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Abstract: Community contributions are often required as part of community-driven development (CDD) programmes, incentivized through matching grants. However, little remains known about the impacts of matching grants or the implications of requiring community contributions in order to receive development funding.

In this paper, we partner with an international and Somali NGO and undertake a randomized control trial of a CDD matching grant programme designed to incentivize informal contributions for local public goods in Gedo region in south-central Somalia. We rely on household survey data collected from 1297 respondents in 31 treatment and 31 control communities, as well as surveys of village leaders and data on informal contributions from the mobile money platform used by community leaders to collect revenues.

Two key findings emerge. First, our research shows that working with communities and incentivizing informal revenue generation can be an effective way to deliver public goods and to support citizens and communities. Second, building on research exploring the potential for development interventions to spur virtuous or adverse cycles of governance, we show that development partners may work directly with community leaders and informal taxing institutions without necessarily undermining—and indeed perhaps strengthening—state legitimacy and related ongoing processes of statebuilding in the country. Indeed, despite playing no direct role in the matching grant programme, taxpayer perceptions of the legitimacy of the local government improved as a result of the programme.

These findings deepen our understanding of how community contributions may be incentivized through matching grant programmes and how they may contribute to CDD and public goods provision in a context of weak institutional capacity

The Tax for Development Webinar Series is jointly organized by CMI and the TaxCapDev-network and features ongoing research and initiatives to strengthen domestic revenue mobilization in developing countries, with a focus on sub-Saharan Africa. You can read more about the webinar series and sign up for the individual webinars HERE.