The Path to Development in a Post-Aid World

Fragile states, almost by definition, never have it easy. But for the roughly 60 poor countries that lack the capacity to perform basic responsibilities for their citizens, the last year and a half have been especially tough. For decades, these countries have subsided on a lean diet of foreign aid from major donor governments and the United Nations, the World Bank, and other multilateral institutions. Yet under President Donald Trump, the United States—traditionally the world’s largest aid provider—has slashed its assistance. Other major donor states have followed suit, as have multilateral organizations.

The cuts are causing serious damage. Foreign aid has done a great deal of good, including by helping poorer governments meet the basic needs of millions of people, and the reductions have already resulted in the deaths of over 500,000 children, according to an estimate by Brooke Nicols at Boston University. But for all its merits, the existing system has always been quite limited. Relying on foreign aid did not provide fragile states with a pathway to meaningful economic growth. It did not advance state capacity. Instead, it left recipient countries vulnerable to the whims of faraway powers, as the cuts have now made evident. For weak states to become strong, they need a new strategy, one that depends mostly on themselves.

Creating such a strategy will not be easy, nor will implementing it. Weak states are weak for a reason. But this task is not impossible. Fragile countries typically possess a wealth of natural resources and receive huge diaspora remittances. Managed right, these streams can provide governments with billions of dollars in revenue and help each country build a robust middle class. These states can create better systems of trade, and they can work across borders to promote internal and external stability. After all, countries typically suffer when their neighbors descend into chaos and thus have a shared stake in ensuring the region’s collective success.

THE GREAT WITHDRAWAL

When Trump returned to office in January 2025, he immediately laid waste to the existing system of economic development. On the very day of his inauguration, he dismantled the U.S. Agency for International Development, the body that accounted for the lion’s share of U.S. development and humanitarian assistance. He also promptly slashed or outright canceled Washington’s annual contributions to the Global Climate Fund, the World Health Organization, and over a dozen other UN agencies. The result has been the end of all kinds of development initiatives. Closing USAID, for example, resulted in the termination of well over 5,000 projects. Washington’s cuts to multilateral bodies, to which it was the largest contributor, has shuttered many other programs. Meanwhile, Trump’s heavy-handed use of tariffs has gutted long-standing provisions that gave vulnerable states advantageous trade terms.

The United States is not alone in pulling back. According to the Organization for Economic Cooperation and Development, other Western governments have slashed assistance grants and development loans to their lowest level since 2016. Belgium, France, the Netherlands, Sweden, Switzerland, and the United Kingdom have all slashed foreign aid in favor of defense spending and other domestic expenditures. These countries have traditionally been among the world’s leading providers of humanitarian aid, after the United States. The United Kingdom’s humanitarian assistance in the social sector, for instance, has fallen below pre-COVID levels, leading to cuts in health programs in dependent countries in West and East Africa, notably Gambia, Kenya, and Eritrea.

Western donors are not the only game in town. China, India, and Russia also provide assistance to weaker states, and they are increasingly positioning themselves as alternative sources. Although China is the only one to have increased its development spending—aid by India and Russia has been static and constrained by domestic pressures—all three have seen demand for new partnerships and have thus expanded their presence in Africa and the global South. The New Development Bank, which is seeded by China, India, and Russia along with other countries in the BRICS consortium, is mobilizing resources for infrastructure and sustainable development in emerging markets and developing countries. Beijing and Moscow are also leading an effort to de-dollarize the international economy—or to make it easier to trade without relying on the United States’ currency—which could help developing states reduce their geopolitical exposure. Weaker states’ reliance on the dollar has not only constrained trade and investment options, including intra-regional trade, but has also rendered them easy prey for unfavorable tariffs.

But relying on these countries has serious drawbacks. For starters, there are limits to their generosity. India’s and Russia’s aid budgets remain fixed despite growing demand. China’s budget has expanded, but Beijing rarely offers cash donations or Western-style grants. Instead, the main vehicle of Chinese assistance is the Belt and Road Initiative, which arrives in the form of loans, construction contracts, and state-backed commercial activities. Chinese funds are also doled out on an ad-hoc basis with little transparency. They typically don’t focus on advancing human rights or improve state capacity. In fact, they often leave recipients mired in debt and thus beholden to Chinese interests.

China’s aid practices are hardly unique. India also operates largely through instrumental loans, mostly in exchange for access to recipients’ natural resources (or in exchange for deals that open their markets to Indian companies). Russia is even more transactional. It has made growing investments in conflict-ridden countries, including the Democratic Republic of the Congo, Niger, and South Sudan, but only to enhance its geopolitical position and secure deals for critical minerals. It, too, is ultimately uninterested in promoting development.

GET UP, STAND UP

The landscape for international aid may be bleak. But fragile countries can compensate for these losses, beginning by making better use of the assets they hold. Afghanistan, Angola, Burundi, the Democratic Republic of the Congo, Gabon, Namibia, Nigeria, and Tanzania all have large deposits of cobalt, lithium, rhodium, and dysprosium. The Democratic Republic of the Congo alone accounts for 50 to 80 percent of the world’s coltan and cobalt, estimated at over $24 trillion in value. (It also has huge reserves of gold, copper, and tin.) Other developing countries have vast natural resources, too. Properly harnessed, these mineral deposits would do wonders to boost economic growth. They could become a source of huge cash inflows and serve as leverage to negotiate more advantageous trade deals with industrialized countries.

Analysts, of course, have long proposed that developing states use their natural resources, and many governments have made effort upon effort to do so. To succeed where past endeavors have failed, policymakers will need to update their geological surveys so that they know exactly where minerals lie and use more modern mining and refining technologies. The skills and technical support of citizens in the diaspora present one possible “home-based” solution here. Regional collaboration is another option, especially as states develop regulatory frameworks to reduce if not eliminate illegal trade and investment activities.Most important, weak states will need to tamp down local corruption and illicit mining by encouraging transparent transactions, judicial reforms, and enforcement of rules and regulations. New mining income must build state capacity, not line the pockets of government officials or businesspeople.

At the 69th Economic Community of West African States Summit in Freetown, Sierra Leone, July 2026  Hickmatu Leigh / Reuters

Natural wealth is not the only resource that fragile states have at their disposal. These countries also tend to receive enormous quantities of remittances from their diasporas. In 2025, for instance, that inflow amounted to $100 billion in Africa, with Nigeria alone receiving over $23 billion. In many low-income countries, remittances make up at least 10 percent of GDP; in some places, including Lebanon, Tajikistan, and Tonga, the figure is closer to 50 percent. For the majority of poor countries, remittances generally exceed overseas development assistance and foreign direct investment as a source of external financing.

Most of this money ultimately goes toward supporting the families of recipients. In doing so, it helps keep millions of vulnerable people from experiencing extreme hardship. Remittances, for example, played a major role in buffering poor countries from the dire economic consequences of the COVID pandemic. Yet the informal, unregulated nature of remittances means that governments usually see little direct benefit and therefore cannot create state-building policies around them. Instead, countries should embrace policies that incentivize formal remittances and shift their focus from providing safety nets for vulnerable families and personal properties to productive ventures and investments.

Nigeria is leading the way on this front. In 2019, it established an agency, the Nigerians in Diaspora Commission, charged with coordinating engagement with citizens abroad and issuing sovereign diaspora bonds, which are savings and investment instruments managed by the government’s Debt Management Office to channel remittances to infrastructure and capital projects. Such bonds help support small- and medium-size enterprises by providing startup capital and assistance with entrepreneurship. They also provide the state with much of the financing it uses to fund critical infrastructure. But even Nigeria can do better. It should use its formal engagement with the diaspora to help transfer the expatriate community’s knowledge and technical skills in emerging technologies, medicine, and agriculture. Rather than just helping to route funds, the government should set up incubation hubs, finance intervention programs, and arrange special visits by expert teams. It should, in particular, encourage skilled workers to return home and use their talents there.

A LITTLE HELP FROM FRIENDS

There is a final source of support that weak states can tap: their neighbors. Neighbors are more likely to provide help because they don’t want instability on or near their borders. The possibility that some countries actually like seeding chaos in neighboring countries cannot be ruled out, as is the case with Rwanda undermining the Democratic Republic of the Congo, but such instances are rare. Weak states should thus work more closely with existing regional institutions, or if needed, forge new ones. Such institutions tend to bring greater local knowledge to bear than global ones, and they generally enjoy greater legitimacy because they are homegrown.

Regional organizations have already had success in helping struggling countries. In Haiti, Liberia, Myanmar, Sierra Leone, Somalia, and South Sudan, regional bodies helped stave off governmental collapse. The African Union is providing technical assistance to members looking to translate their natural resources into investment, job creation, and economic growth. The organization is also developing regionwide initiatives focused on good governance, peace and security, climate change, and disease control. Other regional actors, including the Economic Community of West African States, the Southern African Development Community, the East African Community, the Caribbean Community, and Association of Southeast Asian Nations are all playing active roles in advancing good governance and promoting development. The African Continental Free Trade Area, meanwhile, has helped turn Africa into the single largest geographic free-trade zone in the world. The World Bank estimates that the project will boost incomes across Africa by over $450 billion by 2035.

Right now, regional institutions have shortcomings. The Economic Community of West African States, for instance, was unable to prevent recent coups in Burkina Faso, Mali, and Niger, which violated the body’s protocol on democracy good governance. Sanctions and threats of military action also had the unintended consequence of isolating the countries, and ultimately they withdrew from the body and formed their own alliance. Still, regional bodies are undeniably important for weak states. ECOWAS played a key role in rescuing Liberia and Sierra Leone from collapse and helped to restore democracy in Gambia, Guinea-Bissau and Ivory Coast. The body has also led regional initiatives to tackle such issues as development, food and human security, climate change, health care, and the promotion of regional trade. To make a lasting difference, all regional organizations should prioritize such initiatives because they mitigate the tensions that generate instability.

SELF HELP

None of this means that the governments of the United States, Europe, or other wealthy donor countries were right to curtail aid. They weren’t. Their assistance helped—and still helps—address urgent humanitarian needs and seed local initiatives. It enables the United Nations and other multilateral institutions to strengthen developing countries, as well. It would be much better for the world if these governments restored their aid budgets. They should, at a minimum, direct joint assistance toward issues where poor and fragile countries are least able to fend for themselves, including the transition from fossil fuels and public health.

But these actors are unlikely to turn back the clock. They are increasingly preoccupied with internal issues and have cut weak states loose. Developing countries must therefore do the hard work of leveraging their natural resources and remittances to get stronger. They need to shift their international attention away from the rich and powerful and toward governments closer to home. Self-help and regional help are now not only the best options. They are the only ones.

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