The Director-General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo-Iweala, has issued a stern call to African leaders, urging them to abandon their long-standing reliance on foreign aid and instead mobilize domestic resources to attract investments and drive economic growth. 

Her remarks come at a critical time, as the recent suspension of the United States Agency for International Development (USAID) by the US government has thrown many African countries into uncertainty, exposing the continent’s dangerous overdependence on external assistance.

Speaking on the sidelines of the African Union (AU) meeting in Ethiopia, Okonjo-Iweala warned that the continued dependence on aid not only hinders economic self-sufficiency but also leaves African nations vulnerable to abrupt policy shifts from donor countries.

“Africa really needs to change its mindset about access to aid. We should begin to see it as a thing of the past,” she said.

Instead of waiting for handouts, the WTO chief advised that Africa should focus on two key areas: attracting investment and mobilizing domestic financial resources.

The Impact of USAID Suspension in Africa

Okonjo-Iweala’s call comes amid mounting concerns over the recent suspension of USAID operations by the US government, which has left thousands of aid-dependent projects in disarray across Africa. The decision, made by US President Donald Trump’s administration, has triggered controversy and alarm in many African countries, which have historically relied on USAID-funded programs for critical sectors such as healthcare, education, agriculture, and infrastructure.

USAID is one of the largest sources of development aid for Africa, with an annual budget exceeding $20 billion for projects across the continent. It plays a major role in funding programs related to:

• Healthcare (HIV/AIDS treatment, malaria eradication, maternal and child health)
• Food security and agriculture
• Education and literacy programs
• Economic development and infrastructure
• Democracy and governance initiatives

Several African nations, including Nigeria, Kenya, Ethiopia, Ghana, South Africa, and Uganda, have historically been top beneficiaries of USAID funding. The agency’s sudden suspension has left many governments scrambling to fill the funding gap, exposing the fragility of their financial planning and economic policies.

Africa’s Overreliance on Aid is A Dangerous Precedent

Despite Africa’s vast natural and financial resources, the continent continues to heavily depend on external assistance, making it vulnerable to abrupt policy changes in donor nations. According to economic analysts, foreign aid often comes with political strings attached, limiting the sovereignty of African governments in decision-making.

By depending on aid rather than building self-sustaining economies, African nations have weakened their bargaining power on the global stage, often being forced to adhere to donor-imposed conditions that may not always align with their national interests.

Okonjo-Iweala argued that African nations have enough domestic wealth to finance their own development, but leaders must be willing to mobilize these resources efficiently.

Unlocking Africa’s Domestic Wealth Through Pension Funds and Development Banks

A major financial asset that Africa has failed to effectively leverage, according to Okonjo-Iweala, is pension funds. She revealed that the continent holds approximately $250 billion in pension assets, yet much of this money is invested outside Africa, benefiting foreign economies instead of driving local growth.

“The biggest pension funds are in South Africa, followed by Nigeria, Kenya, Morocco, Botswana, and Namibia. These resources are hugely significant, and we need to find ways to tap into them,” she said.

She also emphasized the need to recapitalize Africa’s multilateral development banks, such as the African Finance Corporation (AFC), which have a combined balance sheet of only $70 billion, despite Africa’s annual infrastructure financing gap of over $200 billion.

“Instead of looking outward for financial support, we must strengthen our own institutions,” she urged.

Halting Export of Raw Materials Without Value Addition

Beyond financial resources, Okonjo-Iweala stressed that Africa must take full control of its vast mineral wealth and develop local industries to process its raw materials. She pointed to minerals like lithium, manganese, and copper, which are crucial for electric vehicle (EV) battery production, as prime examples of Africa’s underutilized potential.

Instead of exporting these raw materials cheaply, Africa should invest in processing plants to create jobs, boost intra-continental trade, and develop a strong industrial base.

“We need to develop our processing industries to create jobs, boost intra-continental trade, and ensure we stop exporting raw materials without value addition,” she stated.

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As creditor repayments for FTX are scheduled to commence tomorrow, there has been notable activity with Bitcoin moving out of wallets associated with the now-defunct FTX cryptocurrency exchange. According to various reports, the first round of repayments is expected to begin on February 18, 2025. This involves distributing over $18 billion to creditors, with a significant portion expected to flow back into cryptocurrencies, particularly Bitcoin and altcoins.

FTX was primarily a cryptocurrency exchange, allowing users to trade a wide variety of cryptocurrencies. It also offered futures and options trading, staking, and yield farming through its associated platform, FTX.US for US customers. Known for its innovative trading products like leveraged tokens and a tokenized version of its native token, FTT. FTX had a close relationship with Alameda Research, a trading firm also founded by Sam Bankman-Fried, leading to conflicts of interest and financial entanglements.

FTX Filed for Chapter 11 bankruptcy in November 2022 after a liquidity crisis was triggered by reports of financial mismanagement and misuse of customer funds for risky investments via Alameda Research. A significant portion of customer funds was allegedly used to prop up Alameda Research, leading to the inability to fulfill withdrawal requests, which ultimately led to its collapse.

Genesis faced liquidity problems after the collapse of the Terra ecosystem in May 2022, exacerbated by the broader crypto market downturn and the fallout from Three Arrows Capital (3AC), a major borrower from Genesis, defaulting on loans. Genesis Global Holdco and two of its lending subsidiaries filed for bankruptcy in January 2023, marking the beginning of a process to restructure and repay creditors. Genesis began preparing for creditor repayments, with movements of assets like Bitcoin out of its wallets noted as part of this process. A settlement of $2 billion was part of the deal to return assets to creditors.

Post-bankruptcy, efforts have been made to recover assets, with billions in cash and crypto being identified. The plan includes repaying creditors with a significant portion of these recovered assets, starting in February 2025, Ongoing investigations and legal actions against former executives, including Sam Bankman-Fried, who has been convicted on multiple counts of fraud and conspiracy.

There’s been speculation and discussion around how these repayments might affect Bitcoin’s price. The influx of liquidity from these repayments could potentially lead to increased buying pressure for Bitcoin if creditors choose to reinvest their recovered funds into the cryptocurrency market. However, the exact market impact remains uncertain, as some creditors might opt to convert their Bitcoin to fiat for financial security or other reasons.

Given the scale of the FTX bankruptcy, with creditors being owed billions, the volume of Bitcoin moving out of FTX wallets is anticipated to be significant. This could lead to increased market volatility in the short term, depending on how and when these Bitcoins are reintroduced to the market by creditors.

FTX collapse had a significant impact on the trust in centralized cryptocurrency exchanges, leading to increased regulatory scrutiny and calls for better practices, transparency, and security across the industry. The FTX repayments will serve as a beacon on investors whose hopes have been on check for a possible repayment plan since FTX filed for Chapter 25 Bankruptcy in 2022.