Seven weeks after President Donald Trump announced a pause in operations of the United States Agency for International Development (USAID) to assess programmatic efficiencies and consistency with US foreign policy; Secretary of State Marco Rubio, also acting administrator at USAID, announced 83 percent of the agency’s programmes will be cancelled and remaining programs will be managed by the State Department. While there are indications programmes such as US President’s Emergency Plan for AIDS Relief (PEPFAR) and other initiatives focused on research in the health sector may survive, details remain scarce. The decision to close USAID is being challenged in court.
The controversial move by the Trump administration sparked concerns of a looming development crisis. USAID was one of the world’s largest aid agencies operating in over 130 countries with an annual budget of US$44 billion (UGSH160.6 trillion) in 2023. Despite its scale, USAID had become a bureaucratic behemoth that always prioritized American interests over local needs, favored US contractors over sustainable solutions and often struggled to effectively engage local personnel and government institutions with multiple challenges implementing localization programmes.
USAID programs were usually designed and implemented by US contractors, regularly leaving local expertise and authorities out of key decision-making processes. This weakened local ownership and long-term institutional capacity. Rather than signaling the collapse of global development, the closure is indicative of the protracted decline in overseas development assistance (ODA). The shift presents opportunities to rethink ways aid is delivered as corporate-led initiatives and locally driven programs continue to expand.
A US Government website reports USAID assistance to Uganda was US$503 million (UGSH1.8 trillion) in 2023 and US$510 million in 2024. Given over 80 percent of USAID’s contracts and grants go to US companies, consultants and NGOs, USAID’s actual expenditure in Uganda was likely little more than US$100 million (UGSH365 billion) per year. The cut in funds is devastating to people directly employed or contracted by USAID and a substantial loss to the health sector where the bulk of assistance went to HIV/AIDS treatment, but is far from the end of development in Uganda.
To provide a sense of scale, the World Bank valued Uganda’s GDP at US$49 billion in 2023 (UGSH 178.9 trillion) with export earnings at US$5.7 billion (UGSH20.8 trillion) and remittances from the Ugandan diaspora at US$1.42 billion (UGSH5.5 trillion) in 2023 according to the Executive Director of Research Adam Mugume at the Bank of Uganda. Prime Minister Robinah Nabbanja recently announced in parliament that “an additional Shs480 billion (US$131 million) is required to bridge the funding gap and sustain essential services.”
The Prime Minister also announced government is engaging relevant stakeholders to mobilize resources to ensure continuity of HIV/AIDS interventions. In the same Parliamentary session, Abdulhu Byakatonda, Member of Parliament representing workers, reported estimates the jobs of over 12,500 community health workers across the country are at risk.
USAID was never purely humanitarian. It evolved from the implementation of Public Law (PL) 480 program established in 1954 under President Franklin D. Roosevelt to offload American agricultural surpluses in developing countries. As the US supported the Marshal Plan to rebuild Europe following WWII, Washington played a critical role rebuilding the economies of South Korea, Taiwan and Japan to ostensibly contain Communist expansion in Asia through a broad range of investments and access to US markets.
In 1961 under President John F. Kennedy, the Foreign Assistance Act formally established USAID explicitly linking aid to US strategic and economic priorities. This structure remained intact until dismantled by the Trump administration earlier this year. In view of the fact such a large portion of USAID flowed back to the US economy rather than directly benefiting recipient nations, the model had long been criticized for reinforcing dependency rather than promoting self-reliance, prioritizing US interests over recipient needs and failing to integrate with national development strategies.
Despite the massive budget, USAID was plagued by inefficiencies, slow decision-making and excessive reliance on consultants. The agency employed approximately 10,000 staff around the world and much of its funding was absorbed by administrative costs, feasibility studies and compliance requirements rather than direct development impact.
Putting aside fierce criticisms of the Agency levelled by Trump and senior representatives of his administration, the Center for Global Development ranked USAID 35th in the world–placing it amongst the bottom third of global donors in 2021. A Government Accountability Office (GAO) report the same year found that USAID’s contracting process caused long delays with some projects taking years to implement due to excessive oversight.
A 2025 USAID Office of Inspector General (OIG) report highlighted persistent accountability challenges that impeded its ability to safeguard US$8.2 billion (UGSH29.9 trillion) in undisbursed humanitarian assistance funds and monitor aid distribution effectively. For recipient nations, navigating USAID’s complex funding and reporting structures was a challenge resulting in waste, inefficiency and duplication of efforts with existing local institutions.
ODA is not about to end. The European Union (EU), World Bank and the African Development Bank (AfDB) remain major sources of funding. The EU dispersed €95.9 billion (UGSG386.4 trillion) in ODA in 2023 up from €71.6 billion (UGSH304 trillion) in 2021. China’s Belt and Road Initiative (BRI) focused on long-term economic partnerships has become a major player, investing approximately US$1.18 trillion in infrastructure projects across Africa, Asia and Latin America since its inception in 2013. USAID’s closure will create opportunities for leaner, more efficient aid structures as thousands of former USAID employees and contractors seek roles in the development sector. This shift could open doors for new, agile initiatives that emphasize sustainability over bureaucracy.
As traditional aid models decline, corporate-led development initiatives are expanding, particularly in Africa. Many multinational companies are integrating environmental, social and governance (ESG) initiatives into their business strategies, especially in agribusiness, renewable energy and financial services with companies such as Unilever, Coca-Cola and Vodafone funding education, healthcare and entrepreneurship programs.
In contrast to USAID’s top-down approach, corporate social responsibility (CSR) initiatives often tend to be more responsive to market needs, ensuring long-term sustainability. Notwithstanding challenges, rather than imposing externally designed solutions, CSR projects are tailored to address specific economic and social challenges in the regions where companies operate. This market-driven approach means that initiatives are more likely to be financially viable and self-sustaining rather than dependent on continuous external funding.
Another key advantage of CSR programs is their ability to leverage private-sector efficiency, avoiding the bureaucratic delays that often plague large donor-funded initiatives. Unlike traditional aid programs that require extensive compliance procedures, lengthy approval processes and complex reporting structures, private companies can move quickly, allocate resources efficiently and adapt to changing circumstances. This flexibility allows them to implement solutions in a timely and cost-effective manner.
CSR initiatives prioritize partnerships with local businesses and governments, strengthening national economies from within. Working closely with local enterprises, supply chains and public institutions, CSR programs help build capacity and create jobs while fostering long-term economic resilience. These collaborations enhance the impact of corporate investments and promote shared prosperity by aligning business success with community well-being.
Beyond CSR, impact investing and blended finance are transforming development finance. The Global Impact Investing Network (GIIN) estimates that over 3,907 organizations manage US$1.6 trillion in impact investing assets globally with much of this capital flowing into Africa and emerging markets. Unlike traditional aid, these investments prioritize economic empowerment, job creation and scalable local solutions rather than externally driven interventions.
Instead of mourning USAID’s end, the focus should shift to how development can be done better—through models that empower local institutions, prioritize direct investments and support long-term economic growth instead of aid dependency. A more transformative approach that moves beyond transitionary outcomes and produces sustainable social impact is required suggested Josephine Lavoy, Associate Director at Planned Parenthood Global (PPG) Uganda.
The African Union’s Agenda 2063 emphasizes self-reliance, regional trade and economic integration reflecting Africa’s shift toward locally driven solutions. New regional financing mechanisms such as the African Development Fund and the African Continental Free Trade Area (AfCFTA) are laying the groundwork for a more self-sustaining economic future.
While rumors are emerging of plans to establish a new Agency for International Humanitarian Assistance operating in cooperation with the Development Finance Corporation (DFC), both embedded within the State Department; the demise of USAID provides opportunities for the development sector to embrace more effective, decentralized and sustainable models. The shift could result in direct funding to civil society and local governments instead of US contractors, greater reliance on private-sector investment and entrepreneurship as economic drivers in addition to an expansion in regional development programs such as World Bank and AfDB infrastructure projects.
The world does not need another massive, bureaucratic aid agency. Smarter, more effective approaches that prioritize efficiency, sustainability and local leadership over outdated ODA models are needed. USAID’s closure marks another milestone in the transformation of overseas development practice with potential to become more locally led, economically sustainable and better aligned with the realities of today’s world.
Christopher Burke is a senior advisor at WMC Africa, a communications and advisory agency located in Kampala, Uganda. With over 30 years of experience, he has worked extensively on social, political and economic development issues focused on governance, public health, environmental issues, extractives, community mobilization, advocacy, communications, conflict mediation and peace-building in Asia and Africa.
