In a stunning policy shift that is sending shockwaves through Rwanda’s development community, the Trump administration has announced the closure of 83 percent of USAID programs. The decision, which affects approximately 5,200 contracts worldwide—including several key initiatives in Rwanda—is already inflicting severe consequences on local humanitarian and development projects. With hundreds of jobs on the line and vital services disrupted, Rwandan organizations that once relied heavily on USAID funding are now scrambling to mitigate the fallout.

Immediate Impact on Rwanda’s Development Programs

Sudden Halt in Funding and Its Human Cost

The freeze in USAID funding came into effect abruptly in February, leaving local non-governmental organizations (NGOs) and development agencies with little time to adjust. Geoffrey Kayonde, country director of Adra Rwanda and president of the International NGOs Forum, described the situation as “an immediate shock.” He explained, “To many organisations, the effect was immediate, work had to stop, staff had to be laid off straight away because the bulk of staff salaries were direct project costs funded by USAID. None had any financial buffer to sustain staff even for a month.”

The repercussions are severe. Many employees, whose livelihoods depended on continuous funding, have been laid off, and projects—especially those targeting health, nutrition, education, livelihoods, and food security—are either on hold or facing significant delays. “We are talking of lives that are going to be lost,” Mr. Kayonde added, emphasizing that aid was not meant to sit idle in offices but to reach the people in need.

Specific Sectors Hit Hard

Among the most affected is the Hingaweze programme, an agriculture and economic development initiative managing a $28.9 million USAID-funded portfolio. Victor Mugarura, the communications head at Hingaweze, lamented, “We are under a stop work order. All projects have been frozen, and we are just waiting for word from USAID… Everyone is in panic, we don’t know what is going on or what is going to happen.” Such widespread uncertainty is not only eroding trust in donor agencies but is also jeopardizing the critical work these organizations do.

An anonymous source from the International Organization of Migration (IOM) Rwanda detailed the devastating impact on migration-related activities: “We had Congolese refugees who were undergoing pre-departure processes—advanced stages, with air tickets already booked and hosts awaiting them in the US—but everything had to be cancelled. The refugees went back to their camps, shocked and shattered.” With USAID accounting for up to 70 percent of IOM’s Rwanda operations, the agency now faces a significant setback in its humanitarian mission.

Historical Context: USAID and Rwanda’s Development Journey

A Legacy of Partnership

For decades, USAID has been a cornerstone of Rwanda’s post-genocide reconstruction and development. The agency’s support has been instrumental in rebuilding critical infrastructure, advancing health and education services, and fostering economic growth. Since the early 2000s, USAID projects have helped transform Rwanda into one of Africa’s fastest-growing economies, with significant improvements in public health, literacy rates, and agricultural productivity.

Rwanda’s government and its development partners have long relied on these funds to complement domestic budgets. According to analysts, USAID funding has, at times, contributed to nearly 30 percent of the country’s international development assistance, making it an indispensable element of Rwanda’s overall strategy for sustainable growth.

A Shift in U.S. Foreign Aid Policy

However, the decision by the Trump administration to shut down a vast majority of USAID programs represents a dramatic departure from decades of established aid practices. Rooted in an “America First” philosophy, this policy shift underscores a broader reevaluation of U.S. priorities in international development. The rationale behind the freeze appears to be a desire to reduce dependency on American aid and to reallocate resources toward domestic initiatives. Yet, for recipient countries like Rwanda, the abrupt withdrawal of such support poses immediate risks to social and economic stability.

Broader Implications for Rwanda’s Economy and Society

Disruption in Social Services

The ripple effects of the funding freeze extend far beyond the immediate loss of jobs. Many USAID-funded projects are integral to the provision of essential social services. From community health clinics to nutrition programs and educational initiatives, the halt in funding disrupts a wide array of services that millions of Rwandans depend on daily.

Nkurunziza Joseph, country director of Never Again Rwanda—one of the affected local NGOs—stated, “I have already laid off about 30 percent of my staff. We had to suspend some activities under USAID funding, particularly those related to citizen participation and governance. The impact of this funding freeze is huge. Livelihoods of hundreds or thousands of laid-off staff are in jeopardy, and Rwanda’s economy will suffer, as this funding used to circulate directly into the economy, support local taxes, and generate employment.”

Economic Downturn and Potential Long-Term Effects

The short-term economic shock is palpable. With hundreds losing their jobs and numerous projects halted, there is growing concern about the broader impact on Rwanda’s GDP growth. USAID-funded projects often trigger a multiplier effect—stimulating local markets, creating ancillary jobs, and driving consumer spending. Their sudden cessation threatens to slow economic progress, exacerbate poverty, and increase dependency on alternative, and possibly less effective, forms of assistance.

Rwanda’s Minister for Finance, Yusuf Murangwa, addressed these concerns in a parliamentary session last February. “Kigali is closely monitoring the situation over the next three months to identify any gaps that may emerge. Once identified, we will plan to address them accordingly. Although USAID funding has been important, we are not solely reliant on it. The government remains the primary driver of our development, supported by numerous bilateral and multilateral partners,” he noted. Yet, as several traditional donors have also scaled back their aid—citing various geopolitical and economic reasons—the challenge of filling this funding gap has become increasingly daunting.

The Broader Geopolitical and Regional Context

Global Trends in Aid Reductions

Rwanda is not alone in facing aid cuts. In recent years, several of Rwanda’s development partners—including Belgium, the United Kingdom, Sweden, and even other segments of U.S. aid—have either cancelled or reduced their financial support. These reductions are part of a broader global trend where donor countries are rethinking the role of foreign aid amidst shifting geopolitical priorities and domestic pressures.

The Trump administration’s move to freeze USAID programs is emblematic of this trend. Critics argue that such policies, while aimed at reducing government expenditure, can inadvertently undermine the very stability and development goals that aid was designed to support. In regions where political and social stability is fragile, the sudden withdrawal of aid can lead to increased vulnerability, social unrest, and a regression in development gains.

Regional Security and the M23 Rebel Issue

Adding another layer of complexity is the regional security situation. Earlier reports have suggested that the reduction in aid has pressured Rwanda to reconsider its support for the M23 rebels, who have reportedly captured two major cities on the territory of the Democratic Republic of Congo (DRC). While this aspect of the story has not been fully detailed, it underscores how foreign aid, domestic policy, and regional security are deeply interconnected.

The shift in aid patterns may force Rwanda to recalibrate its foreign policy and security strategies. As traditional donors pull back, the Rwandan government could be compelled to seek support from alternative sources—potentially from regional powers or emerging donors—which might come with different expectations and conditions.

Voices from the Ground: Local NGOs and Community Leaders

Human Stories of Disruption

For many on the ground, the aid freeze is not just a policy decision but a harsh reality with immediate human consequences. Workers in NGOs and community-based organizations, who once saw their livelihoods secured by USAID-funded projects, now face uncertain futures. “I have already had to let go of a significant portion of my staff,” said Nkurunziza Joseph, highlighting the devastating personal and community impacts of the funding cut.

Local organizations such as Care, Hangakazi, CNF Rwanda, Alight, International Alert, Pact World, World Vision, and Save the Children have all reported similar disruptions. These agencies, which have long been pillars of Rwanda’s development landscape, now struggle to continue operations without the predictable flow of USAID funds. Many have already begun exploring alternative sources of funding, but the transition is neither swift nor easy.

Calls for a Strategic Rethink

Leaders in the Rwandan development community are urging a strategic reassessment of humanitarian and development action. Geoffrey Kayonde’s call to “rethink our strategies for humanitarian action and come up with alternative sources of funding our development” resonates widely. There is a growing consensus that reliance on any single donor, regardless of its generosity or past successes, leaves countries vulnerable to sudden policy shifts.

Local NGOs are now exploring partnerships with private philanthropic organizations, regional development banks, and multilateral institutions like the World Bank and the African Development Bank. While these efforts offer a glimmer of hope, experts caution that diversifying funding sources is a complex, long-term process that requires careful planning, capacity building, and, above all, political will.

Government Response and National Resilience

President Kagame’s Perspective

Amidst the uncertainty, Rwanda’s leadership remains determined to forge ahead. In a recent interview with CNN, President Paul Kagame reflected on the aid cuts with a mix of pragmatism and resolve. “I have seen some good in the aid cuts from Washington,” Kagame remarked. “We might learn some lessons from being hurt. There are things we should be doing on our own. While I have benefited from aid, I have never been a friend of it. Our development path will not be swayed by any punitive measures taken by any government regarding our security.”

Kagame’s remarks underscore a long-held belief in self-reliance and strategic autonomy. Rwanda’s impressive economic and social progress in recent decades is often cited as a testament to the country’s ability to drive development through sound governance, innovation, and effective public policies. Yet, even as Rwanda strives for greater self-sufficiency, the current funding freeze serves as a stark reminder of the challenges that remain.

Diversifying the Donor Base

Rwanda’s government is actively seeking to mitigate the impact of the aid cuts by diversifying its donor base. Minister Yusuf Murangwa has reiterated that, although USAID funding has been significant, Rwanda is not solely dependent on it. The government is engaging with other bilateral and multilateral partners—including emerging donors from Asia and the Middle East—to fill the financial void.

Efforts are underway to enhance cooperation with non-traditional donors, such as China and private sector investors, as well as to tap into regional development funds. These initiatives are part of a broader strategy to build a more resilient, diversified funding portfolio that can better withstand the shocks of political or economic shifts in any single donor country.

Looking Ahead: Strategies for Long-Term Resilience

Rethinking Humanitarian and Development Models

The aid freeze, while painful in the short term, may catalyze a necessary evolution in how humanitarian and development work is financed and executed in Rwanda. As local NGOs and government agencies reassess their funding models, there is an emerging consensus that innovative, sustainable approaches are needed.

One promising avenue is the integration of technology into aid delivery. Digital platforms can enhance transparency, streamline project management, and connect local organizations directly with international donors and private investors. Additionally, public-private partnerships offer a viable route to mobilize resources and expertise outside traditional donor frameworks.

Strengthening Domestic Capacities

In the wake of the aid cuts, Rwanda is also looking inward to bolster its own capacities. Investments in domestic revenue mobilization, improved tax collection, and enhanced public financial management are being prioritized as means to reduce overreliance on external funding. Experts believe that a stronger domestic resource base will not only cushion the impact of future aid fluctuations but also empower the government to implement long-term development strategies with greater autonomy.

Local capacity building is particularly crucial in sectors like health, education, and agriculture, where USAID funds have historically played a significant role. Strengthening local institutions and leveraging innovative financing mechanisms—such as social impact bonds and blended finance—could help ensure that critical services continue uninterrupted, even in the face of external shocks.

Collaborative International Efforts

Despite the current challenges, there is hope that international cooperation can be reimagined to better serve developing countries like Rwanda. Multilateral organizations, including the United Nations and regional bodies, are being called upon to create frameworks that facilitate more predictable, flexible, and accountable aid flows. Such frameworks could help mitigate the adverse effects of sudden policy shifts by major donors, ensuring that vulnerable populations do not bear the brunt of political decisions made halfway across the globe.

International donors are also encouraged to engage in more strategic dialogue with recipient governments. By aligning aid programs with long-term development goals and incorporating robust exit strategies, both donors and recipients can work together to build resilience and foster sustainable growth.

The Road Ahead: Navigating Uncertainty in a Shifting Global Landscape

Balancing External Aid with National Priorities

Rwanda’s experience with the USAID funding freeze serves as a critical case study in the complex interplay between external aid and national development. While international assistance has been a driving force behind many of Rwanda’s successes, the current crisis highlights the risks of overdependence on a single donor. As Rwanda moves forward, striking a balance between leveraging external resources and fostering self-reliance will be paramount.

Government officials and development experts agree that the path to sustained growth lies in a dual approach: maintaining strategic partnerships with international donors while simultaneously investing in domestic capacities. This balanced approach not only provides a safety net in times of crisis but also empowers Rwanda to set its own developmental agenda based on local needs and priorities.

The Imperative for Transparency and Accountability

Amidst these challenges, transparency and accountability have emerged as critical components of effective aid management. Both donor agencies and recipient governments must work together to ensure that aid is used efficiently and reaches those most in need. Strengthening monitoring and evaluation systems can help prevent mismanagement and build trust among all stakeholders.

For Rwanda, increased transparency in how aid funds are allocated and spent will be key to attracting new donors and fostering long-term partnerships. In turn, this can contribute to a more resilient and dynamic development ecosystem—one that is capable of weathering future shocks and sustaining progress over the long haul.

Conclusion: Turning Crisis into Opportunity

The freeze in USAID funding by the Trump administration has undoubtedly placed Rwanda in a precarious position. With hundreds of jobs lost, critical development projects stalled, and significant gaps in funding emerging, the immediate impact is both profound and unsettling. Yet, even as the nation grapples with these challenges, there is a growing recognition that this crisis may also serve as a catalyst for much-needed change.

Rwanda’s leadership—exemplified by President Paul Kagame’s pragmatic stance—and the resilience of its development community offer hope that the country will not only weather this storm but emerge stronger. By rethinking funding strategies, diversifying the donor base, and investing in domestic capacities, Rwanda is charting a course toward greater self-reliance and sustainable development.

While the road ahead is fraught with uncertainty, the current crisis underscores a broader lesson for developing countries worldwide: the importance of building robust, flexible, and inclusive development models that can adapt to shifting global dynamics. As Rwanda navigates this challenging period, the international community will be watching closely—not only to see how the nation responds to the immediate crisis but also to learn valuable lessons about the future of international aid and development.

In the end, the aid freeze may force a long-overdue transformation in the way humanitarian and development work is approached. With innovative strategies, stronger domestic resource mobilization, and more collaborative international frameworks, Rwanda has the potential to turn this crisis into an opportunity—one that ultimately leads to a more resilient, self-sufficient, and prosperous future for all its citizens.

Ready to take your career to the next level? Join our dynamic courses: ACCA, HESI A2, ATI TEAS 7 , HESI EXIT  , NCLEX – RN and NCLEX – PN, Financial Literacy!🌟 Dive into a world of opportunities and empower yourself for success. Explore more at Serrari Ed and start your exciting journey today! ✨

Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

18th March, 2025