Parliament on Wednesday approved two financing bills authorising the Government of Malawi to receive US$130 million (about K229 billion) in grant funding from the International Development Association (IDA) to strengthen local governance and boost the country's export-oriented value chains.
The grants comprise US$80 million for the Governance to Enable Service Delivery (GESD) Project and US$50 million for the Transforming High-Potential Resilient Value Chains Project. Both financing agreements were signed between the Government of Malawi and IDA on June 19, 2026.
Presenting the bills in Parliament, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha said the GESD Project would enhance service delivery by improving financial management and governance at local authority level.
"This project strengthens efficiency in financial resource management and multi-level governance so that our district and municipal councils can deliver better services," Mwanamvekha told Parliament.
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He said the programme would continue the performance-based grant system introduced under the previous GESD Project, rewarding councils that demonstrate transparency, accountability and effective service delivery.
Under the new arrangement, district councils that participated in the previous GESD Project, which ended on June 30, 2026, will continue receiving performance-based grants. In addition, four municipal councils--Karonga, Kasungu, Luchenza and Mangochi--have been included in the programme for the first time.
The legislation also authorises withdrawals from the IDA financing and provides that all payments under the agreement will be charged on the Consolidated Fund. The grant funds are further exempted from taxes, charges and other restrictions under Malawian law.
Parliament also approved the International Development Association Transforming High-Potential Resilient Value Chains Project Bill, 2026, enabling government to access an additional US$50 million in grant financing aimed at expanding Malawi's export sectors.
According to Mwanamvekha, the project seeks to accelerate growth among firms operating in targeted export value chains by improving access to finance, strengthening trade policies and increasing resilience to climate and market-related shocks.
Among its key interventions is an Export Readiness Programme, which will provide advisory services and performance-based grants to help businesses strengthen their export capacity.
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The project will also support the Ministry of Industrialisation, Business, Trade and Tourism to improve implementation of the Control of Goods Act, 2018 through regulatory reforms, enhanced trade data systems and updated export policies.
Government also intends to institutionalise a transparent, rules-based system for making export restriction decisions. This will include issuing a ministerial directive, conducting regular reviews of export restrictions and publishing updated export restriction lists.
On the financing side, the project will establish a Partial Credit Guarantee Fund to encourage commercial banks to lend to firms operating in export value chains. The Malawi Agriculture and Industrial Investment Corporation (MAIIC) will receive technical support to operationalise the fund.
A Shock Responsive Mechanism will also be developed to cushion export-oriented businesses against climate-related risks, while exporters will have access to local currency and foreign exchange credit facilities to facilitate imports of inputs and expansion into export markets.
The project further provides resources for implementation support, including recruitment of an independent verification agent, operational costs and institutional capacity building.
Speaking during debate, Shadow Minister of Finance Peter Dimba supported the two bills, describing the GESD programme as a "game changer" for local governance.
However, he urged government to increase the allocation of foreign exchange to councils to enable timely procurement of construction materials and effective implementation of development projects.
Dimba also called for increased domestic production to expand Malawi's tax base and reduce pressure on the economy while maximising the benefits of the new grant-funded programmes.
