US cuts $51m SME funding, threatening African startups and farmers

…Over 1,000 businesses affected in 22 African countries

The United States Africa Development Foundation (USADF) has withdrawn $51 million in funding aimed at supporting small and medium-sized enterprises (SMEs), startups, and cooperatives across Africa. The decision affects more than 1,000 businesses in 22 countries, with Nigeria and Kenya among the hardest hit.

The funding cut is led by the Department of Government Efficiency (DOGE) under the Trump administration. It marks a significant reduction in direct financial support to early-stage ventures, particularly those based in rural communities and managed by women.

Nigeria and Kenya most impacted

Nigeria and Kenya, the two largest recipients of USADF support, had previously received $20.4 million and $16.9 million respectively. These funds have been used to support women-led businesses, cooperatives, and agriculture-based startups, especially in remote areas.

With the funding now removed, over 397 businesses in both countries face uncertain futures. Many of these enterprises rely solely on USADF support for risk capital and operational funding.

Projects affected by the cut

Several ongoing projects have already been impacted. These include:

A $48,000 WhatsApp chatbot designed to help Kenyan SMEs manage customer engagement and transactions.
An $84,000 wellness incubator programme in Nigeria, supporting young health-focused entrepreneurs.
Nearly $230,000 earmarked for a shea butter processing and export initiative in Burkina Faso.

The withdrawal of funding could lead to disruptions in supply chains, job losses, and the stalling of business growth across affected regions.

Efficiency or exclusion?

DOGE has defended the move, describing it as part of a wider “efficiency drive” that has reportedly saved US taxpayers $140 billion. However, critics argue that the efficiency measures have come at a cost to early-stage innovation and inclusive economic growth across Africa.

The direct-to-business grant model adopted by USADF has long been regarded as a critical source of non-debt capital for entrepreneurs who may not qualify for traditional bank loans or investor backing. Many now fear that the funding cut could lead to the collapse of small enterprises that form the backbone of rural economies.

Call for homegrown alternatives

The development has reignited discussions around the need for sustainable, locally driven funding models. Experts and business leaders are urging African governments, investors, and the private sector to design and implement financing structures that can support startups and cooperatives beyond donor cycles.

Stakeholders also emphasise the importance of building long-term resilience in the SME sector by reducing dependence on foreign aid and improving access to local credit, venture capital, and government-backed innovation funds.

As affected entrepreneurs wait for clarity on the future of their businesses, the funding cut raises questions about the role of international partners in Africa’s economic development and the potential for more self-sufficient ecosystems.