high-impact aid:
- Direct scarce aid toward countries and sectors with greatest effect, especially low-income countries and fragile states, and essential humanitarian needs.
- Strengthen coordination to reduce fragmentation and avoid duplication.
Priority 2 — Broaden the financing toolkit:
- Maintain grant financing where essential (particularly in humanitarian contexts).
- Use blended finance to mobilize private investment for infrastructure, energy, and agriculture, while recognizing limits:
- "It is not a substitute for aid: it is harder to scale, more complex, and can add to debt if poorly designed."
- Managing these trade-offs will be critical.
Priority 3 — Strengthen domestic capacity:
- Mobilize more revenue, improve spending efficiency, and strengthen policy design and service delivery.
- Replacing the implementation capacity that aid provided will take time and sustained investment.

The shift that began in 2025 is unlikely to be temporary and reflects a reconfiguration of development finance shaped by tighter donor budgets and changing priorities.
Implications will vary by country depending on exposure, initial buffers, and policy choices.
Directional summary:
- Reliance on external aid will become more uncertain.
- Domestic policy will matter more for resilience and development outcomes.
Immediate task: manage the decline in aid without backsliding on human development achievements of past decades.
Longer-term challenge: adapt to a world where aid is less abundant and less predictable; how countries navigate both will shape growth and development outcomes for years to come.

Source: "Aid Is Falling Fast. What Can African Countries Do?" By Chie Aoyagi, Maurizio Leonardi, Athene Laws, and Hamza Mighri — June 22, 2026.

2. Aid Cuts in Sub-Saharan Africa: This Time Is Different
- 2. Aid Cuts in Sub-Saharan Africa: This Time Is Different (Markdown version)
- 2. Aid Cuts in Sub-Saharan Africa: This Time Is Different (PDF)