The Municipal Development Project (MDP) aims at providing financial support to the selected LGUs to improve the municipal services delivery to the population. The project is funded by the French Development Agency (AFD) and was designed to include the 16 main cities of the Governorates of West Bank (Jerusalem excluded) and of the Gaza strip. These cities concentrate more than 45% of the total population and 78% of the urban population. In addition, the MDLF selected 5 Joint Service Councils for Planning and Development or Joint Municipalities, where the Project could finance infrastructure, with the aim to supporting the Palestinian Authority’s effort to reduce the overall number of LGUs in the West Bank and Gaza.

However, due to the fact that the implementation of the Project in the Gaza Strip has become impossible because of the blockade of all the importations by the Israeli authorities, the MDLF with the approval of AFD reallocated the budget of Gaza municipalities to West Bank municipalities. The AFD has expressed its commitment to provide additional support for Gaza municipalities once the conditions in Gaza allow for implementation.

The Project objectives include:

- Improve the conditions of living and economic activity in the Palestinian municipalities through the maintenance, rehabilitation, and in limited cases creation of basic municipal infrastructure.

- Stimulate the local economy through the mobilization of local contractors who will create jobs and therefore generate additional income.

- Reinforce the linkages between the newly‐created Municipal Development and Lending Fund and the municipalities.

The Project funds will be divided among the selected municipalities according to their respective populations, with a minimum allocation per LGU of 400,000 Euros to ensure that the available budget per LGU is above a critical minimum threshold for impact and visibility. The Joint Service Councils or joint municipalities will be allocated 320,000 Euros each.

A quick look into the allocation of the AFD fund reveals that most municipalities (about 69%) requested roads projects which are similar to the case in the World Bank and Dutch funds under the EMSRP II project. This indicates the urgency and need for new road as well as maintaining the existing roads network. The second needed sector is public facilities (17%) which include municipal buildings, libraries, community centers and public parks.