Urban governance is one of those facto rs that affect the level of urban development. Thernquality of municipal governance plays determinant role in accelerating the developmentrnof municipal services, facilities and infrastructure. This further contributes towards thernbetterment of quality of life for urban residents. This case study is conducted in 1immarnTown of Oromia National Regional State specifically emphasizing on the governance ofrnrevenue generation and investment promotion by the Municipal Government. The majorrnobjective of the paper was to asses how much the quality of governance in the MunicipalrnGovernment affects generation of revenue from internal sources and promotion ofrninvestment to attract private capital for the Town's development. The study specificallyrnfocused on assessing the governance related challenges faced by the MunicipalrnGovernment in resource generation and investment promotion. It also examined whatrnefforts have been exerted by the Municipal Government to promote investment and thernpatterns of investment growth in the Town. The methods employed in collecting datarnwere more of qualitative in nature with some inclusion of quantitative data. Thesernmethods include; interview with key informants in the Municipal Government, FocusrnGroup discussion held with potential investors in the Town, questionnaire distributedrnamong the business community in the Town and document review that included reports,rnbooks and articles that in any way supplement relevant data to the study.rnThe study finally revealed that, governance related problems like; lack of accountability,rntransparency, weak in ~ titutional capacity and lack of permanent, envisioned and public!)!rnelected Municipal Administration affected the governance of resource mobili zation in thernTown. These problems are impinging on every activities related to revenue generationrnlike; identification of sources, revenue collection, system of valuat ion, nurturingrnvoluntary compliance, legal enforcement and administration of complaints. Moreover, itrnwas also revealed that, investment promotion is at its nascent stage manifested throughrnlack of appropriate institutional mechanisms and instruments to do so. The MunicipalrnGovernment managed to attract very less private investment compared to the resourcernpotential of the Town and its surrounding. This is because of lack of transparency, thernprevalence of disincentives like long procedures, ethnic problems (discrimination), lackrnof transparent land administration system, less participation of residents, potentialrninvestors and other stakeholders in the development activities of the Town. Therefore, thernMunicipal Government should improve governance of revenue generation byrnstrengthening its organizational capacity through better man power, materials andrnlogistics support. Increasing taxpayers' ,?articipation in revenue related affairs, institutingrnobjective and reliable valuation system and installing appropriate institutionalmechanisr,rnto address complaints by taxpayers' could be among the most vital areas on whichrnmeasures have to be taken. Moreover, much attention should also be given to the task ofrninvestment promotion by instituting an ofJice which is responsible lor it. The Munici;JalrnGovernment should work closely with the business community in the Town to makernthem part of its development process. The cost and burden of undertaking newrninvestment activates has to be dealt by streamlining investment services and shorteningrndecision making channels. InÂ·stituting transparent and accountable land administrationrnand distribution system should also be given due attention.