Transcript
A (0:00)
Foreign My name is Rumbi Chakamba and you're listening to this week in Global Development hosted by myself, Ada Seldinger and David Ainsworth. And I am joined by our Africa reporters. I have Ayanat Mercy and Sarah Jerving who are joining me for the call today. It's so great to have you guys. So this is part of our Africa team here. All three of us are based in Africa. And because of that, this week we're going to dig into how African countries are responding to aid cuts, especially aid cuts from the US So to kick us off, CGD did this really interesting analysis of how African countries are responding to the aid cuts. And just to put a caveat on it, they looked at aid budgets in 2025. So this was right after the cuts. And I think they looked at this in June 2025. So these were the first sort of national budgets rather that came out right after the aid cuts. And they were trying to see if countries have adjusted in any way and, and what adjustments they've made. And I think some of their findings were quite surprising. Overall, they found that countries aren't really looking at raising more revenues but are rather cutting back on spending. And I found this quite surprising. A few countries reference the age the aid cuts and how they're going to affect them and how they're going to affect them economically. But I found it quite interesting that very few countries were looking at how to increase their revenue but rather cutting back on spending. Sarah, what did you find interesting about the CGD report and did anything surprise you in there?
B (1:31)
Yeah, it was a fascinating report as you mentioned. And what they, what they did know is that 12 of the 18 countries acknowledged the, the aid cuts in their budget documents. As you mentioned, it was from June 2025, but they only found two countries actually proposing raising revenues to replace lost, lost funding. So that included Sierra Leone where the government spoke about the need to broaden the tax base and improve revenue administration. But they found the most compre response in Tanzania. And Tanzania raised taxes on alcohol, imported vehicles, telecommunications, gaming, rail and air tickets. And then they also propose an import substitution strategy. So they, yeah, as you mentioned, it was kind of more of a kind of trend towards reduced service delivery. But it will be really interesting to see what happens this coming June in the budget documents because a lot has happened in the meantime and there's been, you know, the, the Accra reset was launched last August. So that was after these budget documents came out. So I think we're going to see, hopefully A lot of more kind of practical information in the next budgets.
A (2:48)
Definitely. And I think, I guess last year was a bit of a whirlwind because I think people were also quite unsure of what's going to happen with the US and what the final policy is going to be because there were so many changes, so much up and down. So I agree on part that I think the budgets coming out this year will be really, really important. But one country I want us to zone in on and one thing I want our listeners to know is that Devic will be doing deep dives into different African countries and how they're responding to the aid cuts. And one such deep dive that we published today actually is on Malawi. I'll call it Madalito K, who's based in Malawi is on the ground in Malawi and he was looking at how the government has responded. So Malawi is a very interesting case study. I had some notes here that I want to bring up cuz I the statistics in Malawi, very interesting. So first of all, 73% of the country's development projects are funded by donors. 55% of the health budget is externally funded as well. And then Malawi spends, I think it's 90%. I'm looking for the exact figure here. It consumes around 90% of its domestic revenue on the wage bill and statutory obligations. So if you take away development funding, that leaves very little to no money for actual, for actual development projects. So Malawi has been faced with funding cuts from the US and the US was contributing I think around 350 million annually to Malawi and is now faced with these funding cuts in response. It's done what most countries have done. It's raised taxes, it's raised income taxes, it's raised VAT and a whole lot of other and is also introducing other taxes in order to raise their amount. But analysts say this is not enough. And one, it's not enough and two, it's going to affect consumers and citizens who are already hard pressed here. What did you find interesting about the Malawi situation, Sarah?
