New Zealand is an important partner for small island states in the Pacific and across the world — nine out of the 10 top recipients of New Zealand’s official development assistance are Pacific islands.
Small island states are not always low income, but they are often vulnerable and isolated. Many of them are among the smallest and most remote countries on earth, scattered across a gigantic ocean. Island economies can be highly reliant on a single source of income, such as tourism or natural resources. Their geographic remoteness from export markets and problems with small markets and limited labor force, meanwhile, are unique challenges to small island states.
They are highly vulnerable to natural disasters and climate change as well. Kiribati, for example, with 100,000 people on 32 small atolls, is the first country expected to lose almost all of its land to global climate change. The government has been forced to purchase land elsewhere that its people can migrate to.
Unlike its neighbor Australia, which has conducted massive cuts across its development assistance budget, New Zealand has kept its aid program intact. But a closer look shows that the latest increases, while welcome, are more modest than they seem.
But why is New Zealand seen as being able to deliver aid effectively to small island states in the Pacific and elsewhere? For instance, it used its own experience and expertise as a disaster-prone nation to reduce risks and respond to disasters across the Pacific. It has developed effective cross-government mechanisms to ensure fast disaster response throughout the region.
Effective disaster response using the whole of the government’s capabilities builds on lessons learned from the 2011 Christchurch earthquake. New Zealand quickly supported recovery from the severe flooding in Solomon Islands in 2014 because it already had people on the ground with extensive networks and local knowledge. Wellington immediately provided budget support to help the government when a tsunami hit Samoa in 2009, killing more than 100 people, destroying buildings and electricity networks, while leaving thousands homeless.
New Zealand also uses liberal trade systems and employment schemes to promote economic development in the region. Remittances are by far the biggest source of external development finance from New Zealand to developing countries. Migrant workers in New Zealand sent $1.3 billion worth of remittances to their families and friends in 2012, compared with the $502 million provided in development assistance last year.
The Pacific has some of the highest costs of sending remittances in the world because many islands are small and remote. Bank fees often accounted for more than 10 percent of the amount transferred, but prices fell by over a third over four years. The New Zealand aid program is working to lower remittance transaction costs further, for example by funding a remittance cost comparison website. Wellington also has the largest temporary migration flows of all OECD countries. Aid-funded programs, such as Vakameasina, are providing skills training for migrant workers. A seasonal employer program meanwhile attracts workers from across the Pacific to the fruit, flower and wine industries.
This close relationship with its Pacific neighbors has allowed New Zealand to respond fast and effectively tailor its humanitarian and development programs to individual countries and contexts.
So while it can be argued that the quality of New Zealand development assistance is high, Wellington only provides 0.27 percent of national income to ODA — far from the 0.7 percent international target and below the average of Organization for Economic Cooperation and Development nations. Further, the current level of development aid does not compare well with countries of a similar size, economy and population. New Zealand’s aid budget was affected by two major earthquakes and the global financial crisis. With its economy now recovering well, the country should seek to increase aid and commit to a time-bound path toward the 0.7 percent target.
New Zealand development assistance is doing much good, particularly in the Pacific, which includes some of the most vulnerable and disaster-prone areas of the earth. But New Zealand could do much more of what they do so well.
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