Lesotho and South African Organisations at Loggerheads After USAID Funding Cuts

The instantaneous and chaotic way in which USAID funding was cut earlier this year has caused conflict between two southern African organisations, both of whom appear to have been placed into extremely difficult situations beyond their control.

The Mosepele Foundation Development Forum (MFDF) has accused Mothers2Mothers South Africa (M2M), the prime implementer of the multi-million-dollar USAID-funded Bokamoso project, of withholding funds, breaching regulations, and using financial pressure to force it into accepting “unfair closeout terms”.

The tensions centre on the shutdown of Bokamoso, a five-year initiative launched last year, to improve the health and well-being of orphans and vulnerable children, adolescent girls and young women, as well as their caregivers, families and communities in Lesotho.

MFDF had to retrench 151 of its 157 staff and MFDF says adolescent girls and young women are left stranded, contributing to rising teenage pregnancies and school dropouts in the supported districts.

While MFDF accuses M2M of wrongdoing, the South African NGO says the two organisations were thrust into extraordinary operational and regulatory uncertainty after the US government issued a stop-work order in January that suspended disbursements and restricted their activities to life-saving services only.

M2M Lesotho Country Director Mpolokeng Mohloai told GroundUp that USAID’s guidance made clear that MFDF’s scope of work was not covered under the PEPFAR limited waiver.

M2M emphasised that it, too, had been operating in crisis mode: “This is uncharted territory … we are navigating the stop-work order and closeout budget at the same time,” senior manager Robin Goddard told MFDF during a meeting in May.

However, MFDF maintains that M2M is blocking payments and breaching regulations. It says M2M is holding onto funds due to them under their M16.4-million subaward.

The foundation says it is owed M1.2 million, which includes administrative costs accrued between May and September 2025, mainly staff salaries, PAYE, and provident fund contributions.

But Mohloai disputed this claim as well, saying no formal financial claim with supporting documents was ever submitted to M2M. She added that all allowable expenses for all sub-partners had been paid “regardless of the status of payments from the US government to M2M”.

MFDF executive director Maliehe Mosepele accused M2M of “manipulating or painting a wrong picture” of the financial situation to justify ending the partnership.

He argues that M2M’s actions violate multiple US federal regulations, particularly those governing timely disbursement and proper closeout procedures.

The non-payment, MFDF says, has made it impossible to pay terminal benefits to 151 retrenched field officers, who are now threatening legal action.

How US stop-work order pushed partners into conflict

In January, under the America First Global Health Strategy review, the US froze most foreign aid activities and shifted oversight of projects, including Bokamoso, from USAID to the US State Department.

MFDF accuses M2M of using the crisis to pressure them into accepting a termination letter.

In a recorded 20 May meeting, accessed by GroundUp, M2M officials, senior grants and compliance manager Taryn Buck, and chief legal officer Alex Fitzgerald stated they would only reimburse MFDF’s costs once the sub-award was terminated. A formal termination notice arrived on 27 February, ordering MFDF to cease all activities except closeout.

MFDF says this was retaliation for its repeated requests for clarity and disbursements following USAID’s limited waiver.

MFDF also rejected M2M’s proposed rapid closeout, arguing that the attempt to retroactively date MFDF’s termination to 1 April, and to compress the closeout into 45 days with only six days for financial reporting, violated a 90-day closeout regulation.

But M2M says the 90-day rule does not yet apply because the prime award is still not closed by the US government.

MFDF says M2M repeatedly made unilateral decisions despite the organisations having signed a Teaming Agreement establishing them as consortium partners. “M2M keeps saying ‘we have decided’, yet we are supposed to be partners,” Mosepele said.

Fitzgerald described the situation as a “force majeure”, saying decisions were being imposed on M2M through the stop-work order and subsequent US government instructions.

MFDF says it has since reported M2M to the US Office of Inspector General and Lesotho’s anti-corruption authority.

Contested link between payments and termination

At the tense 20 May meeting, MFDF objected that M2M would only reimburse them if they accepted their terms for termination. MFDF finance manager Mantahli Jonathan said regulations treat these as two separate issues and MFDF should not be linking them.

However, M2M officials said they were forced into a rapid closeout to minimise financial risk after the US stop-work order was issued.

Senior manager Taryn Buck said M2M terminated sub-awards so it could reimburse partners and later reclaim the money from the US government, insisting MFDF remained “technically still subject to the stop-work order”.

Senior Director Kimberly Grubb said the urgency was driven by the shift from USAID to State Department oversight: “It was a difficult decision… to make sure our local partners could be reimbursed.”

M2M stressed it was absorbing financial risk, while MFDF accused it of undermining localisation.

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