An article by Adedeji Adeniran, Director of Research, Salihu Abdulkhalid Anda, Research Analyst and Onyinye Onuh, Research Analyst from Centre for the Study of the Economies of Africa (CSEA)
When the Tap Runs Dry
For decades, Nigeria has operated within a donor-led development finance architecture, with the United States Agency for International Development (USAID) as one of its most significant partners. Between 2015 and 2024, USAID channelled about $7.8 billion in foreign aid to critical sectors in Nigeria, such as health, agriculture, education, economic growth, democracy, human rights, governance, the environment, peace and security, and humanitarian assistance.
Through flagship programmes like the Feed the Future Nigeria Rural Resilience Activity (2019–2024), USAID facilitated economic recovery and livelihood support for over 500,000 people, including vulnerable women, persons with disabilities and internally displaced persons. The agency also provided vital HIV prevention, care, and treatment services through programmes such as the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) and the President’s Malaria Initiative (PMI). The U.S. Embassy and consulate in Nigeria have estimated that these interventions have protected over 31%, or 68 million Nigerians, from malaria, contributed to a decline in child deaths by 16 percent over 10 years and helped reduce national prevalence from 42 percent to 23 percent. Similar impact stories have been recorded in the education sector, where millions of children and youth have witnessed improved early-grade reading skills or expansion of access to children whose schooling was disrupted by conflict. Over time, this steady flow of external support has become deeply embedded in Nigeria’s development finance landscape, shaping both policy priorities and service delivery.
That architecture faced an abrupt shock in January 2025, when a U.S. executive order triggered a 90‑day pause on nearly all foreign aid, effectively halting most USAID‑funded activities in Nigeria. By March, 83 percent of USAID’s programmes worldwide had been terminated, including major health, education, and humanitarian projects, and over 5,200 contracts were cancelled. The funding freeze is most significantly affecting the Nigerian health sector. With over 80% of its funds tied to USAID, the USAID funding freeze disrupted HIV and malaria prevention efforts, stalled nutrition and maternal health programmes, and jeopardised emergency food assistance. In 2024 alone, the USAID assistance to Nigeria totalled $767 million, including $370 million in health funding, $25 million in education, and $7.8 million on agriculture. While a handful of critical health services received temporary waivers, the pause revealed how much essential public services and local development initiatives depend on sustained external financing.
While external funding has delivered undeniable gains, it has also left gaps in domestic capacity to finance, manage, and sustain these services independently. The USAID pause was not only a budgetary crisis but also a stress test of resilience, revealing both the agility of some state and non‑state actors to mobilise alternative resources and the structural weaknesses that leave entire sectors exposed to donor decisions. Yet, in the face of such shocks, Nigeria’s resilience has often emerged, demonstrated through the adaptive responses of both state institutions and civil society actors, which highlights the essential role of domestic development financing in navigating donor uncertainty.
Response to Aid Shocks
Government-Led Approach support.
Following the funding freeze in early 2025, Nigerian federal authorities convened a multi‑ministerial Transition Committee, headed by the Ministries of Health, Finance, and Environment, tasked with designing a transition and sustainability plan to preserve HIV, tuberculosis, and malaria treatment programmes previously supported by USAID. This body quickly identified gaps and mobilised alternative funding sources. Subsequently, the Federal Executive Council (FEC) approved US $1 billion for healthcare reforms and emergency measures, including $3.2 million to procure 150,000 HIV treatment packs over four months. Also, the parliament approved an additional US $200 million in the 2025 federal budget specifically to fill the gap created by USAID’s suspension, prioritising vaccine supplies and epidemic control. To address human resources disruptions, the government moved to absorb 28,000 health workers, previously employed under USAID contracts, into public service payrolls, safeguarding community-based service continuity.
Non-state Actors’ Interventions
One of the most significant disruptions from the aid cut is in the local NGO sector, which has traditionally relied on donor support. An interesting success story is also emerging, demonstrating how local civil society is mobilising resources to fill the void in grassroots programming. The Development Research and Projects Centre (dRPC), with support from the Ford Foundation, established the NGO Support Initiative (NSI), granting N 85 million (N 5 million each) to 17 Nigerian NGOs for immediate three-month projects focused on health, education, and women’s empowerment. This intervention contributed to provide rapid liquidity and technical mentoring to organisations whose operations were jeopardised by a funding freeze.
The private sector have also stepped up in their support. For example, Codix Bio Ltd, a pharmaceutical company in Ogun State, in partnership with South Korea’s SD Biosensor and backed by WHO, launched a facility capable of producing 147-160 million HIV and malaria rapid test kits annually, targeting diagnostics shortages left by USAID cuts.
These actions signal more than emergency relief; they illustrate Nigeria’s early embrace of resilience through domestic funding, strategic public-private collaboration, and civil society adaptation. They set the stage for a deeper question: What will it take to use the crisis and emerging narrative around resilience as a springboard to a new development financing model in Nigeria?
From resilience to a sustainable development financing model
The USAID funding freeze has shown a critical truth; sustainable development financing in Nigeria should rely primarily on domestic resource mobilisation. While foreign donor contributions have helped bridge financing gaps, they cannot substitute for a strong national revenue base that guarantees the continuity of essential services. Strengthening revenue mobilisation is not just about plugging financial holes; it also signals national ownership of development priorities, builds credibility with citizens and reduces vulnerability to external shocks.
In parallel with stronger public financing, the country should expand the role of the private sector and domestic philanthropy in its development finance architecture. By creating structured platforms for corporate social responsibility (CSR) and public–private partnerships, private funding can be channelled into priority areas such as healthcare, education, and infrastructure. Nigeria also has a culture of charitable giving, expressed through religious obligations, community initiatives, and the contributions of wealthy individuals. These resources can be organised as a reliable source of development financing. Philanthropic contributions could be encouraged through tax incentives, transparent accountability systems, and matching schemes with government programmes. Taken together, these steps would foster shared responsibility for inclusive growth and ensure that resilience to future shocks is built collectively, rather than left to the state alone.
Nigeria can strengthen its development finance system by embracing the principles of South–South cooperation. Beyond financial flows, this involves technical assistance, knowledge sharing, and technology transfer among countries facing similar development challenges. For example, partnerships with emerging economies to establish vaccine production plants, expand renewable energy infrastructure, or transfer digital technologies can reduce dependence on imported solutions while building domestic capacity. These forms of cooperation do more than plug funding gaps; they stimulate local industries, create jobs, and embed skills that remain long after donor projects end. By positioning itself as both a beneficiary and contributor in such exchanges, Nigeria can build a development model that is outward-looking yet firmly rooted in domestic growth.
Nigeria’s future in development finance will not be defined by aid, but by its ability to mobilise domestic resources, harness private and philanthropic capital, and draw strength from partnerships that transfer knowledge and technology. With this foundation, resilience becomes a strategy for growth, not just survival.