Financial Crime World

Ethiopia’s Financial Crime Landscape: A Threat Assessment

ETHiopia, a country with a population of over 109 million, is the second most populous nation in Africa and a significant player in various transnational crimes. Despite being removed from “Grey” lists by the US, EU, and FATF, Ethiopia continues to face numerous financial crimes that threaten its stability and development. In this article, we examine Ethiopia’s financial crime landscape, focusing on corruption, organized crime, modern slavery, and people smuggling.

Country Snapshot

  • Population: Over 109 million (second most populous country in Africa)
  • strategic location: A crossroads for various migration routes
  • Major sectors: Agriculture, mining, and services
  • GDP: US$84.3 billion

Corruption

According to Transparency International’s Corruption Perceptions Index (CPI), Ethiopia ranked 96th out of 180 countries in 2019, scoring just 37 out of 100. Despite a slight increase in Ethiopia’s Corruption Control Index score from 34 in 2018 to 37.5 in 2019, significant progress is necessary.

Organized Crime

Based on the 2019 African Organised Crime Index, Ethiopia is considered a “Low-Criminality, High-Resilience” country. However, the presence of criminal networks involved in human smuggling remains a significant concern. Ethiopia’s criminal markets include:

  1. Arms trafficking: Overall score of 6.5/10
  2. Human smuggling: 6/10
  3. Human trafficking: 6/10
  4. Cannabis trade: 5/10
  5. Non-renewable resources crimes (illegal mining): 4/10

Top criminal actor types in Ethiopia are “Foreign Actors and Criminal Networks,” which range from opportunistic criminal entrepreneurs to highly organized and sophisticated networks.

Modern Slavery

An estimated 614,000 modern-day slaves reside in Ethiopia, as reported by the Global Slavery Index in 2018. This equates to an incidence rate of 6.1 per 1,000 people and a government response rating of “CCC.” Ethiopia is a source, transit, and destination for men, women, and children subjected to forced labor and sexual exploitation.

People Smuggling

Ethiopia is identified as a source and transit country for three migration routes:

  1. Northern route to Europe via Yemen and Egypt
  2. Southern route to South Africa via Kenya
  3. Eastern route to Saudi Arabia and other Middle Eastern countries via Djibouti and Somalia

Conclusion

ETHiopia’s unique geographic location, large population, and diverse economy create significant challenges in the fight against financial crimes. The country remains vulnerable to various forms of financial crimes, including corruption, human trafficking, arms trafficking, and modern slavery. To address these challenges, a multifaceted approach is required - improved regulations, increased public awareness, and international cooperation. Despite these challenges, recent efforts by the Ethiopian government to tackle human trafficking and enact new comprehensive anti-human trafficking and migrant smuggling legislation are encouraging signs of progress.