The restructuring or shutdown of the United States Agency for International Development (USAID) represents a critical moment for global development. As one of the largest aid agencies, USAID has played an important role in funding and implementing programs in health, education, economic development, and humanitarian assistance, particularly in low- and middle-income countries(LMICs). The agency's withdrawal or significant downsizing could create a void that threatens to reverse decades of progress in poverty reduction, health outcomes, and infrastructure development, among others.

One of the most immediate and severe impacts would be felt in global health programs. USAID has been a key contributor to initiatives addressing infectious diseases, maternal and child health issues, and malnutrition, providing over $10 billion annually to global health programs. The agency supports the treatment of more than 17 million people living with HIV/AIDS through the President's Emergency Plan for AIDS Relief (PEPFAR). Additionally, USAID has played a crucial role in distributing millions of insecticide-treated nets for malaria prevention and vaccinating over 900 million children against polio worldwide (Glassman & Temin, 2016). The agency's support for HIV/AIDS treatment, malaria prevention, and vaccine distribution and uptake has saved millions of lives. Without this funding, LMICs may struggle to maintain these programs, leading to a resurgence of preventable diseases and increased mortality rates, particularly among vulnerable populations.

Furthermore, the agency has played a vital role in promoting economic development and stability beyond health initiatives. Programs that support small businesses, agricultural advancements, and women’s empowerment initiatives may face abrupt discontinuation. This was evident in Afghanistan, where the withdrawal of USAID funding resulted in setbacks for women's economic participation and agricultural development programs. In Africa, cuts to the Feed the Future initiative threaten progress in food security and support for smallholder farming, which could exacerbate poverty and malnutrition. In fragile states, where USAID-funded programs have helped mitigate conflict and promote governance reforms, the absence of support may lead to increased political instability and displacement crises.

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Education is another sector that could suffer significantly. USAID has been instrumental in improving access to primary education, teacher training, and educational infrastructure in developing countries. The sudden loss of funding could result in higher dropout rates, decreased literacy levels, and a widening education gap, especially for girls in regions where schooling is already limited. This decline in human capital development may have long-term consequences for economic growth and social mobility in the affected countries.

To address the gap left by USAID's withdrawal, state and non-state actors, including international NGOs that rely on USAID to advance their programs and Low and Middle-Income Countries (LMICs), need to adopt innovative strategies. Strengthening regional partnerships, such as those fostered by the African Union or ASEAN, could help mobilize resources and create sustainable, locally driven solutions. For example, the Africa Centers for Disease Control and Prevention (Africa CDC), with support from the African Union, effectively coordinated regional responses to public health emergencies like COVID-19 by securing vaccine procurement and distribution through the African Vaccine Acquisition Trust (AVAT). This model of regional collaboration could be expanded to other areas of development to fill funding gaps resulting from USAID's exit.

Additionally, LMICs should diversify their funding sources by increasing collaboration with private sector investors, philanthropic foundations, and emerging economies such as China and the Gulf states. Improving domestic revenue generation through enhanced taxation policies can also reduce over-reliance on foreign aid. Moreover, leveraging technology and digital solutions can improve service delivery in sectors like health and education, helping organizations optimize their limited resources and expand their reach.

Governments and civil society organizations must collaborate to establish robust social protection mechanisms that protect vulnerable populations from economic shocks caused by aid reductions. While the dismantling of USAID presents significant challenges, it also provides an opportunity for affected nations and development organizations to reimagine more self-sustaining aid models. By prioritizing locally led initiatives, fostering multi-sector partnerships, and enhancing financial resilience, LMICs can mitigate the negative impacts of reduced U.S. assistance.

However, this transition will require strategic planning, political will, and a commitment to maintaining the progress made over decades of international cooperation. Investing in capacity-building initiatives that empower local institutions to take ownership of development efforts will be crucial. Successful examples include Rwanda’s investment in community health worker programs, which have improved healthcare delivery and reduced maternal mortality, and India’s self-help group networks, which have empowered women through microfinance and entrepreneurship.

Furthermore, strengthening local universities and research institutions can enhance policy development and implementation, reducing reliance on external technical expertise. Enhancing transparency and accountability in the use of aid can also attract alternative funding sources and ensure that resources are directed towards sustainable impact. With the right strategies in place, LMICs and their partners can transform this crisis into an opportunity for more resilient and self-reliant development.

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