Using a randomized field experiment we look at the effect of the creation of democratically elected councils in rural Afghanistan on local governance quality, as measured by the outcomes of a food aid distribution. The results indicate that when the distribution is managed by democratic councils, rather than traditional leaders, the food aid targeting is improved and the level of embezzlement is not changed. However, in villages in which a council was created, but the responsibility for managing the aid distribution was not explicitly assigned to it, targeting was not improved and embezzlement increased. Requiring female participation in the distribution also increased embezzlement and did not improve
targeting. Overall, the results show that the creation of democratic institutions can improve governance, but only if institutional esponsibilities are clearly defined. But if democratic institutions are created in parallel with traditional ones and responsibilities are not clearly defined this may lead to an increase in corruption.