Councils starved of cash as Malawi govt releases just 9% of promised billions

Local government authorities across Malawi are being starved of desperately needed cash, after it emerged councils have received just nine percent of their K1.25 trillion Parliament-approved allocation for the 2026/27 financial year — despite the year already being five months old.

The shocking shortfall has sparked fears over stalled projects, spiralling costs and whether government can realistically meet its own budget commitments to the very communities it’s meant to serve.

Parliament had approved a combined K1.25 trillion for councils as part of the wider K10.9 trillion 2026/27 National Budget, made up of K1.145 trillion earmarked for development spending through the Constituency Development Fund (CDF) and K109.3 billion for Other Recurrent Transactions (ORT).

But in a letter dated August 10, National Local Government Finance Committee chief executive officer Kondwani Santhe revealed the grim reality facing councils — confirming that just four percent of the K1.45 trillion development allocation had actually been released, while ORT funding fared only marginally better at 56 percent of its K109.3 billion allocation.

Breaking down the numbers further, the 56 percent ORT release translates to K61.208 billion of the total K109.3 billion allocation, while the paltry four percent development funding release amounts to just K45.8 billion.

“The cumulative funding rate is nine percent of the approved budget. Other Recurrent Transactions funding rate is at 56 percent and development is at four percent [including youth and women empowerment funding made through Malawi Enterprise Development Fund-Medf] of the approved annual budgets,” the council’s communication read.

ORT funding is critical, covering essential allocations for education, health, drugs, agriculture, the general resource fund and disaster risk management, while development funding includes CDF bursaries and CDF project management — meaning the shortfall threatens to hit some of the most vital services communities depend on.

Worryingly, the funding drought isn’t a new phenomenon. Analysis of LGA budgets for the 2025/26 financial year showed that out of an expected K193 billion in government transfers, councils received only K130.7 billion — leaving a deficit of around K63 billion.

Development funding suffered the biggest hit, with councils receiving just K71.312 billion out of an allocated K112.418 billion, while ORT received K63.707 billion against an allocation of K80.828 billion.

Governance and decentralisation analyst Winston Khamula said while it was understandable government wouldn’t want to release funds to councils where projects weren’t ready for implementation, predictability remained crucial.

“My call is for government to ensure that CDF funding is released predictably and in full, preferably in tranches aligned to realistic project implementation schedules,” Khamula said.

He also urged councils and other stakeholders to strengthen their own project readiness through proper planning, designs, procurement and documentation, so that once government does release funds, projects can start promptly and be completed on time and within budget.

Project management expert Felix Manda echoed the concerns, warning that cost escalation, incomplete works, reduced value for money and low budget absorption were all real risks stemming from the delays.

Governance experts have warned that delays could areate dangerous pressure to spend hastily near the end of the financial year, increasing both implementation and accountability risks.

They say delays could have serious consequences for development projects across the country, warning they could lead to escalating costs and further complications down the line.

With councils now facing mounting pressure to deliver services on budgets they haven’t yet received, questions are growing over whether government can turn around the funding drought before the damage to local development becomes irreversible.