The purpose of this study was to assess the peiformance of capacity building activities and examine thernimplementing capacity of decentralized local governance. The study was conducted in Adami Tulu Jidornworeda and Ziway town. Comparative study with cross sectional survey was used in the study to comparernthe two local governments. Descriptive survey method of analysis was also employed to achieve thernobjectives of the study. The subjects of the study were civil servants and cabinet members of the two localrngovernments. Questionnaires were used to collect data from the civil servants and cabinet members. Inrnaddition focus group discussions and interviews were also conducted with about 24 individuals. Datarnwere analyzed through quantitative and qualitative methods. The statistical method used to analyze thernquantitative data was percentage.rnThe results reveal that even though the local governments have been given a wide range of responsibilitiesrnand powers in terms of planning and prioritizing their local needs, their implementing capacity is veryrnweak. Human resource in both local governments both in quantity and quality is found to be deficient tornshoulder different local level responsibilities. Women are also under represented in the civil service andrnin the cabinet members. Shortage of budget and skilled human resource, and high turnover of officials andrnkey experts due to frequent reorganization and restructuring of offices, transfer, demotion and promotionrnare critical problems observed in both local governments. In addition, different facilities and corernresources are not adequately available in the sectors of both woreda and town. As a result the status ofrnhuman resource, organizational and institutional capacity is found to be weak.rnThe capacity building/training activities conducted in the areas were not need-based. Besides, trainingrnimpact assessment was not undertaken. Weak management capacity, unfavorable enabling environmentrnand absence of adequate facilities and resources characterize both local governments. Communityrnparticipation is also limited to implementation of planned projects than at planning and decision makingrnlevels.rnIt was generally recommended that continuous training of employees and officials; conductingrntraining need and impact analysis; designing reward system, support in fulfilling the resourcesrnand facilities on the part of the regional government, participation of local community in needrnprioritization, planning and decision making, making available different policy documents,rnguidelines, and rules for employees; creating stable and suitable structure and in generalrnbuilding local capacity be undertaken.