The District Development Fund (DDF) of Laos brochure presents a chronological order of development that highlights the DDF as an integral component of the Lao PDR sub-national decentralisation agenda.

The DDF is an inter-governmental fiscal transfer mechanism combined with a participatory planning process developed by UNCDF and UNDP. It has proved to be one of the most effective tools in the quest for the inclusive and cost effective transformation of local economies, providing discretionary budget funds and developing technical know-how within local governments to better deliver services.

District Development Fund, a once simple concept and pilot project that has matured to become an inclusive government owned mechanism to implement decentralisation policy. It has opened up many new pathways for rural communities to thrive and strengthen their resilience, using local knowledge and capacities. By leveraging these capacities, local governments have been encouraged to engaged with their constituents to identify and implement scaled projects. These local projects have expanded and strengthened the social fabric and economic infrastructures bounding tradition with modernisation to create new solutions to better the conditions and livelihoods for their generation and the next.

Since 2005 DDF has benefited some 1.7 million citizens living in some of the remotest areas in Laos and supported the staffs of 7 provincial and over 70 local administrations. The first exemplification of the DDF introduced the basic principles of participatory local planning and financing of small scale projects. Essential capacity was built into local governments to involve citizens in development decisions, be able to transparently manage local capital budgets and apply for discretionary grants for local development.

By using discretionary grant financing for local small scale infrastructure projects the DDF demonstrated a new citizen oriented localised fiscal transfer system to develop infrastructures that enabled and improved service delivery. The success of the early pilots led to the scale out of DDF to a significant portion of the country, albeit with a limited budget given the scale of the challenge. However, as found over the last 15 years the real value of the DDF experience and systems development lies not in what it has invested but rather in what it has proved possible. It has shown that with increased decentralised budgetary authority, flexibility combined with training and early mentoring, that district level staff can manage discretionary budget assignments and collaborate with local communities to address their own development priorities. This process has empowered local governments to develop, and maintain the infrastructures and services that are needed by the community in their administrative territories. It has introduced local government accountability and transparency and accurate reporting of expenditures and results to the provincial and national authorities.

By strengthening how finance works at the local levels, UNCDF contributes to SDG1 on eradicating poverty with a focus on reaching the last mile and addressing exclusion and inequalities of access, and to SDG 16 by strengthening government institutions.

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