USAID closure: What will Ghana lose?

John D. Carrington
Washington D.C. USA February 27, 2025

P resident John F. Kennedy instituted the United States Agency for International Development (USAID) in 1961. The USAID is an independent government agency that provides non-military aid. The agency implements aid programs in health, education, financial inclusion, and agriculture. Over the past three decades, its activities have expanded to include democracy, human rights, and climate change. On January 2025, President Trump signed an Executive Order that declared a 90-day freeze on foreign aid. The Executive Order also placed USAID personnel on paid administrative leave and start a process that will dismantle the 64-year old institution.

Change, transformation and closure

The Foreign Assistance Act of 1961 (FAA) that founded the USAID at the height of the Cold War, set out to promote American values around the world. At inception, President John F. Kennedy described it as ‟the single largest counter to the adversaries of freedom”. As the cold war receded, the USAID shifted its focus away from technical and capital programs in the 1970s and pivoted towards ‟basic human needs”. Its programs targeted food and nutrition, family birth control, health, and education. In the 1980s, USAID adopted ‟the doctrine of free markets” and began to promote ‟market-based principles to restructure developing countries’ policies and institutions”. After the collapse of the Berlin Wall, on November 9th, 1989, the USAID pivoted again, this time, towards sustainability and democracy. USAID programs helped establish functioning democracies alongside market-oriented economic systems. Since the year 2000, the USAID has turned the spotlight on gender theory and the right of LGBT groups. These two issues became core pillars of its activities all over the world.

The USAID has become a complex organization. It works with hundreds of so-called ‟vendors” and a myriad of ‟implementing partners” who oversee the implementation of programs in recipient countries. USAID has programs in rich and poor nations. Hundreds of vendors manage funds from the USAID. They include multilateral organizations such as the World Bank, the World Food Program, the World Health Organization, but also private companies (Deloitte Consulting LLP) and universities (John Hopkins University). The agency served different Republican and Democrat Administrations. Its 2023 annual report shows that it spends over US$40 billion a year on humanitarian activities and various other interventions.

But on January 20th, 2025, President Donald Trump signed an Executive Order acting a ‟90-day pause in United States foreign development assistance”. The Executive Order promised an ‟assessment of programmatic efficiencies and consistency with United States foreign policy”. The Executive Order also targeted other federal departments and agencies with responsibility for United States foreign development assistance programs. The President argued that ‟the United States foreign aid industry and bureaucracy are not aligned with American interests” and in many cases, he said, have become ‟antithetical to American values”¹.

The decision to freeze the aid programs ended up in court after beneficiaries and implementing organizations sued the Federal government. Because of the lawsuit, a federal court ordered officials to unfreeze foreign aid funding before Wednesday 26th of February 2025. However, in a statement to the lower court, Pete Marocco, the deputy administrator of USAID, declared that the Department of State will eliminate 92 percent of the agency’s awards and grants. The federal government claimed a total savings of nearly US$60 billion dollars from this gigantic downsizing and restructuring operation.

USAID and Ghana

The first USAID missions in Ghana began in the 1970s. Today, the United States is Ghana’s largest bilateral development partner. The United States Agency for International Development (USAID) serves as the lead U.S. government agency in the country. It has worked with domestic stakeholders to end extreme poverty and enable resilient, and also to unleash the potential of Ghanaian women and youth.

In 2023, total US aid to Ghana was US$191.4 million (including US$188,127,555 for economic aid and US$3,310,667 for military). At least 10 US federal agencies provide and administer US aid to Ghana. Ghana has also been the recipient of the New Millennium Challenge Compact (MCC), valued at US$500 million to strengthen the country’s energy sector. The MCC’s activities in Ghana ended in 2022.

In recent years, Ghana has received aid to tackle the negative effects of drought on farming communities in the North, to strenghthen health care and child health and to fight HIV/AIDS. Other areas include education, the fight against trafficking in persons, and the improvement of reading for children. Ghana will lose a staggering US171.5 million of funds from USAID alons and another US$13 million from when awards and grants from other federal departments are wound up.

Other salient programs include ‟Food-for-Progress” and ‟Feed-the-Future” programs. In 2015, Ghana received US$58.1 million for the ‟Food-for-Progress” five-year program, to improve high-quality feed in the poultry sector. The US government reauthorized this same program in 2018 through fiscal year 2023. In a similar deployment of US aid, on April 26, 2023, the US government granted Ghana $192.9 million in financing in the framework of ‟Feed-the-Future”. At the signing, Kimberly Rosen, Mission director for USAID Ghana, said that the grants intended to develop Ghanaian agribusinesses. She said that the program targeted more than 25,000 agribusinesses, over half of which are women-led and women-owned in a country where Women make up almost 50 percent of the country’s population. Kimberly expected the program to increase agricultural productivity and improve food security ².

Inward investments from the Trade Hub

The country has also been home to USAID-funded West Africa Trade & Investment Hub (Trade Hub). Since 2019, this five-year US$116 million program has promoted activities designed to improve private sector productivity, profitability, and competitiveness in West Africa, through a market-based approaches. The Hub used public funds to boost private investment through a vehicle called the Co-Investment Fund. The ultimate goal was to increase trade between the United States and West Africa.

In Ghana, the Trade Hub focused on export-oriented sectors, including processed agricultural goods, the services sector, garment, apparel production and light manufacturing. The Trade Hub also funded small and medium size industries such as renewable energy and logistics, which stimulate trade and exports. Ghana has been one of the largest recipients of funds from the Trade Hub.

Since its launch in 2019, the Trade Hub has awarded US$83 million in co-investment grants to 93 private-sector companies in West Africa³. In Ghana, the Trade Hub has awarded US$8.5 million in co-investment grants to nine private sector companies⁴.

Reaction of the Ghanaian government

Ghanaian authorities have been philosophical about the US Administration's decision. During the Munich Security Conference of February 14-16, 2025, President John Mahama, referring to the aid freeze, told a townhall audience that ‟in adversity there is opportunity”. He made the statement during a panel discussion on ‟Building or Burning Bridges: Economic and Development Cooperation Amid Multipolarization”⁵.

Before attending the Munich Security Conference, President John Mahama instructed his Minister of Finance to bridge the gap arising out of the suspension of USAID's US$156 million annual assistance to Ghana. The President expressed concerns over the impact of US$78.2 million shortfall on malaria prevention, maternal and child health and reproductive health. He also asked the Minister to mitigate the adverse effects of the funding disruptions on the fight against HIV/AIDS.

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