Following a quarter century of Indonesian occupation and a three‐year transitional period under UN administration, Timor‐Leste became independent in 2002. The country’s current population of 1.1 million people is one of the fastest growing in the world with an approximately 74% of the total population still living in rural areas.

Timor‐Leste remains the poorest country in South‐East Asia with 41 percent of the total population living under the poverty line (2009). Significantly increased Government budgets and overall investments have contributed to positive poverty reduction over the past few years, however at the same time one has seen a sharp rise in income inequality and an uneven social and economic development.

The Government recently published the Strategic Development Plan (SDP) 2011‐2030 which was approved by the National Parliament in July 2011. It provides the vision and goals for the development of Timor‐Leste for the next twenty years. A key part of the plan is the role of rural development and the need to promote local institutions across the country to achieve overall poverty reduction and improved service delivery. This vision is very much in line with the objective of this programme extension.