According to new data from research firm One Data, the decline in traditional donor support over the past decade has reignited concerns over whether countries can sustain development programmes without stable, large-scale funding.

Bilateral lenders, wealthy countries providing government-to-government grants and loans, have reduced net financing by six per cent between 2010 and 2024.

The firm notes that the contraction reflects tighter domestic budgets and shifting priorities in donor countries, leaving many low- and lower-middle-income states struggling to maintain funding for essential projects.

Philanthropic donors, which include private foundations and charitable trusts funding health, education and innovation projects, have also pulled back.

Between 2023 and 2024, philanthropic flows fell by 25 per cent in real terms to $2.7 billion (Sh348 billion).

While philanthropy is valued for its flexibility and ability to pilot innovative solutions, the data shows its overall contribution is marginal compared with the scale of development needs.

Private finance, which includes commercial banks, institutional investors, and corporations providing loans or investments on market terms, has experienced the steepest decline.

Net private flows to developing countries dropped by 94 per cent between 2010 and 2024, on the back of rising global interest rates, currency volatility, and heightened risk aversion among investors.

Consequently, additional support has since come from so-called new donors, or non-DAC providers, including Saudi Arabia, the United Arab Emirates, Qatar, Turkey, and Kuwait.

These state-backed lenders provide concessional loans, grants and project financing, but are not members of the OECD Development Assistance Committee (DAC).

Total net financing from them reached $30.2 billion (Sh3.9 trillion) over the last five years, up from $17.1 billion (Sh2.2 trillion) in 2010–2014, but still falls short of offsetting declines from traditional donors.

Against this backdrop, multilateral institutions have emerged as the most stable source of development finance.

Multilateral lenders, including the World Bank and other multilateral development banks (MDBs), have increased financing by 124 per cent in the past decade to 2024, and now account for 56 per cent of net flows, up from 28 per cent then.

Notably, these institutions offer grants, low-cost loans, and technical support, while reducing the fragmentation countries face when dealing with multiple bilateral donors with differing priorities.

Developing-country leaders appear to favour multilateral finance.

A 2024 survey cited by One Data found that multilateral providers accounted for seven of the top ten donors deemed most influential and helpful.