The term decentralization means different things for different people and hence, several understandings are being usedfor the same term but nOne of the understandings offers comprehensive theoretical or methodological solutions that will help us determine how decentralization should be carried out. However, the different approaches provide important concepts 'and guidelines for determining and implementing decentralization policies as a strategy for development. Decentralization is understood to mean a good many things and as a result most governments like the idea of decentralization. However, most governments have not been successful in carrying out decentralization policies. Decentralization is believed to improve development activities by allowing lower levels of government agencies and the people at large in development planning and implementation. But these objectives have not been fidly achieved by many governments since the important preconditions such as political commitment, availability and access to resources, capacity of implementing agencies, effective inter-organizational relations, and supplementary supports are not effectively fidfilled. The on-going decentralization policy in Ethiopia has introduced a major change in the political, economic and social systems of the country. The new decentralization policy is organized under federal fornJ of government whereby the cOL/nlly has been divided into nine regional gove0lnenJL and t~ regiona~ administrations under the umbrella of the Federal Government. The regions are delimited based Oil ethnic and language factors. As a result, the emerging regions are different in population, area, and economic and social infraSIn/cture. Although authority and powers seem to be decentralizedjrom the center to regional levels, the extent of decentralization to sub-regional units of government is not satisfactory. Moreover, the current decentralization is challenged by many problems such as low revenue bases for regional governments, velY low administrative and manpower capacity both at the federal and regionallevels,-and poor interorganizational relationships. The policy of current decentralization aims at promoting balanced regional development. However, the trend is not as it was thought to be, rather it aggravates regional development differences. Some regions like Tigray, Amhara, Oromia and SNNP are doing good whereas regiollS like Afar, Benishangul/Gwnuez, Somali and Gambella are lagging behind the former regions.