The Sub-National Governance Programme II (SNG) aims to strengthen local and provincial governments and build sustainable institutions in Punjab and Khyber Pakhtunkhwa (KP) to improve the way regional and local governments manage their planning and finances. SNG will help these governments to deliver better services for their 140 million people, particularly the poor. The programme will work towards this aim by improving the government’s planning and budgeting capacities, create effective and accountable institutions, enhance fiscal space by driving efficiencies in expenditures, mobilize more significant revenues, implement robust PFM systems, and sustainably integrate innovation and inclusion.

The Innovation Challenge Fund is a competitive grant fund around a pre-defined theme with at least four funding rounds through the programme life. It seeks to finance innovative and potentially scalable pilot approaches to build evidence of what works to improve systems for better service delivery that meet the needs of poor and marginalized people of Punjab and Khyber Pakhtunkhwa under SNG.

  1. Public Financial Management & Enhancing Fiscal Space (expected launch in March 2020)
  2. Planning and governance (anticipated launch in June 2020)
  3. Local Government Capacity & Municipal Services (expected launch in October 2020)
  4. Transparency, Accountability & Inclusion (expected launch in February 2022)

The maximum project duration allowed will be 15 months, and there is no defined minimum.


Maximum funding for a single pilot will be up to £300,000.

The ICF is open for ideas to all, as SNG believes that good ideas can come from government institutions, civil society, or the private sector. However, Individuals will have to partner with a registered entity to meet eligibility requirements provided in the terms sheet.


The application process has two stages. In the first stage, online submission of a concept note outlining the project idea and detail of the applicant and demonstrating that both meet the eligibility criteria. In the second stage, the concept notes that satisfy the eligibility and are selected for the next round after the appraisal will be asked to submit an entire business case for the project. Applications will be reviewed, and successful applicants will be granted funding after the award decision by the competent authority.

Applicants can submit their project concept notes online through the SNG’s website or send the concept notes to the challenge fund’s email address or by mail.

Within 40 days of the last date of submission of concept notes, the projects shortlisted will be notified to submit their Proposals as per evaluation criteria.

It can be at either provincial or district level, but it must be within SNG’s pilot districts if it is at the district level.

In Punjab: Sialkot, Kasur, Nankana Sahib, Multan, Bahawalpur and Rahim Yar Khan.
In KP:Swat, Lower Dir, Bajaur, Shangla, Haripur, Swabi, Buner, Manserah, Kohat, Hangu, Lakki Marwat and Bannu.

The idea can be specific to one of these districts or all of them.

If the applicant is from the public sector, no contribution is required. However, if they are from the private sector, applicants must contribute their resources to the project, bearing at least 20% of the total project cost. These contributions can be made both in cash and in-kind.