Municipalities in Mozambique wereestablished by law in 1997 and elected in 1998 for the firsttime, only a few years after the peace agreement. Mostinherited archaic and dysfunctional remnants of colonial andcentral government systems and infrastructure, and as suchlimited progress was achieved in transforming them intofunctioning local governments during the first mandate(1998-2002). During the second mandate (2003-2008), however,significant improvements were seen as municipalities beganto grasp the nettle of local governance and some servicedelivery challenges. By the end of their first decade mostmunicipalities have reorganized themselves to some extentand a number have undertaken initiatives that are beginningto bear fruit. There remains a long way to go, however,before municipalities will be robust enough to deliverquality local services to meet growing demand. There is adanger that the pace of municipal technical and financialcapacity development will be overtaken by the growingmunicipal population and by transfers of additionalmandates. Municipalities, central government, and theAssociation of Municipalities (ANAMM) need to supportmunicipalities to perform their potentially significant rolein improving living conditions, stimulating growth andcementing meaningful democracy in Mozambique. This studyprovides the first integrated assessment of the challengesof local development and service delivery through amunicipal lens. It diagnoses the underlying systemicconstraints facing municipalities, discusses some of thespecific service delivery challenges of the municipalities,and it sets out recommendations for both central andmunicipal governments to tackle some of these constraintswithin an integrated and systemic framework.