Part 4: Monitoring aid programmes

4.1
In this Part, we set out our expectations for how NZAID:

• sets performance expectations;
• monitors performance; and
• responds when aid is not progressing as intended.

4.2
We then set out our findings on the extent to which NZAID met those expectations.

Our expectations

4.3
We expected NZAID to:

• have set up funding agreements in a way that enables it to effectively monitor and manage progress, outputs, and longer-term outcomes;
• monitor performance under funding agreements to assess how well aid delivery is progressing; and
• take action when aid delivery is not progressing as intended.

Summary of our findings

4.4
NZAID has no clear approach to setting up funding arrangements in a way that enables it to effectively monitor and manage progress, outputs, and longer-term outcomes. Funding arrangements set out the monitoring and accountability arrangements, but these are not always clearly specified. The extent of NZAID’s monitoring varies, but usually involves assessing reports on agreed milestones, and communicating and working with development partners and other international aid donors. NZAID has interventions available to it when aid delivery is not progressing as intended, and usually addresses issues through its working relationships with development partners.

4.5
In our view, NZAID needs to:

• set clear objectives, reporting milestones, and performance standards and targets within its funding arrangements;
• provide its development partners with more structured monitoring direction and feedback; and
• prioritise and customise the type, level, and frequency of monitoring activity carried out with development partners.

Setting performance expectations

4.6
NZAID does not have a clear approach to setting up funding arrangements in a way that enables it to effectively monitor and manage progress, outputs, and longer-term outcomes.

4.7
NZAID programme teams are responsible for preparing objectives and milestones as part of the funding arrangements they put in place. We reviewed a sample of 12 funding arrangements for aid projects and initiatives within the Papua New Guinea and Indonesia bilateral programmes and the Pacific Regional Health programme, focusing on project or initiative objectives, performance standards, targets, and milestones. While all the funding arrangements had clear objectives and most had reporting milestones, only one arrangement outlined performance standards and only two arrangements outlined specific performance targets.

4.8
In our view, to effectively monitor performance, NZAID needs to set clear objectives, reporting milestones, and relevant performance standards and targets within its funding arrangements. Doing so would enable it to effectively monitor and manage progress, outputs, and longer-term outcomes.

Monitoring performance

4.9
Generally, NZAID requires grant recipients and contractors to report regularly on progress and performance through the funding arrangements it sets up with them. Monitoring and reporting arrangements vary and are established through different mechanisms, including partnership agreements, memoranda of understanding, memoranda of arrangements, specific fund guidelines with monitoring and evaluation frameworks and requirements, contribution arrangements, and funding agreements with international aid organisations.

4.10
NZAID’s guideline on activity monitoring sets out the principles and practices underlying the monitoring of development activities. In practice, NZAID carries out monitoring primarily by assessing reports on agreed milestones, and communicating and working with development partners, other international aid donors, and contractors.

4.11
Monitoring is also carried out through:

• high level talks;
• monitoring visits conducted by NZAID staff;
• providing specific technical support; and
• NZAID membership of relevant governance bodies.

4.12
NZAID generally requires funding recipients to report every six months or every year on how the funding has been spent. NZAID reporting requirements are increasingly aligned with the recipients’ own reporting requirements. NZAID usually requires contractors to report on agreed milestones within the ACS assignment or contract for services.

4.13
NZAID’s development partners in Papua New Guinea, Indonesia, and Fiji told us that NZAID was a flexible aid donor in terms of reporting requirements compared with other international aid donors – an approach that was appreciated. However, development partners also noted that, to build their own capacity, more feedback from NZAID on their reporting was important, particularly on the quality of their financial and activity reporting, and programme design and structure. In our view, to improve performance and capability, NZAID needs to provide more structured monitoring direction and feedback to its development partners.

4.14
As already noted, NZAID’s staffing capacity is stretched, particularly at overseas posts (see paragraphs 3.21 and 3.22). Because of this, NZAID cannot always regularly assess how well aid delivery is progressing by site visits or working closely with development partners. In our view, NZAID needs to ensure that its monitoring focuses on the development partners that need the most advice and assistance, particularly when resources are scarce.

Taking action when aid is not progressing as intended

4.15
NZAID has several interventions available to it when aid delivery is not progressing as intended. Most commonly, where appropriate, it withholds payments if key outcomes have not been met.

4.16
NZAID usually reconsiders funding arrangements only after a wider review or
evaluation of the specific initiative, activity, or programme. NZAID staff said that issues associated with aid delivery are usually dealt with through close communication or working directly with development partners.

4.17
We found examples within the three programmes where NZAID took effective action with two projects that were not progressing as well as intended, involving the Leitana Nehan Women’s Development Agency and the Fiji School of Medicine.

4.18
With the Leitana Nehan Women’s Development Agency and Fiji School of Medicine projects, there had been continuing issues with governance, staff management, and financial reporting. Although there had also been issues with the continuity of NZAID’s support and delays in receiving funding, NZAID provided direct technical support through a contractor to address the issues identified with the Leitana Nehan Women’s Development Agency. It continues to provide this support through a new position to support civil society organisations in Papua New Guinea. NZAID directly supported a governance review and implementation plan to address the issues associated with the Fiji School of Medicine.