THE global development landscape is at an inflection point. As multiple major donors slash official development assistance, with USAID鈥檚 closure as a symbolic turning point, the traditional north-to-south aid paradigm is disintegrating. The effects will be stark: many low- and lower middle-income countries face a sharp reduction in external support, risking setbacks in poverty reduction, health and human capital gains. Such as like Ethiopia, Jordan and Somalia will see some of the largest proportional losses, with overall income levels and growth trajectories likely to suffer.
Yet, this crisis also exposes the limitations of a fragmented, inefficient aid system that, even before cuts, struggled to coordinate diverse actors, align incentives and truly deliver transformational outcomes. More than 80 donors on an average now engage with any given developing country, but poor coordination means that interventions are often duplicative, small in scale and fail to support long-term self-reliance of recipient countries.
Three broad lessons have emerged over time.
Aid must become more strategic and transformational: For decades, the development sector has leaned heavily on cost effectiveness, rigorously funding 鈥榳hat works鈥� through randomised controlled trials and similar methods. This discipline has been valuable but limited. As funding shrinks, there is an urgent need to re-focus aid on interventions that address root causes and foster long-term economic growth and productivity. For example, beyond distributing textbooks or vaccines, countries need investments that help firms scale, export and innovate. This requires 鈥榩ortfolio thinking鈥� 鈥� making bold, riskier bets that carry potential for big returns even if they do not always rank high on cost-effectiveness ratios. Philanthropists and new actors can help fill this gap, but governments and multilateral agencies must share this ambition.
Coordination is more crucial than ever: With less money in the system, there is a real risk of 鈥榦rphan鈥� countries and sectors left unsupported as donors retreat or shift priorities. The pivot should be towards clarifying each donor鈥檚 comparative advantage and coordinating funding to avoid gaps and redundancies. Bridging roles, such as triangular or regional cooperation, offer pathways for diverse actors 鈥� development assistance committees under the the Organisation for Economic Cooperation and Development and non-development assistance committees, bilateral and multilateral, philanthropies and development financing institutes 鈥� to work together more effectively. But this requires tackling trust deficits, aligning objectives and simplifying procedural hurdles that make collaboration so difficult today.
Rebuilding trust and purpose: The development community must fix its story. Too often, aid is sold to domestic voters as a tool of national interest 鈥� border security, economic gain or geopolitical clout. But when the public does not see real progress, this narrative collapses. Aid must return to its core purpose: helping countries build their own resilience and self-reliance. That means listening more closely to what partner governments say they need, especially when they ask for investments that unlock local capacity and private capital. Development actors must articulate a credible, evidence-based case for why transformational, growth-focused aid is an investment that benefits everyone while also being transparent about trade-offs and results.
Looking ahead
The fallout of current aid cuts could be devastating, but it also presents an opening for meaningful reforms. Donors just met at the 4th International Conference on Financing for Development in Seville, Spain. They must seize this moment to prioritise fewer, larger, more transformational programme; strengthen collaboration across diverse donors; clarify roles to make scarce aid catalytic rather than spread thinly; and support interventions that drive productivity, structural change and economic resilience.
If the global community fails to act, today鈥檚 fragmentation and short-termism risk not just lost progress but a deep erosion of the credibility of international cooperation. But with bold vision, coordination and a willingness to take strategic risks, aid can still be made transformational, doing more than just alleviating symptoms, but instead fostering growth and self-reliance for the long term.
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Dr Md Mohsin Ali ([email protected]), a public health and nutrition specialist, is a former government and UNICEF official.
