Eritrea’s Investment Opportunities

Development News
Eritrea's untapped investment opportunity
Eritrea’s untapped opportunity

By Berhane Woldu,

Eritrea is the youngest Africa nation known for its political stability, fiscal restraint and low level of corruption. After independence in 1991, the government of Eritrea embarked on huge development programs that were targeted at reviving the economy, renovations and construction of the devastated infrastructure, and improvement of social services.

The government also formulated and implemented appropriate macroeconomic policies to guide the general development of the national economy. 

These efforts among others resulted in lowering of inflation to 5% increasing the foreign currency balance amounting to 7 months of imports and maintaining stable exchange rates. The country recorded an average GDP growth rate of 7.4% per year for the periods 1993-1997. However, the war of aggression brought about by Ethiopia (1998-2000), reversed the gains and GDP dropped sharply to an estimated 1-2% for the period 2007/2008.

The No-Peace-No-War

The no peace no war stalemate remains a major impediment to the Government’s developments efforts as a number of possible national socio-economic initiatives and resources remain tied up in defense. However, more recently, there have been signs of good economic growth and prospects as investments in the mining sector continue to grow, with GDP projection growth of 6% in 2012 and 7% in 2013[1] .

Eritrea is one of the few countries in Africa that is making steady progress towards achieving the health MDG 4, 5, and 6 that are the reduction of child mortality, the reduction in maternal mortality and combating HIV and AIDS. Eritrea is now quoted as among 4 out of 46 countries in Sub-Saharan Africa ready to achieve the MDG target in specific sectors.


Potentials in Agriculture sector:

Banana and Tomato Processing factory - BANATOM
Banana and Tomato Processing factory

The Government has been vigorously investing in varies water harnessing mechanism in the Past decade. Big strategic dams have been constructed in major river basins and potential catchments for the purpose of increasing the land under irrigation. The nationwide soil and water conservation programs have been on going to revitalize the environment and boost potential of the agriculture sector.  Converting this investment into profitable projects is calling for private sector investment in agriculture sector in country. The Agriculture of the country offers varied potential, in different agro ecological set up. Major Agro ecological zones with big potential for agricultural investment are the sub humid escarpment moist Central highlands moist western lowlands and the dry western low lands.

Potentials in the Mining industry:

Precious and base metals
Precious and base metals

The Eritrean mining sector has been the area of attraction for many international mining companies and support institutions active in the mining industry. Eritrea is a country where 60% of the rocks belong to the prospective Arabian Nubian Shield. Rich deposits of base metals, industrial and construction mining is prospects that attract for private investment. The exploration activities and the recent commercial mining are operated by different multinational companies in varied commodities. The mining potential in country is diverse ranging from base metals, industrial raw materials such as, potash, silica, gypsum, cement and salt as well as construction materials (marble, granites…) and energy source both from potential carbon deposits and geo thermal energy at the Alid geothermal field.


Infrastructure such as construction, communication and energy are the major sectors that offer near term investment opportunities. Construction of Government building, residential housing, roads, airports, ports, and hospitals are some of the major projects. In the housing sector Gruppo Italiano- Costeuzioni an Italian firm is constructing 1,600 units of housing in the capital city Asmara consisting of high rise apartments and single homes. The same company is also building several housing projects and resort that includes restaurant and shopping mall in Massawa. There are abundant opportunities in construction contracts and supply of construction equipment and material.

Marine Resources:

Eritrea’s marine resources is mammoth its coastline elongates 1,300 kilometers rich with commercially important marine life. There is generous opportunity for joint venture to increase marine export. Export of value added products fish, fishmeal, and shellfish which are becoming a significant sector of the economy. Eritrea produces around 290,000 tons of salt annually out of which 7% is used for domestic consumption. Assab salt works which is located in the Port city of Assab has production capacity of 150,000 tons of salt per year and has a potential to increase its production to 250,000 – 300,000 tons per year. According to a preliminary study the Red Sea coast stretching from Berasole to Rahaita, if developed into a modern mechanized production facility has a potential to produce more than 6.5 million tons of salt per year.


A collection of 1930's Unique Art Deco
A collection of 1930’s Unique Art Deco

Tourism is a growth industry Eritrea’s close proximity to Europe, Asia and Middle East gives Eritrea an advantage. Eritrea provides wide range of opportunities and attraction sites for tourists, of varied interests including beach and marine resort tourism, Cultural tourism to archeological remains and historical sites, Eco tourism, and medical tourism to natural hot spas. Some of the major tourist attraction potentials of the country include historical and archaeological sites and remains, pristine beaches, 300 small sunny Islands historical and archaeological sites that is rich and intact.

Furthermore, in the area of water based tourism much is need to attract high end tourists with scuba diving, snorkeling ventures in the all-embracing coral reefs of the red sea islands. Water skiing, boat sail and fishing voyage are some other opportunities. Very scenic highlands, diverse and colorful culture of the nine ethnic groups, the forest reserves and wildlife in escarpments as well as endangered wild species in the Danakil desert habitat, the hot spring-spa for medical tourism are sights that could be enjoyed by tourists. Thus, with such potential the tourism sector offers untapped opportunities in all tourist related services.

Summing up; Eritrea’s investment prospects are immense there is favorable economic environment especially with the age of austerity in the Western countries. The Eritrean Diaspora who had for many years resided in the developed high income countries can use their capital and experience; strategize their businesses plan, form companies, capital venture companies and invest in a much organized corporate style and stride towards economics success.
[1] Economic Intelligence Unit (http:/ ) quoted in Government of the State of Eritrea – United Nations Strategic Partnership Cooperation Framework (SPCF), 2013-2016