Ethiopian Activists Warn USAID Funding Halt Exposes Corruption, Threatens Refugees

After US foreign assistance was halted abruptly amid the efforts of US President Donald Trump's administration to overhaul the United States Agency for International Development (USAID), activists from Ethiopia, one of the top recipient countries of USAID funding, explained to Sputnik how the suspension exposed corruption in the aid distribution system and endangered millions of vulnerable refugees.

Survival of Millions of Refugees

Trump defended the move to halt the USAID activities as a crackdown on "wasteful spending," while Musk called USAID "beyond repair."

However, for grassroots activists working with USAID to deliver humanitarian aid in countries like Ethiopia, one of the agency's top recipients that received $1.2 billion in 2024, the sudden suspension of US funding created significant challenges, particularly for vulnerable refugees.

"We’re a humanitarian organization. We provide assistance to over one million people who are living under the support of USAID. Right now, it has completely collapsed," Gebrehiwet Gebru Kahsay, an activist from the Relief Society of Tigray (REST), a non-governmental organization (NGO) focused on assisting refugees displaced by the military conflict in the Tigray region in northern Ethiopia, told Sputnik.

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Kahsay said that the displaced refugees in the Tigray region have been living in shelters funded by USAID and rely on this aid for basic daily supplies such as food and water.

"More than one million people could die very soon. They don’t have any other choice. They asked us today, ’How can we live? How can we continue life without the support from Washington or USAID?’ We don’t know how to answer them," he said.

Kahsay’s organization met with a group of US specialists from USAID’s team in Ethiopia as recently as mid-January to discuss the implementation of emergency food distribution projects.

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Issues in Funding Distribution

At the same time, Mesud Gebeyehu Reta, an Ethiopian human rights advocate with over 10 years of experience working on USAID-funded projects, has witnessed firsthand the structural issues in how the funding was utilized.

"For instance, we have a big program on the protection of human rights. We’re the implementing partners of the program here. We have about 10 organizations that are receiving funding from this program. It’s a $20 million program over the period of five years funded by the USAID. But we only received less than $100,000 per year from this program. If you do the calculation, all of the 10 local organizations only had access to about $5 million out of the $20 million for this program," Reta, executive director of the Consortium of Ethiopian Human Rights Organizations (CEHRO) in Ethiopia, told Sputnik.

The activist went on to explain why local partners like himself had no bargaining power in the face of USAID.

"That’s why I asked them, 'Is this a joke? Where's the $20 million you announced for the protection of human rights?’ They don’t explain to you. They only tell you that you can only access this much funding from the big portion they promised. The thing is, you have to comply or leave it. We can’t be equal partners with them, because they make us dependent on their funding," he said.

Reta pointed out that one of the biggest problems with the distribution of USAID funding was the fact that all the projects required the participation of US companies or US-based NGOs.

"What they do is they bring American companies or US-based NGOs to manage the funds on behalf of USAID in Ethiopia. They’re like intermediaries. Even if they give the projects to a big Ethiopian organization, the chief of a project has to be an American citizen. The tricky thing is, if they commit, for instance, $20 million, maybe only $5-7 million could reach local partners in Ethiopia. That’s because they pay a big salary to the US citizens who live in fancy hotels. They have a lot of allowances, and they have big cars. That’s why all the money goes back," he said.

Even though the suspension of USAID funding could disrupt many projects in Ethiopia, Reta still supported the Trump administration's efforts, hoping that efficiency reforms would ensure the funding reached local partners.

"That’s why I say the freezing of USAID funding is exposing how the system has been corrupt and how the system has been out of control. And most importantly, how the system has been manipulated by the elites, who can simply sit in the office and collect a large portion of the $20 million funding, while local partners only get $5 million or less. That’s why I hope Trump understands that USAID projects have to show the value for the money. That’s why I like the Department of Government Efficiency led by Elon Musk, because he said the old system didn’t meet the value for the money," the activist said.

Perpetuating Dependency

In addition to the problems with the distribution of USAID funding, Reta pointed out that strict reporting requirements for local partners hindered the efficiency of their work.

"For instance, I had a one-year project valued at about $50,000. But I had to request the funds every month. Imagine, I have to do 12 fund requests and provide 12 funding reports for one year. You can imagine how much time, resources and energy I had to spend on this," he said.

From Reta’s perspective, the steady flow of USAID funding enabled the Ethiopian government to depend heavily on foreign aid, reducing incentives to develop domestic capacities for providing basic social welfare services.

"It makes African governments reliant on USAID for basic services like health care or education. The government budgets are very small compared to the injections coming from USAID. If you see our education system or our health care system, they have already failed. Most of the core service programs are supported by USAID. That’s why we don’t have a homegrown system or even homegrown knowledge on how to build those systems," he said.

Reta expressed hope that rather than perpetuating this cycle, the Trump administration's reforms would create a more efficient US aid system that encourages African governments to strengthen their capacity to provide basic services to their citizens.