Institutional and Administrative Capacity that should exist in the social, economic andrnpolitical institutions has become one of the essential instruments of achieving anyrnenvisaged development policies and programs, and at the same time, sustains andrnsupports the several processes of development. Consequently, capacity development isrnbeing considered as a prerequisite and a sine qua non for the commencement and successrnof development objectives and goals.rnAfter the demise of the Derg Regime, Ethiopia has launched on an unprecedentedrntradition of decentralization and regionalization. Concomitantly, the regionalrngovernments are entrusted with the legal powers of adopting and implementingrndevelopment policies and programs. However, making of policies and programs requirernthe availability of competent and efficient staff members and capable administrationrnwhich almost all of the regional governments lack.rnThe Problem of capacity is grandeur in the forlorn and marginalized peripheral regionsrnof the country one of which is the Benishangul-Gumuz area that did not obtain duernconcern and attention by the past centralist power holders in Ethiopia. The impact ofrnthis capacity constraint has been poor planning, formulation and execution ofrndevelopment policies, programs, strategies, projects and budgets.rnPresently, although the region and the federal governments have been taking uprnnumerous activities in order to redeem the capacity problems, especially in the area ofrnhuman resource development through education and training, the problem seemsrnuntouched and unresolved, and in turn has negatively affected the development efforts ofrnthe region. This study has tried to pinpoint that the overall capacity developmentrnprograms that have been carried out (be it regional or national) have not been wellplannedrnneed-based, and very often ill-implemented. Moreover the study has identifiedrnthat nepotism and favoritism have played significant roles in Ihe planning andrnimplementation of training activities in the region. As to education, Ihe study has also .rnshown that quality deterioration in Ihe educalion system is overtly depicled in Ihe regionrnwhich is true of Ihe country on the whole.rnIn sum, since capacity problems would also resull in widening development disparityrnamong regions, greater emphasis should be given to this aspect than ever. Among otherrnoptions, devising differenl incentive systems of motivating, relaining and slabilizing Ihernavailable civil servanls and launching of massive infrastructure building programs by Ihernfederal government in Ihe peripheral and under served areas appear as some of Ihernmosl important solutions to the prevailing capacity problems. If not, the poorer regionsrnget poorer and the richer ones get richer which would in turn threatens the nationalrnintegrity and unity of the country in the long run.