World Bank increases performance based grants for Malawi local authorities to MK15bn

Finance Minister, Sosten Gwengwe, says the World Bank has increased Performance Based Grants (PBG) for local authorities from $10 million (about MK10 billion) to $15 million (about MK15 billion) per year.

Gwengwe spoke Wednesday in Lilongwe during cheque presentation to 25 local authorities that qualified for 2022 PBG. Gwengwe presided over the ceremony with his Local Government counterpart, Professor Blessings Chinsinga.

PBG falls under a five-year $90 million (about MK90 billion) Governance to Enable Service Delivery (GESD) project, which the World Bank supports in order to strengthen institutional capacity and performance of district councils.

The funds are mostly meant for infrastructure development projects in the local authorities.

Gwengwe described the increase on PBG as significant, saying more money is needed for proper fiscal decentralization to local authorities, where people are and development is required.

“We hope the successful district councils will continue implementing the projects as they are doing, for this will really benefit more Malawians, especially those living in rural areas.

“We also hope that the councils will adhere to the new Public Finance Management Act, which, among others, seeks to improve financial prudence in councils. If we use these resources most efficiently, the lives of many Malawians will change,” Gwengwe said.

The 25 local authorities received a total sum of MK13.8 billion after a 2021 Local Authorities Performance Assessment (LAPA)—conducted from November 1 to 26—show that 26 district councils out of 28 in the country, improved their performance and effectively qualified for 2022 PBG.

LAPA is sanctioned every year by the Ministry of Local Government to determine whether local authorities have the basic capacities or institutional safeguards to manage development grants and provide fiscal incentives to improved local authorities’ performance by rewarding good performers and penalizing poor performers.

The assessment also seeks to identify performance gaps and inform the development and implementation of performance improvement plans for local authorities.

In his remarks, Minister Chinsinga said the assessment leading to accessing PBG “incentivize district councils to put their houses in order”.

He said LAPA has three components: Minimum Access Conditions, performance measures and triggers—which, he said, collectively inculcate a culture of transparency and accountability among councils in the implementation of development projects.

“For those that have not made it, we expect that next year they will ensure that they meet all the necessary requirements so that they access PBG, which is key in implementing development projects,” Chinsinga said.

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