The objective of the research is to analyze the institutional approach to rural LED throughrnnetworks in a particular agrarian locality. It describes the case of three villages in Tede Dildimarnand Golje Dildima RKAs in Lume Wereda, with low natural resource base, dominated byrnsmallholding subsistence agriculture, in promoting locality and CBED. House hold survey, FGD,rnkey informant interview and personal observation data collection teclmiques are used to analyzernthe situation. The study has identified and presented three main rural LED intervention strategiesmicrornwatershed development project, smallholder agriculture development and small-scalernmining enterprise development-in Tede and Golje RKAs. The study found that each institutionsrninvolved in rural LED have a unique role to play in locality and CBED. Furthermore, the analysisrnof rural LED interventions indicates that different types of institutional networks are created bothrnat the wereda and kebele level.rnThe results of the study revealed that institutional networks have brought some positive changes inrnboth kebeles. Rural LED is improved mainly through creating new jobs by using locally availablernresources as well as transferring and disseminating new knowledge and teclmologies in bothrnlocalities. The institutional networking, established particularly in watershed development project,rnin the areas of micro-watershed development planning, development management, resource/fundrnprovision and institutional development have contributed to the local effort of natural resourcernmanagement. In spite of this, however, the poorly integrated and weak institutional networksrncurtai led the dynamism of the rural LED in both kebeles. The established networksl partnershipsrntend to be short term and only temporary, as they are project and program based networks. RuralrnLED tends to be promoted through the conventional sector specific approach in both kebeles.rnThe study found that rural LED initiatives having any significance are almost non-existent atrnGolje and Tede RKAs. The process and functioning of local institutional networks, in promotingrnrural LED is determined and depends on the overall politico-administrative environment providedrnby the national and regional governments. The study concludes that lack of financial and politicalrnautonomy immensely diminish the role of Lume Wereda government as an enabl~r, facilitator,rnand stimulator of the civic and private sector institutions in the process and functioning of ruralrnLED in both kebeles. As a result, rural LED in Tede and Golje RKAs is led by the centralrngovernment, regional government, and rural LG in respective hierarchy order.