Editor: Gabriel Ani
STOCKHOLM —Stockholm International Peace Research Institute (SIPRI) has said that Nigeria is no longer a frontier market to be ignored. It is now a compelling destination where value is being discovered.
The report also echoed a broader sentiment that the international aid system is undergoing a permanent transformation.
The international development landscape is facing its most significant challenge in nearly two decades following the July 2025 abolition of the United States Agency for International Development (USAID) and deep budget cuts from other traditional donors.
According to a policy brief released Thursday by the Stockholm International Peace Research Institute (SIPRI), a “generational shift” is underway as many traditional donor members of the Organisation for Economic Co-operation and Development (OECD) have announced significant reductions in foreign aid.
These reductions, totaling between $41 billion and $60 billion, represent up to 22% of the 2023 official development assistance (ODA) levels. The OECD projects an additional drop of up to 17% in 2025, following a 9% fall in 2024.
While speculation has mounted regarding whether China will step in to fill this vacuum, the report argues that Beijing is neither willing nor able to replicate the traditional Western aid model.
“China does not have the capacity to replace or replicate what the USA and traditional OECD donor countries have typically done,” wrote Dr. Jingdong Yuan, the report’s author. He noted that while USAID once employed over 10,000 staff, China’s primary coordinating agency, the China International Development Cooperation Agency (CIDCA), operates with only about 100 people.
A Different Model of Aid
The report highlights a fundamental difference in how the world’s two largest economies approach international development. Between 2001 and 2023, 72% of U.S. spending was classified as ODA—grants and concessional loans focused on public health, governance, and humanitarian aid.
In contrast, nearly 90% of China’s $1.34 trillion in disbursements over the last two decades consists of “other official flows” (OOF), such as commercial-rate loans, export credits, and infrastructure investments.
China’s model is predominantly project-based and infrastructure-driven, often serving strategic interests such as energy security and market expansion. Major recipients of Chinese financing include resource-rich or strategic partners like Russia, Pakistan, Angola, and Venezuela.
“The PRC has the highest number of its projects in sectors like health (21%) and education (15%), but each project receives small amounts of funding compared to what OECD donor countries would normally disburse,” the report stated.
Regional Impacts
The impact of Western aid cuts is expected to be felt most acutely in sub-Saharan Africa, a region that has long depended on ODA for public health initiatives. In 2023 alone, the U.S. spent $20.6 billion on global health; by contrast, China’s total annual global ODA spending averages only $5.7 billion.
The SIPRI brief notes that while China has recently sent small amounts of aid to organizations like the African Centres for Disease Control following the USAID shutdown, a much greater commitment would be required to close the global funding gap.
Despite its limitations, China has become the second-largest lender in the world, trailing only the combined efforts of the European Union and its member states.
The report concludes that traditional donor countries should seek dialogue with emerging powers like China to mitigate the impact of the current aid contraction.
