Demystifying Africa’s dependence on foreign aid

As development aid from historical donor countries is recently declining, the moment to re-examine the weight of Official Development Assistance (ODA) to Africa has never been more urgent. While the extent of USAID cuts and waning traditional donor commitments seem unexpected, they are signalling a broader trend long in the making. The 2025 Ibrahim Governance Weekend (IGW), held from 1-3 June in Marrakech under the theme Financing The Africa We Want offered a timely platform to confront this changing landscape and focus on domestic financial resource mobilisation.

Some traditional donors have lost faith in the conviction that underpinned aid, the notion that our future prosperity and their future prosperity would go hand in hand. While this is still true, their populations are no longer convinced. The world as we know it has changed for aid, trade and development. We are not likely to return to the familiar status quo ante. These shifts present Africa with obvious challenges, but they also contain opportunities for the continent to move forward and deliver better.

~Dr Ngozi Okonjo-Iweala, Director-General, World Trade Organization

While it [the end of aid] is tragic in the short term, it is a future which for different reasons we all embrace as necessary and, if done right, offering predictable, long-term finance to support countries in their development choices.

~Mark Malloch-Brown, former Deputy Secretary-General, United Nations

ODA received pales in comparison to other sources of revenue

In 2023 (the latest year available), ODA to Africa from all donors totalled $73.6 billion. This is less than the continent received in remittances (2023: $90.8 billion), foreign direct investment (2024: 97.1 billion) or tax revenue (2022: $479.7 billion) per year, and just under 10% of these four main sources of revenue combined.

Africa: tax revenue, FDI, remittances, ODA inflows (latest available year)

2025: a massive ODA cut from historical donor countries

On the day of his second inauguration on 20 January 2025, US President Donald Trump froze US aid for 90 days, pending a government review. As of 7 May, only 891, or 14% of the 6,256 operating USAID programmes remained, worth $69 billion (down from $120 billion on 20 January 2025). In 2023 (the latest year available), the US contributed 20.7% of total ODA to Africa.

According to preliminary data across all Development Assistance Committee (DAC) countries, cumulative ODA for all recipients and sectors fell by -7.1% in 2024 compared to 2023. This is the first drop after five years of consecutive growth, which to a large extent can be attributed to increases in ODA to Ukraine.

In Germany, Africa’s second largest bilateral donor after the US, budget reductions for ODA between 2023 and 2025 amount to €3 billion ($3.1 billion), or 10.5%. France’s 2025 budget includes a €1.2 billion ($1.4 billion) cut to development aid, bringing it to 18.6% less than 2024. The UK has also reduced development aid by about 6.5%, from £15.3 billion in 2023 to £14.3 billion in 2025.

Most DAC countries have never met their ODA/GNI commitments

Since its adoption in 1970 by the UN, donor countries have only been able to reach half of the set target of giving 0.7% of gross national income (GNI) in aid. In 2023, the average across DAC countries was 0.37%, slightly decreasing to 0.33% in 2024. This includes not just ODA to the developing world, but also to countries like Ukraine.

In 2023, only five DAC countries achieved the 0.7% ODA/GNI target: Denmark, Germany, Luxembourg, Norway and Sweden. In 2024, this number fell to four countries as Germany’s ratio dropped from 0.82% to 0.67%.

ODA to Africa has seen a trend of diminishing commitment

Between 2020 and 2023, due to the Russia-Ukraine conflict, Europe was the only world region to benefit from a substantial ODA increase. Total ODA to Europe more than quadrupled and its share of global ODA went from 4.6% to 16.6% at the expense of other regions.

Despite remaining the biggest recipient by total amount ($73.6 billion in 2023), Africa’s share of ODA has dropped 11 percentage points from 37.6% in 2013 to 26.7% in 2023. Of the top ten donors to the region in 2023, six were multilaterals (World Bank, EU, Global Fund, UN, IMF and AfDB) and four DAC countries (USA, Germany, France and Japan).

World regions: share of total ODA & total ODA received for Africa (2013-2023)

’Developing countries, unspecified’ refers to regional projects and programmes that are not attributed to a specific recipient country, and for activities undertaken in donor countries such as administrative or in-donor refugee costs.

Health and governance-related sectors are most impacted by USAID cuts

According to the Center for Global Development, for 42 African countries (of the 44 African countries with data available), the 2025 USAID cuts amount to less than 1% of their GNI. Only Liberia and Somalia are above this threshold with 2.59% and 1.03%, respectively.

Yet certain sectors face more dire consequences than others, a recent New York Times investigation shows. Health programmes, previously large in terms of USAID $ value, have been particularly affected: reproductive health (-92%), maternal and child health (-89%), pandemic and emerging health threats (-77%), tuberculosis (-72%), HIV/AIDS (-69%) and malaria (-68%). HIV/AIDS had been the second largest USAID sector after macroeconomic stability.

Cuts to governance-related sectors have been even more grave: civic groups (-99%), peacebuilding (-99%), democratic participation (-99%), good governance (-96%) and justice and human rights (-95%), albeit these sectors’ financial commitments had already been small compared to economic stability, health and nutrition.

African countries: impact of USAID cuts (as of 27 March 2025)

Based on USAID financial obligations for 2024-2025; data not available for Algeria, Cabo Verde, Equatorial Guinea, Eritrea, Gabon, Guinea-Bissau, Mauritius, São Tomé and Príncipe, Seychelles and Togo.

Source: MIF based on CGD

Net ODA received as a share of GNI has remained more or less the same in Sub-Saharan Africa over the past 20 years, from 2.83% in 2000 to 2.95% in 2022. This represents the highest share of all world regions, five times higher than second place Middle East and North Africa at 0.59% in 2022.

Unlike other regions which remained relatively stagnant, Sub-Saharan Africa was on a downward trend from the historical (since 2000) high of 4.29% in 2006 until 2019. However, between 2019 and 2020, ODA received as share of GNI increased from 2.96% to 3.94%, the steepest year-on year rise due to increased disbursements in the wake of COVID-19.

In 43 out of the 51 African countries with available data, the ODA received-to-GNI ratio increased between 2019-2020, the highest number of countries since 2000. Since 2020, this number of countries has been on a downward trend again, albeit from a much higher starting point.

World regions: ODA as share of GNI (2000-2022)

Additionally, the number of African countries in which ODA received represents a high share of their respective GNI has gone down over the last two decades. In 2000, the ODA received-to-GNI ratio was over 5% in 27 countries, over 10% in 14 countries and over 20% in five countries. In 2022, these numbers have decreased to 22, 9 and 1, respectively.

Globally, of the 20 countries with the highest net ODA received as share of GNI, eight are African, together comprising 8.6% of the continent’s total population. Of these eight, many are countries in acute or with a history of prolonged conflict: Burundi, Central African Republic, Liberia, Mozambique, Niger and Somalia.

Unsurprisingly, these states’ ODA/GNI ratios are in line with other conflict countries such as Syria and Ukraine, showing that a ‘dependence’ on ODA is not an African challenge, but often a consequence of civil war and humanitarian support. Other countries on the list are mainly insular micro-states with comparatively small GNIs.

Top 20 countries: net ODA received as a share of GNI (2022)

Source: MIF based on World Bank

Non-DAC partners slowly catching up?

While their total aid contributions to Africa still remain small in comparison, non-DAC donors have been ramping up support since 2018. Non-DAC ODA to Africa rose substantially from $2.9 billion in 2018 to $6.7 billion in 2022, only to drop to $1.7 billion in 2023. The continent’s share of non-DAC ODA consistently grew between 2018 to 2022, before the 2023 drop.

Saudi Arabia is the largest non-DAC donor to the continent, ranking eighth at country level, just behind Sweden. In 2023, Saudi Arabia and the UAE made up 87% of non-DAC aid to Africa, with Saudi Arabia reaching a ODA disbursed-to-GNI ratio of 0.56 – higher than the DAC average. The drop between 2022 and 2023 is mainly due to a decrease in ODA from Saudi Arabia from $5.6 billion to $1.1 billion.

Preliminary ODA figures for 2024 show that, similar to traditional DAC donors, global aid from non-DAC donors fell from $11.1 billion in 2023 to $10.6 billion in 2024.

Africa: share of ODA disbursed by donor type (2018-2023)

World global military expenditure went up by 37% since 2015

Recent global downturns in ODA are happening at the same time as increases in military spending. Between 2015 and 2024, world military expenditure rose by 37% with the steepest year-on-year rise between 2023 and 2024 (+9.4%). Europe is leading these increases with 83% between 2015 and 2024, followed by Asia and Oceania (+46%), the Americas (+19%) and Africa (+11%).

Africa’s four largest bilateral ODA donors are all part of the world’s top ten countries with the highest military expenditure, but have seen different year-on-year increases from 2023 to 2024: Germany (+28%), Japan (+21%), France (+6.1%) and the US (+5.7%).

The 0.7% DAC vs the 2% NATO target – trading aid for defence?

In 2006, NATO Ministers of Defence agreed on guidelines stating that member countries should allocate 2% of their GDP to military spending, a goal that was raised to 3.5% at the last NATO summit in 2025. While DAC and NATO do not entirely overlap, 25 of the 32 DAC countries are also part of NATO.

Comparing both the 0.7% ODA/GNI and the 2% defence/GDP target over the last two decades shows that in 2002 (earliest data available for ODA), most DAC countries were meeting neither goal. Only one (Netherlands) had reached the ODA/GNI target and three (France, UK and US) were meeting the defence/GDP guidelines. In 2023 however, while the number of countries spending more than 0.7% of GNI on aid had only grown to two (Germany and Luxembourg), the number of countries reaching the 2% NATO target had more than quadrupled to 14 (Czech Republic, Denmark, Estonia, Finland, France, Greece, Hungary, Italy, Lithuania, Poland, Slovakia, South Korea, UK, US).

Even more interestingly, while 2002 showed a slight positive correlation between the two targets, i.e. the more countries spend on defence, the more they spend on ODA (albeit the country sample in 2002 is comparatively small due to DAC membership expansion in the 2010s). In 2023, this trend has reversed, meaning that the higher a DAC country’s military expenditure, the less they tend to spend on ODA.

DAC countries: ODA as share of GNI & military expenditure as share of GDP

Includes only countries which were or became official members of the DAC in a given year, and excludes countries for which not all four data points (ODA, military spending, GNI and GDP) were available.