The administration of President Donald J. Trump has begun the process of dismantling the United States Agency for International Development (USAID) and shutting down its operations in locations around the world.
USAID has played a significant role in Pakistan’s development landscape for decades, providing nearly $30 billion into various sectors from health and education to agriculture and infrastructure.
In 2023, the Government of Pakistan and USAID formalized a partnership through the signing of the Development Objectives Assistance Agreement (DOAG). Under this agreement, a financial commitment of $445.6 million was allocated to be disbursed over a period of five years. This initiative aims to support Pakistan’s socio-economic development by funding key sectors, fostering institutional capacity-building, and promoting sustainable growth through targeted assistance programs.
Given this context, a complete cessation of USAID operations in Pakistan could have disastrous consequences. Women, children, and marginalized communities in Pakistan are disproportionately dependent on various USAID-funded programs for essential healthcare, education, and economic support.
Veteran economist Shahid Hasan Siddiqui interprets the current crisis as a strategic opportunity for Pakistan to restructure its resource allocation and emphasize the pursuit of self-sufficiency.
The United Nations estimates that approximately 1.7 million individuals, including 1.2 million Afghan refugees, will experience direct repercussions from funding cuts. The discontinuation of these programs could exacerbate social and economic inequalities, limiting access to critical services. Reports indicate that hundreds of thousands of women may face severe restrictions in maternal healthcare and other essential services, worsening health outcomes and deepening vulnerabilities in already disadvantaged populations
A USAID shutdown would impact multiple sectors including: Health programs addressing maternal and child health, disease control (eg, tuberculosis, HIV/AIDS), and family planning. Education initiatives aimed at improving literacy, enhancing school infrastructure, and expanding scholarship opportunities. Agricultural projects focused on increasing crop yields, promoting sustainable farming, and optimizing water management. In addition, a shutdown would impact five energy projects and, four economic growth initiatives.
The closure of USAID-funded projects would also result in significant job losses, particularly among local NGOs and implementing partners. In Sindh’s Shikarpur district, over 100 workers have already lost their jobs following the abrupt termination of a U.S.-funded tuberculosis control program, which was launched in November 2023 to combat tuberculosis across 15 underdeveloped districts by 2029.
The elimination of USAID would create substantial unmet needs and present significant challenges. However, it could also provide a chance for Pakistan to chart a more sustainable and self-reliant development path.
Veteran economist Shahid Hasan Siddiqui interprets the current crisis as a strategic opportunity for Pakistan to restructure its resource allocation and emphasize the pursuit of self-sufficiency.
He states that “While it will cause immediate hardships, this crisis may incentivize us to discipline our economy, reshape priorities…”
In my opinion, undertaking such a reshaping of priorities would require a multi-faceted approach. Some of the key elements of that approach should be: philanthropic and developmental support; private sector and community involvement; and targeted governmental programming.
The philanthropic and developmental support should be driven by a diversified strategy. Engaging with bilateral and multilateral development partners, including international financial institutions, philanthropic organizations, and regional donors from Asia, the Middle East, and Europe, would be essential for that strategy to be successful. Strengthening diplomatic and economic ties with emerging global economies and leveraging cooperation could provide alternative funding streams and ensure the continuity of key development initiatives.
Domestic resource mobilization would be crucial for long-term sustainability of Pakistan’s socio-economic development. This should involve improving tax collection efficiency, promoting private philanthropy, and creating an enabling environment for local NGOs and community-based organizations to contribute to the efforts.
A critical dimension of the domestic component should be promoting business participation by doing things such as streamlining regulations, and offering incentives for private sector investment in development projects.
The pivotal element for private sector involvement should be utilizing the expertise and financial resources of the private sector through public-private partnerships (PPPs) to advance development initiatives. Such collaborations can enhance service delivery by fostering innovation, efficiency, and sustainability in the developmental projects. Various reports and studies indicate that numerous private enterprises have actively partnered with local development agencies to address key social challenges in areas such as health, education, and infrastructure.
Moving from the private sector, actions that could be taken in the governmental sphere include: Enhancing governance and ensuring transparency in public procurement and financial management in order to foster trust and attract both domestic and international investment. Implementing robust accountability mechanisms to improve the efficiency of development initiatives. Strengthening institutional capacity through targeted investments in service delivery, regulatory frameworks, and oversight mechanisms.
As the preceding discussion suggests, by diversifying funding sources, engaging the private sector, and strengthening governance, Pakistan can ensure that the needs of the most vulnerable in the country continue to be addressed.
In conclusion, in the past few days it has become apparent that the Trump administration does not intend to walk back its plans to dramatically shrink USAID and shut down most of its operations worldwide. This makes it imperative for Pakistan to shoulder the developmental assistance burden the US will be abandoning.
As a US citizen with a deep interest and some knowledge of this situation, I believe that Pakistan leaders, policy makers and stakeholders have the resilience and resolve to step forward and assume this important responsibility and to do what is required to build a fairer and better Pakistan for all its people.
The writer is an Entrepreneur, Civic leader, and Thought Leader based in Washington DC.