Economy of Eritrea

By | April 29, 2022

Economy of Eritrea

According to businesscarriers, the basis of the country’s economy is agriculture and cattle breeding. By 1991, over 30 years of hostilities on the territory of Eritrea, most of the industrial and infrastructure facilities were destroyed, inactive. The lands of the peasants who had gone to fight were neglected, the number of livestock among the pastoral tribes significantly decreased. Currently, the country’s economy is recovering (infrastructure, roads, dams, bridges, etc.), but this process was negatively affected by the border conflict with Ethiopia, which led to the rupture of economic ties. In February 2001, almost half of the people of Eritrea needed help due to drought and the effects of the war. At the beginning of August 2002, famine as a result of drought threatened every third inhabitant of the country.

Unemployment is approximately 55% in the 20-29 age group and 18% in the 30-39 age group (1995). GDP in purchasing power of currency 3.2 billion USD, GDP per capita 740 USD (2001 estimate). Annual GDP growth 7%. Inflation 15%. Current remittances from Eritreans working abroad account for 40% of GDP. The structure of GDP by sectors (2001,%): agriculture 17, industry – 29, services – 54.

Agriculture produces sorghum, millet, wheat, teff, corn, cotton, coffee, papayas, citrus fruits, bananas, potatoes, vegetables, fish, meat, leather. Cultivated land makes up 10% of the available land. This industry employs approx. 80% of the population. The country has commercial stocks of sardines, anchovies, pink salmon, tuna, sea pike, cod, as well as shrimps, lobsters, lobsters, etc.

In the past, the leading industries are now subject to restoration: oil refining, textile, food, mining. These are more than 40 enterprises for the production of fabrics, cement, glass, footwear, soft drinks, fish processing, etc. Handicraft and home industries are widely represented. Small business and trade have a long tradition.

The length of the railways is 317 km, they connect Asmara and Akordat with Massawa, since 1978 most of them have not been operating due to military destruction. Motorways 3850 km, incl. hard coated 810 (2000). Seaports of international level – Assab and Massawa (2002). There are 21 airports, 4 of them with runway coverage (2001).

30,000 telephones (2001), 2 radio broadcasting stations (2000), 345,000 radios (1997), 1 television stations (2000), 1,000 televisions (1997), 12,000 Internet users (2001).

The diversity of the landscape, the beautiful sea beaches, the beauty and richness of the underwater world in the coastal waters and around the islands (National Park of the Dahlak Archipelago) are attractive to tourists. In Eritrea there are sites of unique archaeological excavations that provided material for the study of pre-Aksumite and Aksumite monuments. In Davo-Kavlos near Asmara, rock paintings (one-color, made in yellow ocher and polychrome) were discovered, created long before the new era. There are monuments of the pre-Christian era (Cohaitto steles), medieval architecture (monastery in Debre Bizen 1361), etc.

Government budget: revenues $206.4 million, expenditures $615.7 million (2000). External debt US$281 million (2000 est.). Economic aid $77 million (1999).

Foreign trade (million US dollars, 2000): export 34.8, import 470. The main export commodities are livestock, sorghum, textiles, food; the main partners are Sudan 27.2%, Ethiopia 26.5%, Japan 13.2%, UAE 7.3%, Italy 5.3% (1998). The main imports are petroleum products, machinery, foodstuffs, manufactured goods; the main partners are Italy 17.4%, UAE 16.2%, Germany 5.7%, UK 4.5%, Korea 4.4% (1998).

Eritrea has declared its commitment to the course of a market economy and privatization. A program for the privatization of state-owned enterprises and companies has been announced, and the investment code has been liberalized. However, the ruling party continues to play an overarching and regulatory role in the economy. In 1994, the implementation of the land reform began: the peasants were given for life use the plots they cultivated. Each citizen can receive a small plot of land for life use. The state encourages the creation of farms and agricultural cooperatives. The Constitution establishes state ownership of land. The economy will remain mixed for the foreseeable future. Small business continues to develop in the capital and metropolitan area. Eritrea is one of the poorest countries in the world. In 1999, according to the United Nations Development Program.

History of Eritrea

In the 1st-10th centuries on the territory of present-day Eritrea and the Ethiopian province of Tigray, the early feudal kingdom of Aksum was born and developed. It became the source of the formation of the Ethiopian state, the northern territories of which (present-day Eritrea) participated in this process to one degree or another. In the 9th-11th centuries. on the Red Sea coast, on the eastern outskirts of the Ethiopian highlands, Islam is spreading. In the north, a number of “states” of the Beja formed, which existed until about the 14th-15th centuries. In the 16th-18th centuries part of the western territories was occupied by the troops of the Sudanese Sennar Sultanate. The Portuguese-Ottoman naval confrontation in the basins of the Indian Ocean and the Red Sea led to the occupation by the Turks in 1557 of Massawa, and then of other areas. The coastal population (Eritrea) was simultaneously under the control of the Ethiopian emperors and the Turkish naibs. In 1865, the Turkish and Sennar (Sudanese) occupation of most of the Eritrean territory was replaced by the Egyptian one. After the opening of the Suez Canal in 1869, Italy showed interest in the coastal regions. In 1890, Italy announced the unification of the territories it had seized on the Red Sea coast of Africa into one colony, Eritrea. In this territory, Italy has created a developed economic infrastructure in order to form a springboard for moving deep into Ethiopia. However, during World War II in 1941, Eritrea was liberated by the Anglo-Ethiopian troops, and until 1952 its territory was under the control of the British administration (under the auspices of the UN since 1945). By resolution of the 5th session of the UN General Assembly, against the will of the majority of the population in 1952, Eritrea was annexed to Ethiopia on the basis of a federation. Under the Constitution of the Ethiopian Monarchy of 1955, the population of Eritrea was deprived of all political rights that it had under colonial status: the flag, freedom of speech, assembly, political parties, and trade unions. In 1962, the federal status of Eritrea was abolished. The Eritrean Liberation Front (EFF), formed in 1958, began armed resistance in 1961. The resistance movement has gone through many stages of development – from the fragmentation and confrontation of many political organizations to the leadership of the Popular Front for the Liberation of Eritrea (EPLF), a military-political organization with a rigid centralized structure. Since 1989, the NPLF, together with the allied Popular Front for the Liberation of Tigray (TPLF), has intensified military operations against the central government. In May 1991, the Mengistu regime in Ethiopia fell, and the NPLF established its control throughout Eritrea.

Economy of Eritrea