A post-foreign aid world needs to be built on transformational tax and trade policies

As traditional donors like the US and UK cut back, the answer for Africa and the Global South is not in charity, but in a fundamental restructuring of how the world economy is organised, writes Fadhel Kaboub

The world’s governments will fly to New York this week for the 80th anniversary session of the United Nations against the backdrop of a world in chaos. For diplomats and humanitarians, one of the big questions on the agenda if whether the UN is on course to "reset" itself when it comes to humanitarian aid. Because even without geopolitical shifts we’ve witnessed in the last few months the sad truth is the current forms of international cooperation aren’t working.

Assembled delegates might like to reflect on the fact that for every dollar that flows into Africa in aid, four dollars flow out in debt repayments. That’s not development cooperation — it’s systemic neocolonial extraction. And in this era of political volatility and donor retreat, we must confront a hard truth: aid has long distracted from — and often sustained — the global economic architecture that keeps the Global South dependent and disempowered.

Aid was never designed to correct the legacy of colonialism or create the conditions for self-sustaining transformative development. It was crafted within a system that sees development through a Northern lens, offering temporary relief while maintaining structural control and undisrupted colonial hierarchies. Debt payments, unfair trade rules, illicit financial flows, and a predatory global tax system continue to drain the South of the fiscal policy space it needs to thrive — far outweighing any aid received.

Now, as traditional donors cut back on aid budgets — under pressure from domestic austerity and shifting geopolitical interests — many are asking what the future of development cooperation looks like. But this is the wrong question. The real question is: what should the post-aid world look like?

Let’s start with debt. Many African countries spend more on debt service than on health, education, or climate resilience combined. Much of this debt was taken under duress, shaped by externally imposed models of development and subject to volatile global financial conditions. Yet we lack a just mechanism for resolving sovereign debt crises. Creditors — whether private bondholders or institutions like the International Monetary Fund (IMF)— continue to dictate terms, often demanding austerity and the prioritisation of repayment over public welfare.

The same structural injustice permeates global trade. Africa exports raw materials and imports manufactured goods. This position in the global value chain was established under colonial rule and persists today through World Trade Organisation rules that make it harder for African countries to industrialise, add value and protect nascent industries.. Aid does not address this imbalance; it merely acts as a sticking plaster for it.

Then there is taxation. Each year, the Global South loses billions to profit shifting and the legal looting enabled by offshore financial secrecy. These are not policy accidents — they are features of a system designed to ensure capital accumulation in the North. Aid cannot compensate for this theft.

Aid is the tranquilising drug that hides the brutal nature of colonial and neocolonial abuse. We must replace the logic of aid with the logic of transformation and justice. That means building an international economic system that supports the structural transformation of Global South economies.

There are four essential pillars:

First, trade justice. Countries must have the right to pursue sovereign industrial policy — to add value, process resources, and build regional production networks. Global trade rules must enable, not prevent, that transformation. More specifically, trade rules governing intellectual property rights and the transfer of life saving technologies must be adjusted accordingly.

Second, debt justice. We need an independent, fair, and transparent sovereign debt resolution mechanism. Odious and illegitimate debts must be canceled, not rescheduled. Debt sustainability must be judged based on the overall resilience of the economy and in terms of human rights and climate resilience — not creditor profitability.

Third, tax justice. The international community must support automatic information exchange, unitary taxation of multinational corporations, and the dismantling of tax havens. Global South countries must be empowered to tax multinationals operating in their jurisdiction, free from global tax sabotage.

Fourth, public finance sovereignty. The idea that the Global South must wait for donors to release funds is both outdated and dangerous. Countries need the fiscal and monetary policy space to invest in universal public services, sustainable infrastructure, and climate adaptation. That requires an end to the austerity orthodoxy imposed by the Bretton Woods institutions, enhancing domestic currency public spending coupled with anti-inflation and antitrust policies to keep inflation under control, and new instruments of international financing — like rechanneling Special Drawing Rights and expanding the lending capacity of multilateral banks under democratic governance.

This is not an abstract agenda. It is already being pursued in various forms by Global South coalitions, scholars, and policymakers. In that spirit, I have proposed what I call the "Geopolitical Bargain of the Century" as a strategic repositioning of the Global South at the center of a truly multipolar world so as to reclaim sovereignty and negotiate from a position of collective strength — not as aid recipients, but as co-designers of a new international economic order of peace, justice, and sustainable prosperity.

Africa and the Global South are not asking for generosity. Through strategic incrementalism, the global majority is gradually building up its economic and geopolitical leverage. They are demanding fairness, dignity, and the structural means to thrive on their own terms.

Aid cannot deliver that. But transformative economic justice can. And it can be a win-win solution for all major economic blocs in terms of economic, social, ecological, and geopolitical outcomes.

Cover photo:  People wait outside a food distribution site in Maban, South Sudan (Guy Peterson/AFP via Getty Images)