Podcast Summary: "What does 2026 hold for global development?"

Podcast: This Week in Global Development
Hosts: Adva Saldinger, David Ainsworth, Rumbi Chakamba
Guests: Raj Kumar (President of Devex), Anna Gawdall (Managing Editor)
Date: January 8, 2026

Overview

In this first 2026 episode, the panel reflects on the seismic shifts in global development over the past year and attempts to forecast what's ahead. From the sharp decline in traditional foreign aid to the rise of investment-driven models and philanthropy, the episode captures the sector’s uncertainty, adaptation, and ongoing debates about the future of global development aid, policy, and practice.

Key Discussion Points & Insights

1. The End of the Old Aid Era: Rapid Declines and Systemic Changes

• Sharp Decline in ODA: 2024 saw a 6% drop in Official Development Assistance (ODA), with even steeper cuts predicted for 2025 (9–18%). Raj forecasts further reductions through 2026, possibly dipping below pre-SDG levels.

  “I predict that we will end 2026 with overall aid levels below the period when we created the Sustainable Development Goals.” — Raj Kumar (03:45)

• Causes: Politics in donor countries, aging populations, debt burdens, inflation, and increased polarization drive the cuts. “Affordability” has become a political rallying cry against overseas spending.
• Unprecedented Cuts: USAID’s deep cuts in 2025 are described as “unprecedented in modern day development history.” There’s also concern over the UK’s 40% aid cut.

2. The Shift from Aid to Investment (08:47)

• Investment Model Emergence: Aid is increasingly about investments rather than grants. Private sector, MDBs, and DFIs are expected to take a larger role.

  "We're basically moving from an aid model to an investment model... It's about putting money at risk. It's not about giving away money, it's about investing and doing a deal..." — Raj Kumar (08:49)

• Transformation Challenges: “This mindset shift is going to be very hard for people in the development community…” (09:37)
• Chasing New Money: With shrinking bilateral aid, organizations must be agile and pursue alternative funding—multilateral development banks, philanthropy, and private investment.

3. The New Face of Development: Commercial and Transactional (04:27; 07:21)

• “Most Honest” Administration: Some see the current US administration’s transactional approach (i.e., health compacts in Africa or explicit quid pro quo for resources) as “the most honest” yet. However, the speed and scale of changes are described as “somewhat dangerous.”
• Private Sector Driven: There's an expectation the sector will chase “money trails” and be more businesslike. Making the “business case” for development is increasingly necessary (13:55).

4. Philanthropy’s Rising Role (25:32)

• Philanthropic Scale: As government aid shrinks, philanthropy is filling gaps—sometimes rivaling or exceeding governmental contributions.

  "Philanthropy has gotten so big and official development assistance has shrunk enough that actually it can play that government level role..." — Raj Kumar (25:34)

• From Carrots to Sticks: Political pressure and possible taxation (wealth taxes) are pushing billionaires into donor roles. “There is a wave of philanthropy coming with lots of challenges, lots of warts. This is not such a simple picture…” (27:32)
• Top Givers’ Paradox: Some of the wealthiest (Mackenzie Scott, Bill Gates) can't give away money as quickly as they accrue it due to market gains (29:03).

5. The Drive for Local Leadership (30:27)

• Locally Led Aspirations and Realities: There is an ideal that countries will “stand on their own two feet,” but many face governance and capacity challenges.

  “…Just saying that each country is going to have a lot more say in their own future. It's not very satisfying because it's not going to go well everywhere...” — Raj Kumar (31:19)

• US Policy’s Forced Localization: The Trump administration avoids funding large INGOs and prefers channeling resources through local governments, raising concerns over monitoring and corruption (32:57).
• Private Investment Requires Local Expertise: Investment-driven models will naturally be more locally led as success depends on local market understanding (34:03).

6. Institutional Adaptation (14:28)

• Bureaucratic Shifts: Major multilateral banks (World Bank, IDB, DFC) are under pressure to be risk-takers and innovators, crowding in private capital.

  "These institutions that are traditionally very slow, very bureaucratic are starting to move..." — Raj Kumar (14:40)

• Fiscal Constraints: Institutions must get creative as donors are unlikely to provide additional capital (16:50). Private finance is increasingly critical.

7. Existential Sectoral Debates (36:02)

• What Does Global Development Mean Now?

  "To me, one of the biggest things I'm looking out for is a real fight, a battle in our sector over what does global development even mean? Because it's been stripped back so much..." — Raj Kumar (36:03)

• Transactional vs. Altruistic Motives: The sector debates whether its purpose is mutual value (my country first) or global solidarity/long-term gains.

  “We've definitely swung toward the my country first side of it. But I think eventually maybe we'll move to a middle ground…” — Anna Gawdall (38:25)

• Cuts to ‘Soft’ Programs: Governance, democracy, and human rights programs are particularly at risk in the new transactional era (39:33).

8. Watching U.S. Politics and Institutions (40:09)

• The “Trump Effect” is Unavoidable: The reshaping of global development is closely linked to US political changes, likely discussed for decades.
• 2026 US Midterms Matter: Shifts in Congressional power could affect international development budgets and priorities, but much will depend on the State Department’s direction (40:29).
• New DFC Mandate: The Development Finance Corporation’s expanded role ($200 billion portfolio) is a space to watch for US-driven investment in global development (41:57).

Notable Quotes and Moments

• On the aid cliff:

  “Someone took a bomb to [the ODA iceberg] last year and there’s no way we can actually go back to what it was before.” — Rumbi Chakamba (00:44)

• On new realities:

  "Aid will be far less... and it will look very different... It'll be much more transactional, much more based on self-interest." — Anna Gawdall (04:59)

• On philanthropy's impact:

  “You just need a few more individuals to get in the game and start giving at the kind of levels that you’ve seen others…” — Raj Kumar (25:51)

• On institutional adaptation:

  “We used to be this sort of quiet, clubby world... now their board is telling them you’ve got to actually take more risk..." — Raj Kumar (14:29)

• On sector resilience:

  "Stay in the game... it isn’t over... we're facing a massive new technology revolution with AI, there is the chance to really leapfrog." — Raj Kumar (43:38)

Timestamps for Key Segments

| Timestamp | Topic / Segment | |-----------|-----------------------------------------------------------------------| | 00:44 | Predictions & reflection on 2025 aid “bomb” | | 01:39 | Raj Kumar on predicting “peak ODA” and consequences | | 04:27 | Anna Gawdall: Europe, US, aid is shrinking, rise of commercial model | | 08:47 | Raj: Moving from aid to investment; new money trails | | 13:55 | Anna & Raj: Challenges to private sector mobilization | | 16:50 | Fiscal constraints and innovation imperatives for MDBs | | 25:32 | Philanthropy’s role and its gaps/limitations | | 30:27 | Locally led development: aspirations, realpolitik, and risks | | 36:02 | Existential questions: transactionalism versus altruism | | 40:09 | The “Trump effect”; importance of 2026 US midterm elections | | 43:36 | Panel’s resolutions for the development community in 2026 |

Closing Resolutions for 2026

• Raj Kumar (43:38):
  “Stay in the game... it’s not over. Just because ODA is declining doesn’t mean impact has to be less. The tools exist for transformational impact—especially with new technologies like AI.”
• Anna Gawdall (44:48):
  “Stay open-minded. Recognize the opportunities for change and embrace the potential for new financing models and systemic shifts.”
• Rumbi Chakamba (45:28):
  “Don’t be reactive only... seize the moment as an opportunity to think through what the next system could and should look like.”

In Summary

The global development landscape in 2026 is marked by sharp declines in traditional aid, the rise of investment-based models, greater reliance on philanthropy, and a focus on local leadership underpinned by private capital. Major debates are surfacing about development’s core purpose, with transactionalism on the rise but hope that innovation and solidarity can keep the sector vital. The Devex team closes with a call for resilience, open-mindedness, and strategic action as the sector navigates turbulence and reinvention.