Net official development assistance will fall by 6.9 percent in 2026, marking the third consecutive year of decline and bringing aid to its lowest level since 2014, according to a report published in 2026 by the Observer Research Foundation. The study, titled "Development Partnerships in a Changing World Order," finds that security pressures and aid budget cuts have upended the global development landscape just as financing needs for sustainable development goals are rising sharply. The authors conclude that traditional donor-recipient frameworks are breaking down, replaced by partnerships shaped by geopolitical competition, mutual benefit, and strategic alignment rather than generosity alone.
The financing gap for sustainable development goals is projected to surge from $4.5 trillion in 2024 to $6.4 trillion in 2030, according to the report. Bilateral aid to Sub-Saharan Africa is expected to drop by 11.6 percent in 2026, while assistance to least-developed countries will fall by 10.9 percent—both marking third straight years of decline and reaching their lowest levels since the early 2000s. The report notes that only four countries exceeded the recommended benchmark of allocating 0.7 percent of gross national income to aid as of 2024: Denmark at 0.71 percent, Luxembourg at 1 percent, Norway at 1.02 percent, and Sweden at 0.79 percent. Social sector spending has been hit particularly hard, with health aid projected to drop between 24 percent and 46 percent in 2026, education aid by 22 percent, humanitarian assistance by 40.3 percent, food aid by 44.5 percent, and energy aid by 22.6 percent. Achieving the sustainable development goals requires budget outlays of between 45 percent and 59 percent of GDP in low-income countries and between 27 percent and 37 percent in lower-middle-income countries, yet most developing nations can't mobilize domestic revenue due to limited fiscal capacity and weak economic outlooks.
The report finds that development partnerships have reached "a breaking point, where the very regulations, mechanisms, and alliances that underpin them are being remoulded." Authors Swati Prabhu and Pratnashree Basu write that generosity is being replaced by geopolitical compulsions, creating what they call a "broken social contract" between aid givers and receivers. The study concludes that decisions about where infrastructure is financed, which technologies are transferred, and which countries receive concessional funding are now shaped by alliance politics, supply-chain resilience, maritime access, and strategic competition alongside traditional assessments of poverty reduction. The authors note that infrastructure financing has become "an instrument for shaping regional order as much as facilitating economic development," pointing to China's Belt and Road Initiative ports, Japan's quality infrastructure emphasis across the Indo-Pacific, and the G7's Partnership for Global Infrastructure and Investment as examples.
The report argues that this shift reflects a broader transformation where states increasingly deploy economic instruments—including development finance, investment, and infrastructure—as tools of strategic influence rather than purely humanitarian engagement. According to the authors, the securitization of development finance risks subordinating local development priorities to external actors' strategic objectives, with infrastructure projects potentially selected for military utility or political symbolism rather than developmental impact. However, they also note that the growing strategic importance of infrastructure and technological connectivity has expanded the pool of capital available for development, as governments increasingly view investments in renewable energy, resilient supply chains, and digital connectivity as contributing directly to national security. The report explains that geopolitical fragmentation is fundamentally reshaping cross-border capital allocation, with border regions, maritime chokepoints, and critical infrastructure corridors attracting disproportionate investment because of their geopolitical importance. This creates what the authors describe as "negotiated interdependence," where states diversify their development partnerships to maximize strategic autonomy while avoiding overdependence on any single provider.
The report recommends that development partnerships be evaluated not by the infrastructure they build but by the capabilities they leave behind. The authors argue that durable capacity exists when countries acquire the institutions, technical expertise, regulatory frameworks, and industrial capabilities necessary to operate, maintain, finance, and eventually upgrade assets independently. They conclude that partnerships creating domestic technical skills, indigenous technological capabilities, competitive local enterprises, and diverse funding sources provide strategic flexibility, while those depending on outside contractors, imported technology, or exclusive financing arrangements merely shift reliance from one supplier to another. Physical assets depreciate and financing cycles end, the report notes, while institutions, skilled human capital, technological competence, and policy autonomy endure—forming the foundations that determine whether development partnerships produce resilience or simply redefine dependence.