The development of productive and liveable cities is key to national growth strategies in developing countries. But for cities to become engines of growth, public policy is needed enhance the positive effects of interaction between firms and individuals in cities, and to tackle the potential downsides of density. In many developing cities, municipal revenues are insufficient to finance the necessary investments in public infrastructure, services and well targeted policies that can deliver long term growth and rising living standards for a city. In this context, local governments are increasingly looking to outsourcing tax collection to private companies to improve the efficiency of tax collection. However, while there are potential arguments for privatisation, and some successes do exist, these successes depend on a range of very particular conditions that may not be met by local authorities in many developing cities. Outsourcing to private collectors instead risks undermining the very government capacity that would be needed to effectively monitor and enforce private collection contracts.