How federalism can be used to provide recognition and accommodate ethnic groups is an important topic, not only in Africa, but in multi-ethnic communities around the world. Examining how institutions of multi-ethnic states have been designed to accommodate ethnic diversity while at the same time maintaining national unity, this book locates institutional responses to the challenges of ethnic diversity within the context of a federal arrangement. It examines how a federal arrangement has been used to reconcile the conflicting pressures of the demand for the recognition of distinctive identities, on the one hand, and the promotion of political and territorial integrity, on the other. Comparative case studies of South Africa and Ethiopia as the two federal systems provide a contrasting approach to issues of ethnic diversity. Suggesting new ways in which federalism might work, the author identifies key institutions lessons which will help to build an all-inclusive society.