Background This study critically examines the dynamics of corruption within Ethiopia’s dam construction projects, focusing on the Grand Ethiopian Renaissance Dam (GERD the Gilgel Gibe series, and Genale Dawa. The research highlights how weak management practices, insufficient oversight, and centralized decision-making, resulting in contribute to inflated costs, project delays, and compromised construction quality. A comprehensive understanding of these issues is crucial for addressing the challenges that impede Ethiopia’s infrastructure development. Methods A qualitative research approach was employed, integrating both primary and secondary data sources. The study utilized four theoretical frameworks—Principal-Agent Theory, Rent-Seeking Theory, Institutional Theory, and Neo-Patrimonialism—to analyze the structural and behavioral factors enabling corruption in Ethiopia’s dam construction projects. Results The study found that corruption is largely driven by weak management practices, insufficient oversight, and centralized decision-making. These factors contribute to inflated project costs, significant delays, and compromised construction quality. The lack of transparency and inadequate monitoring exacerbate these issues, leading to inefficient resource use and undermining the projects’ intended benefits. Economic impacts include increased public debt and strained financial resources. Socially, corruption erodes public trust and adversely affects the communities involved. The findings also highlight how information asymmetry and misaligned incentives contribute to corruption, with weak governance structures and informal networks further exacerbating the problem. These issues lead to cost overruns, increased debt, and diminished public confidence, which negatively impacts development outcomes. Conclusions While corruption in Ethiopia’s dam construction projects poses significant challenges, it is not insurmountable. Strengthening legal and regulatory frameworks, enhancing institutional capacity, promoting community participation, and leveraging international cooperation are crucial for mitigating these risks. Recommendations include implementing e-procurement systems, establishing independent oversight bodies, and promoting transparency to ensure these mega projects achieve their intended economic and social benefits.