Has Eritrea’s Self-Reliant Economy Run Out of Puff?

Medeber recycling asmara Self-reliant economy
Medeber recycling market in Asmara (Photo: by Herbert Graf)

By Mary Harper | for BBC World Service News,

Ago it alone” culture has long been central to Eritrea, including its economy. It is slowly opening up to foreign investment, but recent policies, especially a currency reform, mean many people are now struggling in what was already one of the poorest countries on earth.

In a dusty corner of the capital, Asmara, is a walled market. It assaults the senses as soon as you enter, for it deals in just two things: Chillies and metal.

Big chillies, medium-sized chillies and, fiercest of all, the tiny chillies, draw tears, itches and sneezes.

There is a deafening cacophony as old metal is bashed from rusty, useless scraps into shiny cutlery, hairpins, gates, gutters and religious artefacts.

“I am rewinding the metal,” says a man as he bangs out a large serving dish from an old oil drum.

The market is basically a giant recycling centre and represents the country’s fierce spirit of “self-reliance”, a phrase I hear often in Eritrea.

This culture started during the 30-year war of independence from Ethiopia, when rebels produced almost everything they needed in underground factories, including clothes, shoes and medicine.

It endured after Eritrea won the war in 1991, with the country periodically expelling aid agencies, saying they promoted dependency.

Unlike most African countries, there is a lack of large UN and NGO land cruisers zooming around the place.

Although education up to tertiary level is FREE, young Eritreans are not free to pursue their own dream careers. They become locked into a system of obligatory national service, mainly in civilian roles, and have no idea when they will be released.

In the spice and metal market, a man proudly shows me a storage container he has made from broken bits of mirror and steel.

“I have been in national service for nine years. The pay is very low – less than $50 [£37]a month – so I supplement it by working here.”

Remittances Plunging

Eritrea came third bottom in the United Nations Human Development Index for 2015. Time and again, I hear similar stories of people doing two or even three jobs to make ends meet.

On the plane to Asmara, I meet a man who imports mobile phones, televisions and satellite dishes from Dubai.

“I have been in national service for 12 years. But I sort of ‘dropped out’ to become a trader.”

National service has another economic effect, as it is one of the main reasons so many young Eritreans flee their country for Europe, draining the country of much of its productive workforce.

However, if they get there safely, instead of dying in the desert or drowning in the sea on the way, many end up as “useful” members of the diaspora, sending money home.

In 2005, remittances were estimated to account for about a third of Eritrea’s GDP.

“However, that figure is plunging. The diaspora is now spending the money on helping people leave Eritrea instead of supporting relatives at home,” says one official.

The Eritrean authorities used to be quite happy for disaffected youth to leave, says a diplomat.
A potential threat to stability was out of the way, and they were likely to end up sending remittances.

But, the diplomat says, the country now faces a serious capacity shortage and is doing more to encourage them to stay.

Hagos Ghebrehiwet, the economic adviser to the president, says the amount paid to those in national service is increasing from about $50 to $130 – $300 a month, depending on education levels.

Government ministers tell me they earn about $200 a month, plus some allowances.

How 40% of the Money Disappeared

Most of the complaints I hear in Eritrea are about the skyrocketing cost of living, plus chronic shortages of electricity and water.

Depending on their size, families receive a certain quantity of basic foodstuffs, such as cereals, oil and sugar, at highly reduced prices. But other items cost a lot. For example, a litre of milk costs more than $2.

Business people, including taxi drivers, shopkeepers and hoteliers, say their incomes have halved since a new form of currency was introduced at the end of last year in an attempt to control smuggling, the parallel market and human trafficking.

They complain that restrictions on imports and tight limits on the amount of money they can withdraw from banks are strangling their businesses.

Finance Minister Berhane Habtemariam says people were given six weeks to swap their old notes for new ones, at par.

“We had no choice. The coffers of our banks were literally empty. When people came to exchange their notes, they had to explain how they had earned the money.

“As so much of it was illegal, only 40% of the old notes were handed in, leading to a 60% contraction in the money supply.”

The introduction of the new notes has had an impact on the parallel market. The fixed exchange rate has remained at 15 Eritrean nakfa for $1, but Eritreans say they now only receive about 18-20 nakfa for the dollar on the unofficial market, instead of nearly 60.

It is very difficult to work out what is going on in Eritrea’s economy because the government does not release figures for its GDP and other key indicators.

“We have not given out any information about our budget for seven years because our enemies will use it against us,” says the finance minister.

Mines and Fashion

Despite this secretive behaviour and the allegations of human rights abuses in the labour force, there are signs of growing interest from foreign investors.

Some have been in Eritrea for years, such as the Italian-run Dolce Vita garment factory in Asmara.

The mainly Eritrean workforce makes designer shirts for Giorgio Armani and Pierre Cardin, as well as uniforms for Italian scouts and jeans for the local market.

Another hope for the Eritrean economy is mining.

Canada’s Nevsun, in joint venture with the government, began producing gold at Bisha mine in 2011. The mine also exploits copper and zinc deposits.

Human rights groups criticised Bisha for using conscripts during the construction phase, but Nevsun and the government deny national service labour is used in commercial mining.

Nevsun says Bisha contributed about $800m (£550m) to the Eritrean economy in its first five years of operation.

A Chinese mining company has recently started operations, and two more mines are expected to come online in the next few years.

But mining, although potentially lucrative, does not generate much employment.

The population is predominantly rural, working the harsh, dry land.

But Eritreans and foreign investors are looking towards the country’s 1,200km (745-mile) Red Sea coastline, with its hundreds of unspoiled islands, rich fish stocks and ports, all of which have significant economic potential.

Whether any of this will be realised will depend on two main factors. Eritrea’s willingness to adopt a more flexible attitude towards its economy, and foreign investors’ readiness to engage with a country that has recently been accused of crimes against humanity and has spent years in international isolation.

38 thoughts on “Has Eritrea’s Self-Reliant Economy Run Out of Puff?

  1. Mary and The BBC team did a decent job although I have some issues with her reporting. She Has shown the world that the Eritrean People can speak for themselves and need no minder. She and her cameraman walked and drove where ever they wanted and talked to whomever they wanted . That’s a big Statement to all who have no clue about Eritrea.
    But when she tries to put the National Service in prospective she ,and anyone else who wants to report on NS, should bring up the “Why” and “what” question. What is s the National Service ? it’s purpose and goal.
    Why is it as lengthy as it is ?
    As for the question on Finances. ..all I can say is everyone should mind their business. Akli Tsebet eya tekonom nay Genezeb Neger.

  2. Ethiopian regaim with out USA support food aid and weopens, fanancially never can stay in power even one munites.
    Today Ethiopian peoples suffering and dead of food luck and disease .

    Today Ethiopian peoples hunger and disease migrants to Muslims countries and mostly of them for food convert to islam .

    Ethiopian hostry from BC up to now suffering luck of food and disease never chang history of Ethiopian because of Corrupted and dictatorship ethical issues always cheapest and poorest Ethiopian peoples in our world.

    Aid food made Ethiopian peoples lazy and luck of regaim of Ethiopian never confidential in his policy and outside aid food aduapted.

    Ethiopian land can be more rich and fartilazed but unfortunately every Ethiopian regaim coming or pass the same policy just ethical problems with nighbour countries problem just war that why Ethiopian poorest and population for ever suffering and luck of food.

    USA always plaing game for Ethiopian results today Ethiopian were majority Ordotox christian unfortunately now just for sarivel for food migrants to Muslims countries and convert to islam what they doing nothing because Ethiopian history just war and dead of luck of food .

    Ethiopian just for war and aid food and diseas.
    Jesus christ Halilulea beless them.

    1. What is your problem now on this articles?. Did the lady mentions any words about Ethiopia or you think you are still under Ethiopia?. Why Ethiopia this Ethiopia that on your internal problems that you created on your self will be always Ethiopian problem on Eritrea?. Why you fail to comment only what the article described only?

      1. She mentioned National Service which is being upheld because of you dirty Agame’s. Bereket is right to want to have a go about Ethiopia, he’s right. You people are an embarrassment to Africa and you are trying to hold us down with you. Living on handouts, always causing war and instability. UK TV, water aid, Trying to tell me and the rest of the british public to help poor little Genet in Tigray lool

    2. Wayy gud, Before you call yourself Bereket, it might be wise to go to church and wash your mouth with Tseble. It is my understanding, you are puffing some heavy shit. Stand up Africa and follow Eritrea? Are you mad? Who the hell wants to send their kids abroad and live on remittance? Well, except YOU. Comedian shabo.

      1. I swear you Ethiopians are so so bloody cruel, you hold us hostage with our land which causes a lot of problems, then you try and say that our internal problems are caused by ourselves? You people are bloody mad!!! By now if it was not for Ethiopia and US. Both Eritrea and Ethiopia with the peace kept from 1991, we should both be world superpowers together. You mess with one, you mess with both…. Bloody sad….

        And yes, follow Eritrea because we don’t live on handouts, by the sound of it you are happy and proud for Ethiopia and Africa to live on handouts. You comedian deluded Agame!

  3. What makes me enough happy my country Eritrea mostly and Mojorty of Ethiopian peoples are smart and know it what is truthful and what is political game that why Eritrea peoples and government are wise and care fully understand what is going and only support your government.

    Uinited is best with knowledge.
    Results sweet as we are now what we are seen in Eritrea peoples and government love each other and defeated enmey from out side.
    Eritrean peoples I love them.

    African stand up from aid food and follow Eritrean peoples and government.

    African this in own ability rathe in Forion policy.

    Africa think about your peoples let feeling responsible and take experience from sweet Eritrea African country.

    Africa nations still conalized indirectly.
    In 21 century African in aid food.
    I am proud as Eritrea but I am sad and feeling me shameful as African aid food nations such as Ethiopians and Djibouti, Somalia

  4. The contractions of 40% currency rate indeed affected all wake of life from the traders to hotel owners to diaspora eritreans and the way they spend on the local eritrean economy.i just got back from massawa and its vast sea cost two hours ago to Asmara and witnessed the vast buildings being built by the Chinese the 3×size equivalent of the port in massawa. There are a lot of activities in and around port of assab and soon may trickled down to Massawa . even though the contractions on the nakfa affected the tourism sector and the local service industry the traders and business owners need to adjust their products price to reflect the exchange rate .by doing so they may gain more from smart consumers. The price of a cup of coffee in asmara shouldn’t cost as much as 7/11 in the U.S

    1. The thing is that stuff such as coffee and beer and breakfast has always been cheap in Eritrea, due to the fact that anyone in their home can produce it, and that it is a tradition in Eritrea.

      The problem has always been the stuff that is imported to the country.

      Due to the fact that Eritreans inside Eritrea always been depended on relatives on the outside, the prices has always been high. They shop keepers knows that the Eritreans has relatives and tries to push the price upwards. There is no competition. When the prices are going down – they hide away their goods and create an artifical shortage and as soon as the prices increase – they sell their goods. This is common knowledge. Now I don’t think that the government should interfere so heavily when it comes to economy but in this case, I support shaebia. They had absolutely no choice. They tried to plead with the market but everyone got greedy.

  5. The interseting part is not the fact remittance has already cant cover basic cost or you took Mengistu’s economy model and apply it. What kills me is, shabo supporters are still waiting to see if there will be some mining sector coming to save them at the expense of the youth back home. If you live in the West, dont you owe it the next generation to be flexiable? At a very least, end national service, implement the consistution and allow the youth to go to Addis to find jobs? Its just sad.

    1. What’s amazinig is amusing is that you have Eritrean flag posted as your prof pic; only Eritreans are supposed to be privy to that. Reading your comment, you are either hassus (a spoiled Eritrean blood) or flat out wedi abune aregawi. If you were an Eritrean that truly cared about Eritrea and is informed of its past and current affairs, you would be calling on the West and Ethiopia to end the occupation, abide by the EEBC border ruling, and respect Eritera’s sovereignty. You would also have known why the national service is needed, and why it is as lengthy as it is. By the way, did you know that there is constitution in Ethiopia and most other African countries? Do you also know that that doesn’t stop people from emigrating to the West where life is perceived to be better? Do you know at as many as 70 – 90 thousand Ethiopians left recently to Yemen of all countries when it is practically a war zone? So, stop your sleezy excuse to harass the government of Eritrea, and make your allegiance to abune aregawi public for then at least you will get some respect from the real Eritreans.

      1. He is Tigraian ,he doesn’t hide about it.He is one of the most irritating unwelcome guest in our forum.We take his mambo jumbo as entertainment. Tesfa News tolerate him i guess as a flavor to our discussion.Don’t take him seriously.

      2. Sir, consistution is not there to make sure people dont leave their home land. Its checks and balances within gov. It will take years to have people accept it and implement but needed. Second, EEBC at this point has been voided, thanks to your little stunt a month ago. Last, i agree with the flag part. I like my five stars in the middle better.

        1. It is not a star. It’s a Pentagram. Do you know what a Pentagram is? According to Google, it is the quintessential global symbol of the followers of the Prince of Darkness.

          Now go figure!

    2. *** Reading your comment, you are either hassus (a spoiled Eritrean blood) or flat out wedi abune aregawi. If you were an Eritrean that truly cared about Eritrea and is informed of its past and current affairs, you would be calling on the West and Ethiopia to end the occupation, abide by the EEBC border ruling, and respect Eritera’s sovereignty. You would also have known why the national service is needed, and why it is as lengthy as it is. By the way, did you know that there is constitution in Ethiopia and most other African countries? Do you also know that that doesn’t stop people from emigrating to the West where life is perceived to be better? Do you know at as many as 70 – 90 thousand Ethiopians left recently to Yemen of all countries when it is practically a war zone? So, stop your sleezy excuse to harass the government of Eritrea, and make your allegiance to abune aregawi public for then at least you will get some respect from the real Eritreans.

    3. sentek,
      Do you have any new news as to whose properties (buses, cars, buildings) were burned in Gondar?
      As Woyane supporter, I hope you have some information, after all better, to hear it from you than from other sources like ESAT 🙂

      1. IQ, few hooligans were not in the mood to be arrested or questioned, we put them in their places. Nothing more or less. Ethiopia is like a brand new car driving in the freeway. Sometimes, we have flat tire, need oil change or get gas. When we stop to get gas, our enemies woyld say, they cant breath, if we have a flat tire, we are dying and if we get oil change, we are collapsing. This one was an oil change brother. Simple.

        1. Mr. IQ63, Thanks for your honest response. How about the DEAD MEN IN UNIFORM seen in the streets of the city, where they the drivers of the buses and cars with flat tire. It seems there will be oil change everywhere in Woyane ruled Ethiopia.

      1. Why exclude the starving 15 million, they’re the the bread-winners of the country. The rest are unemployed farmers that produce sh!t…..

    4. Where is Justice?

      “Hagos Ghebrehiwet, the economic adviser to the president, says the amount paid to those in national service is increasing from about $50 to $130 – $300 a month, depending on education levels.

      “Government ministers tell me they earn about $200 a month, plus some allowances.” How Africans would envy of the Eritrean leaders after reading this? An ordinary member of parliament in the dirt poor Somalia earn a cool 2,400 dollar a month and his Kenyan counterpart bags up to 7,000 dollar. Ugandan parliamentarian bags more than 4,000 dollar. This is all with out excluding their allowances and other personal ammenities, like guards, convoy, 4 x 4 cruisers, and accomodation.. just google it.

      While leaving that where it belongs, I don’t know why the agame dogs missed the beef in this news. Do you know troops serving under the Tigray mercenary army are being paid 300 Birr a month, an amount equivalent to $14 US Dollar ONLY?

      Meanwhile, Hagos kisha tells the world that the Eritrean Defense Forces sees the biggest salary increase so that even newly-enlisted cadets attending a 2-year and 4-year college degree programs, will start to earn 2000 Nakfa a month ($130 US Dollars), while those who have already graduated and transitioned into active guard reserves, are earning 4500 Nakfa a month (up to $300 US Dollars).

      Oh, what a difference an independence can make!

      1. Where did theu find you? Did they really name you Abdisa in shabo land? I know Tigri like a back of my hand, know Addis to Bale. I have never heard of “tigri mercenary” but im glad they are the lowest paid. The last accusation from ESAT and people like you were, we are building mansions and taking a vacation in Brazil or looting the country. Please inform the ESAT and latte drinkers in diaspora, how LOW we are getting paid. Choma

    5. It is interesting that, yerasuwa arobat yesew dist tamasilalech!!
      Berother Tesenteq go and help your borhters are being kicked in the A55.

  6. Mary Harper like many western journalists comes to Eritrea with bias, the self-reliance is on target and moving, despite all the curve balls being thrown by Washington, and their European cohorts to derail the mission that this brave country is embarked on. The western media still echoes the very lies that COI fabricated, you allow them to come in and witness for themselves to see the reality on the ground, but alas the truth is irrelevant, and at the end of the day they have to comply with the BBC’s negative policy when you report about Eritrea, that goes for The Guardian, New York Times, Toronto Sun Times…etc., They are the masters of deception, chaos and mayhem. They tried everything illegal, and immoral to bring Eritrea to its knees ,but the Eritrean resilience, steadfastness, and unity has been the wall that’s been keeping them out. “La Lotta Continua”. Like the bees protecting their hives to the last one, so will we!!!

  7. The BBC correspondent, you have a long history of lies and deceit both as a broadcasting service and as a nation that you represent that serious Eritreans would not value your opinion. You would have been better off reporting about the recent news about Brexit, and that the Scottish and the Irish people may soon decide to leave your deceitful british government that would hopefully leave the “UK” progressively less relevant in world affairs aka warmongering and serving as a US lapdog. It must hurt to be a brit nowadays as your ego is diminishing by the day. Hope this comment reaches your rather empty concern.

  8. What a contradictory report she wrote! She said on the top of the report ” i hear similar stories of people doing two or even three jobs to make ends meet ” wow! Eritrea must be booming, jobs everywhere.
    Is she trying to link this to economic migrants?

  9. Either she is not fully informed or purposely deceitful,she keep repeating that it is a dead end after high school for young Eritreans.She never mentions the majority of them they go to college up to Medical school,and for masters degree free boarding and meal those don’t qualify for college also get 2 years of vocational training on their chose technical field,which even her wealthy country UK doesn’t do.She started telling the truth few months ago but now may be her bosses reprimanded her,she is getting in line of BBC’s mindset. After all she have to earn a living.

  10. Like I said on her last report on Eritrea during independent celebration, she must had to much of Suwa, because it was very positive than. My point is do not trust any western journalist with microphone. Specially BBC. Most countries what they dont not know abou Eritrean is when

    God made us He put this in our DNA full of Truth, full of passion compassion, full in Never give up , full of peace and loving. We are very meek and humble. Truth always on our side. May God bless ERITREAN ERITREA . Never Neel Down. Awet N Hafsh.

  11. Mary Harper, the answer to your question is NO; The Ethiopians and their allies with the support of our own detractors have slaved for years to derail the SELF RELIANCE and other sacred Eritrean nation building activities however, time again they failed miserably and they attacked every plan and wanted us to to abandon it but our independent path has grown stronger.

    SELF RELIANCE has been misconstrued in order to confuse the soft heart people.

    Mary,
    SELF RELIANCE IS NOT GOING IT ALONG, it is finding local solution for local problems if need be with the support of other outside agencies and thus SELF RELIANCE should not in any way mean to be Eritreans don’t want any thing to do with other countries.
    African history teaches us majority of African countries are running/kept afloat with AID money, this AID has never solved nor addressed or solved important issues, AID is just a mechanism or a tool of Western world to make the white man or woman more human that the black race!!!

    When I look towards Ethiopia I say million times SELF RELIANCE IS BETTER and the result is sweeter look at Eritrean landscape!!!

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