US aid freeze: A catastrophe looming for the Horn of Africa

The United States aid freeze is poised to have far-reaching consequences on humanitarian efforts, with ripple effects on security and economic stability around the world. One region stands to lose the most: the Horn of Africa and its adjacent states. Out of the $72 billion the US provided in international aid in 2023, around 8% went to Djibouti, Ethiopia, Kenya, Somalia, South Sudan, Sudan and Uganda, making this cluster of countries the largest recipient of US foreign assistance.

The importance of US humanitarian aid for people in this region cannot be overstated. In 2023, almost 48% of Sudan’s external assistance was provided by the US, according to the UN humanitarian agency (UNOCHA). For South Sudan and Somalia, this figure increased to 52%, and for Ethiopia, Africa’s largest recipient of US aid that year, it reached 60%.

Sudan faces the worst humanitarian emergency of our time, with nearly 15 million people either internally or externally displaced, and 51% of Sudanese experiencing acute-to-catastrophic food insecurity. South Sudan and Somalia are grappling with similar crises. In Ethiopia’s war-torn regions of Tigray, Ahmara and Afar, around 4 million people received food assistance last year, according to the latest available data.

Food insecurity may worsen in the months ahead. The Horn of Africa experiences cycles of drought and floods, which climate change has intensified in recent years. Between 2020 and 2023, drought  caused widespread famine and many victims across the region. Now, weather forecasts predict an impendinground of drought, and critical infrastructural projects aimed at mitigating its impact, such as water facilities, have been affected by the aid freeze.

Displacement is likely to increase too. Kenya and Uganda are primary destinations for displaced people fleeing the Democratic Republic of Congo, Somalia and South Sudan. These countries may see more arrivals in the coming future, potentially igniting tensions between host and refugee communities. There have been instances of this kind of intercommunal violence in the past, such as around the Dadaab camp for Somali refugees in northeastern Kenya and, more recently, a series of anti-Sudanese riots in South Sudan. Uganda already hosts 1.8 million refugees, making it one of the largest refugee-hosting nations in the world. Like Kenya’s, its reception system widely rests on foreign assistance, mainly from the US. Additionally, lacking adequate support at home and in neighbouring states, many asylum seekers could resort to the dangerous routes to the Gulf and Europe, putting pressure on these regions as well.

The deteriorating humanitarian crisis is likely to affect security by destabilising brittle local dynamics. Banditry is already widespread in South Sudan and in key Ethiopian regions like Oromia and Ahmara, and worsening living conditions could draw more young people into these activities. Armed groups like Al-Shabaab and pirates in Somalia may find additional recruits among vulnerable youth, as has been documented in the past. Meanwhile, the truce in Tigray, a region highly dependent on aid since its devastating civil war, could face further strain. There, growing tensions between Tigrayan factions and discontent among demobilised soldiers over ongoing hardships are already threatening the fragile status quo.

Finally, there is a critical macroeconomic argument that cannot be overlooked. The economies of South Sudan and Somalia are highly aid-dependent: for instance, foreign assistance accounts to 21% of Somalia’s GDP. In these largely informal economies, development projects serve as a major market for private suppliers and the main source of well-paid jobs, representing also a significant share of tax revenues. In Ethiopia and Kenya, while the aid-to-GDP is much smaller, a drastic reduction of external grants and loans would still have a negative impact on their economies and public deficits, especially at a time of domestic turmoil and serious financial distress.

A Europe-led Western response

Europe has significant economic and security ties with the Horn of Africa and its surrounding region, mainly due to its geographic location along key maritime routes. Neighbouring countries like Kenya serve as important trade and investment partners for the EU, while Djibouti hosts France’s and Italy’s strategic military outposts. The presence of terrorist and non-state armed groups, as well as the region’s role as a source of migrant flows, compels European policymakers to address and contain any destabilising effects in the area.

There is little room for European governments to compensate for the expected loss of US foreign aid given its sheer magnitude as well as Europe’s budget constraints. However, Europeans could adopt a series of mitigation measures. EU member states could agree on modest budget increases for emergency and development aid, as well as promote more private donations.

In doing this, the EU should advocate for a joint response with other Western donors involved in the region, namely Australia, Canada, Norway, Japan, Switzerland and the United Kingdom. If successful, the EU and its partners would send a strong message to Africa and the global south, demonstrating that the West remains a reliable partner. China has a substantial footprint across the region, while Russia is strengthening ties with Khartoum and Addis Ababa. A Europe-led response would limit the scope for China and Russia to leverage the US aid freeze and boost their own soft power. In parallel, the EU and its member states should deepen the dialogue with donors from the Gulf Cooperation Council, who also provide significant aid to the Horn of Africa, to explore a concerted response. Saudi Arabia in particular is concerned with migration flows from the region and could become a valuable partner in this initiative.

Since the funding gap cannot be realistically filled, European donors should focus on initiatives that maximise aid effectiveness.

Since the funding gap cannot be realistically filled, European donors should focus on initiatives that maximise aid effectiveness. European development agencies and the EU Commission should aim at better integrating their aid programmes. While the donors usually coordinate through UNOCHA to avoid duplications and ensure an equitable distribution of aid, projects are often deployed in siloes. As a result, efforts to build collaboration on the ground are left to implementing organisations, which often lack the capacity to establish these connections within a fragmented aid landscape.

For example, a project to provide vocational education in a refugee settlement would greatly benefit from complementary interventions that deploy renewable energy systems (which require electricians) and build agrifood systems (which need electricity and various technicians). It is relatively common to find these sets of projects from different agencies, but they are often funded across different areas and timeframes, limiting the potential for collaboration. A deeper vertical integration of EU and member state aid programmes could enhance impact in a critical region like the Horn of Africa and help compensate for the shortage of funds.

Lastly, European countries could seek more involvement of the European private sector around development interventions to strengthen their economic viability beyond project cycles. This would make interventions more sustainable in the most stable countries of the Horn of Africa, such as Djibouti, Kenya and Uganda, especially in and around refugee settlements. Italy’s Mattei Plan represents a suitable blueprint for these efforts; a similar approach emerges from Germany’s new Africa Policy Guidelines.

A time of heightened humanitarian crisis and geopolitical competition calls for a modest but coordinated funding increase, combined with deeper integration of European aid programmes and greater involvement of the private sector. Together, these interventions would cushion the impact of the US aid freeze on the credibility of the West and the stability of the Horn of Africa.