The Ethiopian Customs Commission’s prolonged failure to approve the Origin Verification Guideline (OVG) has led to significant government revenue losses and reduced operational efficiency, according to a recent audit report. The draft guideline, designed to streamline customs procedures and ensure appropriate tariffs are applied by verifying the country of origin of imports, has remained pending for over a year without formal approval or implementation.
The absence of a clear framework for origin verification has disrupted tariff reforms, causing procedural bottlenecks that resulted in both uncollected taxes and inflated tax burdens. The Tariff Classification and Country of Origin Directorate completed the draft OVG in the 2023/24 fiscal year and submitted it to the Customs Operations Sector. However, despite the elapsed time, the directive has neither been reviewed nor disseminated to branch offices for enforcement.
The audit highlighted how this inaction has impaired the efficiency of tax collection in key sectors such as agriculture, directly affecting the national treasury’s revenue intake. While Commission officials cited the need to incorporate recent African Continental Free Trade Area (AfCFTA) implementation rules into the guideline as justification for the delay, the Federal Auditor General’s office rejected this rationale. The auditors argued that pending improvements should not have stalled the immediate approval and implementation of the directive.
Questions about the Commission’s internal processes were further raised, as officials claimed to have verified the authenticity of 212 origin certificates between fiscal years 2014 and 2016 EC but failed to provide documentary evidence to substantiate these claims.
The report also criticized the Commission’s failure to fully leverage technology and improve inter-agency collaboration. While plans exist to link Ethiopia’s electronic single-window customs system with counterparts in Kenya, Djibouti, and other COMESA member states, progress remains limited to preliminary contract negotiations, with no tangible results achieved.
Moreover, the Commission has yet to fully implement its electronic tariff book system or integrate its single-window platform with key government bodies such as the Ministry of Agriculture, Ministry of Industry, and the Investment Commission—missing critical opportunities for streamlined and efficient customs operations.
The audit concluded that these unfulfilled technological initiatives have rendered Ethiopia’s customs processes technologically outdated and inefficient, hampering trade facilitation and revenue generation.
The Ethiopian Customs Commission now faces mounting pressure to expedite the approval and operationalization of the Origin Verification Guideline and to embrace digital modernization to support economic growth and ensure effective tariff collection in line with regional trade commitments.
