Funding worth over $51 million, once a backbone for African startups and small businesses across the sub-Saharan region, has just been pulled.
The U.S. Africa Development Foundation (USADF), a major backer of rural entrepreneurs and women-led ventures, has had its budget slashed—abruptly and without warning. The fallout is that thousands of small ideas now face a slow death.
At the centre of this cut is the Department of Government Efficiency (DOGE), the controversial agency born during Donald Trump’s presidency and now headed by Elon Musk. Its mission? “Optimise the federal government.” Translation: shut down anything that looks like a leak in America’s wallet. That includes development aid.
This time, the axe has landed squarely on African soil. Nigeria and Kenya, the two largest recipients of USADF cash—together bagging over $37 million in the past decade—are now reeling.
A WhatsApp-based marketing tool for small shops in Kenya has lost its $48,406 grant. A wellness incubator in Nigeria is down $84,059. In Benin, a $240,000 pineapple juice project has stalled. Burkina Faso’s shea butter programme? $230,000 gone. Côte d’Ivoire’s mango-drying facilities? A gaping $246,000 hole.
This is about jobs, livelihoods, and the quiet momentum of young businesses built in harsh climates with no access to traditional credit. In Nigeria, over 200 SMEs were funded under this programme. In Kenya, the figure is close to 190. These weren’t vanity projects. They were grassroots efforts in tough, rural areas where commercial banks don’t bother and venture capitalists rarely tread.
“I’m struggling to keep my team together,” says a startup founder from Lagos whose seed-stage wellness hub depended on the USADF grant. “That money gave us breathing room. Now, we’re gasping.”
What makes USADF’s model unique is that it doesn’t funnel money through governments. The funds go straight to the founders—clean, non-dilutive, and fast. For smallholder farmers, cooperatives, and early-stage innovators, that kind of support is gold. And now it’s gone.
The official word from DOGE? The agency says it has “already saved American taxpayers over $140 billion” by killing off inefficient programmes—including USAID’s support for health and innovation in developing countries. What DOGE sees as waste, many on the ground see as the only reason they had a shot in the first place.
But this move exposes a truth we’ve avoided for too long: the African startup ecosystem leans far too heavily on foreign aid. And when Washington sneezes, Nairobi and Abuja catch a cold.
Between 2019 and 2021, venture capital in Africa soared from $1.3 billion to $4 billion. But by 2024, it had slipped back to $2.2 billion. The funding climate is getting colder. And African startups must dress accordingly.
There are rays of light, though. Yango Ventures, for instance, has launched a $20 million fund for African startups, with a focus on fintech and B2B SaaS. It’s local, intentional, and designed to build long-term capacity. But it’s a drop in the ocean.
The truth? We’ve been here before. Aid comes and aid goes. But what African innovators need is staying power—and that only comes from building funding structures that don’t rely on whoever sits in the White House. Angel investors, private sector partners, revenue-sharing, even crowdfunding—these are not buzzwords anymore; they’re lifelines.
Yes, the funding cut is a blow. A deep one. But perhaps it’s the push African entrepreneurs and policymakers need to stop depending on promises made in faraway capitals. In the end, we either build an ecosystem that can survive without handouts—or we keep playing a game where the rules can change overnight.
And today, they just did.
