Ethiopia Lost an Estimated $24.6 Billion to Trade Misinvoicing Over a Decade, New Report Reveals

Kenya, January 30 2026 - Ethiopia is estimated to have lost about USD 24.6 billion roughly tens of billions of dollars. to trade misinvoicing and related illicit financial flows (IFFs) between 2013 and 2022, according to a new report that highlights a major leak in the country’s economic and revenue systems. 

Trade misinvoicing, the deliberate misreporting of the value of imports or exports to evade taxes, shift profits, or illicitly transfer capital, remains one of the dominant channels through which capital leaves the Ethiopian economy. 

Trade misinvoicing typically involves import over-invoicing (declaring higher import values than actual) to siphon capital out of the country, or export under-invoicing (declaring lower export values than actual) to hide profits and move money abroad. 

These tactics reduce customs duties and tax revenues collected locally and drain foreign exchange reserves, undermining both state revenue and macroeconomic stability. 

Research on Ethiopia’s broader illicit outflows indicates that trade misinvoicing in past decades has accounted for a significant share of capital flight, with estimates showing losses ranging from $6 billion to over $20 billion in earlier periods when including both advanced and emerging trading partners. 

Trade misinvoicing is more than an accounting anomaly; it represents a systemic revenue leak that affects public finances, investment capacity and economic transformation. 

Because import duties and export taxes are key sources of government revenue, especially in economies with limited income tax bases, misreporting inflates fiscal deficits and constrains funding for infrastructure, health and education.

The problem intersects with wider challenges in Ethiopia’s trade and customs environments. Inefficiencies in customs valuation, verification and enforcement have long been cited by economists and traders as impediments to revenue integrity. Suspicions of undervaluation or overvaluation at border posts, sometimes exacerbated by weak processes and lack of transparent pricing systems, reduce trust in official statistics and fiscal planning. 

Ethiopia’s experience with trade misinvoicing reflects a broader African trend. 

The African Development Bank (AfDB) estimates that the continent loses more than USD 580 billion annually to illicit flows, including trade misinvoicing, corruption and profit shifting, with trade misinvoicing accounting for a large portion of that total. 

In Ethiopia’s case, such outflows have been linked to as much as 10-30 percent of government revenue losses and can subtract up to 2.2 percent from annual GDP growth, stark reminders of the scale of economic leakage relative to development needs. 

Part of the challenge is that as Ethiopia’s trade expands, so does the opportunity for misinvoicing. 

Studies show that misinvoicing tends to rise alongside trade volumes and complexity, especially when customs systems lack the modern data analytics, transaction verification and risk-profiling tools that major trading economies use to detect and deter fraud. 

The estimated $24.6 billion lost to trade misinvoicing has multi-layered impacts: