Nation and state building have been central during state formations or consolidations in all parts of the world. Third world countries have pursued both projects in a way to destruct diversity and create culturally homogenous polities experiencing inherent problems like denial of people-hood, overlapping citizenship and nationality, and cultural homogeneity. As a remedy, federalism, democracy and multiculturalism are institutional, policy, and politico-psychological innovations. The Ethiopian experience shows plausible centralist-unitary with failed/confused nation-building in pre 1991 witnessing rough state-society relations while the post 1991 has promised a lot along ethno-territorial federal approach. But still, Ethiopia is in its evolutionary stage whereby observable dual state-building approaches: responsive from 1991-2001 and unresponsive since 2001. This shows the retreat to unresponsive state and nation building approaches where national issues are given priority over passing regional self-rule.In light of this, mega-projects like GERD have contributions either to encourage or discourage healthy state and nation building approaches. Accordingly GERD has both contributions.