Declining foreign aid is reshaping Africa’s economy

During the past year, the African continent witnessed a remarkable transformation with a sharp decline in the volume of foreign aid, especially after the administration of US President Donald Trump reduced the aid provided by the United States.

It seemed at first that this reduction would lead to deep crises and multiply the challenges facing the African continent, but the reality revealed a remarkable ability of many African countries to adapt and withstand, despite great pressures, especially in the health care sector.

US aid declined to about $7.86 billion, compared to $12.1 billion during the administration of former President Joe Biden, which is the lowest level this aid has reached in 10 years. The decline was not limited to the United States only, but also included European countries such as Germany and France, which reduced their contributions. According to Donner Tracker, expectations indicate that total global development aid will decline by about $42 billion by 2025.

Obvious damage

The decline in US aid has had tangible effects, as about 80% of projects managed by the US Agency for International Development have been cancelled, causing clear humanitarian damage, especially in areas such as eastern Democratic Republic of the Congo, where many health facilities that were providing vital services to victims of violence were closed.

US funding allocated to programs to combat HIV/AIDS has also been reduced, despite the major role these programs have played in saving millions of lives.

Although some aid was necessary to meet urgent needs in some troubled areas, long dependence on external fund flows caused many governments to build their fiscal policies on an unsustainable basis.

On the other hand, experience has shown that countries achieve better results when they focus on developing their local economies rather than relying excessively on external support.

Growth factors

It is noteworthy that the economies of sub-Saharan Africa were able to achieve growth of 4.1% in 2025, with expectations of this rising to 4.3% in 2026, a rate that exceeds the global average. This reflects the fact that philanthropy has never been the primary driver of the continent’s future.

Several factors have contributed to this growth, most notably the rise in prices of strategic minerals, such as lithium, cobalt and copper, which are essential elements in the global green economy. The pressures resulting from the decline in aid have also prompted many African governments to accelerate the implementation of long-awaited economic reforms and to rely more on their own resources.

In this context, the importance of expanding the tax base has emerged as one of the necessary reforms, especially in light of the decline in external support.

Countries such as Rwanda, Kenya and Nigeria have succeeded in improving the efficiency of revenue collection through digital transformation.

Countries such as Kenya, Nigeria, Angola, and Ethiopia have also begun to reduce ineffective fuel subsidies with the aim of reducing the fiscal deficit, although oil price fluctuations have temporarily disrupted some of these efforts.

Challenges

One of the challenges that limited Africa’s full benefit from its natural resources is the weak volume of trade exchange between its countries. While other regions, such as Europe and North America, benefited from economic integration, trade relations within the African continent remained limited.

However, the decline in aid has contributed to accelerating economic integration efforts, and continental free trade agreements may represent an important step towards enhancing Africa’s competitiveness at the global level.

Investments

Currently, foreign aid is no longer the primary source of financing on the continent, as foreign investments and remittances from Africans working abroad have become more influential.

African countries have also strengthened their relationships with international partners, such as China and the Arab Gulf states, who focus on supporting infrastructure and promoting trade rather than providing traditional aid. In light of these transformations, it is clear that African countries no longer want to be treated as mere recipients of aid, but rather seek more balanced economic partnerships. Here an important question arises: Does the United States have sufficient vision to establish real trade partnerships with Africa, or will it leave the way for other powers such as China to fill this void? About the Washington Post

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Law of Growth and Opportunity

Last year, US President Donald Trump extended the African Growth and Opportunity Act for an additional year, until December 31, 2026, retroactive to September 2025, which allows eligible African countries to enter American markets without customs duties.

However, the Trump administration seeks to amend this law in a way that opens African markets to American goods through bilateral agreements.

. African countries have strengthened their relationships with international partners who focus on supporting infrastructure and promoting trade rather than providing traditional aid.

. African economies achieved growth of 4.1% in 2025, with expectations of it rising to 4.3% in 2026.