Part 1: Introduction

1.1
In this Part, we briefly describe the role of the New Zealand Agency for International Development (NZAID) and outline why and how we carried out the audit.

New Zealand Agency for International Development

1.2
NZAID is a semi-autonomous agency of the Ministry of Foreign Affairs and Trade (the Ministry). It was formed in July 2002 and is based in Wellington. NZAID is responsible for New Zealand’s Official Development Assistance (ODA) programme, which provides funds to developing countries to promote their economic development and welfare. Previously, a division within the Ministry administered New Zealand’s ODA programme. NZAID was formed after a Ministerial review¹ concluded that aid delivery should have a more distinct identity and be administered by an autonomous agency.

1.3
NZAID distributes New Zealand’s ODA programme budget through different programmes and agencies. NZAID manages bilateral aid programmes (those agreed between the New Zealand government and the government of the country receiving the aid) for specific countries and regional programmes (targeted at groups of countries in a particular region).

1.4
NZAID has 16 bilateral programmes, including 10 programmes with specific programme strategies and dedicated staff. These are the most important in terms of addressing poverty. Of the 10 programmes, NZAID has prioritised its relationships with Solomon Islands, Papua New Guinea, Vanuatu, and Indonesia, and has constitutionally framed relationships with Niue and Tokelau. NZAID also has five key regional programmes in the Pacific. These regional programmes focus on governance, health, education, economic growth, and environment and vulnerability.

1.5
NZAID supports regional agencies and organisations in the Pacific. NZAID also distributes ODA programme funds through multilateral agencies and programmes of the United Nations, international financial institutions (for example, the World Bank and Asian Development Bank), and New Zealand non-government organisations (NGOs) that work in different regions, countries, and sectors. Although NZAID has small regional programmes in South Asia, the Greater Mekong sub-region, Africa, and Latin America, most of NZAID’s larger programmes are in the Pacific and South-East Asia.

1.6
To address poverty and its underlying issues, NZAID focuses on long-term programmes. Its approach to development is moving away from project-based aid funding to long-term programmes designed to deliver fewer, but more strategic, activities.

1.7
NZAID’s Executive Director reports to the Ministry’s Chief Executive. There are five groups in NZAID, each led by a Director who reports to the Executive Director − the Pacific Group; Global Group; Strategy, Advisory and Evaluation Group; Management Services Group; and Executive Director’s Group. The Pacific and Global Groups are responsible for managing NZAID’s aid programmes, with advice and support provided by the Strategy, Advisory and Evaluation and Management Services Groups.

1.8
The Pacific Group and Global Group programme teams include a team leader, development programme managers, and development programme officers and administrators based in Head Office. For the bilateral programmes described in paragraph 1.4, there are also NZAID managers based in overseas posts and supported by local staff (as development programme officers and administrators). For the regional programmes in the Pacific described in paragraph 1.4, there is an NZAID manager based in Suva (Fiji), supported by local staff.

Why we carried out the audit

1.9
There have been two broad reviews of NZAID since it was formed in July 2002, and both were published in 2005. One was a peer review of New Zealand’s development co-operation programme by the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD),² and the other a Ministerial review of NZAID’s progress since its was formed.³ Both reviews supported the way that NZAID had been established, its policy development, programme direction, and approach to partnership. We examined how effectively NZAID manages its overseas aid programmes, rather than its overall strategic direction or approach to development.

1.10
Although small by international standards, the ODA programme budget has increased significantly in recent years. In 2001/02, the ODA programme budget administered by NZAID was $242.1 million. For 2007/08, it is $428.8 million, an increase of $70 million from 2006/07. The number of staff (in Wellington and in overseas posts) in NZAID has also increased, from 131 staff in 2002 to 195 staff in 2007. Given the increase in ODA programme funding and staff since NZAID was formed in 2002, we wanted to examine how effectively NZAID manages its overseas aid programmes.

How we carried out the audit

1.11
To conduct the audit, we reviewed NZAID’s aid strategies, plans, procedures, and guidance documents. We interviewed staff at NZAID’s Head Office in Wellington, and at overseas posts in Port Moresby (Papua New Guinea), Jakarta (Indonesia), and Suva (Fiji). We also interviewed development partners⁴ and key stakeholders in those overseas locations.

1.12
As part of the audit, we specifically examined the Papua New Guinea bilateral programme, Indonesia bilateral programme, and Pacific Regional Health programme. Figure 1 provides an overview of each programme.

Figure 1
Overview of the Papua New Guinea bilateral programme, Indonesia bilateral programme, and Pacific Regional Health programme

* NZAID defines civil society organisations as non-government groups - community-based groups, women’s or youth groups, professional organisations, rights organisations, business groups, activist groups, and media organisations.

1.13
We chose these programmes from a wide range of aid programmes managed by NZAID. They were within the areas of geographical focus for NZAID, were among the largest programmes by value, have experienced increased funding and resources, and represent a wide scope in focus, location, and the types of initiatives and projects within them.

1.14
We examined six aid projects and initiatives from each of the three programmes, with various areas of focus. Those areas included rural economic development, health, education (including basic education), law and justice, strengthening civil society, sustainable rural livelihoods, governance, peace and human rights, study awards, forming strategic partnerships, and multi-year programme initiatives (see Figure 2).

Figure 2
The aid projects and initiatives examined within each of the three programmes we examined

1.15
Parts 2, 3, 4, and 5 of this report set out our expectations and findings on how NZAID plans, implements, monitors, and evaluates aid programmes.

Areas outside the scope of our audit

1.16
We did not examine:

• humanitarian and emergency aid funding administered by NZAID;
• funding administered by NZAID for New Zealand NGOs through the Kaihono hei Oranga Hapori o te Ao: Partnership for International Community Development scheme;
• funding administered by NZAID for multilateral agencies; or
• ODA programme funding administered by other government departments.

1: Ministerial Review Team (March 2001), Toward Excellence in Aid Delivery: A Review of New Zealand’s ODA Programme, Wellington.

2: Development Assistance Committee (2005), DAC Peer Review: New Zealand, Organisation for Economic Cooperation and Development.

3: Dr Marilyn Waring (July 2005), Ministerial Review of Progress in Implementing 2001 Cabinet Recommendations Establishing NZAID.

4: For the purposes of this report, “development partners” includes all of the individuals and organisations that collaborate with NZAID to achieve mutually agreed objectives.