United Nations Capital Development Fund

Supporting Decentralization and Local Governance in Malawi

(booklet published in June 2001)

From the Executive Secretary

The Government of Malawi has a great deal to show for its commitment to decentralization, and UNCDF and UNDP are fortunate to have been able to play a supporting role in its achievements. This collaboration, which began in the early 1990s and continues today, has had positive influences at the level of policy as well as community.

In fact, the Malawi programme is among UNCDF's best examples of what can be achieved by taking risks and being flexible and innovative. The programme began when the legal, institutional and policy framework for decentralisation was still uncertain. Nevertheless, UNCDF offered to work with the Government to develop and pilot a methodology for participatory planning and financing of district-level capital investment. Success in the initial six districts expanded to all 27 districts by 1997, resulted in approval of a decentralisation policy in 1998 and local government elections in 2000.

Today, the Government of Malawi, UNCDF and UNDP continue to work together to support the Local Governance and Development Programme (LGDMP), which builds on the achievements so far to address poverty through the development of decentralization policies and decentralized planning systems. This initiative has had the added benefit of opening the door to additional financial support. The LGDMP established the District Development Fund, through which numerous donors are channeling funds to support Malawi's further development.

As you will read in the following pages, the Malawi programme is an exciting one. There are lessons to be learned here about finding innovative solutions, achieving policy impact and the value of strengthening participation and partnership. Citizens, development practitioners from the Government and among the international community, policymakers, as well as bilateral and multilateral donors have all played an important role in addressing the development needs of the Malawian people. For this support and involvement, UNCDF extends its utmost appreciation.

Normand Lauzon
Executive Secretary, UNCDF

Investing with the Poor in Malawi

The United Nations Capital Development Fund invests with the poor in least developed countries through strengthening and reinforcing the productive capacity and self-reliance of rural communities. It does this by increasing their access to essential local infrastructure and services, and by strengthening the communities' influence over economic and social investments that directly affect their lives and livelihoods. UNCDF's local development and microfinance programmes work to develop the creative and productive potential of the communities. Towards that end, UNCDF-sponsored investments are planned, implemented and monitored with broad local leadership and popular participation.

In Malawi, UNCDF, in partnership with the United Nations Development Programme (UNDP), is supporting a number of programmes that empower people by giving them access to more choices and more resources. One of these programmes, which is being implemented in partnership with the Government of Malawi, is supporting the country's efforts to bring decision making and budgetary authority down to the level of local government. A second programme involves facilitating the provision of financial services to a level that commercial banks fail to reach - poor entrepreneurs who have a vision to succeed in business, but lack the capital or collateral to make it happen. This booklet focuses on the first initiative, supporting Malawi's efforts to decentralize development planning and financing to local-level governing institutions.

View Chart: The Local Planning Process: How projects get identified and funded

Power to the People:
Supporting Local Governance and Decentralization

Life has improved in many ways for the people of Malizani village, a community in the western district of Mchinji, since their development committee decided to spend a portion of its resources from the District Development Fund on a new freshwater system. Tap committee chairperson Ellen Sanga, who oversees the operations and maintenance of the water tap in her village, said before the system was put in, she had to walk for more than an hour to find water. "And the water was not clean," she said, adding: "Now, we have fewer diseases, cleaner clothes and happier faces."

The tap in Sanga's village provides clean and reliable water that is channelled through a system from the mountains to a network of 72 communities. Each village has a committee that maintains and supports the system by collecting contributions from each household. The project is one of more than 1,000 that have so far been identified, partially financed and implemented by local communities throughout Malawi through the UNDP- and UNCDF-supported local governance programme.

Community-driven projects like the Malizani water system became possible when the Government of Malawi embarked on a process of transferring development resources and decision-making authority down to local levels of local government. As part of this process, the Government of Malawi elected new assemblies, reorganized the central government and trained politicians and staff in the new system methodologies.

UNDP and UNCDF have worked closely with the Government of Malawi throughout the process of decentralization. UNCDF believes that this decentralized process promotes greater accountability from the local leadership, and more transparency in the allocation of resources. Furthermore, it encourages a more predictable development planning process, which is critical if local authorities are to formulate a long-term plan for their communities. A key feature of the programme is the direct linkage between the pilot activities undertaken at the local level and national policy development.

In the early 1990s, UNDP and UNCDF launched a pilot initiative in Malawi to provide broad capacity building and capital investment support to district level institutions in the six pilot districts of Dedza, Mangochi, Mchinji, Nkhatabay, Nsanje and Thyolo. Based on the success of the experience there, the Government of Malawi decided, in 1997, to expand and replicate the approach to all of the country's 27 districts. A detailed diagram of the structure through which development plans are identified and financed is provided on page 12.

The development goal of the initiative, known now as the Local Governance and Development Management Programme (LGDMP), is to help reduce poverty in Malawi by improving governance through broader citizen participation in decision-making and the enhanced performance of central and local government in local development. Specifically, the initiative has two overarching objectives:

Central and local governments formulate and implement policies for government decentralization; and
Local authorities implement a due process of integrated participatory planning and financing in their local development activities.

The five-year government programme has a budget of US$ 30.7 million. UNCDF is contributing US$ 13.3 million to the programme, UNDP is providing US$ 9.4 million and the Government of Malawi is contributing US $8 million in-kind. In addition, the communities themselves make valuable in-kind contributions, usually in the form of labour and materials for the economic and social infrastructure identified in their plans.

Programme Results so far: measuring impact

Progress in the programme is enabling local authorities like Moses Franklin Kuchingale, chairman of the Mchinji District Assembly, to better meet the needs of their constituents. Through a policy framework that enables local planning to take place, combined with the skills and resources to plan, finance and manage social and economic infrastructure, Kuchingale and his colleagues in other districts are providing a wide range of critical small-scale infrastructure such as schools, potable water systems and rural access roads.

Although progress can be seen in many dimensions of the pilot programme on different levels, the results can be catagorized into three areas: policy impact; improved planning systems; and collaboration / donor replication.

Policy Impact: The programme has so far had an influence in the area of policy impact, contributing directly to several developments that have assisted the Government of Malawi with its decentralization efforts. For example, the programme has had a direct influence on:

The Government of Malawi formulating and approving its Decentralization Policy and a Local Government Act to transfer administrative functions, responsibilities and authority to local-level government (1998);
The Government of Malawi establishing a Decentralization Secretariat and an Interim Administration for all District Assemblies;
The development of standard accounting and financial management manuals along with comprehensive training on how to use them.
Local government elections, which took place in Malawi in November 2000, setting up 39 district, town, municipal and city assemblies covering more than 800 electoral wards.

In another area of policy impact, UNCDF and the World Bank fielded a joint mission on Local Government Financing in 1998, analyzing the costs of transferring the responsibilities for planning and financing public service. The study outlined specific locally-generated revenue sources, such as property tax and business license fees, that would be transferred to District Assemblies to fund locally-determined social and economic infrastructure. The study also determined that fiscal decentralization would not be an unsustainable burden to the central government and that immediate implementation of the recommendations would yield substantial revenue, which the Government was not hitherto collecting. Many of the recommendations from this study have been adopted and integrated into the Local Government Act and Decentralization Policy.

Improved Planning Systems: The project is strengthening local capacity for planning, managing and financing the delivery of public goods and services at the district and village levels, and has achieved several important accomplishments:

A national District Development Planning System has been developed, with district- and area-level institutional structures established nationwide;
A decentralized financing mechanism, called the District Development Fund (DDF), has been established in all districts (with 419 projects implemented in 27 districts); and
A donor/Government appraisal mission confirmed, in August 2000, that the DDF is the appropriate modality for decentralized financing. The mission furthermore recommended that donor-provided funds be channeled through the DDF.

Collaboration and Donor Replication: Many donors are showing an interest in channeling resources for development in Malawi through the structure set up by the District Planning System and the District Development Fund. Several donors are furthermore demonstrating their support to the UNCDF model through the following activities:

The Danish International Development Agency (DANIDA) is in the process of formulating a project establishing a natural resource management window through the District Development Fund in 12 districts. The total cost of the project is US$2.25m out of which US$1.125m is for the DDF.;
The African Development Bank (ADB) is providing US$ 12 million supporting, among other activities, five districts using the DDF and its district development planning system;
The World Bank has been working closely with UNDP and UNCDF in the area of fiscal decentralization and local government financing; and
The International Fund for Agricultural Development (IFAD), UNICEF, the World Food Programme (WFP), and Action Aid (an international NGO) are planning to channel their development planning and financing through the DDF.

Responding to New Challenges: an evolving programme

As it does with nearly all of its projects, UNCDF commissioned an independent evaluation of the Local Governance and Development Management Programme in Malawi to evaluate progress mid-way through project implementation and to ascertain any possible lessons that could be used to refine the model. The 1999 evaluation, which has been published and widely distributed both in book form and on the Internet, found that overall, the project has succeeded in supporting the decentralization process and is resulting in improved local governance with the anticipated result of reducing poverty. After meeting with government authorities at all levels of administration, the independent evaluation team found that overall, the project has been "remarkably successful in contributing to the area of policy development," and that the "implementation of micro-projects is being successfully managed by the districts."

However, the evaluation also found areas in the methodology and implementation of the programme that need to be addressed if it is to meet all of its objectives - lessons that UNCDF is now incorporating into programme refinement, both in Malawi and in its programmes elsewhere in Africa and Asia Some of the critical issues which the evaluation pointed out involved areas of the model that need improvement, such as the need for more effectivement empowerment of women, and their participation in the planning process.

The report also addresses concerns that have arisen in response to the evolving policy environment in Malawi. The evalutors pointed out that the programme has so far experimented with decentralized planning and financing local development without the presence of elected local officials. The passing of the Local Government Act (in December 1998) and the local government elections (in November 2000) resulted in fundamental changes in the basic responsibilities of central government and the relationship between the centre and local governments. It therefore became necessary for the Programme to reorient itself to new challenges. Some of the challenges include:

Reforming the structure of local governments to better meet the opportunities presented by the new policy framework;
Training local elected officials and staff to take on the new roles and responsibilities, as stipulated in the 1998 Local Government Act;
Transferring more functions and responsibilities from central sectoral ministries to local governments in line with the Local Government Act;
Revising the decentralized planning and financing system (i.e., the District Development Planning system and budgeting and financial management procedures) to take into account the functions and responsibilities transferred to the local governments and the role of the local elected officials;
Developing a fair and transparent intergovernmental fiscal transfer system to ensure that development resources are transferred effectively from central budgets to local governments;
Improving the ability of local governments to mobilize their own resources locally, through policy and administrative changes;
Strengthening the monitoring and evaluation (M&E) system to assess the overall implementation of the 1998 Decentralization Policy, including monitoring local government performance by the Department of Local Government; and
Supporting necessary capacity and systems required to promote local level participation so that decisions taken by local governments are responsive to local needs.

As Malawi proceeds in its efforts to better meet the needs of its citizens through empowering local level governments, it will no doubt face even greater challenges. However, it is moving in the direction of this intended goal with confident strides, taking each step in turn, building on the experiences of the last. In so doing, Malawi offers a good example that other countries facing similar challenges can observe.

Acknowledgements

The editors would like to thank the following for their help, guidance and support during the researching, writing and editing phases of this publication:

Zahra Nuru, UNDP Resident Representative
Normand Lauzon, UNCDF Executive Secretary
Alberic Kacou, UNCDF Deputy Executive Secretary
Roger Shotton, UNCDF Technical Coordinator
Laurie Gross, UNCDF Policy Consultant
Willy Samute, Principal Secretary, Ministry of Local Government
Sebastiano Sentala, Decentralization Coordinator/ Under Secretary, Ministry of Local Government
Bill Chanza, UNCDF Programme Officer
Gresha Mwandira, Information Officer, Decentralization Secretariat
Moses Franklin Kuchingale, Chairman, Mchinji District Assembly
Michael Nkhoma, Director of Planning and Development, Mchinji District
William Chiputu, Director of Planning and Development, Dedza District

And all staff of the District Assemblies of Dedza, Mangochi, Mchinji, Nkhatabay, Nsanje and Thyolo who took time out from their busy schedules during two separate missions.