International aid cuts – most dramatically the stop-work orders implemented by the United States – are not only hitting relief programmes worldwide, but they’re also taking their toll on the local economies that support those humanitarian efforts.
The city of Maiduguri, in Nigeria’s northeast, is a case in point. For a decade, it has been the centre of aid operations aimed at the victims of a rural insurgency by the jihadist group Boko Haram, which has forced 1.9 million people from their homes and tipped millions more into destitution.
A booming service industry – from car hire companies, to security guards, to importers – caters to the needs of the more than 280 registered NGOs and UN relief agencies based in Maiduguri. The state government’s insistence on local employment for humanitarian jobs has also created a class of well-paid graduates tied to the non-profit sector – a limited antidote to a nationwide unemployment epidemic.
Maiduguri, the former urban base of Boko Haram, has been revived. The new hotels, the streets choked with traffic, the housing construction: All attest to both the improved security and an economy that has benefitted from the influx of aid workers and relief programmes.
“The growth in the last eight to nine years, the hustle and bustle of the markets, the amount of goods coming in, is very much linked to the humanitarian response,” said a senior aid worker, who asked for anonymity so they could speak freely. “Without that, you would expect the same level of stagnation you see in other northern cities [where economic growth is far lower than the rest of the country].”
The scale of spending has been significant. The UN launched an appeal in January for $910 million to support 3.6 million people most in need in the northeast, out of an overall vulnerable population of 7.8 million.
Between 2021 and 2024, annual humanitarian appeals have totalled more than $3.4 billion – although actual financing has fallen well short of that donor ask.
The impact of USAID’s withdrawal
The United States Agency for International Development (USAID) has been a key funder, not just financing major agencies like the World Health Organization and the World Food Programme, but for many local projects – especially in health and nutrition.
USAID’s stop-work orders, issued at the beginning of the year, have not only shuttered those projects, impacting the most needy, but they have also affected the lives of local aid workers that have been laid off.
Daniel Hassan, 32, had been a project officer at Supertouch Kindness Foundation (SKF) – a local NGO funded by USAID that serves people with disabilities. His abrupt termination in February was a crushing blow to both his career prospects and his family’s budget.
Although graduating with a bachelor's degree in 2017, he had struggled for years to find full-time work. Landing the position at SKF was “life-changing”, he told The New Humanitarian. “The finances, the status, even the kind of meals the family ate changed.”
Hassan earned 380,000 naira (roughly $238) a month – five times the national minimum wage. “A lot of bills were settled, a lot of debts were paid,” he said. But now, especially as he had been the family’s sole breadwinner, the loss of income “has caused a lot of emotional vulnerability”.
Knock-on effects
The effect of the aid squeeze has rippled through Maiduguri’s economy. The retail outlets that sprung up to meet the new consumer demand from well-heeled aid workers have been hit particularly badly.
Today's Super Stores is a good example. Rising from a small street kiosk in the 2010s to become a major supermarket chain and shopping hub for expatriates, it is now in financial trouble.
“Whatever we become, you cannot take away the enormous contributions of the NGOs,” said Mohammed Suraj, the store's general manager. “They are part of the success of this business.”
Despite the country’s economic obstacles, and prolonged power outages, Today's Super Stores turned in annual profits of $744,000 to $864,000 from 2019 to 2022, said Suraj. But profits took a knock in 2024 as humanitarian funding began to decline – the result of competition from other global emergencies. The situation has turned critical since February this year, when the USAID cuts came into force.
“Before, I would receive about 15 emails and nearly 50 calls daily [from caterers and other businesses affiliated with NGOs], but we barely receive any now,” Suraj explained.
The downturn has also been reflected in the property market.
Demand boomed with the influx of NGOs, which triggered a surge in rental prices. Property owners prioritised renting to new arrivals who could pay in foreign currency, which had the effect of pushing affordable housing beyond the reach of many locals.
For close to a decade, Mohammad Musa had leased his land to an international NGO, which then built offices. But the contract ended in February and “the financial impact is already being felt,” said Musa. Not only has he lost the INGO’s income, but the lack of local demand means he has been unable to find anyone to rent the offices to.
State revenue takes a hit
Borno collected a record $18 million in revenue last year, surpassing its target by 46%. But those gains are now at risk, which will impact the level of services the state will be able to provide its citizens.
“We, as the agency saddled with the responsibility to generate revenue, know that we have been negatively impacted by the exodus of NGOs and INGOs,” Ardo Buba, the board secretary of the Borno Internal Revenue Service (Bo-IRS), told The New Humanitarian.
The retrenchment of workers will mean a significant drop in Pay As You Earn (PAYE) tax deductions, said Buba. Bo-IRS also collects a 10% tax on rented office spaces and residential accommodation, and takes a 5% to 10% slice of NGO procurement costs and consultancy fees – which has represented a reliable source of revenue for the state government.
Despite those revenues, the state government has had a schizophrenic relationship with NGOs. Governor Babagana Zulum has been a harsh critic of the humanitarian sector, arguing that it has bred aid dependency and fattened the budgets of “unaccountable” relief groups.
“With the shrinkage of the aid sector, I think Zulum will finally get what he’s been praying for,” said the senior aid worker. “There will be no one left to clamp down on: But, unfortunately, the people that will be impacted the most will be the beneficiaries of assistance.”
Post-aid plans
Before the emergence of Boko Haram, Borno was a regional economic hub, its commercial and livestock markets attracting traders from neighbouring Chad, Niger, and Cameroon. A multi-billion dollar fish industry transported smoked fish caught in Lake Chad throughout southern Nigeria.
To offset the aid sector impact on jobs and revenue, Abdulaziz Mala, a researcher specialising in the Lake Chad region, believes the state government should prioritise reviving its agricultural potential and local trade networks. It’s a strategy backed by Lake Chad Basin countries, and endorsed by the African Union and the UN Development Programme.
“Now that there aren’t any restrictions on [major] roads, a lot of markets [in the countryside] are currently operating,” Mala noted. “So if the government can ensure peace in these areas, it can be a source of stability for the state’s economy.”
However, that is currently an extremely tall order. Boko Haram – or more accurately its more powerful offshoot, the so-called Islamic State of West Africa – is staging a comeback. There have been repeated attacks on military posts, and an increased tempo in the killing of people sent from Maiduguri’s displacement camps to their ancestral homes in the countryside.
Last month, Zulum warned that renewed attacks and kidnappings were occurring “almost on a daily basis” and the authorities were “losing ground”. The military commander for the northeast was replaced this week by Abuja, worried over the worsening security climate.
There is growing concern that continued gains by ISWAP and Boko Haram could see the northeast slip into the insecurity of a decade ago, with mass rural displacement and worsening food insecurity. This time, though, with the aid sector undermined and the state more impoverished, the humanitarian response will be even less effective.
With additional reporting in Maiduguri by Ijasini Ijani. Edited by Obi Anyadike.
