The global development crisis

The global development system is not merely under strain; it is approaching a state of structural collapse. Under the Trump administration, the US has cut more than 80% of its international aid funding. The UK has slashed its aid budget by 40% while Belgium and France have each cut theirs by 25%. Such drastic reductions signal a decisive political retreat from the idea that wealthy states are obligated to help the world's most vulnerable.

The human cost of this abandonment is immense. As wealthy countries scale back funding for their bilateral aid agencies, multilateral institutions and international and local NGOs, the delivery of essential services to marginalised communities is rapidly eroding. At the same time, climate shocks, displacement and lingering conflicts are multiplying humanitarian needs. Progress toward the UN SGDs, now only seven years away from their 2030 deadline, is dangerously off-track for literacy, health and poverty reduction.

This crisis is not only international. National governments in developing countries also bear responsibility. Years of underinvestment in public services, weak tax systems, elite capture and corruption have hollowed out state capacity to look after the basic needs of their citizens. Too often, governments have relied on donors and NGOs to deliver basic services instead of building their own institutions.

Conversely, the old humanitarian architecture, dominated by large international agencies, rigid project cycles and donor-driven priorities, was already inefficient and inequitable. Now it is being starved of resources at precisely the moment it needs reform and expansion. Some donors and policymakers argue that the private sector can fill the gap left by retreating states. This is a dangerous illusion. Private finance is not a substitute for public responsibility. Corporations invest where returns are predictable and reputational risks manageable, not where suffering is greatest or institutions are weakest.

Blended finance or corporate philanthropy can complement aid at the margins, but they cannot anchor a system built on principles of universality and impartiality. Reliance on private capital skews priorities toward measurable and market-friendly outcomes. It also risks turning humanitarian response into a branding exercise rather than a moral obligation.

If the global development system is to survive, it must be fundamentally restructured to become more agile, more locally driven and more locally accountable. Since the 2016 World Humanitarian Summit, donors have committed to directing at least 25% of humanitarian funding to local actors but estimates suggest that only around 1.2% currently reaches local organisations directly. Grassroots entities thus remain trapped in short-term project grants, constantly chasing funds while fulfilling cumbersome reporting requirements. This dependence deters the building of durable local institutions.

Local responders need multi-year institutional funding that allows them to grow, professionalise and adapt to emerging realities. Donors must measure success differently, moving beyond an obsession with whether predefined inputs were delivered and paying more heed to whether local communities and organisations have become more resilient.

Technology is also increasingly being presented as a silver bullet. Digital platforms have improved cash assistance and disaster management, and AI could help anticipate crises. Yet algorithms cannot undo unequal power structures. Predictive systems can miss realities that local actors understand intuitively, and tools designed in donor countries without local input can reinforce external control.

The global development sector stands at a crossroads. One path leads to a stripped-down, technocratic system that does less, reaches fewer people and becomes increasingly captive to private actors and short-term incentives. The other leads to a rebalanced model that funds local actors directly and defines success by lasting community impact rather than by compliance with donor priorities and narrow efficiency metrics.