Establishment of the Local Development Fund
In January 2008, the Government of Malawi prepared and circulated a Position Paper on the Local Development Fund (LDF) Mechanism that laid out the institutional design and the basis for financing local development using four windows, namely, the Community Window
; the Local Authority Window
; Urban Window
and the Performance Window
. The Fund was established in accordance with the Public Finance Management Act, 2003
and became operational in 2009. The LDF was designed to pool together all funding for local development initiatives into one basket in order to realize a harmonized approach in their implementation to achieve efficiency.
Operationalisation of the Local Development Funding Mechanism
The LDF became operational in 2009 with seed resources of US$50million from the World Bank through the MASAF 3 APLII Project as a follow up Project to the MASAF Programmes (i.e. MASAF 1; MASAF 2 and MASAF 3 APLI Projects). Once operationalized, three Cooperating Partners including Government of Malawi made commitments to joining the LDF Mechanism increasing the number of financing sources to four. These are: (a) Malawi Government (through annual commitments); (b) World Bank through the MASAF 3 APLII Project (closed on 30th June 2014), with a follow up Project, the MASAF IV Project (effective on 16th September, 2014 to June 2018); (c) African Development Bank through the Local Economic Development Programme (January 2010 to December 2015); and (d) German Development Group (KfW) Support to Urban Window subprojects (2012 to 2017).