Africa’s poorest countries face a potential $560 million funding shortfall after the US withheld support for a key development fund that provides grants and cheaper loans to low-income economies across the continent earlier in May.
The gap threatens the latest replenishment of the African Development Fund (ADF), the concessional financing arm of the African Development Bank (AfDB), as donors gather in London on Monday for a two-day pledging conference aimed at raising $25 billion.
Earlier this year, Washington held back a $197 million package pledged during the previous fundraising round, fueling doubts over whether the US will commit fresh funding.
While the AfDB said the US would send a representative to the talks, it remains unclear whether the world’s largest economy will restore its contribution.
“Existing partner countries are unlikely to fully close the $560 million grant funding gap that would remain without a United States pledge,” Valerie Dabady, the AfDB’s head of resource mobilisation and partnerships, told Reuters.
The White House has yet to respond to a request for comments on the matter.
Why the funding gap matters for low-income countries
The uncertainty raised concerns because the ADF is the AfDB’s primary vehicle for financing Africa’s lowest-income countries — nations that have limited access to commercial borrowing and are increasingly constrained by high debt levels, weak currencies and shrinking foreign aid flows.
Replenished every three years, the ADF has provided about $45 billion to 37 low-income African countries since 1972, supporting projects such as irrigation systems, transport links, electricity networks and health infrastructure. Unlike the AfDB’s main lending window, which charges higher interest rates and applies tougher conditions, the ADF offers grants and concessional loans with repayment periods exceeding 20 years.
As global interest rates remain elevated and capital markets tighten, concessional finance has become a critical source of funding for governments struggling to maintain public investment without worsening debt sustainability.
US pullback reflects broader threat
The United States accounted for nearly 7% of the last ADF replenishment, which raised $8.9 billion by the end of 2022, ranking it among the fund’s five largest donors alongside Germany, France, Britain and Japan. AfDB officials say replacing a U.S. contribution would be difficult, even if other donors increase their pledges.
In September, a U.S. Treasury spokesperson told Reuters it was “seeking to return the ADF to its core mission of promoting economic growth and poverty reduction in the poorest African countries,” without offering details.
The Donald Trump administration has also reduced funding for other multilateral institutions.
In May, Washington cut support for the World Bank’s International Development Association — a similar concessional financing vehicle — by $800 million to $3.2 billion, reinforcing concerns about a broader retreat from overseas development funding.
Other donors step up, but risks remain
Some countries have moved to offset the potential shortfall. Denmark said in October it would raise its contribution by 40% to 1.1 billion Danish crowns ($171 million), while Norway pledged a near-6% increase last month. African countries are also expected to boost their contributions, though analysts note their fiscal space is limited.
Economists warn that a weaker replenishment would have direct consequences for the region’s poorest economies.
Fewer concessional resources could slow project approvals and delay spending on infrastructure, agriculture and basic services at a time when rising poverty, heavy debt burdens and foreign exchange shortages are already weighing on growth prospects.
