Economy of Eritrea

Mother Earth Travel > Country Index > Eritrea > Map Economy History

The Eritrean economy is largely based on agriculture, which employs 80% of the population but currently may contribute as little as 22% to GDP.  Export crops include coffee, cotton, fruit, hides, and meat, but farmers are largely dependent on rain-fed agriculture, and growth in this and other sectors is hampered by lack of a dependable water supply. Worker remittances from abroad currently contribute 40% of GDP.

The Government of Eritrea states that it is committed to a market economy and privatization, and it has made development and economic recovery its priorities. Nevertheless, the government or the ruling PFDJ party plays a pervasive role in the economy and the government has imposed an arbitrary and complex set of regulatory requirements that discourage investment. The economy was devastated by war and the misguided policies of the Derg, which disrupted agriculture and industry. The more recent war with Ethiopia has also had a major, negative impact on the economy and further discouraged investment. Eritrea lost many valuable economic assets in particular during the last round of fighting in May-June 2000, when a significant portion of its territory in the agriculturally important west and south was occupied by Ethiopia. As a result of this last round of fighting, more than one million Eritreans were displaced. According to World Bank estimates, Eritreans also lost livestock worth some $225 million and 55,000 homes worth $41 million were destroyed. Damages to public buildings, including hospitals, are estimated at $24 million. Much of the transportation and communications infrastructure remains outmoded and deteriorating. As a result, the government has sought international assistance for a variety of development projects and has mobilized young Eritreans serving in the National Youth Service to repair crumbling roads and dams.

Small businesses, such as restaurants, bars, stores, auto repair, and crafts continue to thrive in the Asmara area. A brewery, cigarette factory, small glass and plastics producers, several companies involved in making leather goods, and textile and sweater factories operate in the Asmara area. The textile and leather industries have made a partial recovery since independence.

In Massawa, the port has been rehabilitated. In addition, the government has begun to export fish from the Red Sea to markets in Europe and elsewhere. Also in Massawa, in 2001, Seawater Farms Eritrea began to export shrimp to Europe and the Middle East. The farm is a joint venture between a group of international investors based in the U.S. and the Eritrean Ministry of Fisheries. It is an integrated project designed to grow shrimp, tilapia, and salicornia (a succulent that can be irrigated with seawater), and to foster the growth of mangrove wetlands. The project is expected to generate a significant volume of exports as well as employment opportunities for Eritreans. The investors also hope that it will serve as the model for a new kind of sustainable, ecologically friendly, yet profitable operation.

GDP: purchasing power parity - $2.9 billion (2000 est.)
GDP - real growth rate: 3% (1999 est.), -1% (2000 est.)
GDP - per capita: purchasing power parity - $710 (2000 est.)
GDP - composition by sector:
agriculture:  16%
industry:  27%
services:  57% (2000 est.)
Inflation rate (consumer prices): 9% (1998 est.), 14% (2000 est.)
Labor force - by occupation: agriculture 80%, industry and commerce 20%
Budget:
revenues: $283.9 million
expenditures: $351.6 million (1997 est.)
Industries: food processing, beverages, clothing and textiles
Electricity - production: 165 million kWh (1999)
Electricity - production by source:
fossil fuel:  100%
hydro:  0%
nuclear:  0%
other:  0% (1999)
Agriculture - products: sorghum, lentils, vegetables, corn, cotton, tobacco, coffee, sisal; livestock, goats; fish
Exports: $52.9 million (f.o.b., 1997), $26 million (f.o.b., 1999)
Exports - commodities: livestock, sorghum, textiles, food, small manufactures
Exports - partners: Sudan 27.2%, Ethiopia 26.5%, Japan 13.2%, UAE 7.3%, Italy 5.3% (1998)
Imports: $489.4 million (c.i.f., 1997), $560 million (c.i.f., 1999)
Imports - commodities: machinery, petroleum products, food, manufactured goods
Imports - partners: Italy 17.4%, UAE 16.2%, Germany 5.7%, UK 4.5%, Korea 4.4% (1998)
Debt - external: $281 million (2000 est.)
Economic aid - recipient: $77 million (1999)
Currency: nakfa (ERN)

SOURCES: The World Factbook, U.S. Department of State

Mother Earth Travel > Country Index > Eritrea > Map Economy History