One key challenge in answering this question relates to the way that health systems are funded. There is a patchwork of different organisations with different funding mechanisms and supply chains. Financial reports are generated by separate donor reporting systems, often with a lag. National budget reports also have limitations: typically, spending is reported by department and facility rather than by health condition (because departments and facilities choose how to control money rather than health conditions). This makes it hard to tease out of budgetary reports whether governments are closing any gaps in funding arising from cuts to vertically funded programmes focused on particular interventions.

Trade data is a less obvious place to look at the impact of aid cuts, but it can reveal useful insights. Most aid-dependent countries rely on imports for the key commodities at the heart of vertically-funded programmes such as PEPFAR for HIV, the Global Fund for HIV, tuberculosis and malaria, the President’s Malaria Initiative, Gavi for immunisation, and UNFPA for family planning. Tracking imports of vaccines, antiretrovirals, antimalarials and contraceptives therefore provides a useful input into understanding what is happening to procurement under these programmes.

One helpful feature of trade data is that it is reported by both exporters and importers. Most major pharmaceutical exporters update their information frequently. For example, India, the largest exporter of pharmaceutical commodities to Africa, has reported its export data up to October 2025. Even if the importing country has not yet updated its trade data, you still have a useful steer on what is happening.

Trade data also has its limits: it records the arrival of goods at the border, not where they go from there or who paid for them. The data is also lumpy at country and commodity level, with procurement arriving in large discrete shipments that can swing single-year numbers significantly. It also tells us nothing about whether staff are being paid to actually hand out medicines. With those qualifications in mind, what does the trade data show?

Have aid cuts disrupted pharmaceutical flows?

For an eleven-country panel[1], Comtrade data from January to October 2025 suggests that in aggregate pharmaceutical imports have not collapsed over the period. Total imports were 2.5% higher than in the same period of 2024. Beneath the aggregate, vertically funded commodity lines, including vaccines, antiretrovirals and contraceptives, were also broadly stable. There is one substantive exception: antimalarial imports are 15% less in value terms relative to the previous year.

Comparing value of commodity imports (US$m), January to October, 2024 vs 2025

Looking at the quarterly breakdown of imports, you see a sharp fall in the values of vaccines and ARVs imported in the first quarter of the year consistent with the USAID closure and associated disruption. The flow of these commodities then seems to recover in the second and third quarters. Antimalarials are the exception to this recovery pattern and the trajectory is harder to read. Imports were modestly below their 2024 level in the first quarter, broadly flat through the second, and substantially lower in the three months from July to September. This is the only commodity class in the picture where the disruption pattern deepened rather than reversed across the year.

Within-year pattern of pharmaceutical imports, 2025 vs 2024

These year-on-year changes need to be set against the scale of what is being measured. In per capita terms, the total value of pharmaceutical imports in 2024 came to just under six dollars per person per year, which is about a cent and a half per person per day. The African Union Development Agency estimates that 70%-80% of medicines consumed across Africa are imported, with local production filling the remainder. For the panel of countries here, the share is likely higher as the panel largely excludes major African producers like South Africa and Egypt (although Nigeria is captured in the panel and has a growing pharmaceutical manufacturing sector). The $6 per-capita import figure understates annual average per-capita consumption of pharmaceutical commodities, but probably not by much.

What has changed over the past decade?

The disruptions to commodity flows in early 2025 follow a decade where the overall value of pharmaceutical imports has barely shifted. There has been an increase of about 5% over the past ten years, which translates to a per-capita decline of roughly 17%. Yet underneath this aggregate picture, you see a striking divergence across different groups of commodities.

In the chart below, the two green lines highlight vertically funded commodity lines. Vaccines surged during the COVID procurement period of 2020-2022 and partially unwound, but their 2024 level is still 65% above 2014. The group of other vertically funded commodities (combining antiretrovirals, antimalarials, and contraceptives) grew by roughly 60% across the decade and were still rising into 2024.

In contrast, you see a purple line of ‘other pharma’ that has declined by roughly 10-12% over the same period. For the purposes of this chart, ‘other pharma’ is a residual category covering everything in the pharmaceutical chapter of the trade statistics that does not fall into the named donor-funded commodity lines above. It is dominated by other finished medicines, including for example antibiotics, cardiovascular drugs, diabetes medications, painkillers, and basic over-the-counter medicines[3]. This ‘other pharma’ category is paid for predominantly through a mix of public health budgets and out-of-pocket spending. At the panel level, ‘other pharma’ constitutes about 60% of the total import basket.

Pharmaceutical imports in to 11 African countries, 2014 - 2024

What is driving this divergence?

Zooming in to trends in specific countries can give some clues as to what might be driving these diverging patterns. Take, for example, Nigeria, which is the panel’s largest market for pharmaceutical imports. The vertically-funded commodity lines rose roughly 70% between 2014 and 2024. In contrast, imports of ‘other pharma’ were about 20% less in 2024 than ten years previously.

Pharmaceutical imports in to Nigeria, 2014 - 2024

The observed decline in the value of ‘other pharma’ might not mean that there have been fewer medicines available. The prices of generic medicines have fallen substantially over the decade. Some of the apparent decline may also reflect domestic production filling part of what was previously imported. Nigeria also has the largest domestic pharmaceutical sector in the panel, with around 115 licensed firms manufacturing basic generic medicines for the local market.

However, this downward trend has not been a gradual decline. The divergence with the vertically-funded commodities begins to widen around 2021, when Nigeria was beginning to face acute shortages of foreign exchange in the economy. Official and parallel exchange rates became increasingly detached before a sharp devaluation took place in 2023. Imports of dollar-priced pharmaceuticals compressed as domestic buyers (the public health system, private importers, pharmacies etc.) adjusted to tighter foreign exchange markets. In contrast, imports of donor-procured commodities, which sit outside the domestic foreign exchange system, continued to grow.

Some confirmation of this reading is visible in the more recent data, which the chart above does not yet capture. Through the first ten months of 2025, as foreign exchange conditions stabilised, Nigerian commercial pharmaceutical imports rebounded sharply. The ‘other pharma’ category was up roughly 24% on the same period of 2024, and 16% above 2023 levels. A rebound on this scale is more consistent with demand having been suppressed by foreign exchange scarcity than more demand now being permanently met by domestic production.

A similar dynamic of import compression is visible in Ghana, although the specific timings differ. A decade ago, the cedi depreciated sharply during the course of 2014 before the country entered an IMF Extended Credit Facility in April 2015. Ghana’s ‘other pharma’ imports fell by roughly a third in dollar terms over two years, while imports of vertically-funded commodity lines held essentially flat through the same period. A similar but smaller compression is visible after Ghana’s recent default. The country’s ‘other pharma’ imports drifted lower from 2022 through 2024, while vertically-funded lines remained well above their 2014 baseline.

Pharmaceutical imports in to Ghana, 2014-2024

What does this mean for the beyond-aid transition?

The fact that the imports of donor-backed commodities have diverged from wider pharmaceutical imports may not come as a particular surprise to global health specialists. It is widely appreciated that donor funding is subject to different kinds of external pressures. However, the picture in Ghana and Nigeria described above does point to structural risks to health financing beyond aid that are often glossed over.

Typically, the beyond-aid transition in the health sector is framed as a fiscal challenge. The core argument essentially runs that governments need to step up and collect more taxes and prioritise certain health services to fill the gaps left by dwindling aid budgets. This is certainly an important element of the overall puzzle. Without sufficient tax collection, governments cannot fund the public health functions that no individual will pay for privately, or pool resources at the scale needed to protect the most vulnerable from health costs they cannot meet themselves.

What such discussions miss, however, is that imported health commodities depend on foreign exchange. Contrary to common discourse, aid and tax are not in this regard perfectly substitutable forms of finance. An aid dollar buys an imported ARV; a cedi or naira raised through taxation buys whatever can be procured in local currency at the prevailing exchange rate.

The availability of foreign exchange is not directly linked to the government’s tax collection capacity. It comes from the wider economy: from exports, from remittances sent home by workers abroad, from foreign investment, and historically also from aid flows themselves. Of these, only exports and remittances are reliably present in an imagined ‘beyond aid’ future. Aid is precisely what is contracting; external borrowing is intermittent and conditional, and ultimately has to be repaid. The availability of foreign exchange that is reliable enough to plan health procurement around depends on the breadth and depth of the wider economy's productive capacity: on having a range of goods to sell, or labour to provide, that the rest of the world wants to pay for.

This then is global health’s long-term dollar problem in a world beyond aid. Earmarked aid flows have enabled lower-income countries to import cutting-edge technologies embodied in pharmaceutical products developed and manufactured elsewhere. This model has done much to drive remarkable gains in health outcomes over the past two decades. The structural question is not whether that model was effective; it clearly was. The question is what happens to commodity flows if that financing dries up.

The post-aid transition implies replacing donor financing with domestic tax revenues. Those revenues have to be exchanged for hard currency before any imported commodity can be procured. At that point, vaccines and antimalarials move from one financing regime to another. They lose the insulation that donor procurement provided, and the trajectory visible in the “other pharma” line in both Nigeria and Ghana becomes relevant for the entire import basket. A health ministry trying to buy antimalarials is now competing for foreign exchange with firms importing machinery, households buying imported food or fuel, and other parts of government meeting their own dollar-denominated obligations.

A common response might be that domestic budget allocations would need to shift accordingly. Technical assistance might focus on better cost-effectiveness analysis or tracking resource flows for treatment of certain conditions. Investments could be channelled to advocates to make the case for increased health spending. The implicit theory in these tools is that the binding constraint on outcomes is the quality of allocation decisions, and that better information, better processes, and better political preferences will translate scarce resources into more health gains.

The constraint identified by the trade data above sits upstream of all three. It is not really a constraint on the quality of allocation processes: it is a constraint on what the procurement portion of the budget can actually buy given the relative cost of foreign exchange. A government can have the same doctors and nurses on payroll and the same political commitment to health spending, and still find that the budget for health commodities buys twenty per cent less medicine than it did the year before, because of exchange rate movements.

This is not an argument that the global health community should retool itself toward trade and industrial policy. The comparative advantage of the field sits with disease control, clinical evidence, procurement, and health systems strengthening, and there are good reasons for that to remain the case. But it does point to certain limits of what budget advocacy alone can deliver, in countries operating under sustained foreign exchange pressure. People who care about how health services will be financed ‘beyond aid’ should be as concerned about exports and remittances as they are about taxes and budgets.

[1] The panel comprises eleven sub-Saharan African economies: Kenya, Tanzania, Uganda, Ethiopia, Mozambique, Malawi, Zambia, Rwanda, Nigeria, Ghana, and the Democratic Republic of the Congo. Together they account for around 760 million people (roughly half of Africa’s population) and include most of the region’s largest recipients of donor-financed health programmes. Francophone West African economies are excluded primarily because France, a major source country for their pharmaceutical imports, files Comtrade returns with substantial delays, making the recent-period comparison less reliable for them.

[2] Comtrade data fills in over time, so comparing complete past years to partial current ones produces apparent declines that are reporting artefacts. The “reliable reporter” subset used here restricts both years to exporters that filed substantively and on time in both. It captures around 78% of total panel pharmaceutical exports for 2024. India accounts for roughly half; the principal excluded reporters are China (12%), France (4%), Korea (2%) and Indonesia (2%).

[3] It also includes wound dressings and bandages, diagnostic reagents, and a handful of smaller medical preparations, but finished-medicines constitute around three quarters of the total.

[4] The long-run charts use the OECD’s Balanced International Merchandise Trade Statistics (BIMTS) rather than Comtrade. BIMTS reconciles exporter and importer reports for each bilateral trade flow and applies a consistent methodology for imputing missing values, which produces a cleaner long-run series than raw Comtrade does. The trade-off is that BIMTS publishes with a longer lag (currently through 2024), so it cannot be used for the most recent period.

The case for investing in clean energy has been quietly rewritten over the past few years. The Middle East conflict is the latest chapter in a line of argument that increasingly justifies investments in renewables as the smart geoeconomic move and not just an investment in protecting the planet.

The Chief of the International Energy Agency has stated:

I expect one of the responses to this crisis will be [an] acceleration of renewables. Not only because they are helping to reduce the emissions but also, they are [a] homegrown domestic energy source.

This argument is salient across countries that rely on fossil fuels, but this vulnerability varies in scale. Ethiopia is an example of an economy that is acutely exposed to the volatility of international markets for fossil fuels. The figure below shows the scale of Ethiopia’s fuel imports relative to sources of foreign exchange across the economy, compared to an industrialised fuel-importer like Germany with a diversified industrial base.

Figure 1: Comparing exposure to fossil fuel imports

Given this exposure, it is not surprising that Ethiopia has been looking to make greater use of its abundant hydropower potential. More than 90 percent of Ethiopia’s electricity is generated by domestic renewables, with the Grand Ethiopian Renaissance Dam now operational. In January 2024, Ethiopia became the first country in the world to ban the import of internal combustion engine vehicles. This was not motivated by ardent environmentalism but a deliberate attempt to reduce import bills, having recently defaulted on its sovereign bonds.

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The standard argument that I hear at conferences is that the main barriers to building out renewable energy systems are financial: the capital is there, it is just not being invested in the right place. The thesis points to the insufficient scale of finance relative to needs. Plugging that gap requires more private finance because of public budget constraints. Mechanisms need to be found to reduce the cost of capital in lower income countries, especially because of the high up-front capital costs in renewables relative to other energy investments.

This is all good and well, but you rarely get much of a sense of what would actually be needed to sustainably draw in and absorb increased flows of capital beyond a rather superficial discussion about the thin pipeline of bankable transactions. There is a macroeconomic arithmetic that is often overlooked. It bites hardest in lower-income countries that need to expand their energy systems but face binding constraints on foreign exchange.

2. Renewables require imports too

While renewables may be domestic in their ‘fuel’, they are largely imported in their hardware. Solar panels, wind turbines, inverters, transformers, batteries, transmission infrastructure are overwhelmingly produced in a small number of industrialised economies (see chart below). The fuel imports that these technologies displace are not replaced by a costless natural resource; rather they are replaced by capital equipment that itself has to be paid for in foreign currency.

Figure 2: Export market shares of various low-carbon technologies by country in 2020 (retrieved from Survival of the Greenest, Amir Lebdioui, 2024)

Building out an energy system is not a single project, or even a portfolio of projects. It is a sustained programme of installations stretched across years or decades that might include solar parks, wind farms, transmission upgrades, grid storage, distribution modernisation and electric vehicle networks. At the project level, the financing of each asset can potentially be structured to produce a manageable life cycle. At the national level, what the country faces is a sustained surge of capital goods imports, and it has to find the foreign exchange to pay for them. Even where the financing is arranged domestically in local currency, the underlying dollars (or yuan or euros) to settle the equipment still have to be sourced from the country’s overall external position.

In an ideal situation, investment in the energy system stimulates a response in the tradeable goods sector. Firms and farms that could not previously access reliable power become able to compete in international markets, and the export earnings that follow service the claims the build-out created. However, this response is by no means guaranteed.

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In its absence, the foreign exchange has to come from somewhere else. The country can borrow to meet its external obligations, but this defers the problem rather than resolving how the imports will ultimately be paid for. It can draw down reserves, but reserves are finite and exist to absorb shocks the country cannot otherwise withstand.

This leaves import compression: essentially the dollars spent on solar panels and transmission infrastructure are dollars not spent on something else that the country imports (e.g. food, medicine, machinery, intermediate inputs for domestic industry). In an energy-rich economy like Germany, the offset can come from the avoided fuel imports themselves. The installation that creates the financing claim also displaces fossil generation that would have required imported fuel, freeing up the foreign exchange to service it. The argument does not hold so well in a country like Ethiopia, where firms and households would consume far more energy if incomes allowed. Substitution alone does not generate the foreign exchange to service the claim; growth in tradeable production (or remittances) has to do that work.

3. When the FX constraint bites

This is not just a theoretical concern: Pakistan and Ghana illustrate the dynamic (even if the technologies in question were largely thermal rather than renewable). Both countries have undertaken substantial power expansion programmes financed through dollar-indexed contracts: Pakistan through successive waves of contracts for independent power producers since the mid-1990s; Ghana through the post ‘dumsor’ procurement push of 2014–2017 that produced 43 power purchasing agreements.

At the project level the contracts were successful in attracting private investment (the projects were ‘bankable’. Plants were built and generation capacity was added, but the overall push to increase power generation has given rise to major financial difficulties. There was PKR 2.6 trillion of ‘circular debt’ in Pakistan by 2025; the government of Ghana cleared $1.47 billion of legacy energy sector debt earlier this year. Roughly thirty to thirty-five percent of Pakistan’s consumer electricity tariff now consists of debt servicing rather than energy costs.

There have been a series of reports (see examples here for Pakistan and for Ghana) documenting some of the shortcomings in approaches to procurement and utility management. Proposals to improve procurement, take alternative approaches to contracting, and improve cost recovery are all valid.

There is also a macro challenge here that compounds these difficulties within the power sector. Capital flowed into the power sector at scale, on terms that made individual projects bankable for international sponsors. The resulting obligations were denominated in foreign currency, but the country’s capacity to generate that foreign currency has not kept pace with the cumulative obligations being created. Macroeconomic adjustment forced the country to compress not only demand for power, but also for imports across the economy as exchange rates devalued.

A contrast with Vietnam is instructive here. Vietnam also expanded power generation rapidly over the past decade and much of it under a feed-in tariff regime that drew in international capital. Like Pakistan’s and Ghana’s arrangements, contracts were denominated in or indexed to hard currency. Vietnam’s power sector has not been trouble-free: there have been disputes over curtailment and delayed payments to renewable developers, and the state utility’s finances have come under strain. But that stress stayed contained within the sector. It did not escalate into a balance-of-payments crisis, because the dong remained broadly stable: manufacturing-led export growth continued to generate the foreign exchange to service the obligations as they accumulated. The contracts created similar foreign-currency claims; what differed was the capacity of the wider economy to absorb them.

Figure 3: Comparing exchange rate movements against the US dollar over the past decade

Balance of payments constraints need not show up as a Ghana-style stress event. The more common pattern is one where insufficient capital is flowing because of a perceived lack of ‘bankable projects’. Project bankability is not just a function of project preparation and the capabilities to undertake good feasibility studies. It is also a function of the country’s external position. Innovations like local currency lending can shift who bears that risk, but they cannot eliminate it; the risk shows up in the cost of the project somewhere. Work to improve project finance structures may do useful work at the margin, but the cost of capital is at least partially endogenous to the country’s external account. The architecture’s emphasis on instrument innovation at the project level cannot transcend a constraint that operates at country level.

4. How to absorb more capital

None of the above should be read as an argument against upscaling investment in clean energy systems, rather it is a suggested corrective on where energies should be focused. ‘Unlocking’ climate finance is not just an up-front financing problem; a sustained increase in capital imports also requires sustained growth in ongoing foreign exchange earnings. Expanding the availability of foreign exchange is a precondition for absorbing the capital flows that the international financial architecture is ostensibly trying to mobilise.

There is of course a horrible chicken-and-egg problem here. Firms in low-income countries consistently identify unreliable electricity as a binding constraint on their growth and particularly growth in tradable goods and services whether that be garment factories in Ethiopia, agro-processing in Tanzania, or digital services in Nigeria. All face power costs and reliability problems that limit their competitiveness in international markets. Building out power requires sustained inflows of foreign exchange, which requires exports: a country needs power to grow exports, and exports to fund power.

The link between power investment and tradeable production deserves more weight than it typically receives. Direct electricity exports are one way to make the arithmetic work. Ethiopia is pursuing this approach, anticipating exports of hydro-generated electricity to neighbouring countries, but when it comes to renewables, this model depends a lot on the demand and infrastructure of your neighbours. For most countries the indirect route matters more: power investment that supports export diversification through industrial development, processing of agricultural and mineral exports, or services exports that depend on connectivity.

At the national level, the structures oriented to tackling constraints to exports are not the same as those required for coordinating flows of money. Less focus would be paid to coordinating different donors (through e.g. country platforms); more would go to the coordination mechanisms between government and the productive economy itself, particularly the firms that would generate an export response. Less time would be spent coming up with ever more elaborate efforts to link fiscal systems to climate concerns; and more about surfacing and addressing concrete operational constraints faced by firms such as customs delays, input availability, skills gaps or regulatory barriers.

None of this may be a revolutionary insight, but it does feel like greater scepticism is warranted about the idea that the world’s largest asset managers hold the secret to unleashing a wave of clean energy investment. For many lower-income countries the constraint is not the capital on offer but the capacity of the economy to absorb it: to earn the foreign exchange that the imported hardware, and the obligations attached to it, will eventually have to be paid in. The harder question, and the more useful one, is what it would take to absorb more capital. Otherwise efforts to engineer ever more elaborate financing structures and strategies will feel like pushing on a string.

Next week the UK’s FCDO is co-hosting the Global Partnerships Conference in London, alongside South Africa, the Children’s Investment Fund Foundation and British International Investment.

It’s a difficult conference to host. The UK has cut back its aid spending faster than any G7 country. The conference can make the right noises about the UK’s commitment to shared challenges, but it is hard to avoid being defensive. It will not alter the arithmetic FCDO officials are working through as they look for cuts to make across programmes providing basic health and education services, or humanitarian assistance.

At the same time, there is a clear desire to look forward. It is being talked about as a conference on the future of ‘international development’ but not about ‘aid’. Much will be said about the UK’s stated ambition to think like an ‘investor’ rather than a ‘donor’.

It is worth stating up-front that catalytic finance and blended instruments will not directly replace programmes providing maternal health treatments. Not all flows of international money play the same role. At the same time, efforts to look at how the UK can usefully contribute to development beyond its aid budget should not be summarily dismissed. The UK’s international footprint does not stop neatly at the 0.3% or 0.5% of gross national income accounted as official development assistance. There is another 99% plus of economic activity that may also contribute to the stated goal to ‘drive shared growth and prosperity’.

Recognising the broader footprint is a useful starting point, but it does not automatically translate into a coherent strategy. What I want to suggest here is that the nature of the UK economy may not lend itself to unleashing major investment flows. The UK’s main attraction to partners and contributions to future economic development might be in areas that the conference does not really talk about much at all.

The UK’s economic structure shapes what kind of partnerships are possible

There is an instructive comparison to be made here with China and the Gulf (especially UAE). Over the past two decades, both have been major outward investors in emerging markets, and in neither case has this been spearheaded by anything resembling a development agency. China’s footprint runs through its policy and commercial banks, exports credit agencies and state owned and private firms. and a labour force that has at times exceeded a million workers across Africa. The Gulf’s runs through sovereign wealth funds, firms like DP World and Mubadala, and securing concessions in logistics, oil and gas, and renewables.

These outward investment drives have not been positioned as gestures of altruism, but as mutually beneficial investments. Motivations have included capital surpluses to recycle, excess construction capacity to deploy, critical inputs to secure, exerting greater control over logistics routes, securing early advantage in rapidly growing consumer markets and geoeconomic positioning to advance.

The development consequences of these outward investment drives have emerged more as a by-product than a primary goal. They can be substantial, they can promote growth, they can also be deeply problematic, sometimes both at once. However, the scale of the investment flows arising from these economic strategies dwarfs anything the relevant aid budgets do. The transformative effects on host economies is what give these engagements their weight (for better or worse).

The UK has a very different economic model to China and the Gulf countries. The UK does not have capital surpluses to recycle (in fact it needs to draw in international capital to finance its current account deficit). The British state also has a lighter hand to play when it comes to directing where private capital flows. The City of London may be a world-leading provider of financial services, but part of its attractiveness is the state’s ‘light touch’ when it comes to influencing how that money is used. BII has a useful role to play, but it does not have the balance sheet of a Chinese policy bank or Gulf sovereign wealth fund. This sets certain limits on what a UK ‘donor-to-investor’ pivot can plausibly look like.

A more important point is that even in more state-directed models like China and the Gulf, investment flows are not allocated and programmed in the same way that an aid budget is. Economic interactions still depend on the interests of firms, banks, and non-state actors aligning with what state institutions are encouraging, and on those interests overlapping with the interests of partner on the other side. Economic partnerships are not designed on blank canvases; they follow the contours of how partners’ respective industrial strengths and resources respond to each others’ own needs.

The UK’s economic strengths look very different to these comparators. The UK is one of the world’s largest exporters of services. Key industries that draw other countries into the UK’s orbit include finance, law, accounting, consulting, media, video games, and university education[1]. These service industries depend more on the movement of people, ideas and data than on the flows of goods and bricks and mortar. This does not mean the country has no ‘partnership offer’, but it does not easily lend itself to big eye-catching investment commitments.

One visible example relates to the UK higher education sector’s increasing reliance on attracting students from emerging markets (especially since Brexit). This includes China, but also historical beneficiaries of UK’s bilateral aid including India, Nigeria, Bangladesh, Pakistan and Nepal. The higher education sector plays a critical role in the UK economy. Innovation in industries including life-sciences, AI and advanced manufacturing can often be traced to research done at UK universities. Universities also support second-city economies (like Manchester, Glasgow, Birmingham, Cardiff, Leeds, Sheffield, and Nottingham) in a country where wealth is overly concentrated in London and the South-East. Attracting international students has become central to the financial sustainability of UK universities. The fees paid by international students underwrite teaching and sustain a research base whose costs domestic fees and funding do not cover.

Trends in international student numbers in the UK

Source: The Higher Education Statistics Authority, ‘Where do Higher Education students come from?’, Chart 6 (January 2026 update)

For prospective students, the offer is the chance to study at a credible institution, but also potentially gain two years of work experience under the graduate route. There is also the possibility of building professional networks and in some cases a longer-term stay in the UK. The English language, a tradition of openness to migrants (relatively speaking) are other selling points.

The time spent studying and working in the UK can potentially provide a formative experience to future political and business leaders. Mo Ibrahim is one such example. He came to the UK for postgraduate work (a PhD at Birmingham in mobile communications) and was then recruited by British Telecom to help design the UK’s first cellular network. He later went on to set up Celtel, which built the first pan-African mobile phone network across 14 countries. (Charles Kenny offers a structurally similar example of Sridhar Vembu in his recent CGD piece on emigration as a growth strategy). The links to development through these kinds of career trajectories are clearly different from those of grant-financed projects providing basic services in low-income settings. They operate on different time horizons, reach different populations, and work through different mechanisms.

The levers for shaping development impact also look different from the ones the donor-to-investor framing implies. They are not primarily about catalysing private capital through institutional vehicles. They are relational and institutional, and they operate in the UK rather than internationally. Regulation can shape who applies, the student experience, and the integrity of the system. The Migration Advisory Committee’s 2024 review pointed to recruitment agents, standards at weaker institutions, and the treatment of dependants as the obvious places to start. Grant makers and foundations could shift from funding international advisers to mentoring individuals as they consider return, supporting work experience, and sustaining collaborations between UK and home-country institutions. The work is closer to shaping the conditions in which talent and ideas circulate than to programming where capital flows. Much of this can be done through universities, individual employers or professional bodies without waiting for a sympathetic government.

Donor to investor - or to something else?

This version of partnership is unlikely to be much discussed next week. The flow of international students to UK universities is not really within the FCDO’s mandate. Flows of money remain the dominant currency of development dialogue even as aid flows are drying up. Anything related to migration is seen as a minefield to avoid. The recent ban on students from Sudan, Afghanistan, Cameron and Myanmar are part of a wider competition over who can adopt the most hostile posture toward migrants. There is a strand of British economic thought, associated with Reform and parts of the Conservative right, that sees the country’s reliance on migrant flows as a symptom of economic weakness to be cured rather than a comparative advantage to be built on. Polling on student migration[2] suggests attitudes may be more permissive than the political conversation suggests, but the political conversation is what drives the window for policy discussions.

Set the political conversation aside for a moment and a picture of a different kind of partnership comes into view. It is not run by the British state. It is not coordinated through bilateral agreements or summit communiqués. It is the cumulative result of universities, research institutes, professional bodies, students, families, and employers making decisions that happen to align. It involves Nigerian families looking for credible degrees, British universities looking for international fee income, researchers looking for collaborators with complementary expertise.

The example of universities matters not just for what it says about the higher education sector, but for what it reveals about how the UK thinks about partnership. The development conversation has been organised around the slice of the relationship that civil servants design and ministers announce. It focuses on the flows of public money to specific countries for specific purposes. That slice is shrinking, and the parts of the relationship that are growing are ones the UK government does not get to programme.

The question then is whether to recognise the partnership that has already emerged, or to keep talking about partnership as if it were about something else that can be moulded to suit more comfortable development narratives. The answer is being given anyway, in lecture halls, research labs, graduate employers and family decisions taken thousands of miles from London. It requires recognising what is real and valued in what the UK has to offer.

[1] See for example this essay by Springford and Sissons or the work of the Resolution Foundation on the structure of the UK economy which describe the UK’s strengths in services industries. Not everybody agrees that this is a good thing. See for example UK Onward’s proposals around Reindustrialising Britain.

[2] Polling consistently shows that public attitudes to international students are markedly more positive than to migration generally. A majority do not want student numbers reduced although this might be linked to how questions are asked. See for example British Future and the recent Comment is Freed post by Sam Freedman

1. The external conjuncture

Speaking to the Mirror before flying to Washington for this year’s IMF Spring Meetings, UK Chancellor Rachel Reeves made no attempt to hide her frustration. “I feel very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve,” she said of the US-Israeli military action against Iran. This was, she emphasised, “a war that we did not start” and “did not want.” The Resolution Foundation estimated that the average British household stood to be £480 worse off over the year as a direct result of the conflict, not because of anything the UK government had done, but because of decisions made in Washington and Tel Aviv.

For African finance ministers arriving at the same Spring Meetings, the experience of having your economy knocked sideways by decisions made elsewhere is not a shock. It is a permanent fixture of the job.

As Thandika Mkandawire once observed1:

“Most analysts underestimate the enormous importance to African economies of external conjuncture… African economies generally do well when the global conjuncture is good and poorly when it is bad. This is a lesson that the Bretton Woods Institutions have gradually learnt as their own stabilisation and adjustment programmes have on several occasions been unscrambled by external factors.”

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This recognition sits awkwardly alongside the dominant language of economic policy advice directed at Africa. There remains a persistent presumption that if finance ministries could simply get the public purse in order - raise more taxes, spend within their means, improve debt management — then growth and resilience would follow. The IMF’s most recent annual report2 on Macroeconomic Developments and Prospects in Low-Income Countries, (which covers much of sub-Saharan Africa) illustrates the point:

“Building resilience and reinvigorating growth remain urgent. This agenda calls for continued fiscal consolidation in most LICs, with pace and calibration tailored to country circumstances, and supported by stronger domestic revenue mobilisation, expenditure prioritisation, and improvements in public financial and debt management.”

This is not necessarily wrong advice as far as it goes. In a crisis, governments often have no choice but to tighten their belts. But it starts from the wrong place. The question worth asking is not how to manage the pain of an external shock once it arrives, but why some economies are structurally more exposed to those shocks than others — and what determines their capacity to absorb them without resorting to painful adjustment. That is often more a question about the balance of payments than the budget.

2. When external developments dominate economic management

In a 2011 article, José Antonio Ocampo challenged the idea that “fiscal dominance” (excessive government borrowing crowding out private investment and stoking inflation) is the primary driver of macroeconomic instability in lower income countries. He argued that in lower-income contexts, short-term macroeconomic dynamics tend to be predominantly shaped by external shocks, positive or negative. He calls this “balance of payments dominance”.

Two channels matter most. The first is the boom-bust cycle of international capital flows. External finance becomes readily available during boom periods and then abruptly dries up or becomes prohibitively expensive during crises. Where demand for foreign currency outstrips supply, exchange rates come under pressure. Currency depreciation raises the domestic cost of servicing dollar-denominated debt, tightening fiscal space precisely when it is most needed. Depreciation also raises the cost of imported goods (which might include certain food-stuffs and fuel), it feeds directly into inflation, and complicates monetary policy.

Since the Covid-19 pandemic, these dynamics have been acute – and well documented. For example, Boston’s Global Development Policy Center has tracked the retreat of Chinese lending to Africa. The Finance for Development Lab has documented how access to international capital markets tightened and costs rose. Eurobond spreads for many African issuers reached levels that made new borrowing effectively impossible. Aid cuts have also denied countries precious resources often earmarked for the provision of basic services.

The second channel is trade. Many African countries are currently facing significantly larger import bills as a result of the Middle East conflict. But vulnerability to trade shocks is a perennial challenge for economies that rely on a narrow set of primary commodities to generate their export earnings. When commodity prices fall or import costs rise, the external constraint tightens regardless of how well the fiscal house is managed.

3. Reading foreign exchange constraints – the case of Tanzania

To make this concrete, consider what Tanzania’s balance of payments actually looks like over time.

Chart 1: Tanzania balance of payments in USD per capita, 1990–2024. Blue bars below the line show imports. Orange bars show export revenues. Green bars show grants and remittances. Grey bars show net financial flows including external borrowing.

Several things stand out. The first thing to note is the scale of the constraint. Around the year 2000, Tanzania’s export earnings were equivalent to approximately $40 per capita. When aid, remittances, and concessional borrowing are added in, the country had sufficient foreign exchange for imports worth roughly $60 per person. That is $60 to cover all the things that are not produced in Tanzania. It is barely enough to cover basic consumption, let alone the import-intensive investment that sustained structural change requires.

A second key observation relates to how that constraint has shifted across different periods. In the 1990s, export earnings were stagnant. They began to grow in the 2000s, partly on the back of the global commodity super-cycle. In the 2010s, export growth tailed off, but import growth was sustained through increased borrowing (the grey bars expanding to fill the gap). The early 2020s brought a sharp contraction in net financial flows, but export earnings have since begun to recover.

Different factors are at work in driving export growth. Tanzania, like other African gold exporters, has benefited from sharp rises in gold prices, driven in large part by gold’s rising appeal as a ‘safe-haven’ asset (and likely a good dose of speculative fervour in international financial markets). Tanzanian coffee exports have grown (along with Ethiopia and Uganda) partly because climate shocks in Vietnam and Brazil, the world’s two largest coffee producers, have disrupted global supply. These gains are in a sense ‘windfalls’ driven predominantly by the ‘global conjuncture’ that may not be sustained.

The growth in services exports tells a different story. Services exports, driven by tourism revenues have roughly doubled on a per capita basis over the past fifteen years. Unlike gold, this is not primarily a function of global prices: it reflects a decade of deliberate investment in infrastructure, access, and positioning.

Chart 2: Export and import composition in Tanzania in per capita USD, 1990 - 2024

Tanzania is not a lone example. Similar patterns of export growth are visible across other major sub-Saharan African economies. The panel below shows a recovery of export earnings in the 2020s across a range of non-fossil-fuel exporters. In each case, improved export earnings have helped counterbalance some of the pressure arising from tighter international monetary conditions.

Chart 3: Export earnings recovery in selected sub-Saharan African economies

The pattern matters because of what happens at the extremes. When foreign exchange constraints bite— as they did for many African economies in the early part of this decade — currencies come under pressure, the local cost of dollar-denominated debt rises, imports become more expensive, and governments face pressure to cut spending precisely when households are most stretched. The boom-bust dynamic is one reason that growth in Africa has tended to be episodic.

When export earnings rise, the same mechanisms work in reverse: the currency stabilises, debt service costs ease in local terms, and governments retain room to maintain spending without receiving a single dollar of export revenue directly.

The magnitudes involved can dwarf official finance flows that are pored over by analysts. Data from the Bank of Ghana shows that Ghana’s formal gold exports surged to over $20 billion in 2025 — almost double the previous year — driven partly by rising prices and partly by the formalisation of artisanal mining through the new Ghana Gold Board. The IMF’s entire three-year balance of payments support programme came to $3 billion. IMF support provides genuine credibility and policy anchoring that the numbers alone do not capture. But the relative scale is striking: the most powerful determinant of whether Ghana needed to impose painful austerity was not the quality of its fiscal management. It was the price of gold.

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4. Beyond the fiscal consolidation fix

None of this is a counsel of fatalism. Recognising the primacy of the external constraint does not mean that domestic policy choices are irrelevant, or that governments should simply wait for commodity prices to turn in their favour. It does mean redirecting attention toward the structural drivers of macroeconomic stability.

Fiscal consolidation manages the symptoms of external vulnerability. It does not reduce the vulnerability itself. That requires something harder and slower: growing the volume and diversifying the composition of export earnings, so that structural change becomes financeable and external shocks become absorbable.

Tanzania remains highly exposed to events in the Middle East because of its geography and the structure of its economy. But fuel imports that absorbed half of export earnings a decade ago now absorb perhaps thirty to thirty-five percent — not only because the export base diversified, but because it grew. Back in 2000, Tanzania had just $40 of export earnings per person to finance everything the economy could not produce domestically. That number has risen substantially. The constraint has not disappeared, but it has loosened a little, and that loosening is what resilience actually looks like in practice: not the ability to avoid shocks, but a reduced susceptibility to being overwhelmed by them.

The external conjuncture will keep changing. Commodity prices will rise and fall. Conflicts will break out in places that move energy markets in ways no finance minister can anticipate.

What governments (and the organisations that advise them) can do is keep a clear view of where the structural vulnerabilities lie, and invest patiently in reducing them.