In recent times privale sector has became an important growth engine in developing economies as itrnplays roles in generating wide employment opportunities, reduce poverty, generating income and helprneconomic growth and transfer of know-how. 77,e Ethiopian government has also undertaken many policyrnmeasures to encourage the involvement of this sector in country's economic activities since the adaptionrnof market based economic policy. In light of this, the research has been conducted to identify performancernlevel, challenges and prospects of private investment in sebeta city administration.rnTo achieve this objective primCily and secondCilY data were collected which is qualitative and quantitativernin nature. To obtain this data questionnaire, FGD and KII was employed where as to collect secondaryrndocumented data ./i'om different institutions, different formats were used Firm level data is the mainrnsource of dala f or the study which was selected through questionnaire from a sample of 115(20%) out ofrn572 approved private investments in the study area based on simple random and systematic randomrnsampling techniques. Purposive sampling method was also employed to collect data from focus grouprndiscussants and interviewees which were mainly used triangulate data collected through questionnaire.rnThe result of the study showed that the peljormance of private in vestments approved at the study area isrnfound to be poor like the status shown at national and regional level. For this low performance, lack ofrnappropriate project screening and appraisal, poor service delively and unresponsiveness, acute problemrnin supply of basic in./i'astructure, rent seeking of some investors and govemment employees, gap in skillrnof govemment employee and entrepreneurship skill of promoters and weak follow-up and after carernservices of investment projects have been identified. Ample investment potential that pertain to locationrnadvantage, stability, ffi'ailability of workforce, proximity to markets, etc have also been identified.rnBased on the major finding of the thesis stated above, recommendations were forwarded that could solvernthe problem and capitalize the opportunities available. In this regard, improving project screening andrnappraising, improving service delivelY and empowering both service providers and promoters, improvingrnthe supply of basic inji'astructure, strengtheningfollow up and after care services and heavy promotion ofrnarea's investment opportunities by targeting at more beneficial projects are factor that needs emphasis byrnconcerned regional and local bodies.