Current water sector reforms in Malawi are taking place against the backdrop of a broader pan-governmental effort to decentralise service provision authority to local government. The newly established Local Development Fund is a mechanism with the potential to increase fiscal decentralisation and build capacity at the local level to address delivery of rural water services, alongside many other technical sectors. Part of the logic of the fund is to provide a common funding basket that will encourage greater local control and improved coordination between sectors at the local government level. To date the fund has channelled US$57 million to local government and after two annual cycles there is only limited evidence to determine if this fund will provide a viable and effective means to support decentralisation in general. Specifically for the WASH sector, the fund has drawn limited support from development partners to date in favour of various other financing approaches unique to each partner.The main WASH stakeholders are also in the process of designing of a number of important building blocks for improved sector-wide performance, including some form of common funding mechanism, national level monitoring system, and a sector wide approach intended to provide a forum to continually identify emerging sector issues and enable collaborative efforts to address them. For all sectors, the Local Development Fund still faces a number of challenges, including the balance between donor ear-marked and so-called open menu financing and lack of awareness about access to the funds for both infrastructure and capacity building.In this case study the gap between these two parallel processes is explored and the apparent disincentives to a closer integration are outlined. Despite the limitations of the current Local Development Fund the authors point to a number of opportunities for improved alignment and suggest options for the way forward, including a possible two- step process of firstly improving internal WASH sector coordination with a view to much closer integration with the LDF in the medium-term. Ultimately, political pressure and leverage of central government , development partners, and local government on the Ministry of Agriculture, Irrigation and Water Development will be instrumental in determining the pace and scope of devolution in the sector.
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