Capacity development is a major and complex challenge. Despite substantial donor funds dedicated to building capacity over the past decades, the lack of sustainable country capacity remains one of the main reasons why many developing countries are failing to meet their development goals. Capacity development refers to the ability of people and organisations to define strategies, set priorities, solve problems and achieve results. It is therefore a much broader concept than the training and technical assistance approaches that are often put forward as answers to the capacity problem. Capacity development requires an approach that not only addresses obvious capacity gaps, but also pays attention to the enabling environment. It is closely linked with the governance agenda and efforts to improve institutions, laws, incentives, transparency and leadership. The international development community has consistently overestimated its ability to build capacity in the absence of national commitment and reasonably good governance. One particularly important lesson is the need to avoid supply-driven technical assistance.