World Country Guide

Business Profile

Economy
The long-running Ethiopian civil war left Eritrea, which was, until 1991, the northernmost province of Ethiopia, with its economy in a parlous condition. Since the split from Ethiopia in 1993, Eritrea has been engaged in a series of military campaigns which have stunted its economic development. The most recent border war with Ethiopia cost Eritrea several hundred million dollars in damage to the country’s fragile infrastructure and parts of its agricultural economy. Agriculture sustains the bulk of the population with indigenous grains, maize, wheat and sorghum as the main crops. However, reconstruction has been hampered by the legacy of war (damage to land, mines, lack of equipment) and poor rainfall, and the country still needs substantial food aid. The small industrial economy produces glass, cement and textiles. The Government has been developing fishing and mineral industries, particularly as there are thought to be significant oil and gas deposits within Eritrea’s territorial waters (which may in part explain its petulance over border disputes). Exploration rights have been granted by the Government to several major multinational oil companies to conduct surveys of the area. With an average annual per capita income of just US$160, Eritrea is one of the world’s poorest countries. But, albeit from a low base, the economy has been expanding rapidly since the end of the Ethiopian war. However, erratic rainfall and below-average cereal production has stumped growth somewhat. Growth rate was 2 per cent in 2004. Eritrea has been granted admission to the ACP group of Third World countries, which receive preferential access to certain European Union markets, and it is now a member of the International Monetary Fund. In 1997, Eritrea introduced its own currency, the Nakfa, in place of the Ethiopian Birr; this has been construed as a deliberate provocation since Nakfa is the location of a battle where Ethiopia suffered great losses at the hands of Eritrean rebels.

Business
Local businesspeople tend to speak English or Italian. A knowledge of French can also be useful. Business cards are not always exchanged. May to October is best for business visits. Office hours: Mon-Thurs 0700-1200, 1400-1800, Fri 0700-1130, 1400-1800. In other towns, hours may vary slightly.

Commercial Information
The following organisation can offer advice: Eritrean National Chamber of Commerce, PO Box 856, Abiot Av 46, Asmara (tel: (1) 121 589 or 121 388 or 122 456; fax: (1) 120 138; e-mail: encc@eol.com.er).