The End of Foreign Aid Is Not the End of Development

The global development landscape fractured profoundly when systemic donor retrenchment vaporized approximately $30 billion in international assistance, creating an immediate, destabilizing shockwave across vulnerable nations. Navigating this fiscal cliff demands an immediate, high-level paradigm shift from transactional charity to aggressive local capacity building, precisely because the end of foreign aid is not the end of development.

To preserve decades of hard-won progress against extreme poverty and systemic infectious disease, international institutions must ruthlessly streamline their operational frameworks, shedding bureaucratic bloat to optimize shrinking resource pools. By engineering a structured, self-sustaining model of planned obsolescence over the next two decades, the development sector can successfully transform this unprecedented funding crisis into an epochal catalyst for authentic, sovereign economic growth.

Foreign Aid Is Critical for Progress

On February 3, 2025, exactly 20 years after former South African President Nelson Mandela stood in front of a cheering crowd in London’s Trafalgar Square to launch a historic global campaign to “make poverty history,” employees of the U.S. Agency for International Development (USAID) received an email telling them not to come to work.

The United States’ main agency for fighting poverty around the world was, as the billionaire entrepreneur Elon Musk put it, being “fed into the woodchipper.” At the same time, the world’s other biggest donors, including France, Germany, and the United Kingdom, were making drastic cuts to their global health and development spending. Over the course of 2025, donors across the world slashed some $30 billion of foreign aid.

The short-term effect of this retreat has been catastrophic. The world’s deadliest infectious diseases—HIV, tuberculosis, and malaria—became even deadlier last year. Initial projections from the Institute for Health Metrics and Evaluation indicate that because of cuts to health assistance, as many as 200,000 more children died in 2025 than in 2024, mostly in Africa—marking the first year this century that the number of children dying around the world went up instead of down.

Even if some countries and institutions step up, aid will not fully recover. Projections indicate that through 2027, global health and development funding will remain nearly 30 percent lower than it was in 2024. It is likely to fall more sharply as the conflict in and around Iran drives up the cost of essential commodities and causes governments to divert even more resources to security and defense.

Yet the world can still make progress with less money if global institutions narrow their objectives and invest in the capacity of poor countries to handle problems on their own. The long-term goal of the aid sector should be to make itself unnecessary in the future. Targeted investments in areas that contribute to local growth and human potential can push the world there within the next 20 years.

HOW TO SAVE A LIFE

Over the past year, those who dismantled USAID have promoted a great myth: that aid has been ineffective and fundamentally wasteful. Musk, for example, called USAID a “ball of worms” operating on “stolen tax dollars.” This myth has already convinced some people that their generosity has no real effect in the world when in fact it has been transformative.

Global efforts to reduce extreme poverty this century have been remarkably successful. In 2000, 2.2 billion people across the globe lived on an income equivalent to $3 a day in today’s dollars. By 2015, that number had dropped to one billion; today, it’s 840,000. And this progress is not only the result of economic booms in China and India. Since 2000, countries as diverse as Bangladesh, Ethiopia, Indonesia, and Senegal have all cut the number of people experiencing extreme poverty in half.

Reimagining the Future of Foreign Aid

Poverty has also become far less deadly as the world has invested in lifesaving care, such as vaccines and improvements during childbirth. From 2000 to 2024, life expectancy in low- and middle-income countries increased by more than six years. Malaria deaths dropped from 839,000 per year to 610,000. HIV deaths fell from 1.8 million to 627,000. And the world halved the number of children dying before the age of five—from nearly ten million to less than five million annually.

Overall, the past 25 years have seen the greatest improvements in life for the most people in history—with the progress primarily benefiting the world’s poorest. Most donor countries played a significant role in advancing that progress without spending more than one percent of their annual government budgets on aid. It is understandable that those who are still invested in health and development work focus their energy on disproving the myth that aid has failed. But they must also be careful to not get so bogged down in trying to defend the successes of the past that they miss a vital opportunity to help global institutions evolve for a new era.

ROOM FOR IMPROVEMENT

Although cuts to aid in 2025 were the immediate result of budget pressures and global instability, they were also the culmination of a series of problems in the post–World War II architecture of international development. One problem has been a failure to transition from charity to investment in local capacity that enables progress to continue after initial funds dry up.

The development programs that have successfully transitioned have generally disappeared from the conversation in donor countries. Take the Brazilian Agricultural Research Corporation, also known as Embrapa. In the 1970s, when Brazil was experiencing widespread hunger and had to import most of its food, USAID helped create the organization to improve food production. By developing new crop varieties and adapting soil and fertilizer techniques to Brazil’s climate, Embrapa transformed a tropical region widely considered to be infertile into one of the most productive agricultural zones in the world. The results were so stunning that Brazil eventually became a major food exporter. But because Embrapa is run by the Brazilian government, Washington’s role in this agricultural revolution has been largely forgotten.

Many of the programs that are fixtures of today’s global health and development system were built in response to immediate crises but then became lasting institutions. The President’s Emergency Plan for AIDS Relief, for instance, was never meant to be permanent—that’s why it was called an “emergency plan.” But PEPFAR has lasted over two decades. In terms of its core objective, it’s been a massive success: it has helped save over 26 million lives. But many countries now rely on that assistance to run their HIV programs—meaning that when aid dollars fluctuate, so does progress in fighting the disease.

It’s also become clear that over the past decade, global health and development resources have been spread too thin across too many objectives, not all of which align with the priorities of the poorest countries they are meant to help. In 2000, the United Nations adopted the Millennium Development Goals, which focused on eight goals and 18 targets related to poverty and health.

The initiative’s successor, which was set in 2015 and known as the Sustainable Development Goals, ballooned to 17 goals and 169 targets, covering everything from eliminating hunger to ensuring the health of “life below water.” The vast majority of Sustainable Development Goals will miss their 2030 deadline, in part because there are not enough resources to go around.

Modernizing Infrastructure Beyond Foreign Aid

Development institutions are also struggling with inefficiency. This is a normal problem in all bureaucracies, particularly ones managing challenges that are constantly evolving. Before the dissolution of USAID, for example, there were more than 20 U.S. government agencies involved in providing foreign assistance, which sometimes led to duplicative programs and systems—a problem that warranted reforms to certain agencies, not their elimination.

PLANNED OBSOLESCENCE

If the world is going to continue making progress against sickness and poverty in an era of tight resources, leaders in global health and development must change their approach. They must focus on investing in local capacity; setting clear, achievable goals; and ensuring that institutions are as efficient as possible. The economic models we use at the Gates Foundation suggest that global health and development organizations can achieve significant progress over the next two decades—but only if they update their strategies.

It is vital that global development institutions hand over some of their functions to recipient countries, many of which are eager for more autonomy. Zambian President Hakainde Hichilema, for example, has said the aid cuts in donor countries present “a challenge, and an opportunity, for African countries to build stronger, more independent economies.”

But self-reliance requires more than will—it takes resources. When a country loses funding and can’t make up for it, the result is more needless death and suffering. Without an adequately funded health system, parents rush their sick child to the closest clinic only to find that it’s closed, or overflowing with people in need of care, or, as one Gates Foundation partner in Mozambique has reported, running so low on supplies that all it can offer any patient is a single variety of antibiotic.

Ghana, South Africa, and Zambia have managed to use their own resources to fill some of the health spending gap left by aid cuts, but no country has been able to compensate entirely. Other governments have not increased their health budgets at all, either because they have not made it a priority or because they don’t have the resources as a result of growing debt repayment obligations and repeated economic shocks.

Between 2018 and 2024, nearly 100 low- and middle-income countries faced increasing debt burdens that depleted their ability to invest in health, human capital, and long-term development. An analysis by Bajeti Hub, a Kenyan nonprofit, has found that in Kenya, when debt service increases by 1.0 percent, health spending falls by 1.2 percent. And today, the conflict in Iran is driving up inflation and renewing pressure on currencies in many low-income countries, sapping their spending on essential public services.

Foreign Aid Empowers Sovereignty

The only way to get out of this trap is to spur broad-based economic growth that can support a strong domestic revenue base. The good news is that this growth is possible. Indeed, the International Monetary Fund expects that overall growth in Africa this year will be faster than in Asia. And innovations including artificial intelligence have the potential to boost productivity massively if leaders harness it for their people.

Consider the possible effects of AI in the agricultural sector, which drives economic growth in areas such as Sub-Saharan Africa where most of the population farms. The Gates Foundation and its partners have successfully piloted and begun to scale AI tools that can give farmers advanced information on planting strategies, soil health, and weather forecasting and connect them to credit services and markets to improve sales—all in local languages. The program is already running in Ethiopia, India, and Kenya. In the next decade, these tools could help more than 40 million smallholder farmers increase their income and productivity by 25 percent, leading to $16 billion in economic gains.

But to take advantage of growth opportunities such as these, low-income countries need resources to build the physical and digital infrastructure that makes them possible. The International Monetary Fund, multilateral development banks, and bilateral donors will need to mobilize a comprehensive suite of tools to alleviate debt burdens and open up space for investments that drive future growth. These should include debt restructuring, debt-for-development swaps, funding mechanisms that better match the risk and return appetites of private and public investors and unlock affordable financing at scale, and—for the foreseeable future—continued grant funding.

DOING MORE WITH LESS

As long as grant funding is necessary, the question is how to manage it in a world in which the pot of aid money is shrinking and the amount being invested in the lowest-income countries is bottoming out. To make do with limited resources, donors will have to narrow their priorities. Over the years, official development assistance has come to encompass an incredibly broad list of priorities as varied as refugee costs in high-income countries and infrastructure investments in middle-income countries that are more appropriately funded by development finance institutions.

Graduating From Dependency on Foreign Aid

It is critical to focus today’s scarce grant money on what we call core development investments: reducing poverty and supporting health and education. By investing in sectors that will drive future growth and opportunity, over time, countries can graduate from relying on development assistance to funding their own needs with more domestic resources and better access to private capital. Of course, donors should continue to fund emergency grants during conflicts or natural disasters. But core development investments are essential to fostering human capital in the long term and cannot be easily replaced by commercial finance.

It takes time for investments in human capital to pay off, so donors must set realistic expectations. Most developing countries will need at least another decade of grants to meet basic human needs in health and education while spurring the growth necessary to become self-sufficient.

The goal should be for the vast majority of the world’s poorest countries to generate enough prosperity to move beyond reliance on health and development aid altogether within 20 years. But it will take focused investment now to make that vision possible. Some programs, such as the State Department’s bilateral health compacts with African countries, are focused on the right issues but withdraw funding at a rate that most partner countries cannot realistically replace given the strong economic headwinds they are facing. The compacts, for example, are scheduled to wind down assistance within five years.

DESIGNED TO BE DELETED

The world’s global health institutions also need to become more efficient and devolve power to national health programs over time. This is not because global institutions are ineffective but because they’ve worked so well in aggregate that they’ve changed the environment they operate in.

In the early 2000s, infectious diseases were rampant in low-income countries and robbed entire generations of their futures. GAVI and the Global Fund to Fight AIDS, Tuberculosis, and Malaria were created during this period and have together saved a staggering 85 million lives. Alongside the World Health Organization and various UN agencies, they helped turn the tide against some of the world’s deadliest infectious diseases. The U.S. government, which has historically been the largest single funder by far of these programs, and other donors can take significant credit for contributing to one of the century’s greatest successes.

Today, however, winning the fight against disease must revolve around long-term efforts to strengthen health systems, expand access to primary care, and create channels for countries to access lifesaving health products and innovations sustainably and affordably. It doesn’t make sense for foreign teams to lead that work. Local health officials waste time navigating a complex web of international institutions—often filling out dozens of grant applications to get funding for any given health initiative. In an ideal world, global health institutions would support governments through streamlined processes, eventually transferring ownership of health programs and responsibility for funding them to recipient countries.

There will still be plenty of tasks better suited for global institutions. These include building data collection tools and setting norms and standards, which benefit from the type of uniform approach that large institutions can provide; acquiring medical supplies, in which bulk purchasing drives down costs; and supporting research and development and pandemic readiness, for which international coordination is essential. But for everyday matters of health, local agencies are better positioned to lead.

Over the past year, the Gates Foundation has accelerated shifts in our own work to meet these priorities. Because we intend to solve problems, not manage them in perpetuity, Bill Gates, the chairman of the Gates Foundation, and our board gave our institution a new end date: we will spend our endowment and the majority of Gates’s personal resources by 2045. During its first 25 years, the foundation spent around $100 billion, with annual payouts roughly on par with donors such as South Korea, Spain, and Sweden; over the next two decades, we will dispense around $200 billion in grants.

Those resources will be put toward achieving three goals: helping end the preventable deaths of mothers and babies, ensuring the next generation grows up without having to suffer from deadly infectious diseases, and lifting millions more people out of poverty.

People today have had the privilege of living through one of the greatest improvements in the human condition in history. Last year’s upheaval of the global health and development system will either mark the end of that progress or be the catalyst to reform global institutions for a new era. The goal is for aid levels to eventually fall not because leaders have chosen to ignore grave problems but because they’ve actually solved them.

This might sound ambitious, but history shows that smart, targeted investments can help countries wean themselves off aid: 11 of the United States’ top 15 trading partners today were once recipients of U.S. assistance. If government and private donors invest now in supporting countries toward self-reliance, the world will become a safer, more prosperous place, and aid itself could become a relic of the past.