South Africa has been flagged as one of the world’s largest sources of financial flows from illicit trade, cross‐border laundering and mineral smuggling.
Public data suggests substantial imbalances between what South African firms report for imports and exports and what our trading partners report.
If such differences reflect trade fraud, then the South African Revenue Service (Sars) might be losing billions of rand in tax revenue every year.
Trade misinvoicing — the deliberate falsification of volumes, values or classifications of traded goods by at least one party in an international transaction — can undermine the accuracy of trade data, erode a country’s tax base or facilitate illicit financial flows.
Over-invoicing imports is one avenue to launder illicit income across borders. Under‐invoicing by domestic exporters bypasses exchange controls, reduces their taxable corporate income and shifts profits to other tax jurisdictions.
On the other hand, export over-invoicing is a way to fraudulently claim export subsidies or value-added tax (VAT) rebates, or to repatriate illicit offshore funds.
Trade misinvoicing appears to be a significant problem in South Africa. A 2026 study by Global Financial Integrity.org notes a gap between 2013 and 2022 of almost $500bn in the value of traded goods reported by South African exporters and that of our trading partners. If these estimates are correct, this would represent a significant loss in potential tax revenue.
Over-invoicing imports is one avenue to launder illicit income across borders.
Along with renewed interest being directed to understanding the illicit economy and cross-border trade, the continued institutional challenges faced by South Africa, including insufficient support to monitoring and enforcement agencies and the collapse of container port infrastructure, make assessment of trade misinvoicing especially pertinent.
Yet there is surprisingly little academic or policy research into this important issue. Data availability is one reason. A lack of mirror data capturing the value of South African imports reported by destination exporters makes it difficult to analyse import misinvoicing as a mechanism enabling illicit financial flows.
South Africa also does not provide detailed information on gold exports, our largest export category. Given the extent of illegal gold mining in South Africa, gold exports may be particularly prone to high levels of under-invoicing. However, a lack of accurate trade data makes it difficult to track potential trade misinvoicing.
Our research focuses on a selection of export commodities, and we show that public data suggests systematic under-invoicing of South African exports. Across just chrome, coal, copper, iron, manganese and platinum, the difference between what South Africa reports and our trade counterparties report exceeded R400bn between 2015 and 2024.
This represents 13%-20% of the value of exports, after adjusting for freight and insurance costs. Platinum stands out among the export commodities we consider, with nine out of the 10 years in our sample suggesting potential under-invoicing by South African exports.
Across these commodities, the degree of potential under-invoicing cannot be explained by exchange rate conversion differences, trade assignment to specific calendar years, re-exporting via countries such as Mozambique or Hong Kong, or the dataset we use.
We highlight a lot of issues with South African trade data that confound this analysis. But if you take our estimates literally, our findings suggest substantial foregone mineral royalties for the South African fiscus. Our back-of-the-envelope estimate ranges between R30bn and R50bn for 2015-2024.
This estimate excludes gold exports, as well as potential misinvoicing of imported goods, or international services trade. Our estimates of foregone fiscal revenue suggest that investing in capacity to monitor trade misinvoicing would be self-funding.
• Dr Steenkamp is CEO of Codera Analytics and a research fellow with the economics department at Stellenbosch University. Smuts is a researcher with Codera. The organisation’s report, ‘Assessing Potential Trade Misinvoicing and Data Quality Issues in South African Exports’, is available here.
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