With the adoption of federalism throughthe 2015 Constitution, seven newly created provincial and753 local governments are now placed at the frontline,tasked to manage substantial amount of public resources anddeliver critical services to citizens. As result, Nepal isnow in the middle of the transition to federalism, and it isunderstandable that the process will be a drawn-out one,which could take decades. This policy note has been preparedbased on the findings, analyses and recommendations of theFederalism Capacity Needs Assessment (FCNA) study. The FCNAwas conducted by the Georgia State University in 2018-2019for the government of Nepal (GoN) with the joint support ofthe World Bank and UNDP. It has identified the gaps betweenthe needs and the capacity in different levels ofgovernment. This note provides a synthesis of the FCNAfindings as well as its forward-looking recommendations interms of actions the government could take in the immediate,medium and long-terms towards a full realization of thebenefits of federalism implementation in Nepal.