How illicit financial flows cost Kenya Sh243b annually
Business
By
Graham Kajilwa
| Sep 19, 2025
Kenya loses Sh243.2 billion, equivalent to 1.5 per cent of the country's economy, through illicit financial flows (IFFs), a new report shows.
The report by the National Taxpayers Association (NTA) in partnership with Oxfam shows that trade in illicit goods takes the largest portion in this basket contributing Sh153 billion.
Corruption costs the economy Sh11.2 billion while international trade misinvoicing costs the economy Sh79 billion.
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The report titled "Study to Establish the Size of Illicit Financial Flows in Kenya", combed through data from Kenya Revenue Authority (KRA), Ethics and Anti-Corruption Commission (EACC), Anti-Counterfeit Authority (ACA), Kenya Association of Manufacturers (KAM) among other bodies, to ascertain how much the country loses through IFFs.
The data showed that one in every five products in the market is a counterfeit, with earlier data from ACA estimating the loss to be Sh100 billion annually.
Further, in the last six years, EACC has traced Sh66.9 billion worth of proceeds of corruption and recovered Sh32.1 billion.
"The size and trend of commercially-driven IFFs arising from mis-invoicing and illicit products on the other hand indicate annual upward trend," the report says.
It explains that the illicit goods trade as reported by ACA and KAM indicate that the value of illicit goods in the market grew from an estimated Sh100 billion in 2021 to Sh153 billion in 2024.
The report further says the variance between import and export flows to and from Kenya and its trade partners was Sh18.7 trillion (USD 144.1 billion) over the last 12 years.
"The size of value mismatch on international trade, established through the Partner Country
Method (PCM) similarly shows an increasing disparity, hence value of mis-invoicing from
a net value of Sh1 billion in 2016 (0.24 per cent ) to a value of Sh180 billion in 2024 (19.81 per cent )," the report says.
Patrick Nyangweso, NTA Chief Executive said some of the issues contributing to this figure such as proliferation of illicit alcohol and cigarettes have been highlighted before.
"The much we lose as a country, if well consolidated, it can go a long way to support service delivery, especially health, education, social protection, infrastructure and even establish cottage industries that will create employment for our vulnerable youth," he said.
Walter Odede, Chief Manager Investigations at KRA, who was part of a panel discussions at the launch of the report said the outcome of the report and it's findings is being taken seriously.
"It has made a foundation for us as KRA to pick on some insights that we can look into," he said.
Odede emphasised on the need for collaboration with the state and non-state agencies both locally and internationally, to address the issues highlighted in the report.
He said KRA has been doing its bit to combat IFFs and ensure that everybody pays their fair share of taxes.
"The research has pointed out some areas that probably we will need to go back to the drawing board and look into how we can benefit from this information in order to work on the fiscal deficit the country is facing," he said.
Some of the recommendations in the report include the need for an effective measure of estimating the size of IFFs that should adopt a wider data integration of all possible (IFF)sources.
The report also recommends investigative agencies should exhaustively investigate all cases reported in order to recover as much illegally acquired wealth as possible.
"The government, through extensive bilateral and multilateral agreements, should establish data exchange protocols to validate declaration values between trade partners," it adds