Complex management contracts: the case of customs administration in Mozambique

The literature suggests that management contracts for public services work best when payment to the contractor is performance-related and when there i s minimal involvement by government in daily management. However, as this c ase study of Mozambique illustrates, neither of these principles can be str aightforwardly applied in management contracts for organizational reform in a developing country. First, establishing successful performance-related p ayment is difficult in a contract with multiple objectives and poor informa tion. The value in setting up performance-related payment appears to be mor e in focusing the objectives of the contract than in improving the contract or's performance. Second, a virtually 'hands on' role is required for the g overnment agency supervising the contract, in the numerous political, legal and staffing issues which arise. The capacity of the agency to carry out t his function is critical to the performance of the contract. It faces the c hallenge of completing the reorganization, sustaining initial achievements and running the new system economically. There are grounds for guarded opti mism. Copyright (C) 1999 John Wiley & Sons, Ltd.