After independence from Italian colonial control in 1941 and 10 years of British administrative control, the UN established Eritrea as an autonomous region within the Ethiopian federation in 1952. Ethiopia's full annexation of Eritrea as a province 10 years later sparked a violent 30-year struggle for independence that ended in 1991 with Eritrean rebels defeating government forces. Eritreans overwhelmingly approved independence in a 1993 referendum. ISAIAS Afworki has been Eritrea's only president since independence; his rule, particularly since 2001, has been highly autocratic and repressive. His government has created a highly militarized society by pursuing an unpopular program of mandatory conscription into national service, sometimes of indefinite length. A two-and-a-half-year border war with Ethiopia that erupted in 1998 ended under UN auspices in December 2000. A UN peacekeeping operation was established that monitored a 25 km-wide Temporary Security Zone. The Eritrea-Ethiopia Boundary Commission (EEBC) created in April 2003 was tasked "to delimit and demarcate the colonial treaty border based on pertinent colonial treaties (1900, 1902, and 1908) and applicable international law." The EEBC on 30 November 2007 remotely demarcated the border, assigning the town of Badme to Eritrea, despite Ethiopia's maintaining forces there from the time of the 1998-2000 war. Eritrea insisted that the UN terminate its peacekeeping mission on 31 July 2008. Eritrea has accepted the EEBC's "virtual demarcation" decision and repeatedly called on Ethiopia to remove its troops. Ethiopia has not accepted the demarcation decision, and neither party has entered into meaningful dialogue to resolve the impasse. Eritrea is subject to several UN Security Council Resolutions (initially in 2009 and renewed annually) imposing an arms embargo and a travel ban and assets freeze on certain individuals, in view of evidence that it has supported armed opposition groups in the region.
Eastern Africa, bordering the Red Sea, between Djibouti and Sudan
gold, potash, zinc, copper, salt, possibly oil and natural gas, fish
Population - distribution
density is highest in the center of the country in and around the cities of Asmara (capital) and Keren; smaller settlements exist in the north and south
Tigrinya (official), Arabic (official), English (official), Tigre, Kunama, Afar, other Cushitic languages
ASMARA (capital) 804,000 (2015)
- Conventional long form
- State of Eritrea
- Conventional short form
- Local long form
- Hagere Ertra
- Local short form
- Geographic coordinates
- 15 20 N, 38 56 E
- Time difference
- UTC+3 (8 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Since formal independence from Ethiopia in 1993, Eritrea has faced many economic problems, including lack of financial resources and chronic drought, which have been exacerbated by restrictive economic policies. Eritrea has a command economy under the control of the sole political party, the People's Front for Democracy and Justice. Like the economies of many African nations, a large share of the population - nearly 80% in Eritrea - is engaged in subsistence agriculture, but the sector only produces a small share of the country's total output.
- External debt stocks
- US$ 873,145,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -104,657,012
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 701,541,184
- Exports of goods and services
- US$ 603,937,953
- Total Merchandise Trade
- FDI, net inflows
- US$ 49,323,061
- Commercial Service Exports
- US$ 54,117,988
sorghum, lentils, vegetables, corn, cotton, tobacco, sisal; livestock, goats; fish
food processing, beverages, clothing and textiles, light manufacturing, salt, cement
- gold and other minerals, livestock, sorghum, textiles, food, small industry manufactures
- machinery, petroleum products, food, manufactured goods
- Country Risk Rating
- The highest-risk political and economic situation and the most difficult business environment. Corporate default is likely.
- Business Climate Rating
- The highest possible risk in terms of business climate. Due to a lack of available financial information and an unpredictable legal system, doing business in this country is extremely difficult.
- Extensive mineral resources (potash, copper, gold, silver, zinc)
- Strategic position on the Red Sea
- Large public and external deficits
- Critical level of debt
- Country boycotted by the international community
- Concerning human rights record
- Extremely difficult business climate
Because of the closing of the country to international institutions, it is difficult to find reliable data on the Eritrean economy.
Growth will increase in 2017. Private consumption, whilst it might receive a boost from remittances from workers abroad, remains contingent on climatic events, 70% of the active population earn most of their incomes from livestock and agricultural production. This sector has however experienced erratic growth, with the donors’ commitments being limited with regard to the need to optimize agricultural activity. The sector suffered from the 2016 El Niño phenomenon which created food insecurity for a large proportion of the population. The mining sector, which is expanding through the creation of joint-venture companies involving the country’s publicly owned mining companies and, mainly Chinese, private companies, is expected to continue to drive growth over the coming years. It will however remain below its potential because of poor government management, the diverting of resources to the armed forces and a lack of investment outside the mining industry. Bisha mine (copper and zinc) is currently the State’s main source of revenue (through taxes and its 40% holding), and copper is also the country’s leading export (30% of total export sales in 2014), ahead of seafood.
Operation of the Koka gold mine started in 2016 and the Asmara copper, zinc, gold and silver mine is expected to start production in 2017. This major project will consolidate the position of China (the mine is now going to be run, in cooperation with the public sector operator, by a state-owned Chinese company and not a Canadian group as originally intended) as the country’s leading investor, creditor and trading partner. This mine will help reduce the State’s reliance on income from the Bisha mine. Finally, production could start at the Colluli potash mine project in 2018 at the earliest.
Chinese companies continue to be involved in infrastructure projects. As part of this, the Hirgigo electricity plant was refurbished in 2016 and work on enlarging the port of Massawa is ongoing.
Inflation remains high because of the financing of part of the public deficit by creating money. A steadying in world food (the country’s biggest import) prices, together with a moderate recovery in agricultural production in 2017 will have a limited downwards effect on price rises. This inflation, exacerbated by a currency shortage, has resulted in an over-valuation of the nakfa, pegged to the US dollar.
Public spending is struggling under the burden of the military budget, with revenues varying depending on levels of production and raw material prices. Public debt is at a very worrying level, all the more so given that the problematic relations with donors are preventing the country from being granted the debt relief it could potentially access as part of HIPC initiative (gross external debt however remains limited relative to domestically held debt).
In terms of the external accounts, copper and zinc exports are expected to increase in 2017 as production rises. In addition, base metal prices are likely to stabilize following the decline in recent years. Demand in China (2nd biggest buyer after India) is however slowing. The investments being made in the mining sector are likely to lead to increased imports of capital goods and services, and the cost of oil and gas imports should rise as oil prices slowly recover. The current account balance is expected to deteriorate, and will be exacerbated by the sanctions imposed by the United Nations that will continue to impact on remittances from workers abroad.
President Isaias Afwerki, in office since 1993, and the country’s single party, control all the levers of power. The regime has repressed most civil liberties and the human rights situation is of concern. A report issued by the UN in June 2016 accused the regime of crimes against humanity. In 2014 Eritrea was in fifth place as the world’s biggest source of refugees (4.5% of the population). Many of these are leaving to escape the compulsory unlimited-period National service in place since the war with Ethiopia (1998-2000).
Relations between Eritrea and most of the international community remain tense, as demonstrated by the renewal of its sanctions by the United Nations for 2017 (the country is in particular suspected of supporting armed groups such as Al-Shabaab in Somalia and Ethiopian rebel movements). The EU is however still providing financial aid and the country’s relations with China remain close. The country is also looking to diversify its diplomatic relations by working more closely with the Arab world.
Its economic development remains hampered by a highly problematic business climate (the country is in last place in the most recent Doing Business survey by the World Bank).