Ethiopia Due Diligence Avoiding Tender Scams

As Ethiopia’s economy continues to grow, U.S. companies are increasingly interested in government contracts and procurement opportunities. However, this rise in interest has also led to a significant risk: the emergence of fraudulent tenders targeting foreign businesses.

Tender scams aimed at U.S. companies in Ethiopia are becoming more common, but they can be avoided with proper due diligence and the engagement of local expertise. One major red flag in the Ethiopian market is unsolicited tender invitations that typically come in via email or text SMS. Scammers often lure companies by offering sole-source “contracts” that are not competitively tendered. This is usually without any prior engagement and frequently with unrealistic volume requests and/or excessively high contract values. Additionally, requests for upfront payments such as registration fees or bond payments should raise concerns, as legitimate tenders rarely require advance payments.

In many instances, scammers falsely claim to represent or have a relationship with well-known government agencies or international development entities (e.g., the European Union, the World Bank, the Africa Development Bank, etc.), but their credentials are typically unverified. They often impersonate officials from an in-country procurement agency or a ministry arm. 

In Ethiopia, institutions like the Public Procurement and Property Administration Agency (PPPAA) and Public Procurement and Property Disposal Service (PPPDS) have been misrepresented by individuals who falsely claim to represent these agencies, soliciting upfront fees from U.S. companies for fake tenders supposedly backed by European funds. Fortunately, many U.S. companies have avoided significant losses due to the intervention of CS Ethiopia – which is familiar with Ethiopia-specific names and tactics associated with these scams. 

To mitigate risks, U.S. companies should reach out to their local USEAC and CS Ethiopia as early as possible when presented with a tender opportunity. By doing so, they can confirm the validity of any offers and avoid engagement with fraudulent parties. CS Ethiopia possesses the knowledge of local agencies and a network of reliable contacts, allowing them to quickly verify the legitimacy of tender offers. 

U.S. companies must conduct thorough due diligence on any organization or individual offering tenders, including verifying their credentials with local authorities. It is essential to refrain from making advance payments unless the legitimacy of the deal has been thoroughly vetted. Constant vigilance is necessary, and companies should remain alert to suspicious behavior, such as unsolicited offers or unrealistic contract terms.

U.S. companies pursuing government contracts in Ethiopia should beware of tender scams involving unsolicited offers, false representation, and upfront payment requests. Engaging CS Ethiopia for due diligence can help verify legitimacy and avoid fraudulent schemes.

For more information, please reach out to Siraj Mustefa, Commercial Assistant, at Siraj.Mustefa@trade.gov