This paper attempts to investigate the raison d' etre and development implications of indigenousrninstitutions. The meaning of institution and indigenous institutions is provided in the context ofrnthe available literature and the study area of the paper. The explanatory power of institutionalrntheories has been assessed and attempt is made to give a theoretical explanation as thernbackground to the existence of institutions that are based on the customs and traditions of localrnpeople. A model of institutional design is also developed in the context of the situation in the studyrnarea to show the place and relative contribution of indigenous institutions in promotingrndevelopment at the local level. Based on a systematic examination and analysis of the variousrnfunctions of fourteen different indigenous institutions identified in the study area, the paper showsrnthat these institutions occupy a very important place in the development actors network as well asrnthe state and private-sector actors. Not only are indigenous institutions important in performingrntheir own distinct functions in their specific localities, but also they play a significant role inrnpromoting development by acting as collaborators to and intervention points for otherrngovernment and non-government organizations.