Rebuilding trust in local leadership in conflict-affected settings: The impact of community-based cash transfers

Trust in local leadership is critical for effective delivery of public goods and services -especially in conflict-affected and post-conflict settings, where local institutions and markets remain weak, and peacebuilding and recovery efforts are crucial. Thus, identifying avenues and instruments for rebuilding trust in local leadership remains important. Building on a recent and large-scale armed conflict in Ethiopia, we study the impact of a randomized community-based cash transfer on trust in local leadership. The randomized cash transfer was introduced after the war in Ethiopia and its implementation involved local community leaders, some of whom may have participated in the conflict. We find that exposure to armed conflict is associated with a significant deterioration in trust in local leaders, while the community-based cash transfer recovers some of the deteriorated trust. We provide suggestive evidence that the impacts of cash transfer are driven not only by those who received the cash transfer but also by non-beneficiary households in communities where the cash transfer is implemented. Our heterogeneity analysis reveals that the treatment effect is largely driven by poor households and households which do not benefit from government safety net programs. These results have important implications for policy design in rebuilding trust in local leadership in post-conflict and fragile settings.