Eritrea

Economic Overview

The State of Eritrea has one of the world's most centrally planned, isolated, and least documented economies, often compared to North Korea. Decades of conflict, international sanctions, and a state policy of self-reliance have created a unique and extremely challenging economic environment. Reliable, publicly available macroeconomic data is scarce, making independent analysis difficult.

GDP Size & Growth Trajectory

There are no reliable, recent GDP figures for Eritrea from major international financial institutions like the IMF or World Bank. The economy is small and is believed to have experienced very little growth over the past decade. Economic activity is severely constrained by a lack of foreign exchange, a command-and-control structure, and the mass mobilization of its working-age population into national service.

Sector Composition

• Mining: This is the most significant source of foreign currency for the Eritrean state. The Bisha mine, a large gold, copper, and zinc mine operated as a joint venture, has been the primary driver of export revenues. Other smaller mining operations also exist.
• Agriculture: This sector employs the vast majority (estimated at over 80%) of the population, mostly at a subsistence level. The sector is highly vulnerable to drought and has very low productivity.
• Services: The services sector is small and dominated by state-owned enterprises. There is virtually no private financial services or tourism sector.

Inflation Trends

Reliable inflation data is not available. However, anecdotal evidence points to high and volatile prices for basic goods due to chronic shortages and a lack of foreign currency to pay for imports.

Fiscal & Monetary Policy Stance

The state exercises complete control over the economy. The Nakfa (ERN) is the national currency, and there is no floating exchange rate; the government sets the rate by decree. All foreign currency transactions are strictly controlled by the state. The fiscal situation is opaque, but it is understood that the government's budget is heavily dependent on revenues from the mining sector and taxes levied on the Eritrean diaspora.

Market Size & Demand Potential

The domestic market is extremely limited due to a small population, widespread poverty, and the absence of a consumer economy.

Population Size and Demographics

Eritrea has an estimated population of around 3.6 million. A defining feature is its policy of indefinite, mandatory national service for all citizens, which has led to a massive exodus of young people, creating a significant refugee crisis and a "brain drain" that has stripped the country of its human capital.

Business Environment

The business environment in Eritrea is widely considered to be one of the most difficult in the world.

Ease of Doing Business & Regulatory Reforms

There is no functioning private sector in the conventional sense. The economy is dominated by companies owned by the state and the ruling party. There are no clear, transparent regulations for private or foreign investment, and the state can expropriate assets at will. The country consistently ranks at the very bottom of global indices for economic freedom and ease of doing business.

Political Stability & Governance

Eritrea is a one-party state with a highly authoritarian and militarized government.

Political Environment

President Isaias Afwerki has ruled the country since its formal independence in 1993. There are no elections, no independent legislature, no free press, and no civil society. This provides absolute political stability but at the cost of all political and economic freedoms.

Rule of Law & Investor Protection

There is no independent judiciary or meaningful rule of law. All power is concentrated in the executive. There is no legal framework for investor protection or contract enforcement.

Infrastructure Readiness

Infrastructure is severely underdeveloped and has seen little investment in decades.

Transport and Logistics

The country has two major ports on the Red Sea, Massawa and Assab. While strategically located, they are underutilized and lack modern infrastructure. The road network is limited and in poor condition.

Energy Sector

Access to electricity is extremely low and largely confined to the capital city, Asmara. The country is dependent on imported fuel for its limited power generation.

Sector-Specific Opportunities

Given the extreme political and economic risks, the centrally planned nature of the economy, and international sanctions, there are currently no viable or recommended opportunities for conventional private sector investment in Eritrea. The only significant foreign involvement is in the mining sector, which operates through direct, opaque agreements with the state.