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Trump Aid cuts and it’s Implications for African Economies

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The African Union logo is seen outside the AU headquarters building in Addis Ababa, Ethiopia, November 8, 2021. REUTERS/Tiksa Negeri

Dr. Kaze Armel, Associate Researcher, Xiangtan University, School of Law, China-Africa Research Institute

Rafalinjara Rose Marie Yannick, Xiangtan University, School of Law, PhD Candidate

Introduction 

A few hours after his inauguration, President Donald Trump issued an unprecedented forty-four executive orders and memos across a wide range of areas, from bureaucratic reorganization to trade, energy, and migration, that communicated his administration’s intention to swiftly implement his new policy agenda. The ripple effects of some of these policy shifts are likely to be significant for low and middle-income countries for which the United States as among major providers of development assistance.

One of the most discussed policy decisions by President Donald Trump, outside of America, was his decision to freeze foreign aid for a period of 90 days. The push to disband, USAID, the central public relations arm of the US foreign policy establishment, has further brought consternation in many parts of the world, and particularly to the African region. While many people in Africa did not have much expectation of the second Trump presidency, little did they know that even the meagre ongoing US development support to the continent under the previous administrations, would be abruptly brought to a screeching halt. And with a stroke of the pen, trump wiped out billions of dollars in aid to Africa, putting lives and livelihoods for millions of people at risk.

Why it matters 

The US is by far the largest donor in the world through multiple NGOs and American aid has been used for a variety of reasons including humanitarian response, strengthening health systems, security provision, education, human rights and climate change mitigation. The US dedicates one percent of the federal budget to foreign development assistance covering both development and humanitarian assistance. In 2023, for instance, the USAID had a budget of US$ 63 billion to carry out its activities around the world. However, the USAID has recently faced many accusations, especially from the Republican Congressman Scott Perry that the agency has been funneling taxpayer dollars to terrorist organizations, including Boko Haram, ISIS, and Al-Qaeda, one of the reasons why President Donald Trump stopped the USAID.

After the ban of USAID, the news was like a tsunami-earthquake-storm kind to the world. This was unprecedented in all ways because Trump told the world that the USA has no interests in foreign aids. In Africa, Trump’s aid cuts have caused much anxiety for a number of reasons. First, the US has been the biggest anchor of humanitarian assistance. The ‘stop work’ have for example affected thousands of aid workers in conflict areas of Africa, including the Eastern Democratic Republic of Congo that exploded in the backdrop of Trump decisions.

Secondly, USAID affiliated programmes such as U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) have for decades saved lives through targeted support to people living with HIV/AIDS in Africa. Since inception in 2003, the fund has saved over 23 million people around the world, including millions of children who are either infected or orphaned as a result of HIV/AIDS.

Thirdly, many USAID programmes touching on education have enabled children, including girls to access education across Africa. Other programmes touching on environmental conservation, agriculture, civic and capacity education, conservation of endangered species and even small-scale manufacturing, have been affected by the pause on US funding.

Fourth, because of the financial support from the US to different sectors of economy, many governments have been left with huge budget holes and forced to frantically look for funds to plug the deficits caused by the USAID exit.

Fifth, the US aid cuts could hinder progress towards achieving the United Nations Sustainable Development Goals (SDGs), which many African countries are striving to meet. This includes notably goals related to poverty reduction, better education, and gender equality.

Countries affected by the aid cuts in Africa

Essentially, all African countries receive some form of aid from the US. Seven African countries will be hit the hardest by the Trump administration’s funding cuts to the USAID. DRC (Democratic Republic of Congo), Ethiopia, Liberia, Somalia, South Sudan, and Uganda received more than a fifth of their total development assistance from USAID. The small size of their economies means that aid accounts for an average of 11% of their gross national income with USAID providing 30% of development assistance, the freeze could create a shortfall equivalent to over 3% of GNI. In all but two of these countries, USAID’s focus is categorized as an emergency response. Basic health is the main sector targeted in Liberia, while in Uganda it is reproductive health. According to government records, the majority on humanitarian and health aid, the USAID spent more than $12 billion in Sub-Saharan Africa in 2024. DRC alone received the largest amount of aid, at $1.3 billion, followed by Ethiopia and Sudan.

In 2024, for example, top recipients of the USAID funding in Africa were: Nigeria (US$622 million), Mozambique (US$564 million), Tanzania (US$560 million), Uganda (US$559 million), and Kenya (US$512 million?. Such funding significantly contributed to national programmes on critical areas such as health, agriculture, capacity building and governance strengthening.

Following the exit of USAID, there are already serious ramifications for the countries, people and the planet.

Eight of the world’s poorest countries most of which are found in Africa, get up to a fifth of their aid from USAID. These include South Sudan, Somalia, Democratic Republic of Congo, Liberia, Sudan, Uganda and Ethiopia. In these countries, aid is invested in critical government programmes and the freeze in US aid beyond USAID is going to compromise ability of recipient governments to deliver the much-needed public services.

But it is not just the poorest of the countries. Middle income countries like Angola, Zimbabwe and Kenya equally rely heavily on US aid. in East Africa’s strongest economy, Kenya, for instance, over 35,000 health workers have lost their jobs as a result of the USAID freeze. In addition, 150 clinics offering critical HIV/AIDS care have also been closed down, leaving over 72,000 people on HIV medication without hope. PEPFAR alone employs approximately 41,500 healthcare workers in Kenya, further amplifying the key role US aid plays in Kenya’s economy.

South Africa, the largest economy in Africa, has particularly come under heavy attack by the Trump administration, in terms of cutting of development aid. Trump announced that his country would freeze all types of aid to South Africa, accusing the current government in Pretoria of implementing racially discriminating and incriminating policies targeting the white South Africans. The aid cuts mean that South African government must actively looks for alternative funds to close the gaps left by USAID and other financing streams.

US provided US$ 453 million worth of aid to South Africa, in 2024, under PEPFAR, contributing up to 17% of the country’s budget for response to HIV/AIDS. Similarly, the USAID pumped US$ 60 million in a number of programmes in areas such as climate mitigation, and community violence prevention. Besides increasingly strained relations between Pretoria and Washington, South Africa will be forced to resort to other avenues to ensure continuity of programmes and projects that were being supported by the US aid.

Given the US preoccupation with hard security, the pullback by President Trump is also set to affect security support for different countries in the continent that relied on US aid. The horn of Africa and Sahel countries like Somalia, Mali, Niger, and Burkina Faso where American aid has been critical in addressing security challenges and supporting development initiatives are staring at uncertain futures. Paradoxically, cutting aid in such countries will not only affect the security of the affected countries and the region as a whole – it has real security implications for the US in the long run.

Broader Geopolitical Implications of Trump Aid Cuts

As the largest donor in the world, the decision by President trump to cut aid to developing countries pull the US out of multilateral platforms like the Paris climate agreement foment bad diplomatic precedence for Washington in Africa. Under Trump, America is increasingly viewed as unpredictable, unstable and escapist partner only interested in self.

Many African leaders, organizations and people have voiced disaffection with the decision of Trump to halt aid without preparing the recipient countries. It has revealed that Trump is disinterested in long term and productive partnership with Africa.

Secondly, the US withdrawal from Africa’s aid landscape tacitly reveals waning influence of Washington in the continent. It is emblematic of the general pushback of the west in the continent with countries like France facing outright hostility in Africa.

Thirdly, the inward US policy creates opportunity for other partners of the continent to play a more pronounced role in Africa’s socioeconomic transformation. China, in particular, is now considered as a formidable alternative to the US as a development partner for Africa. Beijing has particularly presented an alluring vision for Africa’s partnership, including rolling out pragmatic and impactful cooperation platforms like the Belt and Road Initiative; Global Security Initiative; Global Development Initiative and the Global Civilization Initiative.

How are African countries responding to the Trump aid cuts?

As a response to the new reality of the Trump administration, African countries have been forced to resort to a number of mechanisms and strategies to stay afloat. These measures include;

Diversification of Partnerships: African countries are actively seeking to diversify their international partnerships, engaging more closely with other donors, such as the European Union, China, or multilateral institutions like the World Bank and the African Development Bank. China’s support for Africa’s infrastructure modernization, health response and climate mitigation have set Beijing aside as a dependable and stable partner for Africa. As US looks inside, more voices in Africa are calling on China to expand footprints in the continent for mutually reinforcing and sustainable development gains.

Strengthening regional cooperation: African leaders are increasingly looking at leveraging regional organizations like the African Union (AU) and regional economic communities (e.g., ECOWAS, SADC) to mobilize resources and coordinate development efforts.

Domestic Resource Mobilization: African countries are focusing on domestic resource upgrades through initiatives like improved tax collection, reducing illicit financial flows, and creating a more favourable environment for domestic and foreign investment. Also, many local government bonds are in play to attract domestic investments.

Encouraging public-private partnerships (PPPs). This is seen as alternative path to Africa’s socioeconomic regeneration. Private sector players can drive Africa’s industrialization, job creation and wealth fortification. could also help leverage private sector resources for development projects. Manufacture of medicines and other therapeutics has been marked by many African countries as an important avenue to fortify health response in the continent.

Leveraging Technology and Innovation: Digital technologies are being considered as pathways to improve service delivery, enhance governance, and create new economic opportunities. By using telemedicine, for example, African countries can make up for loss of medical personnel due to USAID withdrawal and provide essential diagnostic services to populations in the rural areas. In addition, innovations in areas like mobile banking, e-commerce, and renewable energy are increasingly viewed as outputs to reduce dependency on external aid.

Africa races to fill the USAID gap: A reset for the continent

Many African countries have felt the aid cuts, and it is being hard for some to fill the gap. However, some African countries are being aware of the issue and are on their way on finding how to fill the gap. Nigeria, Africa’s largest economy, committed $200 million to fill the funding void left by the US suspension of health aid across the continent as it approved its $36.6 billion budget for 2025. Meanwhile, the World Health Organization said it would release an additional $2 million to support Uganda’s response to its latest Ebola outbreak. The pause in US funding has already affected contact tracing and screening of departing international travelers. The uncertainty around the future of USAID has raised urgent questions about which countries and blocs will step in to support vital aid projects in Africa.

Not only African countries are racing to fill the gap, the African Union as well is on its way finding potential solutions to overcome the gap.  The dismantling of USAID gave the African Union the opportunity to develop strong position in G20 as the US leaves a vacuum of leadership. The African Union is working closely with the rest of the G20 to find a common solution to overcome Africa’s gap on USAID and this will be more beneficial to Africa than it was before under the USAID. The potential way out of this will be for the AU to negotiate with partners like China and Russia and many others on the economic bloc such as BRICS on how to fill the gap. As the US aid decreases on the continent, China, Russia and even Brazil may increase their influence in Africa through their own aid and investment programs. This could shift economic and political alliances, potentially marginalizing US interest in the region.

African countries are also strengthening their ties with China in many sectors. However, the question remain is can China help fill the void left by the U.S aid cuts? China has rapidly expanded its financial influence in Africa, but its approach differs from Western aid models. Unlike the US and Europe, which provide grants and social programs, China focuses on loans, trade agreements, and large-scale infrastructure investments under initiatives like the Belt and Road Initiative (BRI) among others. China and Africa are stepping up efforts to build an all-weather communities with a shared for new opportunities in the new era. Chinese government has maintained its status as the largest Africa trading partner for 15 consecutive years. In 2023, the volume of China-Africa trade was four times that of the United States and Africa. While China could partially replace US financial support, concerns over rising African debt levels persist. To truly fill the void left by US aid cuts, China would need to expand its humanitarian assistance efforts and introduce development programs with fewer debt risks.

Conclusion

The proposed aid cuts under the Trump administration present significant challenges for affected African countries, particularly in critical sectors like health, security, and humanitarian assistance. While the immediate effects might be felt in reduced funding for critical programs, the long-term consequences could include slower economic growth on the African continent, increased instability as seen in DRC lately, and a shift in global influence. However, these challenges also offer an opportunity for African nations to rethink their development strategies and build more self-reliant, resilient economies. African countries and international community need to explore alternative funding mechanisms and partnerships to mitigate these potential impacts. By diversifying partnerships, mobilizing domestic resources, strengthening governance, and investing in human capital and innovation, African countries can mitigate the impact of aid cuts and chart a path toward sustainable development.

 

Trump’s Attempt to Fire Lisa Cook Represents a Direct Challenge to the Federal Reserve’s Independence

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President Donald Trump announced on August 25, 2025, via Truth Social, his intention to fire Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud raised by Federal Housing Finance Agency Director William Pulte.

The allegations claim Cook falsely declared two primary residences to secure better mortgage terms. Cook, the first Black woman on the Fed’s board, appointed by President Joe Biden in 2022 for a term until 2038, has denied the accusations and stated she will not resign, asserting Trump lacks legal authority to remove her.

Her attorney, Abbe Lowell, plans to challenge the action in court, potentially escalating the case to the Supreme Court. The Federal Reserve Act allows removal of governors only “for cause,” typically interpreted as serious misconduct during their term, leaving Trump’s legal basis contentious, as the allegations predate Cook’s tenure.

Legal experts suggest the move could test the Fed’s independence, a cornerstone of its ability to manage monetary policy without political interference. If successful, Trump could gain influence over the Fed’s board, especially with another vacancy from Adriana Kugler’s resignation and his nomination of Stephen Miran.

However, even with additional appointees, Trump’s influence over interest rate decisions may be limited, as the Federal Open Market Committee includes non-board members. Financial markets showed minimal immediate reaction, but analysts warn that undermining the Fed’s autonomy could unsettle investors.

Trump has historically discussed using tariff revenue to fund domestic initiatives. For instance, during his campaign, he proposed tariffs on imports, particularly from China, to generate revenue for tax cuts or other benefits for Americans.

The Federal Reserve Act stipulates that governors can only be removed “for cause,” typically interpreted as serious misconduct during their term. The allegations against Cook, related to mortgage fraud predating her tenure, may not legally qualify as sufficient cause. If Trump succeeds in removing her, it could set a precedent allowing future presidents to dismiss Fed governors for political reasons, eroding the Fed’s insulation from executive influence.

Cook’s legal team plans to challenge the dismissal in court, potentially reaching the Supreme Court. A ruling in Trump’s favor could weaken the legal protections surrounding Fed governors’ terms, making them more vulnerable to political pressure. Conversely, a ruling against Trump could reinforce the Fed’s autonomy.

Trump’s action aligns with his history of criticizing the Fed and its chair, Jerome Powell, for not aligning monetary policy with his economic goals. Successfully removing a governor could embolden further attempts to influence the Fed’s decisions on interest rates, inflation, or employment, undermining its mandate to prioritize long-term economic stability over short-term political objectives.

The Fed’s Board of Governors, currently with six members following Adriana Kugler’s resignation, could see a shift in dynamics if Trump fills vacancies with loyalists, such as his nominee Stephen Miran. While governors alone don’t control monetary policy (the Federal Open Market Committee includes regional bank presidents), a Trump-aligned board could pressure the FOMC toward policies favoring his agenda, such as lower interest rates to boost growth, even if inflationary risks persist.

The Fed’s independence is critical to maintaining investor confidence in U.S. monetary policy. Any perceived politicization could unsettle financial markets, potentially increasing volatility in bond yields, stock prices, or the dollar’s value. While markets showed minimal immediate reaction to the Cook announcement, prolonged uncertainty or successful interference could lead to broader economic repercussions.

Trump’s move could be seen as part of a broader effort to assert control over independent institutions, potentially polarizing public and political opinion. Supporters may view it as a bold stand against perceived misconduct, while critics may see it as an attack on institutional integrity.

Cook’s historic role as the first Black woman on the Fed’s board adds a layer of sensitivity. Her removal could spark debates about diversity in economic leadership, especially if the allegations are perceived as politically motivated or insufficiently substantiated.

However, if Trump were to propose using tariff revenue for direct payouts, it could indirectly pressure the Fed. For example, large-scale fiscal policies like dividends could fuel inflation, forcing the Fed to adjust interest rates. If Trump perceives the Fed as resistant to accommodating such policies, he might intensify efforts to influence its leadership, further threatening its independence.

Tariffs, a cornerstone of Trump’s economic agenda, could generate significant revenue but also raise consumer prices, complicating the Fed’s dual mandate of price stability and maximum employment. A less independent Fed might face pressure to keep rates low to offset tariff-driven inflation, risking long-term economic stability.

How This Affects Fed Independence

The attempt to fire Cook directly challenges the Fed’s structural independence by testing the legal boundaries of gubernatorial removal. If successful, it could embolden future interventions, weakening the Fed’s ability to act without political interference.

A precedent allowing presidents to remove governors for non-term-related reasons could make the Fed more susceptible to political cycles, aligning monetary policy with electoral goals rather than economic data. This could undermine global confidence in the U.S. dollar and the Fed’s credibility as a neutral arbiter.

The Fed’s design, with staggered 14-year terms and a mix of board and regional bank input, provides some buffer against immediate politicization. However, sustained efforts to stack the board with loyalists could gradually erode this resilience, especially if combined with legislative changes or public pressure.

A less independent Fed could lead to higher risk premiums in U.S. financial markets, as investors demand compensation for uncertainty. Internationally, central banks and foreign investors might question the reliability of U.S. monetary policy, potentially impacting the dollar’s status as the world’s reserve currency.

The outcome of this action—whether through legal battles or political negotiations—will shape the Fed’s ability to operate free from executive influence. While the tariff revenue dividend proposal remains unconfirmed in this context, any such policy could amplify pressure on the Fed to align with Trump’s fiscal agenda, further testing its autonomy.

OpenAI and Anthropic test each other’s AI models in rare safety collaboration amid fierce competition

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Two of the world’s leading AI labs, OpenAI and Anthropic, briefly put rivalry aside to conduct joint safety testing of their advanced AI models — a move seen as a rare instance of cross-lab collaboration in an industry defined by secrecy and cutthroat competition.

The project, unveiled on Wednesday, allowed each company’s researchers special API access to versions of their competitor’s models with fewer safeguards, enabling them to test for weaknesses that internal teams might have missed. While OpenAI noted that GPT-5 was not included in the experiment since it had not yet been released, the tests focused on recently deployed models from both companies.

A consequential stage for AI

In an interview with TechCrunch, OpenAI co-founder Wojciech Zaremba said the collaboration reflects the urgent need for industry-wide standards in safety.

“There’s a broader question of how the industry sets a standard for safety and collaboration, despite the billions of dollars invested, as well as the war for talent, users, and the best products,” he said.

He described AI as entering a “consequential” stage of development, where systems are not just research prototypes but products used by millions daily, raising the stakes for safety and alignment.

Nicholas Carlini, a safety researcher at Anthropic, also expressed optimism about the experiment. “We want to increase collaboration wherever it’s possible across the safety frontier, and try to make this something that happens more regularly,” he said.

Competition remains fierce

The cooperation comes against the backdrop of escalating competition between leading labs, where billion-dollar data center investments and $100 million pay packages for top AI researchers have become standard. Experts worry this arms race could incentivize companies to cut corners on safety in order to ship more powerful systems faster.

Indeed, the collaboration did not erase underlying tensions. Shortly after the joint research concluded, Anthropic revoked API access granted to another OpenAI team, accusing OpenAI of violating terms of service by allegedly using Claude to improve competing products. Zaremba insists the incidents were unrelated, but acknowledged that rivalry will remain intense even if safety teams collaborate occasionally.

Key findings: hallucinations and refusals

The research compared how the models behaved in situations where they lacked reliable answers. Anthropic’s Claude Opus 4 and Sonnet 4 frequently refused to answer, declining up to 70% of uncertain questions with responses like, “I don’t have reliable information.”

OpenAI’s o3 and o4-mini models, by contrast, refused questions less often but hallucinated more, offering confident answers even when lacking sufficient knowledge.

Zaremba said the right approach lies between the two extremes — OpenAI’s models should refuse more, while Anthropic’s could attempt to engage more often.

The problem of sycophancy

Both labs also tested for “sycophancy” — the tendency of AI models to agree with users, even when reinforcing harmful behavior. Anthropic’s report flagged examples of “extreme” sycophancy in both GPT-4.1 and Claude Opus 4, where the models initially resisted but later validated concerning or manic user statements. Other models showed lower levels of this behavior.

This issue has recently taken on tragic real-world consequences. On Tuesday, parents of 16-year-old Adam Raine filed a lawsuit against OpenAI, claiming their son relied on ChatGPT, powered by GPT-4o, for advice during a mental health crisis. The chatbot allegedly reinforced suicidal thoughts rather than pushing back, which they say contributed to his death.

Zaremba called the case heartbreaking: “It would be a sad story if we build AI that solves all these complex PhD-level problems, invents new science, and at the same time, we have people with mental health problems as a consequence of interacting with it. This is a dystopian future that I’m not excited about,” he said.

In response, OpenAI said in a blog post that GPT-5 has made significant improvements in reducing sycophancy compared to GPT-4o, particularly in handling mental health emergencies.

Both Zaremba and Carlini say they would like to extend this model of collaboration, testing not just hallucinations and sycophancy but also other pressing safety issues across future AI models. They also expressed hope that other AI developers will follow suit, creating a broader culture of cooperative oversight even as market competition intensifies.

The experiment may be brief, but it highlights a growing recognition among AI leaders that as the technology becomes deeply embedded in daily life, no single lab can guarantee safety alone.

Google Cuts One-Third of Managers as Efficiency Drive Continues to Reshape Workforce

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Google has eliminated more than one-third of its managers overseeing small teams, part of the company’s sweeping effort to streamline operations and reduce bureaucracy.

“Right now, we have 35% fewer managers, with fewer direct reports than at this time a year ago,” said Brian Welle, Google’s vice president of people analytics and performance, during an all-hands meeting last week, according to audio obtained by CNBC. “So a lot of fast progress there.”

The cuts affect managers who oversaw fewer than three employees, according to a person familiar with the matter. Many of those affected have remained at the company as individual contributors. Executives said the restructuring is aimed at speeding up decision-making and ensuring managers, directors, and vice presidents make up a smaller share of Google’s total workforce over time.

Job security questions linger

At the meeting, employees pressed Welle and other executives on issues ranging from job stability to workplace culture, following several rounds of layoffs, buyouts, and reorganization efforts over the past year.

Google CEO Sundar Pichai acknowledged the concerns but noted the need for efficiency. “We need to be more efficient as we scale up so we don’t solve everything with headcount,” he said.

Alphabet, Google’s parent company, laid off about 6% of its global workforce in 2023 and has since made targeted cuts across multiple divisions. Chief financial officer Anat Ashkenazi, who joined last year, said in October she planned to push cost-cutting measures “a little further.”

Buyouts gain traction

As part of the restructuring, Google has offered “Voluntary Exit Program” (VEP) packages in 10 product areas, including search, marketing, hardware, and people operations. Between 3% and 5% of employees in those units have accepted the offers, executives said.

“This has been actually quite successful,” said chief people officer Fiona Cicconi, noting that many employees who took buyouts were seeking career breaks or time to care for family members.

Pichai defended the move, saying the buyouts reflected employee feedback. “It gives people agency, and I’m glad to see it’s worked out well,” he said.

Sabbatical debate

The town hall also touched on employee benefits. Workers asked whether Google might adopt a sabbatical policy similar to Meta’s “recharge” program, which grants a month off after five years at the company.

Alexandra Maddison, Google’s senior director of benefits, dismissed the idea, saying the company’s current vacation and leave policies already provide sufficient time for rest.

“We’re very confident that our current offering is competitive,” she said.

Cicconi added that, unlike Meta, Google offers the voluntary buyout program. Pichai quipped in response, “Should we incorporate all policies of Meta while we’re at it? Or should we only pick and choose the few policies we like? Maybe I should try running the company with all of Meta’s policies. No, probably not.”

Balancing morale and profits

The restructuring comes at a time when Alphabet’s stock has continued to climb, rising 10% this year after gains of 36% in 2024 and 58% in 2023. Yet employees say morale has been strained, as the company posts record earnings while continuing to cut jobs.

Executives maintain that the changes are necessary to ensure Google remains agile in a highly competitive tech industry, even as the company grapples with how to balance efficiency with employee trust.

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