Date : 3rd Oct 05

Summary:

On completion of the Urban Sector Rehabilitation Programme, the Government formulated the Local Government Support Project (LGSP). This is a World Bank financed project, which jointly with funds from the Government own sources, and others from development partners will finance a Local Government Capital Development Grant (LGCDG) system. The system, which is based on a systematic devolution of a significant share of the development budget aims at providing non-sector specific development funding for Local Government Authorities (LGAs) development activities in accordance with locally identified priorities. All the LGAs will access funds under this new system so long as they satisfy some Minimum Conditions (MCs), which have been set and categorized into Primary and Secondary MCs. The main features of this system, which is expected to be fully operational by the financial year 2008/09, are as follows: ?National applicability ?Formula based allocation ?Qualification by performance ?Capacity building linked to grant provision. Under the LGCDG, three types of grants are provided, which are: ?Capital Development Grants (CDG) These are meant for all the LGAs, which strictly meet the Minimum Conditions as set out under the system. On top of the Minimum Conditions, there will also be some Performance Measurements to determine the day-to-day functioning of the LGAs, which have accessed the CDG. The allocation formula for these grants has been decided to be as follows: i) 70% will be distributed in proportion to the size of population, ii) 10% will be distributed in proportion to the land area, and iii) 20% will be distributed in proportion to the estimated number of poor residents of the LGA. ?Capacity Building Grants (CBG) These are in principle meant for the LGAs that have not attained the Minimum Conditions for accessing the CDG. There are only two conditions for accessing these grants, which are: i) To have an acceptable capacity building plan, ii) To have satisfactorily accounted for previous grant disbursements. ?Local Government Development Grants (LGDG) These are discretionary development funding grants, which are in principle meant for the LGAs that have not attained the Minimum Conditions for accessing the CDG, but have met the less strict conditions of accessing these grants. It should be noted that an LGA can only qualify for either the CDG or the LGDG, but not both. Conditions for accessing the LGDG are: i) A Development Plan and an Annual Budget approved on time by the Council and a copy submitted to PORALG, ii) The latest Annual Accounts submitted to the Office of the Controller and Auditor General (OCAG) within three months from the close of the financial year, iii) The latest Audit Report of the Annual Accounts not adverse, iv) Timely submission of quarterly financial and physical progress reports in the prescribed format. Funding Modalities and Timing Funds for implementation of this LGCDG, - specifically the performance assessment, provision of capacity building grants, capital development grants and the capacity building of PO-RALG will be provided through a World Bank loan, by the development partners through various modalities and the Government own budget. Status Todate The LGSP and through it the LGCDG system was officially launched by the Minister of State - PORALG on 18 April 2005 at Kunduchi Beach Hotel and Resort in Dar-es Salaam in the presence of various development partners and Chief Executives of the LGAs.

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