Adapting to Diminishing Aid: Lessons from Eritrea’s Self-Reliance

Eritrea’s 2005 expulsion of USAID marks a significant shift towards self-reliance, highlighting how other African countries can adapt as aid declines. Experts stress the need for strategic use of remaining resources while enhancing trade and investment. The article discusses the impact of dwindling foreign assistance and the urgent need for African countries to focus on domestic financing and regional cooperation.

In 2005, Eritrea made a pivotal decision to expel USAID and reduce dependency on foreign aid by prioritizing self-reliance. This action was rooted in the belief that, as President Isaias Afewerki stated, facing struggles without external help drives innovation and determination. Fast forward to today, as other African nations face evaporating aid and funding reductions, they are urged to replicate this self-sufficient model.

A recent report highlights concerns that diminishing aid could lead to increased poverty and health crises across Africa. Experts argue that Africa must develop strategies to manage reduced support while enhancing regional trade and investment. The first part of this series examines the future of aid, revealing that African nations are increasingly challenged to adapt to a world less reliant on foreign assistance.

Experts like Ngozi Okonjo-Iweala emphasize that while aid is declining, African nations must strategize to use whatever resources remain effectively. She advocates for a gradual withdrawal of aid to allow countries to adjust their budgets accordingly. Moreover, the need for interim financing is critical to bridge significant gaps, especially in healthcare.

Western nations have significantly reduced aid contributions, a trend exacerbated by the pandemic and global conflicts. The administrative decisions made during the Trump administration, including a substantial budget freeze on USAID, have further accelerated this decline. Eritrea uniquely thrives amid this backdrop, having managed to avoid US aid entirely last year.

While Eritrea serves as an example of resilience, its approach is not without criticism. Living under a regime that suppresses freedoms, its development indicators still compete with nations receiving substantial aid. For instance, Eritrea and Rwanda both report similar life expectancies, showcasing how alternative models can yield comparable results without dependency on donor funds.

The impact of aid cuts has been stark across Africa, with healthcare systems feeling the strain. For example, in Kenya, high numbers of trained health professionals lost their jobs, severely impacting access to essential treatments. Countries such as Sierra Leone now face budget cuts impacting educational and healthcare projects, with foreign aid previously comprising a significant portion of GDP.

Despite historical reliance on external support, countries are tightening budgets to ensure essential services remain funded. However, boosting taxes during inflation raises tensions within communities, as seen with recent protests in Kenya. Other experts note that Africa’s rapid urban growth necessitates a shift towards domestic financing and away from donor dependency.

Trade, particularly intra-African trade, is seen as the path forward. Governments are encouraged to improve investment climates and capitalize on natural resources. While Western aid may diminish, development finance institutions still offer avenues for investment, pushing African nations to adapt and innovate.

Philanthropic organizations are stepping in with interim funding; however, the potential for US and donor nations to cut contributions to concessional loans remains a concern. Lower-income nations, heavily reliant on aid, face increased risks, while middle-income nations may find this shift motivates them to reduce corruption and seize new opportunities.

Eritrea’s decision to reject foreign aid in 2005 serves as a pivotal case study for other African nations now facing diminishing aid. As experts advocate for boosting trade and regional self-sufficiency, the continent must navigate this transition strategically. The focus should shift from dependency to sustainable growth, leveraging local resources and investments to build resilience against external shocks. This transformation is critical for the future of healthcare, food security, and overall stability in Africa.

Original Source: www.biznews.com