Funding ‘drought’has hit local government authorities (LGAs) who have received just nine percent of the K1.25 trillion Parliament-approved allocation for the 2026/27 financial year five months into the new fiscal year.
The allocation represents four percent of the LGAs’ allocation, raising concerns over conclusion of stalled projects, rising costs and whether government can meet its budget commitments.
Phiri. | Nation
Parliament approved the combined K1.25 trillion for councils in the K10.9 trillion 2026/27 National Budget comprising K1.145 trillion for development with the Constituency Development Fund (CDF) and K109.3 billion for Other Recurrent Transactions (ORT).
In a letter dated August 10 2026 to LGAs, National Local Government Finance Committee chief executive officer Kondwani Santhe said the councils learnt that four percent of the K1.45 trillion development allocation has so far been released while ORT received 56 percent from K109.3 billion.
The 56 percent ORT funding translates to K61.208 billion of the K109.3 billion allocation while the four percent development funding amounts to about K45.8 billion.
Reads the council’s communication: “The cumulative funding rate is nine percent of the approved budget. Other Recurrent Transactions funding rate is at 56 percent and development is at four percent [including youth and women empowerment funding made through Malawi Enterprise Development Fund-Medf] of the approved annual budgets.”
ORT funding covers allocations for education, health, drugs, agriculture, general resource fund (GRF) and disaster risk management while development funding includes CDF bursaries and CDF project management.
The funding position was similarly low at the end of June, which marked the close of the first quarter. At the time, only four percent of the cumulative budget had been funded, with ORT accounting for 40 percent and development funding just one percent, according to the council.
The current funding pattern is not new as the council’s analysis of LGA budgets for the 2025/26 financial year showed that out of an expected K193 billion in government transfers, councils received only K130.7 billion, leaving a deficit of about K63 billion.
Development funding suffered the biggest shortfall, with councils receiving K71.312 billion out of K112.418 billion while ORT received K63.707 billion against an allocation of K80.828 billion.
In a written response yesterday, Catholic Commission for Justice and Peace (CCJP) national coordinator Lewis Msiyadungu said the delays could have serious consequences for development projects.
He said the delays could lead to cost escalation, incomplete works, reduced value for money and low budget absorption.
Said Msiyadungu: “Delays can also create pressure to spend quickly near the end of the financial year, increasing implementation and accountability risks.
“At community level, unmet expectations may erode trust in councils and local participation structures, while poorer and remote communities are likely to bear the greatest burden.”
In a separate interview, governance and decentralisation analyst Winston Khamula said it was understandable that government would not want to release funds to councils where projects were not ready for implementation.
However, he said the release of CDF funding should be predictable.
Said Khamula: “My call is for government to ensure that CDF funding is released predictably and in full, preferably in tranches aligned to realistic project implementation schedules.
“Councils and other stakeholders should strengthen project readiness through proper planning, designs, procurement and documentation so that when government releases funds, projects can start promptly and be completed on time and within budget.”
Project management expert Felix Manda added that the trend was worrisome because development projects at community and constituency level were supposed to address priority needs in a timely manner.
He said resources for the administration of development projects should have been released concurrently with funding for the actual implementation of projects on the ground.
“Any delay and inadequate funding coupled with untimely implementation for public development projects is a serious violation of the right to development and other fundamental human rights for citizens,” said Manda.
The continued delays have also raised questions about the government’s ability to meet its financial commitments to councils.
Centre for Social Transparency and Accountability executive director Willy Kambwandira said the delays in CDF funding risked reinforcing public speculation that government was withholding funds because the resources were simply unavailable.
“Funds approved in the national budget must be released predictably and on time with clear public reporting on allocations and utilisation,” he said.
However, in a ministerial statement delivered in Parliament on July 7, Minister of Local Government and Rural Development Ben Phiri dismissed suggestions that the government was broke.
“Yes, we are facing turbulences. However, it does not mean to say that projects are not running. I think it is unfair to say that the government has completely no money,” he said in response to a question from Dedza Kasina legislator Joshua Malango (Malawi Congress Party).
Phiri said there was no reason for government to release all the resources to councils at once when councils were still undertaking procurement and other processes.
“When they are awarded, they will be given the 20 percent mobilisation fee and then upon production of certificates then they will be paid and you can be rest assured that there will not be delays in payments upon production of certificates, everything will flow,” he said.
The funding squeeze also comes against a broader change in the structure of local development financing.
In the 2026/27 financial year, CDF has effectively absorbed other funding windows, including the District Development Fund (DDF), Water Resources, Infrastructure Development Fund (IDF) and Hospital Rehabilitation funds.
With development funding standing at just four percent of the approved allocation by August, concerns are now growing over whether councils will have sufficient time and resources to implement projects within the financial year.
