Abebe, Dechasa(PhD)Anteneh Chanie, Asnake2018-06-112023-11-182018-06-112023-11-182014-05http://etd.aau.edu.et/handle/12345678/268Trends in Africa show that ethnicity has been manipulated by rulers for political appointment, economic control, social supremacy and cultural domination. Previous studies on the continent, extensively tried to explore ethnicity in terms of its political and cultural implications. Its economic inferences has not been well explored until recently. This study, by employing a qualitative approach, critically investigates the adverse effects of ethnicity on economic development in Ethiopia and Nigeria. It also aims at deriving constructive African lessons on how ethnic diversity can be managed and switched to fast, equitable as well as sustainable economic growth. In general, the research findings show that although federalism (either in ethnic or other forms) has been implemented as a system for state building in Ethiopia and Nigeria, still there are rising laments on political and economic inequality as well as manipulation of federal power by dominant groups. Ethnicity, with having a great space on the politico-economic structure of the nations, has hampered economic development through influencing investment, intensifying brain drain, amplifying corruption, leading unfair competition, eroding trust and exacerbating economic marginalization. Thus despite registering remarkable growth over the past couple of years economies in Ethiopia and Nigeria, while they enrich few sections of political elites and affiliated spectrums, leave masses of ethnic groups to live under poverty and face inequality. This directly shows the nations’ inability to implement genuine federalism for viable economic development. By recognizing the very existence of various ethnic groups and widening space for their prosperity through implementing genuine federalism, the study suggests that, the governments should propagate the grand positive impacts of national identity for state building and harness it accordinglyenEconomic Development, Effects, Ethiopia, Ethnicity, Federalism, Nigeria.Thesis