Inauguration of the KfW-funded bike lane in Lima's Pueblo Libre.
Metropolitan Municipality of Lima
Bike lanes in Peru.
That seems innocent enough, but that simple phrase has stoked massive controversy in Germany. Starting in 2020, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) provided €44 million to develop bike paths in Lima. The German state-owned bank KfW also helped finance the work toward a permanent cycling network in Lima.
All this is part of a larger project for sustainable mobility in the Peruvian capital, with anticipated benefits for economic development and climate protection.
Helping the environment was just one reason that Jeffrey Leandro Diaz’s ex-girlfriend, Cecilia Melgar Bravo, was an avid cyclist. Their first date was a cycling date. Tragically, Melgar was killed in 2023 while cycling on a Lima road that lacked a bicycle lane. She was 26 years old.
Since then, Leandro has carried forward her legacy as Lima’s Bicycle Mayor. In this voluntary role, his advocacy activities have included bike lanes in high-risk areas and improvement of bicycle parking. Leandro also continues to cycle, both out of love and out of practicality, as cycling gets this biologist to work in 1/3 of the time that public transport would. But he recognizes the risk before getting onto his bike: “Every day is like saying goodbye to your parents.”
In Germany, aid critics have seized on the Lima bike lanes to suggest that German public money is being wasted on woke leisure projects far away, while public services within Germany are crumbling. In particular, the extreme-right Alternative für Deutschland (AfD) party has been astonishingly effective at inflating the cost of the German support, while diminishing its benefits. Indeed, the anti-development crowd has been more successful at stoking public interest in foreign aid than development professionals themselves.
Leandro understands the controversy. He feels that Lima’s government should be allocating more than it is to bike lane construction and maintenance. At the same time, he recognizes that there are limited resources, and appreciates the external funding. He explains that the bike lanes will help Lima’s economy as well as the environment, given the many hours residents lose in other forms of transport. And more importantly, “the bike lanes really save lives if they are constructed correctly.”
Despite the life-saving benefits, this one case has come to symbolize the downward slide of Germany’s foreign aid. In 2025, Germany spent 0.56% of gross national income on overseas development aid (ODA). This was a significant reduction from 0.83% in 2022. (The global benchmark for rich countries is in between, at 0.7%.)
Other figures also show how dramatic the change has been. The BMZ budget is now at its lowest level in 15 years, while humanitarian aid (administered through the Federal Foreign Office) has been slashed to half the 2024 level. The government has proposed another €500 million cut to development cooperation spending in the 2027 budget.
There are many reasons that German support for development funding has tailed off in the last half-decade. From the Covid-19 pandemic to Russia’s full-scale invasion of Ukraine to U.S. friction with NATO, the feeling has become entrenched that Germany, the world’s third-wealthiest country, simply can’t spare the money. The rising cost of living, including food price inflation, has hit many hard. And the specter of Russian military aggression has spurred much talk of pouring money into defense instead.
Rising alongside these global crises has been a populist movement focused on grievance and nationalism. Given this inward focus, “solidarity in a broader sense in society in Germany is weakening in many ways,” comments Stephan Klingebiel, who heads the Political Science Department at the German Institute of Development and Sustainability (IDOS). Against the backdrop of mounting far-right influence, “Development policy is an easy victim. People do not really understand what it is about.” In previous coalition governments, development funding was supported across political aisles. But the rise of the AfD party has shaken that up.
The pull away from aid funding was boosted in the last two years by the extraordinary disruptions in the U.S., which dismantled its world-leading development agency and transformed the government’s approach to foreign aid. “It definitely served as an example,” observes Sandra Dworack, a policy adviser for essential services at Oxfam Germany. “It fuelled this already existing skepticism towards international spending.”
This led to the situation where Germany “became almost by accident the biggest donor,” Dworack explains. In 2025, Germany spent just a hair more on development than the U.S., leading to the unexpected situation where “we became the biggest donor while at the same time simultaneously cutting the development budget in the last two years.” Rather than being proud of this new leadership role, it seems that German politicians are nervous, even a bit embarrassed, about it.
In any year, Germany’s ODA figure is many times smaller than what the public believes the country is spending on development. It’s a problem besetting a number of rich countries where the majority of people don’t feel well off.
In Germany, in reality, even less is spent on overseas poverty reduction, climate, education and health projects than is suggested by that not-terribly-inspiring figure of 0.56%. This is because of some peculiar accounting. Like the U.K., for example, Germany includes “in-donor refugee costs” within its ODA figures. Essentially, money spent within Germany on accommodating Ukrainian refugees, for the first year after their arrival, gets counted toward overseas aid. So does the education within Germany of students from low- and middle-income countries.
Funding for those areas doesn’t come from the federal agencies responsible for development cooperation or humanitarian aid, but from various state agencies. Yet they’re reported as development funding. The upshot, according to Klingebiel, is that grants and loans for development from the federal development ministry and the foreign ministry account for only about half of the official development assistance figure. This financial and accounting tangle means that ultimately, much of what Germany reports as overseas development aid is neither spent overseas nor really about development.
Klingebiel believes that some cuts to development may be appropriate, if all federal budgets (with the glaring exception of defense) are also tightening their belts. But it should be proportionate, he argues. Instead, the chopping of development has been major.
The reshaping of development spending has not just been about shrinking the budget. It’s also starting to involve a harder-nosed approach to German strategic interests. Think loans rather than grants, a focus on regions closer to Europe, and attempts to open up economic opportunities for German companies abroad. Klingebiel refers to what is now a “narrow short-term expectation that development finance resources should get back to German companies.” Yet “we know from research: if you try to tie aid to the procurement in donor countries, you will lose efficiency and effectiveness of aid.”
One sign of this move toward perceived self-interest, Dworack says, is recent restructuring of BMZ to include an economic cooperation department and to reduce staffing in areas like education. Basic education overseas is an area where Germany has been a leading donor, but the country has decreased its contributions to education projects including the Global Partnership for Education and Education Cannot Wait. Dworack applauds Germany’s commitment to continued funding for Education Cannot Wait until 2031, but notes that this funding comes at a lower level. “We made a calculation that the cuts alone to Education Cannot Wait by Germany could result in 2 million more children losing access to education in the most vulnerable situations.”
Supporters of development are now fighting to halt further cuts, such as the 2027 budget proposal that will be handed over to the Bundestag (the German Parliament) in July. But this is an uphill battle. Oxfam Germany has a petition urging an end to overseas aid cuts, especially given the effects on girls’ schooling, women’s health, and other aspects of gender justice. According to the organization’s analysis, Germany’s reduction by 1/3 of its contribution to the United Nations Population Fund (UNFPA) between 2024 and 2026 could result in 90,000 more unsafe abortions by 2030.
The German NGO DSW, which focuses on young people in East Africa, is also seeing the effects of the aid cuts. “One of the most severe consequences—one that directly affects our work—is the large-scale dismissal of healthcare personnel, extending in some cases to the closure of entire clinics,” explains Sebastian Tripp, the CEO of DSW. “In addition, there is a significant shortage of modern contraceptives and essential medicines, including treatments for HIV and AIDS. As a result, therapies are being interrupted, with dramatic consequences, for example for the prevention of mother-to-child transmission.”
Dworack calls the government’s framing a false choice “between supporting people living in poverty and in crisis areas, and ensuring adequate spending on social sectors here in Germany.” As she points out, “Development cooperation only accounts for a tiny fraction of the federal budget. And cutting here will not save the budget.” Instead of hollowing out solidarity spending in other countries, she calls for imposing a domestic wealth tax—which has also been floated in the U.K. , and which previously existed in Germany. “It is a political choice at the end of the day to make those cuts to development cooperation and also to humanitarian aid,” Dworack argues.
Germany’s aid cuts may have already harmed it on the international stage. Some observers believe that they contributed to Germany’s unprecedented defeat in this month’s election for a temporary seat on the UN’s Security Council.
For DSW’s Tripp, an ongoing public health emergency also highlights the importance of international cooperation. “The current Ebola outbreak should serve as a wake-up call,” he says. “Its rapid spread is already highlighting the consequences of cuts to development aid. When health centers close, critical supplies are lacking and people are forced to move more frequently due to reduced aid, outbreak control becomes considerably more difficult.”
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