There is a growing global recognition of local government as an important level of government both as institution of democratic participation and basic service delivery. It is also used for accommodating ethno-linguistic minorities in countries with ethnically diverse population. So much so that different regional and global institutions have adopted resolutions or charters calling countries to empower local government. The African Charter on the Values and Principles of Decentralisation, Local Governance and Local Development, which was adopted in 2014, recognises local governments as ‘key corner stones of any democratic governance system’. The European Charter on Local Self-Government provides that ‘local authorities are one of the main foundations of any democratic regime’. The European Charter further states that citizens right for participation is ‘most directly exercised’ at local level. For this reason, the international instruments mentioned above require the recognition of local government as sphere or level of government. However, local government in Ethiopia is far from being democratic. It is rather instrument of control and oppression. This is so, among others, because of deficient institutional design. This paper begins with a brief description of local government in the political history of Ethiopia. It then discusses the constitutional status and institutional structure of local government. It finally explains how the deficient institutional structure rendered local government undemocratic.