Three key shifts for Kenya as development aid shrinks

The world is changing rapidly and profoundly. In this region, one of the most consequential shifts is the rethinking of the development relationship between North and South. We are at an inflection point in global development.

For decades, Official Development Assistance (“ODA”) was regarded as a necessary, irreplaceable, and noble engine of progress. But the world has changed.

Developing economies are no longer defined by deficits or dependency, but by potential, by market size, and by sovereign ambition. At the same time, developed countries are questioning the level of responsibility they carry for development beyond their borders.

Shift already underway

Belgium has decided to reduce its overall development budget by 25 per cent before 2029. Others have taken similar decisions, cutting development assistance by 30 or 50 percent or transferring a percentage of GDP from the development budget to the security budget. Under different circumstances, this would be seen as an existential crisis.

Yet geopolitics itself is in flux. On both sides of the debate, this shift is increasingly viewed not as a crisis but as a catalyst.

Earlier this year, public reactions in Kenya to the USAid funding announcement revealed how much attitudes have evolved. Former President Uhuru Kenyatta remarked, “Why are you crying? It is not our money,” a comment that captured a growing sentiment about national responsibility.

Another Kenyan, surprised to learn how long the PEPFAR programme supplied free condoms, asked, “All those years? How were we not paying for that ourselves?” These reactions, although informal, illustrate a wider realisation that reliance on external funding cannot remain the default path.

A watershed moment

The moment to reset the relationship is now. North and South are facing a watershed in their relations. Before long, former colonies will have been independent longer than they were under colonial rule.

Around the same time, the heads of State in these countries will belong to a generation born after independence. This watershed moment is happening as we are resetting our development partnership.

Growth and economic development will increasingly be driven by a growing middle class and participation in international trade and investment flows, rather than continual dependence on systems that perpetuate external determination of what is right or necessary.

This does not diminish the place of solidarity and “traditional” cooperation. Europe’s post-war generations rebuilt their nations through institutions that reduced inequality, including free education, social security, and healthcare.

Later generations embedded these mechanisms globally and turned that historical responsibility into the ODA systems we know today.

The limits of philanthropy

However well-intentioned, it is now becoming clear that the modern development challenge cannot be solved by philanthropy alone. The capital needed to meet the Sustainable Development Goals amounts to trillions, and private finance is necessary to close this gap.

However, this level of demand requires institutions capable of effectively navigating between public and private capital.

Among others, Development Finance Institutions (DFI’s) possess these abilities. They provide patient and catalytic capital, facilitate early-stage risk-sharing, and craft blended finance arrangements that draw private investment into sectors vital to long-term development.

So, private capital will play a central role in the reset we mentioned earlier. Private capital that is scalable, efficient, and self-sufficient. And that is precisely the DNA of the private sector.

Our new environment, therefore, calls for three shifts. First, there must be a stronger focus on risk mitigation rather than risk avoidance.

Development agencies should pivot their instruments from grants to guarantees and from direct aid to co-investment, to reduce the real and perceived risks that often prevent institutional and corporate capital from flowing into emerging markets. This shift will be essential in attracting the volumes of capital required and DFI’s will have a central role to play.

Second, there must be an investment in systemic solutions rather than isolated projects. We need enabling environments that include infrastructure, digital literacy, and regulatory reform, as well as regional platforms that support cross-border trade.

The African Continental Free Trade Area offers a historic opportunity to build shared production hubs, create competitive regional value chains, and expand markets that attract global investors.

Third, there must be a commitment to local ownership and long-term sustainability. The ultimate measure of success is not how much aid was disbursed, but how quickly the local economy rendered that aid unnecessary. Development is an integral part of sovereignty, and each country carries that responsibility.

Africa’s emerging foundations

Africa is not starting from zero.

The continent’s demographic advantage, entrepreneurial energy and rapidly growing innovation ecosystems in fintech, agritech, climate technology and health systems are already shaping a new era of value creation.

As local industries deepen and regional markets integrate, Africa moves closer to a development paradigm defined by partnership rather than dependency.

Belgium and her European partners remain committed to Africa’s economic aspirations, because this partnership is grounded in shared values of innovation, sustainability and inclusivity. Development finance is not disappearing. It is transforming from direct provision to catalytic enablement.

The question is not whether partners will remain present, active and engaged. They will. The question is how we use modern instruments to drive sustainable development and to support the private sector and the middle class. This is a pragmatic and mature era of cooperation, shaped by leaders who recognise that historical models have reached their limit.

We should view the contraction of traditional aid not as retreat, but as an impetus to unlock a future defined by competitive industries, resilient societies, and a protected planet.

Our prosperity will be determined not by aid flows, but by the partnerships we build, the industries we scale, and the confidence we place in our own capacity.

Mr Maddens is the Ambassador for Belgium and Mr Oigara is the Regional CEO East Africa, Standard Bank