Ethiopia, Kenya to pen agreement to combat illegal trade

Ethiopia and Kenya to sign simplified trade regime agreement to manage illegal cross border trade.

Small scale trade along the Kenya- Ethiopia border is poised to thrive following bilateral negotiations between the two parties to agree on a Common List of products to be traded under the Simplified Trade Regime (STR). The negotiations took place on 1st March 2022 at the Moyale border post and addressed the implementation of the STR between two countries. The STR which was launched in 2010 was done so in order to enable smallscale traders’ to become beneficiaries from COMESA’S trade liberalization programme by simplifying and formalizing the trade.

According to experts, effective implementation of the STR spurs growth, enhances production and productivity of the agricultural sectors through value addition and processing thereby creating jobs and increasing household incomes down the road.

Ethiopia has lost up to 78 billion dollars in five years through trade mis-invoicing practices, one of the tools in executing illicit financial flows.

Export under-invoice and import overinvoicing are the common activities in the illicit financial flows.

Corrupted officials at borders contributed to the expansion of illegal financial flows and trade, Mussie Mindaye, Trade Relations and Negotiations Directorate General at the Ministry of Trade and Regional Integration, pin-pointed.

Mussie explained that the absence of a comprehensive trade deal with neighbors and poor border management as contributing factors to the booming illegal trade in border areas.

Ethiopia’s vast borderland makes construction of infrastructures across the border expensive and cumbersome task, according to Mussie. Illegal business activities conducted in different ways in Ethiopia are affecting the country's economy to a great extent and the problem is reaching at serious level. As stated in the discussion forum held recently regarding illegal trade and related issues, domestic and foreign illegal trade activities are becoming a thorn in the flesh for the contry economic activities.

The Director of Trade Relations and Agreements of the Ministry of Trade and Regional Cooperation of Kenya, Moses Mendaye pointed out that the illegal trade with income and expenditure trade is a concern.