<p>Illegal trade and cross-border contraband trade, poses a significant challenge in Ethiopia, especially in the Oromia region. This research aims to analyze the causes and practices of illegal trade in the country. Primary and secondary data were collected and analyzed using qualitative and quantitative methods. The study revealed that contraband trade has double-edged sword implications for the socio-economic development of the country and the involvement of regulatory bodies hindering effective regulation. Coordination issues among government structures and conflicts of interest among the neighboring states further escalate the problem. The study also highlighted the extensive involvement of regulatory bodies in the hidden supply chain of contraband trade. The prevalence of illegal trade activities can be attributed to the existence of legal loopholes rather than the absence of regulatory legal institutions. To address these challenges, comprehensive strategies and interventions beyond the capabilities of the regional government are needed, including strengthening anti-illegal trade institutions and promoting local production. Cross-border collaborations and trade agreements can also help reduce illegal trade on basis of free trade framework. Overall, coordinated efforts and pragmatic interventions are necessary to overcome the multifaceted challenge of illegal trade in the Oromia region and protect socio-economic interests.</p>