he recent closure of the United States Agency for International Development and the programmes in Pakistan funded by it marks more than the end of a donor partnership. This is a moment of reckoning for the country’s development construct. Combined with the subsequent global aid and development funding reduction, this can lead to a new era of development financing; new approaches; and new practices.

It is high time to prioritise locally-led development that is inclusive, sustainable, owned by all stakeholders and provides contextual solutions at all levels.

Over $845 million in USAID funding has been put on hold in Pakistan. This has resulted in the termination of 39 active projects and more than 70 contracts, directly affecting more than 60 organisations. The ripple effect is more extensive. The affected programmes ranged from public health initiatives and climate-smart agriculture to improvements in energy, water and sanitation, education, skills building, women and youth empowerment, governance, economic growth, private sector competitiveness, trade and investment and human rights sectors.

An estimated two million lives are expected to be affected. Only one USAID-funded award, the Integrated Health System Strengthening and Service Delivery, is still active.

Beyond these numbers lie critical questions. Why has development in the country always been dependent on external support and vulnerable to decisions made elsewhere? What will it take to replace it with locally-led and contextualised sustainable development solutions?

For 64 years, the USAID has been one of Pakistan’s largest bilateral donors, providing nearly $8 billion in development assistance. Its footprint stretches across health systems, education reform and scholarships, women’s empowerment, youth engagement, skills building, governance support, institutional capacity building, agricultural, energy, water, economic resilience and disaster management. The abrupt closure has shown how central the donors remain to service delivery in the country.

The programmes to combat TB, maternal mortality, reproductive health and malnutrition have been affected. Education programmes, especially for girls, have lost scholarships and training support.

Agricultural adaptation projects, like $24 million Climate Smart Agriculture initiative, have come to a standstill, leaving many farmers without tools to manage the climate shocks. Civil society organisations, already struggling with shrinking space, are losing their operational lifelines.

However, changes in global aid should not be surprising. Given donors’ fatigue, domestic political shifts, emerging economic and global trade tensions, shifting geostrategic interests and change in US foreign policy, development assistance could not remain a constant.

Most development institutions, run both by state and civil society, have, by and large, remained locked in a model built on external support. There has been little or no focus on how to localise financing, diversify partnerships and build sustainable delivery systems with effective strategies, adequate preparedness and efficient resource allocation to ensure transparency.

To navigate this development challenge, there is a need to respond with policies, programmes and practices incorporating locally-led, inclusive development solutions.

The government, higher education institutions and industries should build an ecosystem to fund, mentor and incubate change makers. Their priorities should include bridging the digital divide. 

Both federal and provincial governments need to reprioritise development funding, and optimise public spending. Resource allocations must keep critical public services, particularly health and education, operational.

National development funding supported by domestic contributions and strategically built partnerships can support the transition from donor-dependent projects to nationally funded programmes. Diversifying development partners and the funding base is inevitable.

There is a need to strategically engage with and build resilient partnerships with national philanthropy entities, industry, businesses, public institutions, researchers and academia, political leaders, along with regional and global allies. It is critical to strengthen policy and research institutions to drive development agendas.

Building and enhancing a broad coalition of partners, such as multilateral institutions, can offer both funding and technical expertise. South-South cooperation and development alliances with Turkey, Malaysia, China, Saudi Arabia, and other regional states offer culturally aligned and politically feasible alternatives. Diaspora and philanthropic capital can help mission-driven investments.

Ensuring transparency, accountability and law and order are key to such alliances for rebuilding trust in national institutions. Investing in transparent systems - including procurement, auditing and data reporting - is essential. Among other approaches, results-based financing can be a useful tool.

Empowering local NGOs and communities through capacity-building and grant management can have effective outcomes. Continuity of services, regardless of political cycles or donor shifts, must be ensured. Fostering inclusive decision-making and building resilient partnerships with wide-ranging stakeholders will be key to some immediate development solutions and sustainable progress.

Investing in youth skills training and tapping into this massive potential can help drive social change. The entrepreneurship ecosystem and youth-led social innovation should be strengthened. Social entrepreneurs, impact investors and youth-led start-ups can play a pivotal role in solving problems with locally contextualised solutions.

The governments, higher education institutions, industry and private sector should build an ecosystem to fund, mentor and incubate change makers. To achieve this, their priorities should include bridging the digital divide, improving digital skills and infrastructure and digitising systems. This will help accelerate socio-economic progress. The development sector in Pakistan must become innovation-driven and have the right partnerships.

The USAID exit can lead to an embrace of self-reliance; taking charge of national development with locally-led solutions, strategic investments and efficient financing; and sustainable collaborative programmes. It has highlighted the need for enhanced local ownership and strengthened policy influence.

We need a re-imagined development paradigm that is locally owned, has diverse funding and is sustainable beyond any shifts. In the new era of responsibility and development, we owe it not to donors, but to our people.

The writer holds a master’s degree in public policy from the Crawford School of Public Policy, the Australian National University. She is an Australia Award scholar and has recently worked in higher education and development sectors in Pakistan. This article is based on her work and reflects her perspective