Humanitarian needs are rising around the world. At the same time, major donors such as the US and the UK are pulling back support, placing increasing strain on already overstretched aid systems.
Global humanitarian needs have quadrupled since 2015, driven by new conflicts in Sudan, Ukraine and Gaza. Added to these are protracted crises in Yemen, Somalia, South Sudan, and DR Congo, among others. Yet donor funding has failed to keep pace, covering less than half of the requested US$50 billion in 2024, leaving millions without assistance.
Notably, the US recently slashed billions of US dollars from global relief efforts. The slashed contributions once made up to half of all public humanitarian funding and over a fifth of the UN’s budget. Other donors have been cutting aid as well.
As funding shortfalls widen, humanitarian agencies increasingly face tough choices: reducing the scale of operations, pausing essential services, or cancelling programmes altogether. Disruptions to aid delivery have become a routine feature of humanitarian operations.
Yet few rigorous studies have provided hard evidence of the consequences for affected populations.
A recent study from one of the world’s largest refugee camps in Kenya fills this gap.
Our research team from the University of Oxford and the University of Antwerp was already studying Kakuma camp and then had an opportunity to see what happened when aid was cut. We observed the impact of a 20% aid cut that occurred in 2023.
The study reveals that cuts to humanitarian assistance had dramatic impacts on hunger and psychological distress, with cascading effects on local credit systems and prices of goods.
Kakuma refugee camp
Kakuma is home to more than 300,000 refugees, who mostly came from South Sudan (49%), Somalia (16%), and the Democratic Republic of Congo (DRC) (10%). They have been housed here since 1992. With widespread poverty, lack of income opportunities, and aid making up over 90% of household income, survival in the camp hinges on humanitarian support from UN organisations.
When the research began in late 2022, most refugees in Kakuma received a combination of in-kind and cash transfers from the World Food Programme. Transfers were worth US$17 per person per month, barely enough to cover the bare essentials: food, firewood and medicine.
Over the span of a year, the research team tracked 622 South Sudanese refugee households, interviewing them monthly to monitor how their living conditions evolved in response to the timing and level of aid they received. We also gathered weekly price data on 70 essential goods and conducted more than 250 in-depth interviews with refugees, shopkeepers, and humanitarian staff to understand the broader impacts.
Then came the cut. In July 2023, assistance was reduced by 20%, just as the research team was conducting its eighth round of data collection. This sudden reduction in humanitarian aid created a rare opportunity to assess the effects of an aid cut on both recipients and the markets they depend on.
Consequences of aid cut
The 20% cut in humanitarian aid had cascading effects, affecting not just hunger, but local credit systems, prices, and well-being.
1. Hunger got worse. As a Somali refugee interviewed by the researchers put it: “After the aid reduction, the lives of refugees become hard. That was the money sustaining them. […] Things are insufficient, and hunger is visible.”
Food insecurity was already widespread before the cut, with more than 90% of refugees classified as food insecure. Average caloric intake stood below 1,900 kcal per person per day – well under the World Food Programme’s 2,100 kcal target and about half the average daily calorie supply available to a US citizen.
Food insecurity further increased following the aid cut, with caloric intake falling by 145 kcal, a 7% decrease. The share of households eating one meal or less increased by 8 percentage points, from about 29% to 37%. At the same time, dietary diversity narrowed, indicating that households tried to mitigate the negative impacts of the aid cut by reducing the variety of foods they consumed.
2. Credit collapsed. As a refugee shopkeeper of Ethiopian origin reported: “When we give out credit we have a limit; since the aid is reduced, the credit is also reduced.”
Cash assistance in Kakuma is delivered through aid cards, which refugees routinely use as collateral to access food on credit. When transfers are delayed or unexpected expenses arise, refugees hand over their aid cards as a guarantee to trusted shopkeepers, allowing them to borrow food against next month’s aid.
But when assistance was cut, the value of this informal collateral plummeted. Retailers, fearing default, reduced lending or refused lending altogether. Informal credit from shopkeepers shrank by 9%. Many refugees reported being refused food on credit or having to repay past debt before receiving any new goods.
3. Households liquidated assets. With no access to credit, households began selling off possessions and drawing down food reserves. The average value of household assets fell by over 6% after the aid cut.
4. Psychological distress increased. The aid cut reduced self-reported sleep quality and happiness, indicating that reductions in aid go beyond physical impacts and also have psychological effects.
5. Prices fell. With reduced expenditure and purchasing power, the demand for food dropped, and food prices went down, partially offsetting the negative effects of the aid cut.
Implications
The study carries two major policy implications.
First, aid in contexts like Kakuma should not be treated as optional or discretionary, but as a structural necessity. It is the backbone of daily life. Mechanisms are needed to protect it from abrupt donor withdrawals.
Second, informal credit is not peripheral, it is central to economic life in refugee settings. In many camps, shopkeepers act as retailers and de facto financial institutions. When aid transfers serve as both income and collateral, cutting them risks collapsing this fragile credit system. Cash transfer programmes must therefore be designed with these dynamics in mind.
Olivier Sterck receives research funding from the IKEA Foundation, the World Bank, and The Research Foundation – Flanders (FWO).
Vittorio Bruni is affiliated with Oxford University
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