Ethiopia is losing a significant share of its gold production to informal and illegal trade networks, according to a new report commissioned by the Indian Embassy in Addis Ababa. The study warns that nearly two-thirds of the country’s gold, particularly from artisanal and small-scale miners, is either sold in underground markets or smuggled abroad.
The report, presented to the Ministry of Mines, estimates that Ethiopia may be losing up to 60 tons of gold annually, valued at nearly USD 6 billion, due to unregulated trade. Although the National Bank of Ethiopia (NBE) received around 26 tons of gold over the first nine months of the current fiscal year—including 10 tons from Tigray—the total production is believed to be much higher, with most of it never reaching official markets.
Experts say this situation is weakening the country’s foreign exchange reserves and damaging Ethiopia’s potential to become a key player in the global mineral export market. The NBE, which buys legally mined gold for export, is reportedly struggling to compete with informal buyers offering faster cash without bureaucratic hurdles.
The report highlights a number of challenges in Ethiopia’s mining sector. These include delays in obtaining permits, inconsistent licensing processes between federal and regional authorities, and lengthy customs procedures. In Tigray, for example, the regional administration suspended foreign mining licenses in 2024, which has left many licensed companies unable to resume operations since the conflict began in 2020. Many of these sites have since been taken over by informal miners.
In addition, the report notes that while Ethiopia has access to India’s Duty-Free Trade Preference (DFTP) scheme—which offers duty-free or reduced-tariff entry for 98% of Ethiopian goods—mineral exports remain underutilized due to poor awareness, lack of certification systems, and the absence of standardized grading for precious stones.
Beyond economic concerns, the study also addresses the social and environmental impact of the artisanal and small-scale mining (ASM) sector. It supports the livelihoods of over 7.5 million Ethiopians, but many miners face poor working conditions, outdated equipment, and exposure to environmental degradation. Women’s participation in the sector is reportedly declining due to the difficult and unsafe nature of the work.
To address these issues, the report recommends stronger government oversight, simplified licensing and export procedures, support for ASM miners through training and infrastructure, and the formalization of gold production to curb smuggling.
The study concludes that Ethiopia’s ability to regulate and modernize its gold mining sector is critical not only for economic growth but also for creating sustainable livelihoods and boosting its role in global trade, particularly with India.