Eritrea Economics and Business


According to COUNTRYAAH, Eritrea is one of Africa’s and the world’s poorest countries. At the end of the Civil War in 1991, more than 85 percent of the population depended on foreign aid. Agriculture is the country’s most dominant industry and main industry for 80 percent of the population. The most important agricultural areas are in the highlands, where teas, maize, wheat, sorghum and millet are the most important crops. Recurring dry periods and years of growth have posed serious problems for the very agricultural dependent country. In order to alleviate the catastrophic consequences of the recurring dry periods, the government, with international assistance, has built water reservoirs and ponds. Terraced areas have also been terraced to reduce the effects of widespread soil erosion. The country has for a long time been dependent on international food aid.

The country is considered to have rich natural resources, such as significant mineral resources (gold, copper, silver and nickel) and oil deposits, but production is still very small. In 2011, a Canadian mining company began mining gold in the Bisha mine about 150 km west of Asmera. The long Red Sea coast provides good conditions for a thriving fishing industry, but so far the country has not been able to exploit this potential. However, the state has announced major investments in the fishing industry in the future.

Note: the capital city of Eritrea is Asmara with a population of 713,000 (estimate 2013). Other major cities include Assab with a population of 104,000, Keren with a population of 84,500, Massawa with a population of 54,700 (estimate 2013).

Abbreviated as ERI by, Eritrea has a relatively well-developed light industry, including the food, textile and leather industries and the production of building materials. But the industry is in great decline, and recurring downtime means that it has been able to utilize only about 1/3 of its capacity. The country’s most important export products are minerals, mainly gold, livestock. sorghum, textiles and leather goods. Imports consist mainly of machinery, crude oil and food.

Eritrea Economics and Business

Financially, the Eritrean state lives on customs revenues, above all (about 40% of revenues); from the federal government it receives a quarterly administration, established conventionally, as payment on the customs duties that the federation receives on goods with origin or destination in Eritrea. The federal government supports the expenses for the functioning of the organs and services entrusted to its competence with the proceeds of a special federal customs law of 10% on imported goods and 2% on exported goods, imposed in 1954.

The economic life of the former colony has contracted, falling to a somewhat more modest level, with the cessation of many commercial activities of the Italians (reduced to just over 10,000) and with the consequence of the unemployment of indigenous labor, especially in urban centers ; add the high Ethiopian customs tariffs (extended to Eritrea), which led, at the time of the federation, to the increase in prices. The maintenance of the Western-style social, political and economic order imposes on Eritrea the same problems of Ethiopia, with the same serious material and technical difficulties, aggravated by the general poverty of the territory. Hence the presence of foreign consultants in all branches of public life (the British administration already left a large group of them in 1952), the granting of external financial aid, both foreign and Ethiopian, the latter of which invest every sector of the country’s economy. some projects are put in place to increase or start a better agricultural productivity in some area, such as the one, already studied under the Italian administration, of an extensive irrigation at Zula, with the construction, in progress since 1959, of a large dam to retain the seasonal waters of rivers.

All this makes the political autonomy of Eritrea more difficult, already clearly considered a semblance by Ethiopia, which has extended its own systems of government to the country, trying to level out any difference in political and cultural structure: thus they dissolved. political parties antagonistic to the advent of the federation; the press has adapted to the conformism of the Ethiopian one; manifestations of free criticism, political and social, are scolded and silenced; in teaching, the Amharic language was made compulsory, unlike Tigrinya, while the curricula of the schools were brought into line with those of the Ethiopian schools. On this path, since May 1960, with a provision of the Eritrean Assembly, there is no longer talk of Eritrean “government” but of Eritrean “administration”.

The Italians still remaining in the ancient colony still constitute an essential element for the life of Eritrean society: they work largely in public administration (Eritrean and federal) as technicians and industries, trade, professional activities are largely exercised by them, along with not many other foreigners.

The arrangement of the properties, movable and immovable, of the Italian state in Eritrea was defined by a resolution (January 30, 1952) of the UN General Assembly, which attributed that patrimony to the Eritrean state, leaving the schools, hospitals and other buildings belonging to the Italian community, buildings intended to house the Italian diplomatic representation (consular level) and religious buildings. The assets of Italian private individuals were respected and direct payment by Italy of civil and military pensions and other rights recognized to Eritreans at the time of the entry into force of the peace treaty was allowed.

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