Development Cooperation Is at a Turning Point, Localization Should Come Next

Development Cooperation Is at a Turning Point, Localization Must Come Next
By Mohamed Okash

As policymakers, investors, and development leaders gathered in Paris last week for the Organisation for Economic Co-operation and Development’s (OECD) conference on The Future of Development Co-operation, one reality hovered over nearly every discussion: the old foreign aid model is weakening.

The numbers explain why. Development assistance fell 23.1 percent in 2025, the sharpest annual decline on record, as donor governments redirected spending toward domestic pressures, defense, and geopolitical competition. Across Africa, the consequences are already visible in shrinking humanitarian budgets, delayed climate adaptation projects, and growing uncertainty around development financing.

When it comes to development, it is time for a long overdue transfer of power. We must move towards localization. That does not mean simply giving more grants to local nongovernmental organizations or consulting communities more frequently. It means shifting authority, capital, and execution power to domestic actors — governments that set priorities, municipalities that deliver services, universities that generate knowledge, businesses that create jobs, and civil society groups that hold institutions accountable.

Consider the “Accra Reset,” launched by Ghanaian President John Mahama in 2026 as an African-led effort to rethink how countries work together at a time when foreign aid is shrinking and global priorities are changing. Rather than rejecting international partnership, the initiative seeks to refocus it on building local capacity, strengthening public institutions and supporting strategic investments. This initiative epitomises an essential truth: development cooperation must move beyond dependency toward domestic capability and institutional ownership.

As Ghana’s deputy chief of staff, Nana Oye Bampoe Addo, said at the OECD conference, the “Accra Reset” initiative is not a rejection of global cooperation, but an effort to “reset the terms” of that cooperation from charity toward strategic investment and mutual interest.

For decades, development cooperation has often operated through externally designed projects, priorities driven by donors, and fragmented financing. While these mechanisms delivered important gains in health, education, and humanitarian response, they rarely produced meaningful, sustainable change.

Africa remains heavily dependent on commodity exports, vulnerable to debt distress, and under-industrialised despite decades of development assistance. This dependence continues to shape the export structure of many African economies, limiting value addition and industrial diversification, according to the UN Conference on Trade and Development. This is why the foreign aid debate is becoming inseparable from questions of sovereignty and economic transformation.

Africa is at a turning point. The challenge now is not simply replacing lost aid flows; but building the institutional and economic foundations capable of reducing long-term dependence on them. That requires credible local institutions and a stronger role for African enterprise. According to the International Finance Corporation, small and medium-sized enterprises (SMEs) account for around 90 percent of businesses and more than half of global employment.

In several ways, Africa is already moving in that direction. Across the continent, governments are increasingly emphasizing industrial policy, regional integration, sovereign financing mechanisms, and domestic resource mobilization. The African Continental Free Trade Area (AfCFTA) represents part of that shift, as do new debates around climate finance, critical minerals, and economic sovereignty.

Even fragile states are beginning to demonstrate elements of this transition. In Somalia, diaspora remittances, private sector, entrepreneurial trade networks, and locally financed infrastructure projects such as Garacad Port have shown how domestic initiatives can substitute for weak formal systems in ways traditional aid models often underestimated.

None of this means foreign aid no longer matters. Humanitarian crises, conflict settings, and climate-vulnerable countries still require substantial international support. But there is strong recognition among development experts that the future of development cooperation cannot be built on dependency management alone. The deeper question is no longer whether foreign aid budgets will recover; it is whether the international system is prepared to trust local actors with real authority and real financing power to shape their own futures.