Abstract Severe capacity gaps continue to constrain effective urban management in Ghana, despite numerous donor-supported training programmes. This paper examines the nature of these capacity gaps and analyses specifically the factors contributing to the low attraction and retention of local government staff: politicisation of the bureaucracy, excessive use of external experts, excessive state intervention in skill development and low remuneration of local government staff. Against this background, the paper reviews critically a recent capacity building initiative: the establishment of the (new) Institute of Local Government Studies in Accra. Suggestions to improve capacity building for urban management in Ghana are offered. These include the need to prepare a coherent strategy to guide and co-ordinate stakeholder inputs in capacity building; to place training in the context of institutional development; and encourage the development and use of local expertise in donor assisted projects; and, promote merit-based remuneration of local government staff.