US foreign aid freeze: What it means for Bangladesh's development sector

The recent decision by the United States to freeze parts of its foreign aid budget, including funds disbursed through the United States Agency for International Development (USAID), has raised concerns for Bangladesh. 

Though the freeze does not include assistance related to the Rohingya crisis, it may still have far-reaching consequences for the country's development programs, especially in health, education, agriculture, and climate resilience.

Bangladesh has been one of the major recipients of US development assistance on a continuing basis. In FY2022, the US government allocated roughly $217 million for various sectors in Bangladesh. Over time, USAID has played a substantial role in driving progress in maternal and child health, agricultural productivity, disaster preparedness, and women's empowerment.

USAID programs have brought clean water, sanitation, and basic education to millions of Bangladeshis. The agency has also provided critical support to help the country fight infectious diseases and strengthen health systems, which are crucial for reducing child mortality and improving maternal health outcomes.

However, many of these life-saving programs are now at risk with the freeze in US aid.

One of the strongest pillars of Bangladesh's development has been the health initiatives led by USAID, including vaccination drives, maternal and child health programs, and efforts to combat tuberculosis and dengue. A freeze in funding might delay or derail these programs, leaving millions of people exposed to disease.

For example, vaccination rates may decline, exposing children to preventable diseases. Similarly, maternal health programs may regress; for instance, pregnancy-related deaths, which had been decreasing, could rise again, especially in rural areas where healthcare infrastructure is weak.

The agricultural sector in Bangladesh has also benefited from US assistance, as almost half of the population is employed in this sector. USAID programs have introduced contemporary farming techniques, improved irrigation systems, and provided farmers with access to superior seeds and fertilisers.

These initiatives have not only enhanced food security but also improved rural incomes. In the event of funding cuts, many of these programs may be downsized or scrapped, affecting millions of farmers and threatening the country's food supply.

As one of the countries most vulnerable to climate change, Bangladesh has relied on international support to build climate resilience. USAID-funded programs have helped communities adapt to rising sea levels, floods, and cyclones, as well as improve urban planning and disaster preparedness.

However, these efforts are now at risk due to the aid freeze, leaving communities highly vulnerable to the devastating impacts of climate change. For instance, investments in embankments, early warning systems, and sustainable housing could be delayed, increasing risks for millions living in coastal and flood-prone areas.

From health workers to project managers, from community mobilizers to support staff, thousands of professionals in Bangladesh's development sector depend on USAID-funded projects for their livelihoods.

If the freeze persists, NGOs and other organisations reliant on US grants may be forced to downsize or shut down operations, leading to massive job losses — not just for those directly involved in project implementation but also for ancillary workers such as drivers and administrative staff.

This could have ripple effects on the economy, particularly in urban areas, where job losses in the development sector would be especially damaging.

A key exception to the US aid freeze has been funding for the Rohingya crisis. Since 2017, the United States has been a leading contributor to humanitarian appeals supporting nearly a million Rohingya refugees living in Cox's Bazar district. As a result, essential services such as food, healthcare, and shelter for refugees have continued.

However, the exemption of the Rohingya crisis from the freeze does little to address the broader challenges faced by host communities in Bangladesh, many of whom have also benefited from USAID-funded development programs.

Bangladesh has shown resilience in the face of challenges, whether natural disasters or economic shocks. However, the US aid freeze is different, as it disrupts systems designed to support the country's most vulnerable populations.

If left unresolved, the freeze could delay progress on critical development indicators, exacerbate inequalities, and increase vulnerability. This would be a significant setback for a country that has made remarkable strides in poverty reduction and human development.

The US has been Bangladesh's long-standing development partner. At a time when global uncertainties are rising, it is crucial to reaffirm mutual commitments to shared objectives. For Bangladesh, sustained US support is not just financial aid — it is a lifeline for millions who aspire to a better future.

Sadika Tabassum is a development practitioner. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard