Working Paper Nr. 281

Silent revolution of the aid regime: impact on Africa

Author: Judit Kiss

In: HUN-REN CERS, Institute of World Economics, Working Paper Nr. 281 (2025) April 2025

Abstract

Africa is the major recipient of foreign aid; however, it is not the region that benefits the most. Many African countries have become trapped in the aid syndrome leading to overspending, budget deficits, indebtedness, corruption, and moral hazard. The impact of aid is unclear, short-term microeconomic gains are mixed with long-term macroeconomic setbacks. Aid exit is a theoretical option, though its feasibility is challenged by the huge finance gap and the vested donor and recipient interests in maintaining the recent system. Critical voices have intensified, and a silent revolution has already started: aid is scaling up due to changing aid power dynamics, new theories and modalities have developed, target areas are changing while serving the same “old” objectives. As the present aid architecture is a significant constituent of the unequal North-South relationship, there is no paradigm shift at the horizon. Africa must try to make the most of the current situation which presupposes political stability and institutional reforms.