OECD - Paris, 15 April 2005

New Zealand aid agency a success - now time for aid levels to rise

The OECD Development Assistance Committee (DAC) welcomed New Zealand's decision to reform its aid policies and delivery system. In particular the DAC praised the creation of New Zealand's international aid agency, NZAID, which has heightened New Zealand capacity to deliver effective development programmes. Based on this success, the DAC called for the establishment of a firm medium term aid target as a concrete step towards New Zealand's goal of reaching the agreed United Nations target of 0.7% of GNI. While New Zealand's official development assistance (ODA) has increased in absolute terms, at 0.23% of Gross National Income (GNI) it still lags well behind the DAC member country average of 0.42%.

"New Zealand sees itself as a good global citizen and its work in development, particularly in the Pacific region, is evidence of that. But we believe that New Zealand should back up those ambitions with a clear programme of medium term increases in aid. The logic for an increase in ODA volume has become inescapable," says OECD DAC Chair, Richard Manning. This was the first DAC review since the creation of NZAID in 2002. The main findings were summarised by the DAC Chair as follows: The New Zealand government's decision to create NZAID as a semi-autonomous body with a central focus on poverty elimination was commended.

The reforms have addressed problems identified in the previous DAC peer review in 2000, by fostering strategic focus and development expertise.

The DAC found that in practice the semi-autonomous status of NZAID is working successfully. Its independent staffing structures and strong policy and programme development capacities are well-aligned with international thinking on aid effectiveness and the UN Millennium Development Goals. The approach to poverty elimination is broad and includes economic growth and peace and security which are fundamental to development and coherent with New Zealand's overall foreign policy agenda.

NZAID is encouraged to reduce the number of its core bilateral partner countries, particularly in Asia where New Zealand's resources are spread thinly.

NZAID has nineteen core bilateral partner countries: eleven in the Pacific and seven in South East Asia. South Africa is the only partner outside these two regions. NZAID also funds regional, multilateral and NGO programmes, delivered in numerous ways to about one hundred countries. The DAC recommends that New Zealand maintain its focus on the Pacific where it has an especially important role and impact. The more targeted approach proposed for its Asia involvement will allow New Zealand to better coordinate its work with other donors, and reduce heavy transaction costs for poorer countries.

New Zealand's achievements in countries like Solomon Islands and Papua New Guinea where political circumstances have been difficult are of particular interest. The response by Australia and New Zealand, with their regional partners, to the Solomon Islands government's appeal for help to restore law and order and economic stability through the Regional Assistance Mission in Solomon Islands (RAMSI) was innovative and successful. New Zealand's support, in conjunction with the European Commission, for reconstructing the education system in Solomon Islands and helping to build local capacity was particularly commended.

New Zealand should further strengthen its government-wide coordination of development work by establishing a more explicit policy coherence framework, and systematic inter-departmental processes.

The range of issues that face developing countries today are wide and evolving, particularly for Pacific Islands countries where areas like migration, environment, education, trade and investment remain challenging.

New Zealand's commitment to policy coherence for development would be strengthened by a political statement which would identify this as an objective for overall government action.

The emphasis on basic education and strengthening developing countries' capacity to shape and implement their own education policies, is a welcome and major shift.

Previously New Zealand's education programme was founded on tertiary scholarships in New Zealand, despite unclear linkages with the development needs and priorities of developing countries. New Zealand is encouraged to fulfil its commitment to devoting half of its education support to basic education and to increase the allocation significantly to this purpose, while also continuing to strengthen the effectiveness of its support to higher education.

Strengthening NZAID's presence in the field, particularly in key partner countries should now become a priority.

NZAID has promoted an effective team-based approach to country programme management, in close co-operation with MFAT. Strengthening field presence is critical to the agency's ability to actively participate in policy dialogue with local partner countries and to co-ordinate with other donors.

The DAC Peer Review of New Zealand's development cooperation and policies took place on April 13 2005. The discussion was led by the DAC Chair Richard Manning. The New Zealand delegation was headed by Executive Director of NZAID, Peter Adams. The examiners for the Peer Review were Denmark and the European Commission. The main findings and recommendations of the DAC regarding this review will be published on the OECD web site, at www.oecd.org/dac, during the week of 18 April 2005.

ENDS

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