Bangladesh to roll out an innovative financing mechanism to promote the performance of Local Government Institutions
  • January 23, 2013

The United Nations Capital Development Fund (UNCDF) and the Local Government Division (Ministry of Local Government and Rural Development & Cooperatives) signed a Memorandum of Understanding (MoU) on the 22nd of January, which sets the framework and procedures for Performance-Based Grants for Union Parishads (the lowest tier of Local Government in Bangladesh), supported through the Union Parishad Governance Project (UPGP).

The document was signed by the UNCDF Head of the Regional Office, David Jackson and K.M. Mozammel Haq, Additional Secretary, Local Government Division, and National Project Director.

UPGP supports the design and implementation of an effective, transparent and functioning financing mechanism, based on performance-based grants that enable and encourage the Union Parishads to deliver services, alongside inclusive and efficient public expenditure management procedures.

The performance-based grants will target  571 Union Parishads, located in seven pilot districts across the seven divisions of Bangladesh, and will be provided to UPs selected on the basis of their performance, and compliance with specified access conditions. The performance criteria are closely aligned to the laws and frameworks associated with Union Parishads, and promote efficient pro-poor service delivery.

The total contribution from UNCDF and contributing development partners to the performance-based grant mechanism will be of USD 6,880,000 over the 4 fiscal years, with an average annual allocation of USD 1,720,000. 

In the same effort to strengthen the planning and financial management of UPs, UNCDF signed in September, an Instrument of Cooperation with the United Nations Development Programme (UNDP), the World Bank and the Local Government Division (MLGRD &C).  This framework establishes areas of coordination and cooperation between UPGP and the second LGSP, which is implemented nationwide, capitalizing on the different agencies’ respective comparative advantages.

Within this framework, UNCDF, the World Bank and the Local Government Division, jointly organized training for over 1,800 auditors who are now engaged in auditing accounts and performance of Union Parishads across the country.

The UPGP is part of the overall programmatic framework for UNCDF and UNDP support to the Government of Bangladesh Local Governance reforms that is supported by the European Union (EU), the Government of Switzerland (SDC) and Denmark (Danida).