Government of Malawi

MINISTRY OF FINANCE

THE LOCAL DEVELOPMENT FUND

FIRST ANNUAL REPORT JULY 2009 TO JUNE 2010

Technical Support Team, Area 14, Red Cross Building, Private Bag 352, Lilongwe 3. Tel: 01 775 666; Fax:01 775 949; E-mail: masaf@masaf.org

TABLE OF CONTENTS
THE CHAIRMANS REMARKS............................................................................................................................. 8 EXECUTIVE DIRECTORS REPORT.................................................................................................................... 9 EXECUTIVE SUMMARY..................................................................................................................................... 1 1 EXECUTIVE MANAGEMENT ............................................................................................................................ 1 3 SECTION 1: OVERVIEW OF THE LOCAL DEVELOPMENT FUND.............................................................. 1 4 1.1 1.2 BACKGROUND......................................................................................................................................... 1 4 PURPOSE AND OBJECTIVES OF THE LOCAL DEVELOPMENT FUND.......................................... 1 4

SECTION 2: PROGRAMME ADMINISTRATION.............................................................................................. 1 6 2.1 Institutional Status and Organizational Structure.................................................................................... 1 6 Institutional Status........................................................................................................................... 1 6 Organizational Structure.................................................................................................................. 1 6

2.1.1 2.1.2 2.2 2.3

Financial Management System and Disbursements................................................................................ 1 6 Procurement............................................................................................................................................. 1 9

SECTION 3: ACHIEVEMENTS UNDER OPERATIONAL WINDOWS............................................................ 2 0 3.1 COMMUNITY WINDOW..................................................................................................................... 2 0 Primary School Staff House Project (PSSHP)................................................................................. 2 0 Crisis Response............................................................................................................................... 2 3 Open Menu Investments.................................................................................................................. 2 3 Savings and Investment................................................................................................................... 2 5

3.1.1 3.1.2 3.1.3 3.1.4 3.2 3.3 3.4

LOCAL AUTHORITY WINDOW............................................................................................................. 2 5 URBAN WINDOW ..................................................................................................................................... 2 8 PERFORMANCE WINDOW..................................................................................................................... 2 9

SECTION 4: NATIONAL INSTITUTIONAL STRENGTHENING..................................................................... 3 2 4.1 4.2 4.3 Joint Annual Review (JAR) Forum......................................................................................................... 3 2 Supervision Missions by Cooperating Partners....................................................................................... 3 3 Establishment of LDF structures............................................................................................................. 3 5 2

4.4 4.3 4.4 4.5

Strategic Planning and Institutional Development.................................................................................. 3 5 Monitoring and Evaluation...................................................................................................................... 3 5 Management Information System (MIS)................................................................................................. 3 7 Development Communication................................................................................................................. 3 8

SECTION 5: PROGRESS ON PERFORMANCE INDICATORS ......................................................................... 4 1

ACRONYMS ADC
AfDB APL CBRLDP CCA COMSIP CONGOMA CRW CSC CSO DCDOs DEC DDP DIOs EOP GoM GTZ IEC IDA IRLADP IFMIS JAR KISS LA LC LDF LED NPDP MAC MALGA MASAF MDG MGDS M&E M&EO

Village Development Committee

African Development Bank Adaptable Programme Lending Community Based Rural Land Development Programme Credit Ceiling Account Community Savings and Investment Promotion Council for Non-Governmental Organisations Crisis response Window Community Score Card Civil Society Organisations District Community Development Officers District Executive Committee District Development Plan District Information Officers End of Project Government of Malawi German Technical Cooperation Information, Education and Communication International Development Agency Irrigation, Rural Livelihoods and Agricultural Development Project Integrated Financial Management Information System Joint Annual Review Knowledge and Information Sharing System Local Assembly Local Council Local Development Fund Local Economic Development National Physical Development Plan Minimum Access Conditions Malawi Local Government Association Malawi Social Action Fund Millennium Development Goals Malawi Growth and Development Strategy Monitoring and Evaluation Monitoring and Evaluation Officer 4

MISO MIS MLG&RD MTEF NICE NLGFC NTAC ODPP PAD PAM PSSHP PWSP SEP TST TOR UNDP UNICEF VAP VDC

Management Information System Officer Management Information System Ministry of Local Government and Rural Development Medium Term Expenditure Framework National Initiative for Civic Education National Local Government Finance Committee National Technical Advisory Committee Office of the Director of Public Procurement Project Appraisal Document Performance Assessment Measures Primary School Staff Housing Project Public Works Subprojects Social Economic Profile Technical Support Team Terms of Reference United Nations Development Programme United Nations Childrens Fund Village Action Plan Village Development Committee

TABLES AND FIGURES

TABLES Table 1: Status on inflows as at the end of June 2010 Table 2: Major procurements during the 2009/2010 fiscal year Table 3: Community Managed Projects: Primary School Staff Housing Project disbursement Status as at the end of June 2010 Table 4: Community Managed Projects: Open Menu projects disbursement status as at the end of June 2010 Table 5: Status on Public Works Programme: 2008/2009 and 2009/2010 cycles Table 6: Results Framework (MASAF 3 APL II-LDF mechanism Project)-progress on indicators FIGURES Figure 1: Public Works beneficiaries reached versus yearly target

PREFACE This report is the first Annual Report of the Local Development Fund (LDF), produced by the Technical Support Team (i.e. the management entity of the LDF). The report covers the period from March 2009 (i.e. when the MASAF 3 APL II-LDF Mechanism Project became effective) to June 2010 (i.e. end of the fiscal year). The report presents progress achieved during the year which includes institutionalization of the Local Development Fund, setting up of systems and operational frameworks and achievements under subproject implementation. The report is structured into five sections: Section 1: Presents overview of the Local Development Fund; Section 2: Is a presentation of progress under programme administration; Section 3: Highlights achievements under operational windows; Section 4: Presents achievements made under the National Institutional Strengthening; and Section 5: Concludes the report with a highlight of progress towards performance indicators.

THE CHAIRMANS REMARKS Strategy to finance projects for improving livelihoods of poor communities and for local economic development. To date the Government has made significant progress towards institutionalisation of the LDF programme through institution of structures and systems and procedures for management of the LDF. The establishment of a Technical Support Team has been instrumental for rolling out implementation of the LDF. The Steering Committee as a policy oversight structure for the LDF was instituted and the first meeting slated for 29th July 2010. The Steering Committee and its subcommittee, the National Technical Advisory Committee (NTAC) will ensure that the Technical Support Team (TST) is supported in addressing both policy and technical issues for effective delivery of LDF programme objectives.
Mr. Joseph Mwanamveka Chairman of the Steering Committee

One year has elapsed since operationalisation of the Local Development Fund (LDF) in 2009, as an effort towards a national mechanism to coordinate and harmonise development interventions at the local and community levels but also as an instrument for deepening decentralisation and facilitating efficient delivery of services at the local level. The Government established the LDF within the framework of the Malawi Growth and Development

The support of Cooperating Partners in the operationalisation of the LDF and implementation of various activities towards achievement of intended objectives is commended. The institutionalisation of the Joint Annual Review (JAR), as a supervision instrument agreed upon between Government and Cooperating Partners demonstrates the strength of this cooperation. The JAR is a critical enabler to the performance of the LDF as the forum will provide a platform for critical review of the LDF programme performance every year. I encourage all stakeholders to continue performing their respective roles in the implementation of the LDF, with continuous focus on the objectives of the programme. The LDF as a fiscal instrument will go a long way in improving the livelihoods of poor households in the country as well as improving capacities of local governments for improved service delivery and local governance.

EXECUTIVE DIRECTORS REPORT the year, the following were established: Handbooks and manuals; Financial Management System, Management Information System, Procurement System, Performance Assessment System and Monitoring and Evaluation System, not withstanding guidelines and procedures. In addition, studies for setting performance assessment benchmarks were done (i.e. Baseline survey for Public Works programme and Minimum Access Conditions study. Also, processes were underway for implementation of baseline study for Local Economic Development (LED) Project. During the year, resources amounting to US$89 million were fully committed to the LDF from the Malawi Government, the World Bank (through the MASAF 3 APL II-LDF Mechanism Project) and the African Development Bank (through the Local Economic Development Project) for various earmarked activities under the Community Window, Local Authority Window, Urban Window, Performance Window and Institutional Strengthening component. The MASAF 3 APL II-LDF Mechanism Project became effective in March 2009 and therefore considerable progress had been achieved during the year. A total of 546,621 beneficiaries were reached with cash transfers amounting to MK1.3 billion (approximately US$ 9.4 million) through two cycles1 of Public Works programme, with 4,536 community assets created or rehabilitated. A total of 985 Primary School staff houses were under construction countrywide and 471 community projects were also under implementation across the country. Under the Community Savings and Investment component, a total of 937 groups (i.e.18, 942 individuals) were assisted to engage in savings and investment activities. Of these, 11,311 were female (59.7%) and 7,631 men (40.3%). A total of MK 13million had been mobilised in savings across the groups. On the other hand, the Local Economic Development Project had delayed effectiveness (i.e. became effective for first disbursement2 on 19th January 2010) and as such subproject activities were not rolled out during the year. It is however, worth noting that achievements were made towards preparatory processes to subproject implementation.

Mr. Ted. Kalebe Executive director The year 2010 marks one year since operationalisation of the Local Development Fund in 2009 as a fiscal instrument for mobilization of financial resources for poverty reduction and service delivery at the Local Authority and Community levels. The establishment of a Technical Support Team (TST) as an agency for facilitating implementation of the LDF programme signaled rolling out of the programme activities. The first part of the year was therefore focused towards putting in place systems and operational frameworks to enable effective delivery of the programme towards achievement of intended objectives. By the end of

Note that the first cycle was implemented in 2008/2009 and the second cycle in 2009/2010 fiscal year. The first cycle was enabled through retroactive financing arrangement made between the Malawi Government and the World Bank that the Government could mobilise resource for implementation of the PW programme. Denotes that the Project could start to draw funds from the Project loan Account.

Despite the impressive progress achieved during the year, the programme experienced a number of challenges including: (a) The position of Executive Director had been vacant for a long time; (b) delays in rolling out of community subprojects due to systemic challenges i.e. opening of LDF Credit Ceiling Accounts for Local Assemblies delayed due to logistical issues among the National Local Government Finance Committee, the Accountant General and the Reserve Bank. (c) Constitution of the Steering Committee as a policy oversight arm of the LDF was considerably delayed. However, by the end of June 2010, the Steering Committee had been constituted and was to hold its first meeting on 29th July 2010; and (d) Delayed effectiveness of the Local Economic Development Project Government delayed in fulfilling the last condition for the LED Project effectiveness i.e. recruitment of a director for the Urban Window. The LDF received unprecedented support from stakeholders during the year, as evidenced by the many achievements accomplished in the year. The support of Cooperating Partners (both financial and strategic) particularly the World Bank and the African Development Bank is greatly appreciated. The inputs from various government ministries and departments in various operational activities were valuable. The Local Assemblies and Communities were instrumental to successful implementation of subprojects and therefore encouraged to continue with the momentum. The year 2010/2011 ahead will equally require full support of respective stakeholders for continued progress towards realization of the objectives of the LDF. I therefore encourage all stakeholders to maintain the impetus in the next year.

EXECUTIVE SUMMARY

1.0

Institutional Status

For the efficient and effective operation of the LDF as a fiscal facility, and to ensure adequate backstopping to Local Councils and communities, the Government established a Technical Support Team (TST) with a total of 44 staff positions. By the end of June 2010, 35 of the 44 staff positions had been filled representing 79.5% of staff compliment. During the year, the Government put in place a Steering Committee to provide policy oversight on the activities of the LDF. The Steering Committee is chaired by the Ministry of Finance (the Secretary to Treasury), and other members include: Secretary for Local Government and Rural Development; Secretary for Development Planning and Cooperation; Principle Secretary for Public Sector Reform; Chairperson for Malawi Local Government Association (MALGA); Chairperson for National Local Government Finance Committee; Chairperson for NTAC (Secretary for Rural Development); Chairperson for CONGOMA, with the Executive Director for LDF providing secretarial services. By the end of the year processes were underway for the first meeting of the committees. Being the first year of operation, the TST was preoccupied with setting up of systems and procedures (both programmatic and fiduciary systems) to facilitate transparency and accountability in the operations of the LDF. The systems include: operational frameworks (window specific handbooks and guidelines; Financial Management System, Procurement System, Management Information System and Monitoring and Evaluation System). During the year, a Government-Donor Annual Review System (Joint Annual Review) had been established to track the progress of the LDF. The first Joint Annual Review forum was held on 28th January 2010, during which critical issues regarding institutionalization of the LDF were deliberated and agreements made. These issues are highlighted in section 4 of this report. 2.0 Progress on programmes

During this first year, the LDF disbursed considerable amount of resources to Local Councils and Communities for implementation of various development projects particularly under the World Bank supported MASAF Project (the Project became effective in March 2009) and Malawi Government resources. By the end of June, a total of US$28.4 million of the US$50 million commitment from World Bank were drawn from the loan account representing 57% of the Project resources. A total of MK 1.7 billion (approximately US$12.1 million) had been disbursed to Local Councils for Public Works Programme (PWSP). Of these resources, a total of MK1.3 billion (approximately US$ 9.4 million) was transferred to a total of 546,621 beneficiaries in form of wages after their participation in labour intensive works through which 4,536 community assets were created or rehabilitated. By the end of June, 2010, a total of 985 Primary School staff houses were under construction countrywide and 471 community projects aimed at closing various sector gaps including education, health, and agriculture, among others, were under construction across the country. Under the Community Savings and Investment Component, a total of 937 groups (i.e.18, 942 individuals) were assisted to engage in savings and investment activities. Of these, 11,311 were female (59.7%) and 7,631 men (40.3%). A total of MK 13million had been mobilised in savings across the groups.

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The LDF also facilitated detailed assessment of infrastructure damaged in earthquake hit districts of Karonga and Chitipa to establish the extent of requirements for rehabilitation and reconstruction. The LDF is expected to facilitate the reconstruction and rehabilitation of primary school infrastructure in these districts. The Local Economic Development (LED) Project became effective for first disbursement on 19th January 2010 after Government met the last condition for Project effectiveness. In this vein, the Project has been operational for only five months during the year. Consequently, only US$0.44 million of the US$22.7 million commitment was withdrawn from the loan account. Major activities were largely preparatory in nature (i.e. holding of national and district launch workshops; establishment of Business Support Units in the four LED project areas, recruitment processes for consultancy on Detailed Economic Assessment and Value Chain Analysis, and processes towards implementation of LED Project baseline Survey). 3.0 Local Assembly Capacity Enhancement

The LDF is also committed to ensuring that Local Councils are assisted to improve their capacity in various functional areas to enable them effectively manage LDF resources. In this vein, a Minimum Access Conditions (MAC) exercise was undertaken to establish the level of readiness for LAs to access LDF resources, whose findings were instrumental in preparation of a capacity enhancement plan for the LAs that had been under implementation during the year. LAs were therefore being assisted to cover various gaps under this plan, both on supply and demand basis. In addition, the Performance Assessment Measurement (PAM) instrument, as an annual LA performance assessment instrument was launched during the year. The findings from this exercise were under review by June 2010 and were expected to inform refinement of future assessments. 4.0 Additional Financing from IDA and AfDB

The Technical Support Team also facilitated the preparation of documentation for additional financing from IDA amounting to US$14 million. These resources are intended to contribute towards rehabilitation and construction of primary school infrastructure that was damaged by earthquake in Karonga and Chitipa districts, as well as scaling up of Public Works interventions country wide. On the other hand, preparations were underway to facilitate preparation of documentation for additional financing under the AfDB to support Growth Centre Development and Enterprise Development initiatives under Local Economic Development Project. 5.0 Reporting and Dissemination

During the year under review (2009/2010), various programme progress reports were produced and these include: five (5) Quarterly reports; one (1) Joint Annual Review Report; one (1) LDF operationalisation workshop report; one (1) LED Project launch workshop; one (1) Implementation Support Mission to LAs report; one (1) Public Works Baseline Survey report; five (5) Interim Financial Management Reports (IFMRs); one (1) audit report; one (1) Minimum Access Conditions (MAC) report; one (1) Performance Assessment Measures (PAM) report); one (1) District Councils Capacity Building Workshop report; and one (1) The role of Civil Society in advocating for and promoting transparency and accountability workshop report. These reports were informative and strategic in influencing decision making for improved performance of various elements of the LDF programme.

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EXECUTIVE MANAGEMENT

Mr. Ted Kalebe Executive Director

Mr. Mike Moyo Director for Urban Development

Mr. Charles Mandala Director for Advocacy and Knowledge Management

Mr. Paul Chipeta Director of Operations

Mr. Steven Mchenga Director for Financial Management System

Mr. Alifeyo Banda Director for Local Assembly Capacity Enhancement

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SECTION 1: OVERVIEW OF THE LOCAL DEVELOPMENT FUND

1.1

BACKGROUND

The Government of Malawi has established the Local Development Fund to mobilize financial resources for poverty reduction at Local Authority and Community levels. As a fiscal instrument, the LDF provides an opportunity for putting into action the Paris Declaration (i.e. making aid effective through mobilization of resources intended for local development into one basket). The LDF has four operational windows and National Institutional Strengthening Component, namely: (a) the Community Window (Primary School Staff Housing Project (PSSHP), the Community Managed Subprojects (i.e. Open Menu) and complimentary services for Enterprise Development), (b) the Local Authority Window (Public Works sub projects), (c) the Performance Window (Local Authority Capacity Enhancement); (d) the Urban Window and (e) National Institutional Strengthening Component Programme Administration, Advocacy, Knowledge Generation and Application. The LDF is being implemented within the framework of the Malawi Growth and Development Strategy (MGDS) and the decentralization policy. It currently contributes towards the following themes (a) Sustainable Economic Growth - through funding of local economic projects that are aimed at spurring economic activities under the Urban window; (b) Economic Empowerment mobilization of communities for savings and investments and supporting of other productive enterprise development activities; (c) Social Protection and Disaster Risk Management Cash transfers to resource poor people targeted under the public works programme; (d) Social Development Support to construction of Primary School staff houses to reinforce quality education in rural areas. Also, various sectoral projects are funded e.g. water, education, health, irrigation among others, through open menu mechanism under the Community Window. In addition, women participation is encouraged in all project activities i.e. it is a design principle that women representation in Project Management Committees and public works beneficiaries and beneficiaries of enterprise development initiatives should be at least 40%; and (e) Good Governance the LDF contributes towards building of Local Assemblies capacity for improved service delivery and local governance, through the Performance Window. The design of the LDF benefited from implementation experiences from MASAF programmes, the Secondary Development Centre Project and the Public Sector Reform Project, among others. 1.2 PURPOSE AND OBJECTIVES OF THE LOCAL DEVELOPMENT FUND

The purpose of the LDF is to establish and provide a nation-wide, sustainable, standardized and transparent financing mechanism which is open for financing by Government and Cooperating Partners, so that Local Councils (LAs) in Malawi can support decentralized and sustained development. The overall objective is to mobilize financial resources for equitable economic growth and development in order to reduce poverty and improve service delivery in line with the development aspirations of the country. Specifically, the LDF is intended to: i. Support planning and management of development resources at the assembly and community levels ii. Facilitate the implementation of the Integrated Rural Development Strategy
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iii. Provide resources which ensure that development investments respond to prioritized community development needs; iv. Protect financial resources for pro-poor development activities and service delivery at LA and Community levels; v. Enhance the accountability of Local Authorities to their constituents. vi. Finance capacity enhancement of local governance institutions at National, LA and Community levels These objectives are put into action through the following operational windows and the National Institutional Strengthening Component: i. Community Window: Provision of direct financing to community managed projects - currently the Primary School Staff Housing Programme and Community Managed Open Menu projects (to address various sector needs). In addition, Community Savings and Investment Initiatives are promoted among beneficiaries of Public Works programme. COMSIP. Local Authority Window: Provision of funds to Local Authorities for cash transfers to poor household incomes through labour intensive safety-nets operations. Urban Window: Provides funds for socio-economic infrastructure development in urban (potential economic growth points) areas to stimulate local economic development which is both labour and capital intensive as prioritised in the District Development Plans or Urban Development Plans. In addition, Savings and Investment Initiatives are promoted among local entrepreneurs and business groups through Business Service Providers.

ii.

iii.

vii. Local Authority Capacity Enhancement The component finances capacity enhancement of local governance institutions at National, LA and Community levels iv. National Institutional Strengthening (NIS): The component finances national level cross-cutting issues aimed at improving accountability and transparency and encourage programme learning.

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SECTION 2: PROGRAMME ADMINISTRATION

2.1 2.1.1

Institutional Status and Organizational Structure Institutional Status

The Government established a Technical Support Team to coordinate and oversee the implementation of the Local Development Fund. The TST among other things is responsible for the following: (a) Coordinating functions of resource mobilisation, programming, disbursement and accounting (fund management); (b) Conducting multi-skilled technical backstopping in project management, procurement, quality assurance, development communication and information management system support, training, institutional development and capacity building, knowledge management and application, monitoring and results accountability; and provision of professional administrative services to the LDF Steering Committee and its subcommittees. A total of 44 staff positions across the above disciplines, including support staff have been established. By the end of the year (i.e. June 2010), a total of 35 of the 44 staff positions were filled, representing 79.5% of staff compliment. A Performance Assessment System has been put in place as a mechanism for ensuring that various accountabilities towards achievement of LDF objectives are accomplished. Contracting processes for a consultant to facilitate Strategic Planning and Institutional Development of the LDF were nearly finalized by the end of June 2010. The process will enable key stakeholders to determine the appropriate institutional mandate and structure of the LDF and the Technical Support Team. The consultancy had however, delayed substantially due to prolonged contract review processes by respective parties. The assignment is therefore expected to start once the contract is signed during the next fiscal year 2.1.2 Organizational Structure

The TST is headed by the Executive Director who reports to the Secretary for Treasury. The LDF activities are supported by five directorates, namely: (a) Financial Management Services; (b) Operations (c) Local Capacity Enhancement; (d) Urban Development; and (e) Advocacy and Knowledge Management. The TST works hand in hand with the National Local Government Finance Committee (NLGFC) in matters of financial accountability and regulation of local assemblies. 2.2 Financial Management System and Disbursements

The overall objective guiding financial and fund management (Financial Management Services) of the LDF mechanism is to ensure that an acceptable financial management system is consistently maintained throughout the programme.

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2.2.1 Financial Management System At the national level, the LDF is using an Integrated Financial Management System (IFMIS) and Sun Accounting System for management of LDF resources. In view of the need for an efficient financial management system at the LA level, the Government is supporting implementation of the IFMIS in LAs. The IFMIS is expected to facilitate management and accountability of the huge inflow of development resources to LAs under the LDF. In this vein the TST has been committed to provide technical support towards implementation of the IFMIS in LAs during the year. By the end of the year, (June 2010) the IFMIS had been rolled out to seventeen (17) LAs, six (6) of which were launched on pilot (i.e. Blantyre City, Thyolo, Mangochi, Mchinji, Lilongwe and Mmbelwa Districts). Also, the TST had drafted Terms of Reference for costing the roll out of IFMIS to remaining LAs and for the review of 6 IFMIS pilot sites. During the year, the TST was also preoccupied with development of an appropriate accounting information database to cater for the information requirements of the various stakeholders to TST. In the same vein, the TST worked with various stakeholders in improving accounting systems in Local Authorities. As part of promoting transparency and accountability, the TST in collaboration with the National Local Government Financing Committee facilitated an internal audit exercise that was conducted by the Central Internal Audit. Further, a draft anti Corruption programme for implementation with the Local Councils was developed and awaits ACB management approval. 2.2.2 Resource Commitment

There were three fully committed funding sources to the LDF towards earmarked activities of the LDF, while one funding source from the German Cooperation Group (KfW) was under appraisal process by the end of the year. The KfW have earmarked a total of EUR 11 million (approximately US$ 14.5 million) for the Urban window. The committed funding sources as at the end of June 2010 included the following: (a) Malawi Government By the end of June , the Government had contributed a total of MK 2.4 billion (approximately US$16.6 million) for the year. These resources were intended to support the Primary School Staff Housing Project; Open Menu for Community development projects (e.g. education, health, irrigation, water, among others); Institutional Development of the LDF and Counterpart funding to AfDB Local Economic Development Project. (b) World Bank Through credit No. 4483-MW made effective on 24th March 2009, the IDA committed to support discreet activities of the LDF through the MASAF 3 APLII LDF-Mechanism Project to the tune of US$50 million over a period of 5 years. In addition, Government secured additional funding of $14 million from IDA for MASAF 3 APL II Project under the Crisis Response Window for the reconstruction and rehabilitation of school infrastructure that was damaged by the earthquake in Karonga and Chitipa districts as well as up-scaling Public Works Programme in 13 districts affected by dry spells in the 2009/2010 agricultural season. (c) African Development Bank Through loan No. 2100150017493, made effective for first disbursement on 19th January 2010, the African Development Bank committed to support discreet
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activities of the LDF through the Local Economic Development Project to the tune of US$ 22.7 million over a period of five years. 2.2.3 Status on In-flows

A total of US$ 28.3 million of the original US$ 50 million commitment from the World Bank had been withdrawn from the loan account, representing 57% of Project resources by the end of the year. On the other hand, only US$0.4 million of the US$22.7 million from the LED Project has been drawn from the loan account, as the Project was made effective much later in the year and that subproject activities had not yet been rolled out by the end of the year. In terms of grants disbursed to Local Assemblies during the year, resources amounting to K2.5 billion (US$17.3 million) had been released for Primary School Staff House Project (financed by MASAF and Malawi Government) and Community Savings activities. Resources amounting to K682 million had been released for Community Managed Projects, while a cumulative total of K1.7 billion (US$11.9 million) for Public Works Programme (cash transfers and LA administration costs). Table 1 below presents the status of in-flows by the end of June 2010. Table 1: Status of in-flows as at the end of June 2010
SOURCE (US$) Cumulative to 30th June 2010 (US$) Total inflows 30th June 2010 ( US$) Total negotiated/ Pledged (US$) Balance from funding sources (US$) Percentage Inflows over total pledged

Malawi Government Projects and Counterpart IDA MASAF 3 APL II IRLADP CBRLDP ADF TOTAL 13.9m 17.473 36m (MK5.4b) 50m 17m 15m 22 .7m 140.7m 21.227m 49%

24.28m 13.83m 14.7m 0 66.71m

28.353m 14.803m 14.7m 0.436 75.765m

21.647m 2.197m 0.3m 22.264m 64.935m

57% 87% 98% 2% 54%

2.2.4 Fund Management Services to other IDA funded projects (a) Irrigation, Rural Livelihoods Agriculture Development Programmes (IRLADP)

Since 2005, the TST provides Fund Management services to the Farmer Services and Livelihood Fund component of the IRLADP. Out of the component allocation of US$ 17million, a total of US$ 14.13 million had been disbursed to LAs as at 30th June 2010. The project will run up to December 2011. (b) Community Based Rural Land Development Project (CBRLDP)

Out of the component allocation of US$15 million, a total of US$15.21million (i.e. including Government Contribution) had been disbursed as of 31st March 2010. The Project was closed on 31st
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December 2009. Negotiations for extension of certain components of the Project and extra funding had been concluded by the end of the year. However, the involvement of the TST in providing continued fund management and justification services remained to be clarified. 2.3 Procurement

Procurement of Goods, Works and Services under the LDF is guided by procurement principles and procedures based on the Public Procurement Act of 2003, World Bank and African Development Bank. Procurement is implemented at two levels within the LDF, namely at the National Level i.e. at TST and at the local level (Local Council and Community level). The TST provides technical support and capacity building to the Local Councils to assist them to carry out procurement functions effectively, while the Office of the Director of Public Procurement (ODPP) provides overall oversight of all procurement at the National and Local Councils level. During the period under review, the TST in collaboration with ODPP facilitated procurement training for Local Councils across the country, to ensure that LAs were well conversant with procurement procedures and principles as it relates to the LDF. Major procurements done during the year at the national level were towards institutionalisation of the LDF (i.e. procurement of motor vehicles and office equipment and computers) and consultancy services as necessitated during the first year of the programme. Table 2 below highlights major procurements on goods and services undertaken during the year.
Table 2: Major procurements during the 2009/2010 year
Item No. 1.0 Description Category Estimated Cost(US$) US$868,000.0 0 US$107,000.0 0 326,340.00 Actual Cost Source of Funding IDA Progress

Supply and Delivery of Motor vehicles Supply and Delivery of Office Equipment and Computers Supply and Delivery of Motor Vehicles Supply and delivery of a 30-seater minibus

Goods

US$711,470.54

2.0

Goods

US$76,675.39

IDA

3.0

Goods

AfDB

Contract signed and delivery of vehicles 70% done Contracts signed and delivery 100% done Preparation of specifications and bidding document Contract signed and awaits delivery of the minibus No Objection provided by IDA and the consultant to sign the contract when he arrives Short list and RFQ submitted for clearance.

4.0

Goods

MK21,100,000.0 0

MG

5.0

Strategic Planning and Institutional Development

Consultan cy

US$40,000.00

IDA

6.0

Detailed Economic assessments and Value chain analysis

Consultan cy

152,595.60

AfDB

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SECTION 3: ACHIEVEMENTS UNDER OPERATIONAL WINDOWS

This section presents progress achieved under the four operational windows of the LDF: Community Window, Local Authority Window, Performance Window and the Urban Window, during the first year of the LDF (2009/2010). Overall, considerable progress was achieved in all windows save for the Urban Window due to delayed effectiveness of the Local Economic Project (major activities were preparatory in nature). Window specific achievements are presented below: 3.1 COMMUNITY WINDOW

The LDF support Community window activities to enhance the capacity of communities to plan, manage, and sustain their own development which addresses their priorities. In addition, the window contributes towards improvement of welfare of the poor communities by increasing the availability, use and access to quality social and economic infrastructure. These projects are largely managed by communities themselves through Project Management Committees, with oversight from Local Assemblies. The maximum cost of a community managed project is US$40,000. In this window, the LDF promotes women empowerment by encouraging participation of women in decision making (i.e. at least 40% of Project Management Committee members), and beneficiaries of enterprise development initiatives should be 40%. Environmental safeguards are enforced in all subproject activities. In this vein, a total of 27 District Environmental Officers have been trained to facilitated implementation Environmental Mitigation Measures in the districts. During the year, various community projects were funded including: Primary School Staff houses particularly in rural areas; Open Menu investments and enterprise development initiatives. 3.1.1 Primary School Staff House Project (PSSHP)

The overall objective of the PSSHP is to improve the quality of education services in rural areas. The specific objective of the project is to enhance the quality of primary education through improved teacher to pupil ratio in the rural areas by attracting more teachers to teach in rural areas. The PSSHP is financed by the Government and the World Bank for implementation of 1,000 staff houses every year for a period of five years. Resource allocation to District Councils is based on two factors: (a) The teacher -to- house ratio i.e. the total number of teachers divided by the total number of houses available; (b) The number of pupils being served i.e. the teacher-to-house ratio in (a) above weighted with the number of pupils in that district. In the 2009/2010 fiscal year, a total of 1,000 staff houses were planned to be constructed. A total of MK 2.4 billion (approximately US$16.6 million) was disbursed to all 30 educational districts in the country. However, the disbursed resources were adequate for 985 houses instead of the planned 1,000
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staff houses due to escalation of prices of construction materials. This challenge emanated from delays in opening of Credit Ceiling Account for the LAs, due to systemic issues between the National Local Government Finance Committee, the Accountant General and the Reserve Bank. By the end of the year (June 2010), LCs had just rolled out preparatory activities including: (a) training of Project Management Committees; (b) opening of project bank accounts; (c) project launches; and (d) procurement of contractors and materials for the construction of staff houses. Physical progress was to be tracked from July 2010 as projects were not yet on the ground. Table 3 below portrays the district allocations and number of houses expected to be implemented.

21

Table: 3 Community Managed Projects -Primary School Staff Houses Disbursement Status as of June 2010
# EDUCATION DISTRICT TOTAL ALLOCATION (MK) TOTAL DISBURSED (MK) TOTAL MALAWI GOVT TOTAL IDA TOTAL NUMBER OF HOUSES

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Chitipa Karonga Rumphi Mzimba North Mzimba South Nkhata Bay Likoma Kasungu Nkhotakota Dowa Ntchisi Salima Mchinji Lilongwe Rural East Lilongwe Rural West Dedza Ntcheu Mangochi Balaka Machinga Zomba Rural Blantyre Rural Mwanza Neno Chikhwawa Nsanje Chiradzulu Thyolo Mulanje Phalombe Grand Total

72,736,196 72,356,373 60,486,889 77,483,990 92,676,929 71,026,991 12,638,058 152,283,244 74,065,578 124,409,233 52,795,464 63,335,565 102,932,163 119,834,308 159,533,977 91,433,575 98,089,413 89,638,341 73,875,667 66,184,241 110,148,809 113,662,176 38,399,376 33,599,454 54,979,449 36,747,922 61,436,448 104,831,280 81,662,048 38,267,216 2,400,389,431

72,736,196 72,356,372 60,486,890 77,483,989 92,676,929 71,026,991 12,638,058 152,283,245 74,065,578 124,409,232 52,795,463 63,335,566 102,932,162 119,834,308 159,533,976 91,433,574 98,089,414 89,638,342 73,875,666 66,184,242 110,148,808 113,662,176 38,399,376 33,599,454 54,979,448 36,747,922 61,436,448 104,831,280 81,662,048 38,267,217 2,401,550,371

36,368,098 36,178,186 30,243,445 38,741,995 46,338,464 35,513,495 6,319,029 76,141,622 37,032,789 62,204,616 26,397,732 31,667,783 51,466,081 59,917,154 79,766,988 45,716,787 49,044,707 44,819,171 36,937,833 33,092,121 55,074,404 56,831,088 19,199,688 16,799,727 27,489,724 18,373,961 30,718,224 52,415,640 40,831,024 18,358,423 1,200,000,000

36,368,098 36,178,186 30,243,445 38,741,994 46,338,465 35,513,496 6,319,029 76,141,623 37,032,789 62,204,616 26,397,731 31,667,783 51,466,081 59,917,154 79,766,988 45,716,787 49,044,707 44,819,171 36,937,833 33,092,121 55,074,404 56,831,088 19,199,688 16,799,727 27,489,724 18,373,961 30,718,224 52,415,640 40,831,024 19,908,794 1,201,550,371

29 30 25 34 40 31 4 60 28 52 26 24 41 52 60 33 48 35 34 28 41 44 14 13 21 16 24 48 33 16 985

22

3.1.2 Crisis Response During the year, the TST started processes towards reconstruction and rehabilitation of school infrastructure that was damaged by the earthquake in Karonga and Chitipa districts. The major activity done during the year was an assessment on the extent of damage done to school infrastructure in these districts. The assessment revealed that a total of 887 educational facilities (i.e. 376 classrooms, 278 teachers houses and 233 VIP toilets) were damaged by varying degrees. A total of US$5.4 million (approximately MK810 million) had been earmarked for this programme under the Additional Financing funding from the World Bank. The TST was expected to facilitate rehabilitation and reconstruction of these school facilities in two phases, with a total of 516 educational facilities (i.e. 212 classrooms, 101 teachers houses and 203 VIP toilets) rehabilitated/reconstructed in phase I (2010/2011 fiscal year). 3.1.3 Open Menu Investments

Local Assemblies were also assisted to cover various service gaps (in education, health, water and agriculture, among others) through an open menu mechanism. For an equitable distribution of resources to the LAs, an allocation formula based on the following factors is used: (a) Population (50%); (b) Population below the poverty line (25%); and (c) Vulnerability (25%). During the year, a total funding of MK750 million was allocated for implementation of various community managed projects across the difference sectors countrywide. Of the MK 750 million, a total of MK 682 million was disbursed to District Councils only while project proposals from Town and City Councils were yet to be received by the TST. By the end of the year, a total of 471 community managed projects had been rolled out across the districts. Table 4 below presents distribution of resources to the Local Councils.

23

Table 4: Distribution of resources for Community Managed Open Menu projects

# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Name of LA Chitipa Karonga Karonga Town Rumphi Nkhata Bay Likoma M'mbelwa Mzuzu City Kasungu Kasungu Town Nkhotakota Ntchisi Dowa Salima Salima Town Lilongwe Rural Lilongwe City Mchinji Dedza Dedza Town Ntcheu Mangochi Mangochi Town Machinga Liwonde Town Balaka Town Balaka Zomba Rural Zomba Municipality Chiradzulu Blantyre Rural Blantyre City Neno Mwanza Thyolo Luchenza Town Mulanje Phalombe Chikwawa Nsanje Total US$ Equivalent Allocation(MK) 6,299,772 13,333,548 1,261,300 8,663,770 9,745,243 354,860 45,635,207 5,867,336 26,368,741 1,300,516 14,584,399 15,138,049 26,400,897 15,752,638 831,665 42,403,292 28,452,785 23,703,184 36,969,095 625,676 27,000,568 50,287,295 1,208,944 25,589,111 482,147 439,063 16,397,323 49,737,286 3,627,706 37,394,363 25,274,211 24,890,732 11,342,925 20,933,817 32,031,823 271,520 32,912,253 33,145,606 12,341,575 20,999,755 750,000,000 5,360,972 23,703,184 36,969,095 625,676 27,000,568 50,287,295 1,208,944 25,589,111 16,397,323 49,737,286 37,394,363 25,274,211 11,342,925 20,933,817 32,031,823 32,912,253 33,145,606 12,341,575 20,999,755 681,960,639 4,874,629 42,403,292 14,584,399 15,138,049 26,400,897 15,138,049 26,368,741 8,663,770 9,745,243 354,860 45,635,207 Amount Disbursed (MK) 6,299,772 13,333,548

24

3.1.4

Savings and Investment

The LDF is promoting a savings and investment culture among communities, and particularly beneficiaries of Public Works Programme and other government funded programmes to enable them graduate out of continuous dependency on safety nets and participate in local economic development. During the year, COMSIP Cooperative Union (an agency that grew out MASAF) was contracted as a service provider to mobilize and train community groups in savings and investment activities. In order to ensure that the requisite outputs were achieved by the programme, a Memorandum of Understanding between the TST and COMSIP Union was drafted to guide technical and financial cooperation between the two parties in the implementation of this component. By the end of June, 2010, a total of 937 groups (i.e.18, 942 individuals) were assisted to engage in savings and investment activities. Of these, 11,311 were female (59.7%) and 7,631 men (40.3%). The high participation of women was encouraging in the year as economic empowerment of women is believed to go a long way in improving rural livelihoods. In terms of total savings portfolio, a total of MK13 million in savings has been mobilized by the groups and 95% of the groups had opened savings bank account with the Malawi Savings Bank. Institutional structures3 have been constituted at national, district and community levels to facilitate the linkage between Public Works Programme operation and community savings and investment activities. In this vein District Task Teams on Savings and Investment were formed to anchor savings and investment activities at the district level. A total of 18 district teams had been oriented on their terms of reference. Also, following constitution and orientation of the district teams, 178 extension workers from the 18 districts, from sectors of Agriculture, Forestry, Fisheries and Community Development were oriented.

3.2

LOCAL AUTHORITY WINDOW

Currently, subproject activities funded under this window are largely Public Works programme funded by the World Bank and Government. The primary objective of the Public Works Programme is to increase cash incomes for poor households and reduce food insecurity through expansion of opportunities in labour intensive activities. In addition, the programme contributes towards availability and access to socio-economic activities through various subprojects that are implemented in the programme. Just as in the Community Window, implementation of Environmental Safeguards is also enforced in the Local Authority Window. A number of factors were used to determine respective LA resource allocation and these included: (a) Population (50%); (b) Food insecurity (10%); Population below the poverty line (20%); and Vulnerability (20%). At the LA level, Local Authorities carried out intra district allocations based on the level of vulnerability in various areas.

At the national level- an LDF Enterprise Development Thematic Working group, comprising key sectors and related institutions (comprising Ministry of Trade, Ministry of Agriculture, COMSIP, BESTAP and TST); LA level District Task Teams: these are multisectoral teams for the integration of savings and investment activities of the LDF; and Extension Workers from various sectors.

25

By the end of the year, two cycles of the five planned PWSP cycles had been completed. The first cycle (i.e. implemented in the year 2008/2009) was enabled through retroactive financing arrangements that were made between the Government and the World Bank, that GoM could mobilise resources to fund the activities, pending effectiveness of the MASAF 3 APL II Project. The second cycle (2009/2010) was implemented during the year under review. Overall, a total of MK1.3 billion (US$9.4 million) had been transferred to resource poor households, totaling 546,621, with a total 4,536 community assets created or rehabilitated. In regard to achievements made in the specific cycles, a total of MK785,868,000 million was transferred to 327,445 beneficiaries across the country during the 2008/2009 PWSP operation, with a total of 2,311community assets created/rehabilitated across various sectors including roads, irrigation and forestation, among others. In the second cycle, resources amounting to MK570 million were transferred to 219,176 beneficiaries, with a total of 2,225 community assets created across different sectors (roads, forestation and irrigation, among others). Figures 1 below highlights progress made by the end of the year versus yearly beneficiary target.
Figure 1: Public Works beneficiaries reached versus yearly targets.
# Programme year 2008/2009 2009/2010 Total for two cycles Number of beneficiaries Target Actual 1,500 2,311 1,500 3,000 2,225 4,536 Number of subprojects Target Actual 120,000 327,445 120,000 240,000 219,176 546,621 % of target 272.9 182.6 228%

It is worth noting that the 2009/2010 Public Works programme was able to target 93.9% of resource poor people with only 6.1% leakage (i.e. non-eligible beneficiaries, who were already well off economically), according to the findings of the baseline survey (LDF, 2010). Although the leakage was lower, the TST intends to facilitate improvements in targeting of subsequent PW programmes beneficiaries to ensure that the leakage is minimized or eliminated. The following table presents amount of resources disbursed to Local Councils for the two cycles implemented:

26

Table 5: Local Council Specific status on public works programme: 2008/2009 and 2009/2010 cycles
# Name of Local Council Funds disbursed (MK) 2008/2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Chitipa Karonga Karonga Town Rumphi Nkhata Bay Likoma M'mbelwa Mzuzu City Kasungu Kasungu Town Nkhotakota Ntchisi Dowa Salima Salima Town Lilongwe Rural Lilongwe City Mchinji Dedza Dedza Town Ntcheu Mangochi Mangochi Town Machinga Liwonde Town Balaka Town Balaka Zomba Rural Zomba Municipality Chiradzulu Blantyre Rural Blantyre City Neno Mwanza Thyolo Luchenza Town Mulanje Phalombe Chikwawa Nsanje Total 7,917,146 16,731,775 1,451,780 10,970,492 12,573,934 476,771 56,678,081 7,658,144 34,838,748 1,448,804 20,592,497 19,361,254 32,622,548 20,773,418 1,062,564 54,889,711 31,432,825 28,133,000 53,043,704 804,323 35,117,586 65,420,335 1,386,998 40,709,712 819,618 746,379 26,243,651 76,683,167 6,040,072 55,976,519 39,692,981 41,563,561 17,232,503 33,567,777 51,141,847 461,567 49,073,750 50,318,041 19,839,629 32,002,792 1,057,500,000 2009/2010 5,484,901.59 10,800,346.88 1,126,762.65 7,119,540.80 8,137,498.71 310,913.00 36,590,977.34 4,897,831.46 21,992,652.44 1,161,793.96 12,079,183.07 12,048,173.15 21,922,055.48 12,976,498.86 742,954.49 37,042,465.21 24,004,841.30 19,444,781.47 29,731,211.32 558,937.26 21,899,552.78 40,131,618.32 1,079,990.23 20,229,428.43 430,717.74 392,229.94 35,064,628.81 38,183,193.76 2,954,243.33 28,019,593.22 19,748,879.17 20,543,090.52 8,863,630.05 17,430,361.41 25,242,064.84 242,558.20 24,794,103.61 25,644,996.02 37,990,086.85 32,940,712.39 670,000,000.05 Wage Component (MK) 2008/2009 6,333,717 13,385,420 1,161,424 8,776,394 10,059,147 381,417 45,342,464 6,126,515 27,870,998 1,159,043 16,473,997 15,489,003 26,098,038 16,618,734 850,052 43,911,768 25,146,260 22,506,400 42,434,963 643,458 28,094,069 52,336,268 1,109,598 32,567,769 655,694 597,103 20,994,921 61,346,533 4,832,058 44,781,215 31,754,384 33,250,849 13,786,002 26,854,221 40,913,478 369,254 39,259,000 40,254,433 15,871,703 25,602,234 846,000,000 2009/2010 4,387,921.27 8,640,277.50 901,410.12 5,695,632.64 6,509,998.97 248,730.40 29,272,781.87 3,918,265.17 17,594,121.95 929,435.17 9,663,346.46 9,638,538.52 17,537,644.38 10,381,199.08 594,363.60 29,633,972.17 19,203,873.04 15,555,825.18 23,784,969.06 447,149.81 17,519,642.23 32,105,294.65 863,992.19 16,183,542.74 344,574.19 313,783.95 28,051,703.05 30,546,555.01 2,363,394.66 22,415,674.58 15,799,103.34 16,434,472.42 7,090,904.04 13,944,289.13 20,193,651.87 194,046.56 19,835,282.89 20,515,996.82 30,392,069.48 26,352,569.91 536,000,000.04 No. of Beneficiaries 2008/2009 2,639 5,577 484 3,657 4,191 159 18,893 2,553 11,613 483 6,864 6,454 10,874 6,924 354 18,297 10,478 9,378 17,681 268 11,706 21,807 462 13,570 273 249 8,748 25,561 2,013 18,659 13,231 13,855 5,744 11,189 17,047 154 16,358 16,773 6,613 10,668 352,500* 2009/2010 1,828 3,600 376 2,373 2,712 104 12,197 1,633 7,331 387 4,026 4,016 7,307 4,325 248 12,347 8,002 6,482 9,910 186 7,300 13,377 360 6,743 144 131 11,688 12,728 985 9,340 6,583 6,848 2,955 5,810 8,414 81 8,265 8,548 12,663 10,980 223,333*

*Actual number of beneficiaries reached in 2008/2009 cycle was 327,445 beneficiaries and 219,176 for 2009/2010 cycle. Other LCs were not able to recruit all planned beneficiaries (other resources were used to buy inputs e.g. seedlings in some cases).

27

3.3

URBAN WINDOW

The Urban Window of the LDF has been designed to finance socio-economic infrastructure in urban areas to stimulate local economic development which is both labour and capital intensive as prioritised in the District Development Plans or Urban Development Plans. Urban areas include cities, municipalities, towns; district centres (Boma); rural growth centres and all urban settlements as classified in the National Physical Development Plan (NPDP). The Window was mainly being financed by the African Development Bank, and particularly focused on four rural growth areas in Mmbelwa, Ntchisi, Mangochi and Phalombe respectively. However, an appraisal process by the German Cooperation Group (KfW) for funding of other districts in the country was underway by the end of the year. The minimum project cost under the Urban Window is US$ 250 million and therefore the Window is termed the challenge window because of the magnitude of the projects that are anticipated for the LAs to manage. During the year, major activities done were largely preparatory in nature due to delayed effectiveness of the Local Economic Development Project. The LED Project became effective on 20th October 2009 with first disbursement effected on 19th January 2010. Subproject activities were therefore expected to commence later in the next year. Below are the major activities done during the year: 3.3.1 LED Project launches Following the effectiveness of the Project on 19th January, 2010 the TST facilitated a national LED Project launch held in Mangochi in February 2010. This was followed by District Launch Technical Workshops that were intended to sensitise key stakeholders in the four LED Project districts on the Project and their expected roles and responsibilities. 3.3.2 Pre-investment activities

The implementation of Urban Window projects requires a lot of pre-investment activities to be done due to the large scale nature of the projects to be implemented. As such, during the year, the TST was committed to kick-start laying down these foundations for project activities, including preliminary assessments and scoping work in the four beneficiary districts of Mzimba, Ntchisi, Mangochi, and Phalombe. In addition, Urban Structural plans for these growth center areas. Process for contracting consultancy services to undertake Detailed Economic Assessment and Value Chain Analysis study in the four growth centre districts (i.e. technical evaluation) were also done in the year. 3.3.3 Establishment of Business Support Units

The LED Project activities are expected to generate a lot of entrepreneurs that would require continuous support from the district Councils. This therefore necessitated establishment of Business Support Units in the four LED Project districts. Office space and trade officers had been identified by the end of the year.

28

3.3.4 Pre-appraisal processes for support from German Cooperation Group During the year, the TST facilitated a pre-appraisal process by the German Cooperation Group (KfW) that have earmarked resources amounting to EUR 11 million (US$14.5 million) for the urban window. 3.3.5 Support to other government institutions

The TST provided technical support services to Lilongwe City Council, Kasungu Municipal Council and Balaka and Ntcheu District Councils, particularly in areas of urban infrastructure developments (i.e. Sports Complex, Civic Offices, and Sports Ground). 3.4 PERFORMANCE WINDOW

The Performance Window of the Local Development Fund is aimed at improving capacities of local governance institutions at National, Local Authority and community levels for improved local governance and service delivery at the local level. During the first part of the year, the TST focused on putting in place operational frameworks for the respective windows of the LDF, including an LDF operational manual to guide implementation of the programme. 3.4.1 Operationalisation of the LDF

A national stakeholders workshop4 for the operationalisation of the LDF was held in July 2009 in Mangochi district to sensitise key stakeholders of the LDF programme and their expected roles and responsibilities in the implementation of the programme. During the workshop, stakeholders had the opportunity to provide inputs into the operational frameworks. The TST proceeded with four Regional workshops in August of the same year, to ensure that key stakeholders from the districts were also well conversant with principles and procedures of the LDF interventions. In addition, various interventions were undertaken in the course of the year in response to the following workshop recommendations:
i. Revise LDF manuals: The LDF Task Team to incorporate workshop comments into the various manuals before regional orientation meetings were undertaken Institute disciplinary measures: Disciplinary measures for abuse of LDF resources need to be included in the operational manual Institute Joint Annual Review: Stakeholders to suggest date for the Joint Annual review, preferably within September each year. Fill key LA staff positions: Ministry of Local Government and Rural Development to fill LA staff vacancies Clear LA audits: The backlog of audits to be cleared in related LAs Define LA minimum contribution: LA contribution in urban infrastructure development need to be defined Clarify resettlement framework: The resettlement framework need to be clarified

ii.

iii.

iv.

v. vi.

vii.

The workshop brought together key stakeholders including: District Commissioners/Chief Executive, Cooperating Partners, Government ministries and the TST.
4

29

viii.

Distribute PAD to LAs: Project Appraisal Document for the MASAF 3 APL II- LDF mechanism Project to be distributed to all LAs Undertake regional orientation meetings: The operational framework of the LDF need to be widely disseminated to more LA members and for this purpose regional meetings in all the three regions need to be conducted within the month of August 2009. Follow up on policy guidelines on TBAs: There is need to follow up with the Ministry of Health on policy guidelines regarding Traditional Birth Attendants.

ix.

x.

3.4.2

LA capacity assessment

Early in the year, the TST undertook a baseline assessment of capacities in the LAs to assess the level of readiness for LAs to access LDF resources. The Minimum Access Conditions (MAC) assessment was intended to appraise LAs on the availability of requisite capacities in five functional areas, including: (a) Human Resource Availability; (b) Financial Management and Accountability; (c) Local Development Planning; (d) Urban Development Planning; and (e) Procurement. The findings of the MAC exercise were instrumental in the preparation of capacity enhancement plans that were being implemented during the year. In general, the MAC exercise revealed the following: i. Of the five functional areas assessed, only one functional area (i.e. Procurement) was rated very satisfactory in all the 40 LAs, as all LAs had Internal Procurement Committees in place. In addition, copies of procurement guidelines, manuals and the Procurement Act could be sighted in almost all the LAs. The only shortfall under procurement was that over half of the LAs (i.e. 22 of the 40 LAs) did not have consolidated Procurement Plans. Only 5 of the 40 LAs had up to date audited accounts. However, at the time of the exercise, the GoM had already instituted a special audit exercise to the LAs to have the account audited, and the exercise was finalised by the end of the year. Varying levels of gaps were also observed across the LAs in the remaining three functional areas (i.e. Local Development planning; Urban development Planning and Human Resource availability).

ii.

iii.

During the year, the TST in collaboration with the National Local Government Finance Committee also facilitated the first annual performance assessment of the LAs, namely Performance Assessment Measures (PAM). The PAM as a performance assessment instrument will be implemented annually and will provide critical input into the LA performance grant system for rewarding LAs. By the end of the year (June 2010), a draft report for 2009/2010 had been circulated to stakeholders for comments in readiness for a stakeholders meeting. It was expected that the findings would contribute towards development of capacity building plan and refinement of the instrument. 3.4.3 Implementation of Capacity Enhancement activities Following identification of various capacity gaps through the MAC exercise and the development of a related capacity enhancement plan, the TST in collaboration with stakeholders started to respond to these needs during the year. The various capacity enhancement initiatives were being addressed through two mechanisms (a) Supply-driven to respond to both generic gaps and LA specific gaps depending on the significance of need during the year; and (b) Demand led responding to LA requests based on their assessment of need. The following initiatives were implemented during the year:
30

Supply-Led - The TST facilitated training of all Environmental District Officers on Environmental Safe Guards, particularly as it related to implementation of LDF supported interventions. In order to incorporate lessons on decentralisation and local governance in the implementation of the LDF, the TST facilitated a Study Tour to Uganda and Rwanda for nine Government officials led by the Principal Secretary, Ministry of Local Government and Rural Development. In addition, vehicles were provided to the Ministry of Local Government and Rural Development and National Local Government Finance Committee. Demand Driven During the year, the TST provided capacity building financial Support to Mzimba District Council (MK3, 329,440.00) for VDC training and Nkhotakota (MK1, 499,850.00) for preparation of District Development Plan. By the end of the year the TST had received requests from Salima, Nsanje, and Luchenza Councils which were under review for possible funding.

31

SECTION 4: NATIONAL INSTITUTIONAL STRENGTHENING

Responsible for knowledge generation and application with the objective of strengthening community participation in project implementation and documenting and sharing community fostering experiences with service delivery. The component provides the organization with strategic support for its overall development and performance improvement strategy through the development of Knowledge and Information Support System (KISS) for the LDF that will be focused on programme accountability and learning. Major activities undertaken during the year were therefore focused towards establishment of structures and systems for ensuring transparency and accountability in LDF funded operations. The sections below presents key achievements made in the year. 4.1 Joint Annual Review (JAR) Forum

In order to facilitate performance measurement of the LDF, the Government and Cooperating partners agreed to institute an annual forum that would be done jointly by the two parties including other key stakeholders, namely the Joint Annual Review (JAR). The first JAR therefore took place during the year (28th January 2010) and it brought together all key stakeholders5. The following issues and conclusions were made during the forum, some of which were addressed during the year: i. The future of the Local Development Fund - The LDF is currently under transition and that eventually donors will pool their resources into a basket for local development financing; Definition of the LDF scope Government need to clarify the scope of LDF particularly in terms of its scalability and potential to incorporate other funding sources such as those coming through the SWAP arrangements; The role of the Joint Annual Review in the implementation of the LDF The JAR is recognised as a critical supervision instrument by both Government and Cooperating Partners. However, Cooperating Partners expressed interest to contribute to the development of generic Terms of Reference for the Joint Annual Reviews; Institutionalisation of LDF governance structures (i.e. the Steering Committee and its sub committees) Participants encouraged Government to ensure that these structures were in place and particularly recommended that the Steering Committee could start addressing policy issues emerging from the JAR ;

ii.

iii.

iv.

Local Councils, Ministry of Finance, Ministry of Local Government and Rural Development, Ministry of Development Planning and Cooperation, Sector ministries (Industry and Trade; Agriculture and Food Security; Lands; Transport and Public Works; Gender); National Audit Office; Education Infrastructure Management Unit; the National Local Government Finance Committee; Cooperating Partners (World Bank, African Development Bank, GTZ, UNICEF, UNDP/UNCDF and the Irish Aid) and the LDF Technical Support Team. 32

v.

Opening of Local Assembly LDF accounts Due to delays in the opening of Credit Ceiling Accounts (i.e. accounts for managing LDF resources at the LA level), the meeting suggested that the Ministry of Finance, the National Local Government Finance Committee and the Accountant General make arrangements to speed up the process; Rolling out of IFMIS to Local Assemblies Concerns over delayed roll-out of IFMIS. Participants suggested that efforts should be made to ensure roll-out of the system to all LAs. Also, the scope of the IFMIS to cater for issues of project management and output reporting at LA level needed to be clarified. Filling of critical LA staff positions The meeting encouraged Government to ensure that LA staff issues were concluded; The need for stakeholder inputs towards criteria for assessing LA capacity gaps Participants suggested that stakeholders should be given opportunity to contribute to the criteria for future LA performance assessments; Coordination with other Public Sector Reform Programmes The need for more coordination with other Public Sector Reform Programmes such as the Decentralisation and Capacity Development Programme prepared by the Ministry of Local Government and Rural Development; and Results accountability and use of Monitoring and Evaluation results at the local level Participants emphasised the need to clarify the interface between the LDF Monitoring and Evaluation framework and the National M&E framework. The meeting also suggested that the LDF should facilitate use of M&E results at the Local Assembly level. Supervision Missions by Cooperating Partners

vi.

vii.

viii.

ix.

x.

4.2

During the year, 2009/2010, the World Bank and the African Development Bank undertook supervision missions to the Local Development Fund to provide technical and strategic support towards implementation of various aspects of the MASAF 3 APL II-LDF Mechanism Project and the Local Economic Development Project respectively. Key issues highlighted during the mission are presented in following sections: 4.2.1 Supervision Mission by the World Bank

4.2.1.1 First Mission (June 29th to 10th July 2009) The World Bank undertook its first mission between 29th June to 10th July 2009 to review the progress of implementation; agree on a revised 6 month work plan; and participate in the LDF operationalisation workshop. Implementation progress was rated satisfactory as the Government was in the process of finalising relevant LDF implementation handbooks and that the Government was able to use existing guidelines to finance the 2008/2009 public works programme6. The IDA also recognised efforts being done by the Government towards institutionalisation of the LDF within the overall Government

The programme was implemented before effectiveness of the MASAF 3 APL II-LDF Mechanism Project using retroactive financing arrangements as agreed upon between the IDA and Government.
6

33

programme management. However, specific issues raised during the mission were being addressed by respective stakeholders in the course of the year. 4.2.1.2 Second Mission (18th to 29th January 2010)

The IDA undertook another mission in January 2010 (18 to 29th January 2010) to: Handover of the Project to the new Task Team Leader; review progress and support project implementation; hold discussions on the use of funding that may become available under IDA Crisis response Window to potentially expand on the Public Works component under the project; discuss possibility of channelling additional financing through MASAF to support earthquake recovery efforts in Karonga and Chitipa Districts and participate in LDF Joint Annual Review. The mission considered the overall progress on Project Development Objective and Implementation to be moderately satisfactory. The Project rating was undermined by delays in the following areas : (a) recruitment of the Executive Director; (b) institution of the Steering Committee and the National Technical Advisory Committee (NTAC);(c) recruitment of fiduciary staff at the local government level; and (d) the roll-out of the Integrated Financial Management System (IFMIS). On the other hand, overall Project Management was rated satisfactory Financial Management was rated satisfactory and procurement was rated moderately satisfactory. The rating was affected by the fact that the Project had partially achieved some of the milestones agreed to for the first six months of implementation. However, these issues were being addressed by relevant authorities during the year. 4.2.1.3 Third Mission Additional Financing (26th May to 4th April 2010) The IDA undertook a third mission during the year, 26th May to 4th April 2010 particularly in response to Government request for Additional Financing under the Project for scaling up PWSP operation in food insecure districts and for reconstruction and retrofitting earthquake damaged infrastructure in Karonga and Chitipa districts. The mission was therefore intended to: (a) reach agreement with the Government on the specific activities that Additional Financing Project will support; (b) assess financial, economic, institutional, technical, environmental, and social aspects of the proposed project; and (c) review and update the project implementation arrangements. The Project rating on implementation progress remained moderately satisfactory (since January mission) due to limited progress made on key issues highlighted during the January mission. It was noted that some of the agreed actions were not addressed: (a) establishment of the Steering Committee and the NTAC; (b) establishment of internal audit unit for Local Councils; (c) sharing information by Ministry of Finance on establishment of procurement function in Local Councils including staffing status; (d) recruitment of the Executive Director, among others. However, during the mission, the IDA had made agreement with Government to finalise processes towards recruitment of the Executive Director and formation of the Steering Committee. It was further agreed that Steering Committee meeting could be attended by a delegated staff of a grade not lower than a director to enable effective discussions on policy issues during the meetings. In regard to Additional Financing, the mission agreed with Government that the proposed Additional Financing would support reconstruction/retrofitting of education infrastructure in Karonga and Chitipa and scale up Public Works and Savings and Investment initiatives in vulnerable districts in the Southern region, as well as Karonga and Chitipa in the Northern region.

4.2.2

Supervision by the African Development Bank

34

The African Development Bank undertook its first mission in January 2010 (a launching mission) to support preparatory processes towards rolling out of LED Project activities as the Local Economic Development Project became effective for first disbursement on 19th January 2010. In addition, the Bank participated in the first Joint Annual Review of the LDF. However, preparations for a second mission, (9th to 16th July 2010) were underway by the end of June 2010. 4.3 Establishment of LDF structures

The Government kick-started processes towards establishment of institutional structures that would provide both policy and technical oversight over LDF activities. By the end of the year, a Steering Committee had been established to provide policy oversight, while processes were underway for establishment of the National Technical Advisory Committee (NTAC) to provide technical assistance. The Steering committee is chaired by the Secretary to Treasury, with membership from Secretary for Local Government and Rural Development; Secretary for Development Planning and Cooperation; Principle Secretary for Public Sector Reform; Chairperson for Malawi Local Government Association (MALGA); Chairperson for National Local Government Finance Committee; Chairperson for NTAC (Secretary for Rural Development); Chairperson for CONGOMA, with the Executive Director for LDF providing secretarial services. Processes were underway for the Steering Committee to hold its first meeting during the month of July. 4.4 Strategic Planning and Institutional Development

A consultant had been identified to facilitate the institutional building process that will enable key stakeholders to determine the appropriate institutional mandate and structure of the LDF and the Technical Support Team. This process is expected to achieve the following:
i. ii. A Visioning Workshop with TST staff and all key Government ministries and agencies that will determine the strategic thrust and functional linkages of all key players in the operations of the LDF. Assessment of the capacity and current mandate of the TST management to effectively deliver and meet the expectations of GoM with regard to LDF objectives and that of the beneficiaries of its (LDF) programmes. Determination and adoption of an appropriate institutional and management framework of the LDF. Undertaking of a strategic planning process for TST in the context of the envisioned new status and mandate

iii. iv.

The consultancy had delayed substantially due to prolonged contract negotiation and clearance processes by respective parties. The assignment is therefore expected to start once the contract is signed during the next fiscal year. 4.3 4.3.1 Monitoring and Evaluation Setting up of a Monitoring and Evaluation System

A Monitoring and Evaluation system was put in place at the beginning of the year, as a mechanism for facilitating performance measurement for LDF programme accountability and decision making (using experiences from the MASAF 3 APL I Project). In this vein, Monitoring and Evaluation framework and a Monitoring and Evaluation plan were prepared to guide implementation of M&E activities and these were shared with the Ministry of Development Planning and Cooperation. Also, to ensure that
35

monitoring data generated from the system was accurate, timely and relevant, the TST prepared reporting formats for use by the Local Councils. A total of 36 of the 40 M&E officers from the LCs were oriented on these data collection instruments. In addition, Results Framework for the MASAF 3 APL II-LDF Mechanism Project was prepared to guide tracking of progress towards achievement of Key Performance Indicators (See section 5). 4.3.2 Establishment of baseline information for Public works programme and Local Economic Development Project

As part of setting benchmarks for evaluation of the Public Works programme, the TST facilitated collection of baseline data on the 2009/2010 PWSP beneficiaries in 38 of the 40 LCs (except for Lilongwe and Mzuzu City Councils councils were not able to collect the data due to other challenges. The exercise was facilitated by M&E experts from LAs, Ministry of Local Government and Rural Development, Ministry of Development Planning and Cooperation and the TST. A baseline study report is therefore in place. Major findings shows that the programme did well in targeting resource poor households, as 93.7% of the beneficiaries were within the target population. In the same vein, the TST in collaboration with the World Bank started processes towards designing of an impact evaluation framework of the PWSP. A design had been developed by May 2010 and it was expected that sampling of panel households would commence during the next year. On the other hand, the TST started processes towards establishment of baseline data for the Local Economic Development Project through preparation of baseline data collection instruments. The baseline survey is expected to be done during the next year. 4.3.3 Implementation Support Mission to Local Councils

An implementation support mission to LCs was undertaken in December, 2009 to support implementation of the Public Works subprojects7. The overall objective of the PWP subproject Implementation Support Mission was to follow up on the extent to which implementation guidelines (principles and procedures) were being adhered to by the Local Councils for employment of corrective measures where errors were identified. Key conclusions and recommendations, among others, included the following: i. In general LCs were able to conform to implementation guidelines on the number of beneficiaries, the wage component and afforestation except in isolated districts where lapses were noted; Although all LCs received PWSP implementation guidelines, these were not shared with relevant sector heads (e.g. the District Community Development Officers, District Forestry Officer and in some cases Monitoring and Evaluation Officers) which compromised on the application of related aspects of the guidelines; In majority of the LCs project preparatory activities such as vulnerability assessment mappings, community wealth ranking exercises were not conducted. This was attributed to delayed funding from the TST. Major recommendation was that funding for administration costs should be released to LCs by August each year. On the other hand, LCs need to be encouraged to put in place mechanisms for monitoring compliance to vulnerability assessment indicators during beneficiary recruitment by communities;

ii.

iii.

Note that community window subprojects were not yet on the ground

36

iv.

v.

vi.

vii.

The need for the TST in collaboration with selected district forestry officers to refine implementation guidelines for afforestation projects to sieve out inconsistencies that were observed in regard to norms from the forestry department; The need to clarify the linkage between Public Works operation and the Savings and Investment Component as observations showed that most LCs had limited understanding on what was expected to be done; Village Action Plans (VAPs) and Social Economic Profiles (SEPs) under District Development Plan (DDP) were not extensively and fully used for project identification and prioritisation as political leaders valued more equitable distribution (equal sharing of resources). There is need to employ mechanisms for ensuring that PWSP projects originate from the VAPs; City Assemblies had problems submitting projects to be supported through the PW programme. These probably need additional support towards project identification and preparation;

The TST undertook an active review of the issues for decision making and generation of lessons for improvement of subsequent PWSP operations. 4.3.4 Development of social accountability framework A framework for implementation of Social Accountability tools, particularly Community Score Card was prepared towards the end of the year and expected to be undertaken early in the next year. 4.4 4.4.1 Management Information System (MIS) Readiness of systems for management of LDF data and information

The TST carried various assessments on LC data and information management to determine the level of readiness by the LCs to manage LDF information requirements and subsequently facilitate establishment of mechanisms for effective management the systems. Major findings showed that various MIS systems were being used across the LCs with some using Local Assembly Information Management System (LAMIS8), while others were using excel sheets and Microsoft Access. Also, the TST made further assessment of the LAMIS to generate lessons from LCs that continued its usage and those that had abandoned the system for application in the implementation of future systems. In related activity, LC Management Information Officers were oriented in various aspects of information management of the LDF programme at the LC level. 4.4.2 IFMIS: Provision of Technical Assistance

During the year 2009/2010, the TST took a key role in the preparatory processes for rolling out of IFMIS to LCs. By the end of the year, the IFMIS had been rolled out to seventeen (17) LAs, six (6) of which were launched on pilot (i.e. Blantyre City, Thyolo, Mangochi, Mchinji, Lilongwe and Mmbelwa Districts). Also, the TST had drafted Terms of Reference for costing the roll out of IFMIS to remaining LAs and for the review of 6 IFMIS pilot sites.

LAMIS is an information management system that was introduced to LCs by MASAF during the MASAF 3 APL I project.

37

4.4.3

Development of Knowledge Management infrastructure

The TST is expected to put in place a Knowledge and Information Sharing System (KISS) to facilitate documentation, storage and sharing of information as well as preservation of knowledge gained for future use. As part of the KISS infrastructure development, the TST prepared terms of reference for a consultant to undertake an Information System Strategy Planning (ISSP) study. Also, terms of reference for contracting a consultant to develop an LDF website and intranet were prepared. These assignments were expected to commence during the next year. 4.5 4.5.1 Development Communication Development of an Interim Development Communication Strategy

An Interim Development Communication Strategy was prepared to guide implementation of various development communication activities aimed at addressing specific strategic communication issues. A mix of communication approaches were used in implementation of the strategy, including: Advocacy; Information, Education and Communication (IEC); Institutional Strengthening; and Community Mobilisation, in line with the following core activities in the strategy: i. ii. iii. iv. v. vi. Informing the public of the establishment of the Local Development Fund as an InterGovernment Fiscal Transfer Mechanism for financing local development; Clarifying the policy and strategic context for the LDF Mechanism; Managing change from MASAF and the expectation of stakeholders; Advocating and promoting transparency and accountability; and Raising awareness on resource allocation and roll-out of the 2009-2010 LDF programme activities; and Building communication capacity at the LC and community levels.

On the other hand, the TST started processes towards preparation of a Comprehensive Communication Strategy. By the end of June 2010, Terms of Reference for contracting a consultant had been prepared and sent the World Bank for approval. 4.5.2 Orientation of the media on LDF activities

Considering the critical role that the media were expected to play in the implementation of LDF activities and the need to enhance their role in reporting on development interventions, the TST engaged five media houses on a media tour to a sample of the Public Works subproject sites, in December 2009. The five media houses included the Malawi Broad Casting Corporation; Nation Publications Limited; Blantyre Newspapers; and Zodiak Broadcasting Station. Also, early February, 2010, the TST in collaboration with key stakeholders9 organised an orientation workshop for the media practitioners to raise awareness and understanding on the LDF. Major areas covered included LDF design issues; Implementation progress; Financial Management arrangements; and the Integrated Rural Development. The workshop was concluded with a live onehour radio programme on MBC radio 1, during which participating journalists posed questions to the panel comprising: Acting Executive Director of the LDF-TST; Director of Operations-TST; Principal Rural

LA (Mangochi District, Ministry of Local Government and Rural Development, National Local Government Finance Committee and TST and various media houses-Television Malawi; Malawi Broadcasting Cooperation, Zodiac Broadcasting Services, among others)

38

Development Officer (MLG&RD); Director of Rural Development; District Commissioner for Mangochi; and Director for Assemblies Financial Management Services (NLGFC). 4.5.3 Development Communication Capacity Building workshop

The TST organised a workshop to sensitise District Information Officers (DIOs), District Community Development Officers (DCDOs) and District Management Information Officers (MISOs) on their roles and responsibilities related to LDF Communication and information management requirements. This was a mechanism for creating synergies and developing appropriate capability for managing communication and information at the District Council level. Areas of focus included: Communication for Development; Strategic Communication for Community Driven Development (CDD); Crisis Communication in the LDF; Communication in Local and Rural Development in Malawi; and Management Information Systems. Key recommendations from the workshop included the following: i. ii. iii. iv. v. 4.5.4 The need to facilitate provision of job descriptions for Local Council staff to avoid conflicts of roles; Inform Local Council management regarding the role of the LDF Development Communication cluster so that it is integrated into the LDF planning framework at the LC level; Provide resources for LC level development communication interventions; Collaborate with line ministries on staff issues with potential sectoral policy implications; and Follow up the formulation of LC level development Communication strategies for LDF to ensure consistency with the Interim Development Communication Strategy. Orientation of Civil Society Organisations (CSOs)

An Orientation session for Civil Society Organisations was undertaken in May 2010 as part of exploring the role of CSOs in advocating for and promoting Transparency and Accountability in the implementation of LDF funded activities. The workshop was organised in recognition of the fact that CSOs could play a critical role in ensuring that resources disbursed to Local Councils were used on intended activities and achievement of the intended outcomes. In addition, CSOs were viewed to play a significant role in assisting communities better manage their development processes. On the other hand, representative of the CSOs, Council for Non-Governmental Organisations in Malawi (CONGOMA) appreciated the effort that the TST had made to engage CSOs to play their rightful role in the implementation of LDF supported interventions and therefore encouraged CSOs to position themselves in line with their areas of expertise/competencies towards the respective windows of the LDF. Major recommendations from the workshop included the following: i. ii. The TST to sustain the productive engagement with CSOs e.g. by facilitating implementation of issues generated from the workshop; The need for TST to have follow up meeting the National Initiative for Civic Education (NICE) for further exploration on how the civic infrastructure of NICE could be of use for LDF development interventions at the Council and Community levels; The issues generated from the workshop to input into the Comprehensive Development Communication Strategy; The TST to follow up with CONGOMA on its pledge to finance Joint LDF quarterly review (JQRs) in districts of its jurisdiction; and

iii. iv.

39

v.

The TST to explore possibility of incorporating special interest groups (particularly the physically challenged) into the Steering Committee, NTAC and District Executive Committee (DEC). Production of public relation art facts

4.5.5

A total of 25,000 wall calendars and 544 diaries for the year 2010 were produced and shared with stakeholders, including LCs and Traditional Authorities.

40

SECTION 5: PROGRESS ON PERFORMANCE INDICATORS

This section highlights progress achieved towards Key Performance Indicators, particularly under the MASAF 3 APL II-LDF Mechanism Project. Key Performance Indicators for the LED Project are not included because implementation of subprojects was not yet rolled out by the end of the year due to delayed effectiveness of the LED Project. Overall MASAF 3 Program Objective (APL series I to III 2003-2015): to improve service delivery by communities supported by Local Governments and Sector Ministries through the CommunityDriven Development (CDD) approach and within the Malawi Growth and Development Strategy framework so that Malawi can progressively move towards the attainment of 12 MDG indicator targets.
Table 6: Results Framework for MASAF 3 APL-II LDF Mechanism Project (original Project and Additional Financing). Key Performance Indicators MASAF Program Achievements since inception in 1995 Baseline MASAF3 APL 2 Progress as of June, 2010 (End of first year) Original EOP Targets 09/2013 Revised EOP Target 10 09/2013 Use of Information

Project Development Objective: To improve the livelihoods of poor and vulnerable households and to strengthen the capacity of local authorities to manage local development. 2,074,454 (total earnings US$28.0 million) 45.6% female - PWSP beneficiaries with New indicator savings of at least 50% of PWSP wage one year after participation (of which % female) - PWSP beneficiaries that 68% (based on were able to buy MASAF 3 APL I agricultural inputs Impact Evaluation following participation in only) the PWSP (of which% female) Person days provided in 47,971,196 labor intensive work in 45.6% public works (number, of % which female) PWSP Beneficiaries (number, % female) 0 546,621 (47 % Female) 600,000 900,000 (40% Female) (40 % Female) 33,750 (40 % Female) Document contribution to the Malawi Growth and Development Strategy and the MDGs

New indicator

Information N/A (This is available new February 2011for indicator) 2010 beneficiaries Tracking study under discussion N/A (This is new indicator)

68%

540,000 (40 % Female)

6,609,336 Female: 47%

7,200,000 10,800,000 Female: 40% Female: 40%

10

The revised EOP target value reflects the original Projects EOP targets plus the additional activities to be undertaken with the Additional Financing (Crisis Response Window)

41

Local Authorities able to set objectives to 67.8% 70% 70% 52.7% 37.5% implement community service packages (in annual investment plan) and achieve at least 70% of their annual targets (% of LA)11 (Trigger for APL III) Direct project 3,030,279 3,034,759 4,730,729 11,525,136 0 beneficiaries (number), of Over 40% (47 % Female) (40 % (40 % which female (%) (core Female) Female) female indicator)12 Intermediate outcome indicators Component 1: Community Livelihood Support. Intermediate Outcome: Communities and Local Authorities able to successfully manage (prepare, implement, evaluate) a targeted public works program Roads rehabilitated, 22,018km 0 7,760 km No set 18,00013 rural (km) (core target Assess indicator) effectiveness of public works Area reforested (ha) 10,833 ha 0 1,442,440 No set TBD processes in seedlings14 targets achieving desired Area provided with 128.6 (MASAF 0 128.6 No set 250 outcomes, impact irrigation and drainage 3 APL II only). targets of community services, assets created on new/rehabilitated (ha) improved (core indicator) services, and PWSP sub-projects No set review implemented for 373 311 0 targets sustainability - irrigation 596 518 0 700 strategy improvement (number) 1,611 1,370 0 - reforestation (number) (Based on 1,300 - road maintenance MASAF 3 APL I (number) and II only)15 5,000 People with access to improved learning environment (number)16 - Primary school staff houses constructed 248,640 0 0 12,000 50,000

1,701

1,000

1,300

Every LA has an annual investment plan. Annual values are determined by the Performance Assessment Measures (PAM) undertaken by Ministry of Local Government, facilitated by TST; the final report is released September each year. The PAM exercise did not measure this indicator for 2009, however, the PAM instrument is expected to be reviewed and will take into account this indicator, among others as required. Community service packages are set forth for education, health and water and sanitation in alignment with the Medium Term Expenditure Framework (MTEF). 12 Direct project beneficiaries are from PW programs, Training activities and primary school teachers and pupils. Beneficiaries under saving & investment scheme are subsumed under the PWPS beneficiaries group. 13 Target numbers are based on actual numbers as of April 2010 after implementation of the first cycle of community driven sub-projects. Actual achievements may shift between the main areas of focus: roads, forestation and irrigation. 14 To be converted to hectares based on sector norm during the September 2010 implementation support mission. 15 Data on MASAF 1 and MASAF 2 not segregated 16 Improved learning environment includes: new and rehabilitated schools, staff houses and expected improvements in efficiency of educational investments supported by the community fund. Number of people with access is: 60 pupils per classroom built, 5 persons per teacher staff house built.
11

42

- Student/classroom ratio in intervention areas with school construction - Classrooms built/ rehabilitated (number) (core indicator) People with access to improved sanitation under the project (number) (core indicator)
17

1:60 (based on achievements up to MASAF 3 APL I) 4,144

1:90 (subprojects not yet rolled out) 0

1:60

1:60

987,120

Crisis response programme Crisis response programme

244

27,750

- VIP toilets built (number)

8,226

Crisis response programme

231

Safety Net Programs (Public works subprojects) implemented (number) Annual PWSP cycles completed according to plan18 (Trigger APL III) Compliance with targeting methods: Share of Beneficiaries of PWSP complying with eligibility criteria (identified through verification exercise) (%) Beneficiaries paid in a timely manner: Wages paid within two weeks of works (%)

7,610

4,536

7,500

9,000

N/A

(0%) Programming delays of funding to LAs Tracking studies under discussion

70%

70%

90%

90%

50% (MASAF 3 APL I Impact Evaluation)

50% 19

Tracking studies under discussion Indicative figure will be available from the Community Score Card process planned October 2010

90%

90%

17

Calculated from pupils and teachers having access to 231 new VIP toilets constructed under the project, assuming one VIP toilet serving 2 classrooms at avg. size of 60 pupils. PWSP cycle spans over one year and is defined as follows: (i) assessment of drought-affected or food insecure labor-surplus households vulnerability assessment (April-July of each year), (ii)calculation of allocations to each of the Local Authorities (June of each year), (iii) disbursement of allocations to LAs (August of each year), (iv) execution of PWSPs combined with community institutions support through IEC, savings and investments, etc. (September-December of each year), (v) execution of tracking studies (December -May of subsequent year). Based on MASAF 3 APL-I Impact Evaluation findings.

18

19

43

- Active micro-savings 13,198 45,000 67,500 13,198 0 accounts (number) Female:50% 50% female - Active micro-savings accounts held by women (%)20 (core indicator) Community savings and 937 groups 937 groups 1,400 1,500 0 investment groups created that reach stage 3 (number)21 Intermediate outcome indicators Component 2: Local Assembly Capacity Enhancement (LACE) Intermediate Outcome: Strengthened capacity for longer-term planning and financing of local development Framework for IGFTS reviewed N/A IGFTS reviewed Finalized and Finalized and Assess impact of Intergovernmental by NLGFC, by NLGFC, report operational operational capacity Fiscal Transfer System report sent to sent to IDA for enhancement to support service IDA for review, review, awaiting interventions on delivery of LA defined awaiting cabinet cabinet approval performance of and tested by MTR approval local councils in governance and Local Authority Prepared, tested Revised and Revised and Prepared tested N/A service delivery Performance System and due for review operational operational and due for defined and tested under review LDF by MTR22 Appraised Community Action Plans reflected 75% 100% 100% 75% in District Annual 75% Investment Plans by 23 MTR (%) Local Authorities 12.5 50% 50% meeting specified 12.5% criteria in Financial 12.5 % Management:24: non qualified audited accounts. Local Authorities meeting specified 72.5% 72.5% 80% 80% criteria in Procurement (functional Internal 72.5% Procurement Committee, availability of Procurement plan) Intermediate outcome indicators Component 3: National Institutional Strengthening (NIS) Intermediate Outcome: Increased transparency and accountability for the use of resources at community, local Authority, and national levels. Communities Information 49% for LAs n/a New 70% Assess the impact satisfaction with support only (based on available by indicator of project on provided by LAs, ADCs community score November 2010 enhancing and VDCs25 card -2005) from transparency and Community accountability in Score Card use of project findings. resources

Micro-savings accounts are measured as share-holders participating in community savings and investment Stage 3 means that group reaches financial literacy and is able to understand basic concepts of savings & investment. On average it takes a group 6-9 months to reach this stage. 22 The system includes grants, rewards, capacity gap identification and capacity building. 23 Community Action plans are integrated into the District Investment Plans from which Annual Investment plans are derived 24 100% with financial accounts, to be maintained throughout. 25 To be assessed by community score cards (CSC) and participatory assessments. First CSC to be implemented in Sept. 2010; results expected to be available by Nov. 2010
21 20

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VDCs/ ADCs actively involved in overseeing sub-project implementation to address service gaps at community level26 (%) Communities with operational community level tracking system (%) Community level tracking system that delivers information on baselines, targeting, utilization of PWSP wage earnings on an annual basis defined and implemented

39%

39%

39%

70%

70%

N/A

Tracking studies under discussion Baseline survey report finalized in May 2010. 93.7% of beneficiaries resource poor 31% used PWSP cash for food; 24.9% bought subsidized fertilizer. To be established in the next year 2010/2011 Data not yet available

TBD

TBD

N/A

N/A

Tracking study determining use of income implemented

Tracking study determining use of income implemented

LAs with reporting mechanism for MDG indicator targets (number) (Trigger for APL III) Funds lost to errors, fraud, and corruption: Identified through audit exercise (%) LAs publicly disclose revenues, such as grants and expenditures by MTR (%)

100% at the end of MASAF 3 APL I

n/a

70%

80%

N/A

5%

5%

12.5%

12.5%

50%

50%

26

Reported through project implementation executive committees and score cards.

45