Abstract

A developmental explanation for the niche of informal institutions and their linkage to governance suggest that they evolve functionally within societies to address checks and balances and comparative advantage issues. Contemporary attitudes and beliefs about informal institutions and the role that they play constrain centralization of authority, in the sense that national government becomes pre-eminent just in time to avert fragmentation and atomization. Just as predictably, informal bodies exert their influence when decentralization provides better approaches to solving societal problems. Through the polycentric governance theory, this paper argues for the fact that management of common pool resources by stakeholders yields better results and sustains democratic governance the most. The paper concluded with the facts that true democracy can not be said to be in place if the people do not identify with the state, if the system continues to be alien to the cultural frame of reference, corrupt in its behaviour, fails to guarantee the people’s security and does not influence the economic activities of the people in a positive way. It is therefore advocated that the system must recognize the importance of local institutions and realise that institution building cannot take place without taking the superinstitution of the state into consideration.

Key words: Institutions, governance, local government, democracy.