The project was designed as a long-term capacity building and institutional development project utilizing a pilot funding program, Municipal Grant Fund (MGF), as the first stage of support for municipal infrastructure and services. The original four components included (a) Legal and Institutional Reform; (b) Municipal Capacity Building; (c) Municipal Grants; and (d) Project Management and Technical Assistance. The restructured project development objectives were to assist the Government of Mozambique to operationalize the legal, institutional and fiscal framework for municipal governance; develop a sustainable training and technical assistance system and increase the capacity of municipality officials and personnel; and establish an operating mechanism for providing grants to municipalities through a pilot program in eight cities to finance capital investments for municipal capacity building and infrastructure. Some of the lessons learned are as follows: (a) The design of a project and in particular of a pilot program should be simple and within the capacity of the staff and agencies responsible for its implementation. (b) Team leaders from government and Bank project teams must develop strong working relationships built on effective communication so that both organizations are working toward the same objective.