The programme is focusing on three main areas of the National Decentralization Programme:

1. Institutional development and capacity building to enhance the capacity of central government and district management institutions to effectively implement their roles and responsibilities related to the decentralization policy and Local Government Act;
2. Fiscal decentralization and financial management to support the development of local government finance system which enhances local revenue mobilization and generation for local development;
3. District development planning and financing mechanisms systems to support local governments and communities in the planning and management of local development and service delivery

• Malawi has developed a Poverty Reduction Strategy Paper (MPRSP), which was launched by the Head of State on 24th April 2002, to guide investment and development activities for the reduction of poverty in Malawi. The Decentralization Policy of 1998 has been identified under Pillar 4 of the MPRSP as the main institutional strategy for the implementation of the MPRSP.
• In order to operationalize the decentralization policy the Department of Local Government has developed a National Decentralization Program (NDP) both as a resource mobilization and guiding tool. The NDP contains seven components including legal framework, building of a democratic culture, institutional development, fiscal decentralization, local development planning and financing mechanisms, devolution of functions, and accounting and financial management.

• Ministry of Local Government and Rural Development executing agency for the programme;
• Decentralization Secretariat overall management responsibility;
• Oversight of programme implementation carried out by the Inter-ministerial Technical Committee on Decentralization; chaired by the Principal Secretary of Local Government, and comprising representatives from the Local Government Finance Committee (LGFC), National Audit Office (NAO), Local Authorities Services Commission (LASCOM), Malawi Local Government Association (MALGA), UNDP, UNCDF and key donor partners.

12 Districts: Nsanje, Chkwawa, Thyolo, Machinga, Mangochi, Chiradzulu, Mchinji, Kasungu, Ntcheu, Dedza, Mzimba, Nkhata Bay (plus Lilongwe and Blantyre)

• 2004 Mid Term Evaluation
• Ongoing Final Evaluation

• In the light of the approach of the Malawi Decentralized Governance Programme (MDGP), the Government has now fully developed the district development planning system (including participatory development planning processes at the local level, dissemination of planning manuals and establishment of Village Development Committees (VDCs) and Area Development Committees (ADCs) – considered as the official community participation—enhancement structures at the local level.
• After having assisted the Government to establish the DDF (the official Government owned mechanism for funding local development), together with other partners, the MDGP has now fully supported the review of the DDF and subsequent establishment of the Local Development Fund (LDF)—a commonly agreed funding mechanism for decentralization in Malawi. The principles of the LDF largely draw from DDF guidelines.
• The MDGP has supported the Government to finalize the development and dissemination of a computerized and integrated financial management system (IFMIS), which is currently being rolled out to all districts in the country with support from other development partners.

An amendment of the project has been signed by the different parties in November 2006. It includes the inclusion of a new output related to preliminary small-scale, Local Economic Development (LED)-related measures paving the road for a large scale project.

• The Final Evaluation’s results will inform the entire programming process;
• Government and major donors fully involved in creation of an Local Development Fund LDF, a key, comprehensive financial facility (which benefited from previous UNCDF’approaches, studies and methodologies).

The project strategy will support three key components:

1. Nurturing a Policy Dialogue among stakeholders to support the development of an inclusive financial sector
2. Supporting Innovations in Financial Markets that deepen and broaden access to services focusing on agricultural finance and mainly to women , savings services, and electronic banking applications
3. Building the Capacity of key institutions supporting micro, rural and agricultural finance including Reserve Bank of Malawi, the Malawi Microfinance Network, the Government, and Micro and other financial institutions, particularly in the areas of financial transparency, outreach and sustainability.

The project key results to be achieved include:

1. Appropriate mechanism (s) established to promote an effective policy dialogue for the development of an inclusive financial sector;
2. Innovations in financial markets that extend financial services (savings, loans, payment services, money transfers, or insurance) to low-income groups, primarily in rural markets mainly women;
3. Capacity of institutions operating in financial sector strengthened to increase outreach and sustainability of the sector, such as Financial institutions, Microfinance network, the Reserve Bank of Malawi and Local Service Provider.

It is expected that the number of household savers will increase by 50% by the end of the Project with a baseline (June 2006) of 283,000 thus 141 500 additional new household savers (764 100 people); the number of household borrowers by 50% with a baseline (June 2006) of 183,000 thus 91 500 new household borrowers (494 100 people) and the number of households rural clients by 40% with an estimated number of 100,000 (2006). Women should represent 50% of the total clients. The maximum number of new households having access to financial services whether savings or credit is 141,000. This number is inclusive of the other targets.

• Developing Inclusive Financial Sectors in Malawi aims to contribute to poverty reduction by increasing access to financial services (loans, savings, payment services, money transfers, and/or insurance) for poor and vulnerable populations, with priority given to increasing access to rural areas where demand for services is greatest.
• The project takes a sectoral approach, situating the development of microfinance in the overall financial sector including banking and capital markets.
• A new platform called the Microfinance Forum was set up in July 2006 to enable effective communication across sectors and among stakeholders to discuss issues of financial sector development, the role of micro, rural and agricultural finance in the financial sector development, and broad policy interactions. The Forum can contribute to the financial sector deepening. The Forum will support the designing of the legal and regulatory framework and the information sharing to increase synergy between the financial inclusion programmes.

• Ministry of Finance executing agency for the programme;
• Other national partners are Malawi Microfinance Network (MAMN), the Ministry of Industry, Trade and Private Sector Development and the Reserve Bank of Malawi.

• The Project will benefit to the Microfinance Forum, the Ministries involved in the sector, the Reserve Bank, the MAMN, the FSPs and the Local Technical Service Providers.
• The final clients of the FIMA are the poor and low – income populations in Malawi who will have better access to financial services, including women in rural areas.

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• Investment Committee releasing the first investments