Local Government Authorities (LGAs) have set ambitious targets for Locally Generated Revenue (LGR) in the 2026/27 financial year, but have dared central government to unlock the resources through implementation of relevant legislation.
In an interview last week, Lilongwe District Council chief accountant Edson Zaniku, whose district plans to raise K1.78 billion from K1.4 billion this year, said the council was in discussion with Ministry of Local Government and Rural Development to have by-laws approved and gazetted.
“Enforcement of council by-laws will ensure that all illegal markets are closed. Further, the council plans to continue construction of various infrastructure in the markets, but also adopt digital methods of collecting revenues to reduce leakages,” he said.
Kasungu District Council director of finance (DoF) Solomon Nkundika stressed that challenges in gazetting approved by-laws, which sometimes result in councils operating without updated legal instruments, expose them to potential legal risks.
He said: “The council has engaged the Ministry of Local Government and Rural Development on these issues, particularly regarding the gazetting of council by-laws.
“We will also expand on revenue through asset management, including development and sale of council plots,” he said.
In Dowa, district commissioner (DC) James Kanyangalazi said the council, which plans to raise K1 billion in the 2026/27 fiscal year, is set to lobby for ceded revenue to be implemented.
“Other government revenue percentage to be directly transferred to local authorities like mining, forestry and road taxes,” he said.
Ntchisi DoF Frederick Muyaba said the council will register and licence enterprises that operate in the district, but are not based there, so that all economic actors make revenue contributions.
“The council has also introduced a one percent levy for businesses not registered in the district but doing business with it. The full council already assented to this,” he said, adding that the council plans to raise K194.7 million in the 2026/27 fiscal year.
Minutes from Chiradzulu Full Council meeting dated February 26 2026 show that in the 2026/27 fiscal year, the council plans to hike business licences for body corporate companies and big institutions.
The fees include an increase from K500 000 to K5 million in licence fees for commercial banks operating in the district while quarry mining companies will now pay K5 million from K1.5 million, manufacturing companies/industries to pay K6 million from K1 million and estates will now part with K4 million from K1 million.
Malawi Local Government Association executive director Hardrod Mkandawire said the National Decentralisation Policy 2024 requires government to provide ceded revenues such as toll fees, motor vehicle registration and fuel levy as major drivers of improving fiscal space locally.
“We, therefore, call upon the Ministry of Finance, Economic Planning and Decentralisation to ensure that there is full implementation of this policy to ensure LGAs achieve the fiscal autonomy envisaged by the legal and policy framework,” he said.
On his part, public expenditure tracking expert Mavuto Bamusi said the situation reveals hidden potential which is grossly underexploited within the Councils to generate significant amounts of revenue with high possibility of being self-sustaining.
“The councils sit on vast natural resources such as mineral wealth, fertile soils and plenty of fresh water bodies that are catalysts for implementing the Agriculture, Tourism, Mining and Manufacturing (ATMM) strategy.
“However, sadly the Councils are grossly underfunded, there is also huge capacity gaps in terms of Human Resources and technical expertise to implement the devolved functions that are essential to unlocking the economic potential in the councils,” he said.
Budget and Finance Committee of Parliament chairperson Sosten Gwengwe, in a separate interview, stressed that a key part of decentralisation is fiscal decentralisation, urging close collaboration with the Malawi Revenue Authority (MRA).
He said: “LGAs must be supported to become standalone entities with capacity to collect, implement programmes and account for resources. Central government’s role should be capacitating the councils, not micro-managing them.
“Now that decentralisation has moved to the Ministry of Finance, the Department of Decentralisation in the ministry should quickly move to identifying capacity challenges human and technical and support the councils.”
Responding to the concerns, Ministry of Local Government and Rural Development spokesperson Chimwemwe Njoloma said all councils were tasked to review and approve their by-laws by March 19, after which they will be sent to the Ministry of Justice and Constitutional Affairs for approval.
She said the existing by-laws were previously submitted, but are on hold pending input from new councillors and that the ministry expects the by-laws to be ready for use by the end of April 2026.
“All councils are digitising collection processes to enhance transparency and accountability. Regarding ceded revenue, the government has allocated K5 billion to councils to support major projects.
“This is a significant milestone in devolving resources to local authorities. Councils are autonomous by law and should annually review tariffs through a consultative process,” said Njoloma.
The National Decentralisation Policy (2024) demands government to provide at least 5 percent of Net National Revenue to LGAs, but in the 2026/27 fiscal year, the K179 billion translates to 4 percent or 82 percent of the required threshold
