Developing Country – Eritrea

The economy of the world as a whole is developing rapidly. Countries like China are enjoying unprecedented growth levels and can now join the category of developed countries. By contrast, there are some countries where the majority of citizens are unable to afford two meals per day, lack access to the fundamental amenities, and the standards of living are extremely low. The economies of these countries are relatively underdeveloped because of a myriad of problems, such as lacking infrastructure and unemployment (Tesfagiorgis, 2010). The majority of these countries are found in Africa, with Eritrea being one of them. The country suffers from political insecurity. In addition, Eritrea does not enjoy good relations with its neighbors, which is affecting its development. Despite the fact that the country has good environment and climate, which are conductive for a good tourist sector, there is no development and the illiteracy levels are alarming (Thomson, 2016). This paper will discuss the social and economic indicators of Eritrea, the country’s relationship with international organizations, and its social problems.

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Social and Economic Indicators

Economic Indicators

Eritrea, under the leadership of a sole political party the People’s Front for democracy and Justice, is a command economy in which the government centrally determines the income, prices, investments, and production (Volz, 2011). In comparison to other African countries, about 80% of Eritrea’s population engages in subsistence agriculture, although the sector contributes a minimal share to Eritrea total output. Additionally, Eritrea is among the most highly secluded and economically stagnant nations. It has been governed under emergency rule since 1998 (Volz, 2011). The country’s rule of law remains fragile, while the economy is extremely underdeveloped. In recent years, nearly 9% of the population has fled the nation. According to the World Bank semi-annual Global Economic Prospects report, Eritrea is expected to produce a real growth in GDP of 3.0%, 4.0%, and 4.3% in 3 years’ time (Volz, 2011). However, the United Nations department of Economic and Social Affairs projects Eritrea’s growth to be 7.3% in 2015 and 6.8% in 2016 (Wang, 2014). In 2000, after the conclusion of the Eritrea-Ethiopian war, the state has strengthened party-owned businesses and military use to accomplish President Isaias’s agenda regarding development. The Eritrean government has strictly controlled the utilization of foreign currency through restricting its availability (Connell, 2011). Most private companies that can be found in Eritrea operate together with government partners. The exact datat on food in the country cannot not be obtained since the labor force percentage and erratic rainfall continue to affect economic development as well as agricultural production (Habtom, 2014). Generally, the county’s harvest cannot fulfill food demand without purchases of supplemental grain. In a few years, the production of gold, potash, and copper is anticipated to increase the economic growth, but the military budget will need to be competed with investments and development plans (Connell, 2011). Global food prices, international sanctions, and management of such social problems as low skills and illiteracy will successfully determine the future of Eritrea’s economy.

Income Distribution

Domestic industries are developed in Eritrea with the available policies that aid in meeting indigenous necessities, aiming at equal distribution of wealth. Through the policy of self-reliance used by Eritrea, there is growth in goods production for domestic usage and a decrease in inequality (Debesai & Reddy, 2014). Eritrea follows the basic principle of ensuring the citizens are the main beneficiaries of the nation’s resources. In comparison to other African nation, both poor and rich, the wealth gap is significant, making it almost impossible to narrow it (Debesai & Reddy, 2014). The income distribution in Eritrea is minimal wealth spread widely; ownership of land is equitable, while property rights are legally defendable (Debesai & Reddy, 2014). Land reforms have leveled income in rural regions. However a significant number of citizens still languish in poverty.

GDP

The Gross Domestic product (GDP) in Eritrea was valued $ 3.86 billion in 2014 (Habtom, 2014). The value of Eritrea’s GDP represents 0.01% of the world economy. In Eritrea, GDP averaged $1.27 billion since 1990 until 2014, attaining a record high of $3.86 billion in 2014 and an all-time low of $0.34 billion in 1990 (Volz, 2011). The World Bank reports the GDP of Eritrea. See figure 1 below.

Figure 1: Eritrea GDP (Thomson, 2016)

Health Measures

Eritrea has focused considerably on controlling communicable conditions and changing the lifestyle and standards of living among the Eritrean population, leading to a shift in disease patterns (Cooper & Besada, 2016). In addition, environmental factors contribute to the epidemiological changes in contagious and non-communicable illnesses. However, the burden of diseases in Eritrea as compared to other underdeveloped nations continues to be dominated by communicable diseases, with non-communicable conditions becoming the core cause of mortality and morbidity (Cooper & Besada, 2016). Nonetheless, diarrhea, acute respiratory infection (ARI), and other infectious conditions are the leading causes of inpatient and outpatient mortality and morbidity. Their occurrence rate decreased or remained consistent in comparison to other causes of morbidity (Cooper & Besada, 2016). In 2003, the leading causes of deaths in health facilities in Eritrea were liver disease, diabetes mellitus, heart failure, and hypertension, summing up to 35.5% of the overall Eritrea’s death rate (Cooper & Besada, 2016). Furthermore, diabetes mellitus, heart failure, and hypertension surpassed malaria as the leading causes of deaths in hospitals. See the causes of deaths distribution in Table 1 below.

Table 1: Causes of deaths in Eritrea (Tesfagiorgis, 2010)

Education Measures

In Eritrea, education is compulsory for children under the age of 15. The academic year runs from September till June. The learning system includes pre-school education for infants aged 5-6 years, elementary school that takes 5 years for children aged 7-11, junior secondary that runs for 2 years, and senior secondary school that runs for 4 years (Habtom, 2014). When students reach the 10^th grade, they are allowed to choose whether to undergo technical school for 3 years. The Eritrean government sponsors a national program known as Mahtot (Tesfagiorgis, 2010). In this program, children in grades 9, 10, and 11 are obligated to work while on school holidays for 2 months in various agricultural establishments. These activities include picking cotton, terracing, such reforestation services as planting trees, water projects like irrigation and building canals, and maintaining and producing school furniture (Habtom, 2014). Furthermore, Eritrean government engages in compulsory practices. For students to graduate, it is mandatory to complete their final 12^th year of military training and schooling at the Sawa Center for Education and Training in remote Western Eritrea. See Table 2 below describing students’ enrollment in the 12^th grade and at tertiary institutions (Thomson, 2016).

Table 2: Enrollment statistics for Eritrea (Thomson, 2016)

Vulnerability to Climate

Eritrea as an undeveloped nation is situated within the semi-arid and arid Sahelian region. It is defined by harsh, challenging conditions, so it is essential to manage and adapt to the effects of changes in climate (Tesfagiorgis, 2010). Generally, a larger percentage of Eritrean population is settled across semi-rural and rural regions, with their main source of income generated from animal husbandry and crop cultivation. In addition, the primary hindrance to these people is water scarcity (Tesfagiorgis, 2010). Presently, the country is projected to suffer significantly from climate change effects, such as decreased soil moisture, extreme droughts and constant dry spells, a growing variability in rainfall, a decrease in precious water sources like run-off and boreholes-run-off excess water from rain flowing on land, and a 4^oC increase in temperature come 2050 (Habtom, 2014). Moreover, these climate changes will significantly affect Eritrea’s agricultural sector and water resources, thus, escalating the nation’s existing challenges of food security and development. In the recent years, the Eritrean government has tried to counter the impacts of climate change with the help of various relevant stakeholders and international development partners (Volz, 2011). The government invested in programs and initiatives, such as developing sprinkler, pump, and drip irrigation systems, installing solar panels for water pumps across the country, building various dams, reservoirs, and ponds, and creating small-scale irrigation schemes (Debesai & Reddy, 2014). Therefore, these solutions have helped farmers to cultivate their land, ensure food security, and earn a secure income efficiently.

Percentage of the Poor

Eritrea is one of the world’s poorest nations. Almost 66% of the population lives below the poverty line (Tesfagiorgis, 2010). According to a report called Dimension of Poverty in Eritrea, the general poverty rate in Eritrea is 66.40% with 70.32% in urban and 64.64% in rural areas (Tesfagiorgis, 2010). In 1998, almost 1 million individuals migrated to a neighboring country Sudan because of the severity of war, droughts, and rampant poverty, reducing the resident population to 3.5 million (Tesfagiorgis, 2010). There was an extreme humanitarian emergency encountered by half of this population in 2000, connected to the epidemic of respiratory infections, malaria, and diarrhea. Eritrea faces inadequate basic requirements to aid in countering crises of disease, want, and homelessness. A decade ago, 13% of Eritrean population had access to sanitation, whilst 22% could access safe water (Tesfagiorgis, 2010). During the same time, the poor healthcare system and prevalent malnutrition resulted in low life expectancy of 50.8 years and high infant death rates, with every 70 deaths per 1000 live births (Tesfagiorgis, 2010). Just like any other country, poverty (BPL) is calculated based on money value. Consequently, Nakfa 150 per capita per month is considered extremely poor, and Nakfa 240 per capita per month is the poverty line. See Table 3 below for data on poverty.

Table 3: Poverty in Eritrea (Tesfagiorgis, 2010)

Access to the Internet

Eritrea registers the lowest percentage of cellphone ownership worldwide (Habtom, 2014). The telecom sector of the country functions under a state-owned monopoly for mobile and fixed services. Until mid-2016, mobile penetration was almost 7.4%, and fixed-line Internet usage was rare (Thomson, 2016). The situation intensified because of minimal use of computers. About 2% of households own a computer, while the majority of computer literate people live in the country’s capital Asmara (Debesai & Reddy, 2014). The sector of Internet Service Provider (ISP) is open to competition. However, there is visible progress in the Internet and mobile sector, since the Eritrean Telecommunication Services Corporation (EriTel) is currently rolling out a 3G (Third Generation) mobile network. Nonetheless, effort is still required in order to enhance the availability of services in the telecom infrastructure (Habtom, 2014). In May 2016, the Eritrean state declared a work program to improve telecom infrastructure with the aim of covering rural areas, enhancing services quality, and safeguarding the support of telecom infrastructure by solar power to substitute the lack of better electricity network (Thomson, 2016).

Relationship of Eritrea with Organizations

Eritrea joined the International Monetary Fund in July 06, 1994 (Volz, 2011). The country became eligible to borrow from the IMF enhanced structural adjustment facility. This happened because the county has the same characteristic as the other member countries qualified to borrow from the IMF’s ESAF, which is low per capital income (Thomson, 2016). The ESAF refers to an IMF lending facility that was created with the aim of offering assistance to qualified low-income developing member states that are undertaking comprehensive programs associated with structural adjustments in order to strengthen their external payments positions and foster sustainable growth. This lending facility enables the IMF to assist qualified member countries in implementing wide-ranging structural and macroeconomic reforms, as well as helping them access extra concessional financing (Habtom, 2014). The IMF concluded a formal assessment of the Eritrea in 2009. The IMF called on the government of the country to lessen the large fiscal deficits, which are a key problem contributing to the economic instability of the country. The IMF encouraged the government to adopt comprehensive structural and fiscal reforms. Currently, Eritrea does not have any outstanding loans to the IMF. Additionally, the country does not have any financial arrangements with the IMF (Thomson, 2016). The lack of financial arrangements with the IMF can be attributed to the fact that the IMF believes that the economy of Eritrea is hardly growing. Moreover, Eritrea is the only country in Africa that rejects loans issued by the IMF. Eritrea is neither a member nor an observer of the World Trade Organization (WTO), despite the potential benefits this can bring to the country’s economy (Thomson, 2016).

Social Problems of Eritrea

Inflation

In 2015, the rate of inflation in Eritrea was recorded at 12.5%. The rate of Eritrean inflation averaged 13.98% from 1993 until 2015, attaining a record high of -1.38% in 1993 and an all-time low of 34.70% in 2009 (Thomson, 2016). See the figure below on inflation rates in Eritrea.

Figure 5: The rate of inflation (Thomson, 2016)

Severe Inequality

In Eritrea, equality between women and men remains unstable, despite the fact that they fought alongside each other in the independence wars. Women still encounter numerous challenges in this country (Volz, 2011). Considering the population of employed individuals over 15 years of age, 69% are employed with 16% being women (Debesai & Reddy, 2014). However, Eritrean women have witnessed numerous changes in the social and political values of the society. For instance, they have been allocated 30% seats in the Eritrean parliament.

Malnutrition

Following poor rainfall over the recent years, Eritrea has encountered poor harvests as a result. Therefore, most resident are struggling to survive even though they are capable of growing their own food (Wang, 2014). Moreover, animals are perishing because of water and food shortages. Additionally, the cost of grain in the neighboring markets is beyond reach for most residents. Diseases and malnutrition are increasing rapidly, making villagers desperate. The Eritreans are suffering from the current drought (Wang, 2014). According to recent reports, acute malnutrition among children is about 15% in Habero, Asmat, and Hagaz regions.

HIV

The first HIV/AIDS case was reported in Eritrea in 1998. Over time, the percentage of infected patients increased significantly. By the first months of 2000, HIV/AIDS became the 2^nd leading cause of death among Eritreans (Habtom, 2014). During this time, dominance was at almost 2.0%, with about 30,000 people infected and 1900 new infections annually. However, the figures are relatively low compared to other African nations. The Eritrean government received a warning concerning the HIV/AIDS pandemic (Tesfagiorgis, 2010). Presently, the country has a prevalence rate of nearly 0.6%, with a record decrease of 500 novel infections per year – one of the lowest in Africa. See figure 2 below for a comparison figure across the continent according to WHO.

Figure 6: HIV prevalence (Thomson, 2016)

Political Instability

Eritrea has earned the name of regional peace spoiler and exporter of political instability. It is known for allegedly complicating the determinations to convey peace and the process of economic incorporation of the country (Connell, 2011). In the past 12 years, the ruling political party of Asmara has recklessly disagreed with various nations, such as Ethiopia, Djibouti, Yemen, and Sudan, claiming numerous material and human losses (Thomson, 2016). The single leadership has operated unlawfully and severely violated and weakened international laws, creating political instability and hindering efforts for development in Eritrea.

War

Eritrea and Ethiopia fought each other over borders from 1998 till 2000. In March 2008, the United Nations peacekeepers stopped patrolling the area (Thomson, 2016). Presently, the nation’s military forces remain strong along the border areas. Crossing the borders between the two countries is prohibited. Additionally, Eritrea has had disputes with Djibouti, which led to serious fighting between the two nation following border disputes in 2008 (Volz, 2011). Travelers are advised to stay a minimum of 25 km away from Eritrea’s borders with Ethiopia and Djibouti.

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Conclusion

Eritrea is among the low-income nations in Africa. As a result, it has faced limited economic opportunities, which has hindered the availability of financial resources. The income distribution in the country can be described as the available wealth being spread widely and land ownership being defendable along property rights. The nation’s GDP was valued at 3.86 billion USD in 2014. Eritrea is faced with diarrhea among other infectious condition as the leading cause of emergency visits. The literacy levels in the country are standard, with education being compulsory for children under the age of 15. The severe climate has increased poverty levels, causing malnutrition, inflation, political instability, and other social challenges. Eritrea is determined to develop infrastructure to aid in overcoming the social and economic hindrances facing the country.