The project is aimed to contribute to poverty reduction through improvement of local governance in the rural districts of Nampula, Cabo Delgado, Gaza and Central level and to increase access by rural communities to basic infrastructure and public services, through sustainable and replicable forms of decentralized participatory planning, financing and capacity building at the district level. Expected outputs are:

1. Participatory planning cycle for local government established, institutionalized and made self-sustaining;
2. Local government financial systems established and managed in a responsible and transparent manner;
3. Provincial and District Governments have established and institutionalized a transparent system for the implementation, supervision, operation and maintenance of basic infrastructure;
4. Institutional (including human) capacity strengthened and made self-sustaining for improved local government performance;
5. Gender and vulnerable group issues effectively mainstreamed into local development and governance processes;
6. Innovations such as local economic development, natural resource management and district-municipality integrated planning included in the decentralized planning methodology;
7. Best practices generated through decentralized planning are systematized, standardized and articulated in support of the elaboration of a National Strategy for Decentralized Planning and Financing.

• Since 1989, UNCDF has assisted the Government of Mozambique with a number of projects including support to strategic infrastructure;
• From 1998 to 2001, UNCDF financed its first Local Development Programme: the "District Planning and Financing Project in Nampula Province". The project was considered as an official pilot project by the Ministries of State Administration and Planning & Finance for decentralized planning. Based on the Local Development Funds (LDF) conceptual framework the PPFD provided direct support to the government's effort to decentralize planning and finance activities;
• From 2002 onwards, UNCDF has pursued its effort to promote economic development and alleviate poverty through introducing decentralized, participatory planning. This represented a continuation, refinement and extension of the previous PPFD in Nampula Province, taking into account the interest of the Government of Mozambique and other donors in replicating the Nampula programme and up scaling into a National Programme on Decentralized Planning and Finance. In 2003, UNCDF expanded its programme to the adjoining Cabo Delgado Province.

• Ministry of Planning and Finance/National Direction of Planning and Budgeting;
• Provincial Directorates of Planning and Finance, Provinces of Nampula and Cabo Delgado.

• Entire Province of Nampula, 6 districts of the Province of Cabo Delgado;
• UNCDF is also providing technical assistance to the Ministry of Planning and Development (MPD) and in the Ministry of Housing and Public Works (MOPH) in Maputo;
• 200,000 persons.

• 2004 Mid Term Evaluation
• 2006 Final Evaluation

• Government recognition of the district as development pole for service delivery (as advocated by the PPFD): the UNCDF experience was the first project specifically devoted to decentralized, district and participative planning backed by significant resources for not only plan preparation but also plan implementation.
• The project adopted a province-wide approach in partnership with central government and in consequence was well institutionalized in the Provincial Government through the Provincial Directorate for Planning and Finance. Through this arrangement the project was able to access and influence decision-makers at central level, a factor that was to prove one of the projects major strengths and decisive for decentralization in Mozambique.
• In terms of fiscal decentralization, the PPFD has largely contributed to the definition of a system of equalization grants and revenue sharing to complement the resources available to local governments from local taxes and fees. The PPFD also contributed to define & disseminate measures aimed at increasing local revenues. The project introduced some interesting innovations in the area of integrated planning, on-the-job training and capacity building, the creation of participative institutions and mechanisms and the use of local development funds.
• The PPFD project, initially implemented in two of Mozambique’s 11 provinces, has subsequently been up scaled and, with the support of various agencies, it presently covers 8 Provinces, with 60 districts (out of the 128 of the country).

Despite its largely positive results, the programme experienced some challenges:

• The legal basis for district planning itself has, until recently, been ambiguous.
• There was no obligation for districts to produce plans and no requirement for sector ministries to take such plans into account.
• Although the plans were integrated in that they adopted a multi-sectoral and coordinated approach to resolving locally defined problems, the level of coordination and integration into sector and national plans should be definitely strengthened. However, in the last two years some key legislative changes, such us the LOLE and the OIIL have suggested that this situation may change.

• In realizing its objectives, the project contributed to the development of the national PPFD programme. The Government of Mozambique, which is now replicating it with the additional support of other development partners and has decided in principle to establish a National Programme from 2008 with a resource-pooling or common-funding.

The “Building an Inclusive Financial sector in Mozambique” programme will support:

1. The operationalization of the designed National Microfinance Policy by designing and implementing a monitorable Action Plan;
2. The expansion of the training capacities and opportunities to the Financial Service providers; and
3. The promotion of innovative solutions to reach out mainly in rural areas.

The programme will seek partnerships with the major donors in the sector, namely IFAD, kfW, AFD and CIDA to set up a joint investment committee. With a 3 – year Program (2007 – 2009) with a budget of 3.1 million USD founded by UNDP (0.8 Million USD), UNCDF (1.3 Million USD) and 1 million to be mobilized, the program will contribute to the objectives set up in the PARPA i.e. the cumulative number of active clients will reach with a baseline of 100 000 in 2006, 125 000 in 2007; 150 000 in 2008 and 175 000 in 2009.

• The financial sector in Mozambique is very exclusive mainly in rural areas, the penetration rate is around 1.2%. However two major programmes are ongoing to support the development of the financial sector: the Rural Finance Support Programme (34.3 million US$, funded by IFAD and ADB) and the Financial Technical Assistance Programme (17.8 million US$, funded by IDA, DFID, WB, ADB and KfW).
• Based on UNCDF gap analysis of the sector, the current programme will contribute to the achievement of the MDGs and to the UNDAF by mainly supporting outcome 1.7 "Institutions responsible for the promotion of pro-poor and sustainable economic development strengthened” through the following output 1.7.2 "Community access to business and financial services, disaggregated by districts, area and beneficiaries (in particular women and other marginalized groups) increased”.

• Ministry of Planning and Development.

• National level: poor and low – income populations;
• Microfinance Service Providers; Public Administration, Local Private sector/Training institutes.

• Technical reviews by UNCDF;
• Performance – based agreements with the Financial Service Providers (FSPs) and reporting to the Mix Market;
• Independent final evaluation.

As of end December 2007:

• National seminar organized on MF;
• First phase of TOTs on ILO course organized (12 trainers to be trained); course on MF organized in cooperation with the University of Mozambique (for 24 participants); 5 thesis supported on MF;
• Contract signed for support of 5 Micro Finance Institutions for development of HIV-SIDA plans;
• Contract signed for study on possibility of Micro-insurance in Mozambique.

N/A

• The Country Resident Advisor to be fully operational on the ground early 2008;
• The Programme will seek partnerships with major donors in the sector, namely IFAD, KfW, ADB and CIDA to set up a joint investment committee.