Can Africa Survive the Global Aid Squeeze? Yes, but It Will Take Financial Discipline

Africa faces declining aid, rising debt, climate pressure and a weakening global order. Official development assistance, the technical term for foreign aid, fell by 23.1% in 2025, the largest annual contraction on record. It’s projected to decline by a further 5.8% in 2026, before accounting for strain from the current crisis in the Middle East.

UN Trade and Development has also warned that debt servicing is diverting scarce resources from education, health, infrastructure and other development priorities.

We believe that this moment is not only a crisis to survive. It is an opportunity to ask whether development can be renegotiated on more equal terms.

Our views are based on our earlier research on trust, corruption and tax compliance; ongoing work under the Africa-Europe Clusters of Research Excellence on African agency, development financing and sustainability, a collaborative hub connecting researchers, policymakers and practitioners; and recent roundtable discussions with policymakers, scholars, activists and civil society representatives in Ethiopia, Malawi, South Africa and Mauritius.

The question is whether Africa will approach this moment with priorities shaped by donors, creditors and external policy agendas, or with its own policy compass. Agenda 2063, the African Union’s long-term development blueprint, was designed to provide that compass. It speaks of inclusive growth, sustainable development, regional integration, good governance, peace, prosperity and citizen wellbeing.

That matters because Africa does not need another grand vision. It needs to treat the vision it already has as a discipline.

That discipline begins with money. AU policy direction is clear that Africa must finance its own development, including Agenda 2063. In practice, this means African governments must rely less on external goodwill through fairer domestic revenue, more productive use of debt and firmer negotiations with donors, creditors and investors.

From aid dependence to ownership

Aid has supported health systems, education, infrastructure and food security. But aid was never a secure foundation for sovereignty. Dambisa Moyo, the Zambian-born economist and author of Dead Aid, warned that the aid-dependency model keeps Africa in a “perpetual childlike state”. When donor budgets shrink, geopolitical priorities change, or wars elsewhere redirect resources, African countries are left exposed.

Malawi shows how sharp that exposure can be. Development partners have historically funded close to 40% of its national budget. One roundtable participant in Blantyre put the stakes bluntly: if Africans do not do away with aid, aid will do away with them. If African countries do not shape what comes after the old aid model, its collapse will simply consume them.

Agenda 2063 cannot be implemented through permanent dependence on external goodwill. If African governments are serious about owning their development priorities, domestic resource mobilisation must move from technical language into the centre of politics.

In our view, that means raising and spending taxes fairly, using borrowed money more productively, and standing together as a continent to increase bargaining power.

Tax justice, not just more taxes

Citizens already carry heavy burdens through consumption taxes, fees, informal payments and the daily costs of poor services. Asking them to pay more while public money is wasted, elites avoid tax, and services remain weak is not domestic resource mobilisation. It is extraction without accountability.

The real issue is tax justice. People are more likely to accept taxes when they can see that public money is used fairly, services improve, and leaders are held accountable. But citizens are unlikely to accept this bargain when corruption is widespread and institutions lack credibility. Evidence from fragile African states shows that corruption weakens public trust and can undermine citizens’ willingness to comply with tax obligations.

Revenue systems need to widen the tax base fairly, improve administration without harassing small traders, reduce illicit financial flows, and tax rents, wealth, property and extractive sectors more effectively. They also need to close exemptions that serve political connections more than development.

Citizens do not pay taxes so that governments can search for aid on their behalf. They expect services, security and accountability. Agenda 2063 will remain abstract unless it is felt in clinics, schools, roads, electricity, water systems and public institutions that treat people with dignity.

Debt as a development test

Debt raises a similar issue: whether borrowed money strengthens development or deepens dependency. Africa’s debt problem is often discussed as if borrowing itself is the disease. That is too simple. Roads, power systems, universities, irrigation, industrial corridors and climate adaptation require large investment. The issue is not only whether governments borrow. It is what debt does.

Borrowing that expands productive capacity can strengthen a country. Borrowing that finances recurrent spending, vanity projects or corruption leaves the next generation paying for yesterday’s failure. It weakens bargaining power and turns national policy choices into negotiations with creditors.

Agenda 2063 should become a test of debt quality. Does a loan increase a country’s capacity to produce, trade, employ and innovate? Does it support regional integration, food systems, skills, infrastructure or future revenue? If the answer is no, the debt may be legal, but it is not developmental.

Bargaining power

A country that cannot finance basic services, manage debt or mobilise fair revenue will struggle to negotiate with donors, creditors and investors. It may speak the language of sovereignty while operating from dependency.

African agency depends on bargaining power. That power does not come from slogans. It comes from fiscal capacity, credible institutions, regional cooperation and the ability to say no. Rwanda offers a glimpse of what that looks like, directing its development partners towards national priorities rather than accepting whatever is offered. Saying “no, thank you” requires somewhere else to stand: stronger continental and regional institutions, alliances within Africa, diaspora networks and South-South cooperation.

This is why regional integration cannot remain ceremonial. The African Continental Free Trade Area (AfCFTA), one of the African Union’s flagship projects under Agenda 2063, aims to accelerate intra-African trade and strengthen Africa’s common voice in global trade negotiations. That ambition should not remain on paper.

The trade agreement should help African countries negotiate from stronger positions over debt restructuring, climate finance, investment, infrastructure, energy access, local processing and fairer value chains. Fragmented negotiations leave countries exposed to external terms negotiated one by one.

No more excuses

The real danger is policy laziness: producing visions without financing them, announcing reforms without implementing them, and promising transformation while preserving the systems that block it. The danger also lives in language. Buzzwords such as resilience, capacity building and localisation travel well across institutions precisely because they have stopped meaning anything in particular. Retiring them, or filling them with substance, is part of what reclaiming agency means.

African citizens are not asking for abstract development language. They want decent work, reliable electricity, functioning clinics, good schools, roads, water, security and accountable institutions. They want governments that do not use crisis as an excuse for permanent failure.

African countries are at a potential turning point, but only if today’s uncertainty produces more serious policy choices. Africa already has a vision. The task now is to use it.

Dan Banik receives funding from the Research Council of Norway.

Hafte Gebreselassie Gebrihet does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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