Monitoring Elite Capture in Community-Driven Development

The purpose of this paper is to argue that, when the so-called 'elite capture' problem is serious, mechanisms of fraud detection are necessary, yet they are not enough. Coordination mechanisms, at the level of aid agencies and/or at the level of the ultimate purveyors of funds for Community-Driven Development, must exist to tame or mitigate the opportunism of local leaders. One important conclusion is that no effective control of the elite capture problem is possible if failures encountered by aid agencies are punished while successes are rewarded. Taking this conclusion into account would involve a radical change of perspective in development aid circles. We then examine the feasibility of a leader-disciplining mechanism using sequential and conditional disbursement of aid funds in the context of decentralized bilateral relationships. In the light of the inherent limitations of such a solution, more sophisticated, multilateral control mechanisms are discussed.