This paper reviews some major challenges experienced following a shift in the management of fisheries resources in Malawi from centralised system to co-management in early 1990s. While the policy and legal frameworks governing management of the fisheries resources were established between 1997 and 2000, several key governance processes remain uncompleted. The decentralisation process has been slow while expectations among the user communities remain high. This is especially the case where the government made promises to the user community to establish a revenue sharing mechanism and gear compensation scheme and yet till now that has not yet been fulfilled. With adoption of the decentralisation policy, the institutional support from the local governments devolved functions like licensing, enforcement and extension is far from being secured. In some areas there is power struggle between the traditional institutions that form informal structures and the local level representative Beach |Village Committees. The principles of good governance that include participation and accountability of the representative committees are lacking in some areas, mainly due to how members are elected. The initiation process is another area of concern especially in cases like Lake Malombe where the government took a leading role to introduce the co-management arrangement and made several promises as incentives for participation of the user groups. However, ongoing activities like identifying other relevant stakeholders and their specific roles in a broad-based participatory process, developing constitutions, by-laws and management plans is a positive step towards signing of management agreements.