This profile is also available in French here.
To download a pdf version of the full 2019 Eritrea country profile, click here.
Eritrea is located on the coast of the Red Sea, bordering the countries of Ethiopia, Sudan and Djibouti. The country’s population is estimated at 5.9 million, and though poverty levels remain high, the country’s government has identified education and human capital formation as national policy priorities.
In 2018, Eritrea’s GDP growth rate was registered at 4.2 percent, driven mainly by mining construction. Additional developments in energy, irrigation and roads have also been identified as key drivers of GDP growth. Eritrea’s economy is largely driven by mining and subsistence agriculture. This exposes the country’s production to risks associated with climate shocks, most notably droughts.
The financial and banking sector in the country is predominantly state controlled, though there is a prevalence of informal financial markets. The formal banking sector is 100 percent state-owned and regulated by the Bank of Eritrea. There are three banks in the country: The Housing and Commercial Bank of Eritrea, Eritrean Investment and Development Bank and the Commercial Bank of Eritrea. The Housing Bank of Eritrea was established in 1994 to address the acute housing need in the country by providing mortgages to individual customers and for financing housing complexes.
Housing demand in the country far outstrips supply, and this has led to the emergence of unlicensed housing developments. Data on the housing market is also scant, which hampers investment action as well as informed price setting within the real-estate sector. The country’s property sector is dominated by foreign developers, who mainly develop high-end residential properties.
The regulation of housing markets in Eritrea is limited, which exposes residents and investors to arbitrary confiscation of property or land. From the Ease of Doing Business indicators, according to the World Bank Doing Business 2019 Report, out of 190 economies, Eritrea was ranked 187 in starting a business, 186 in dealing with construction permits, 180 on registering property, and 174 on protecting minority investors. Notwithstanding these challenges, Eritrea presents some opportunities for investment. These would require collaborative investment and partnerships between private sector actors and the State.
Find out more information on the housing finance sector of Eritrea, including key stakeholders, important policies and housing affordability:
- Access to finance
- Housing supply
- Property markets
- Policy and regulation
- Availability of data on housing finance
- Additional sources
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2019 edition, which has up-to-date profiles for 55 African countries.Download yearbook
Eritrea is on the Red Sea coast and borders Ethiopia, Sudan and Djibouti. The country has been under crippling diplomatic isolation and UN sanctions for decades due to allegations of sponsoring terrorism. In addition, the country fought a two-year-border war with its neighbour, Ethiopia, which ended in a “no war no peace” settlement of the conflict. However, the recent restoration of diplomatic relations between Eritrea and Ethiopia is seen as a giant step in fostering peace in the Horn of Africa region. This is supported by the World Bank, which observes that in 2018 Eritrea marked the end of decades of diplomatic isolation.
According to the Central Intelligence Agency (CIA) World Fact Book, Eritrea has an estimated population of 5 970 646. The CIA report observes that although the country has remained persistently poor, it has undertaken education and human capital formation as key national priorities. These national priorities are aimed at fostering economic development, effectively curing endemic poverty.
Eritrea’s growing investments in mining construction was the key driver of the 4.2 percent real gross domestic product (GDP) growth rate in 2018. The African Development Bank (AfDB) Africa Economic Outlook 2019 also finds that infrastructural developments such as energy, irrigation and roads were also important drivers of GDP growth in the country. Eritrea’s GDP stands at US$6.72 billion.5 Eritrea is currently in debt distress, mainly comprising 80 percent domestic debt and 20 percent foreign debt. Nevertheless the country has managed to contain inflation at nine percent as per the 2018 AfDB report4 and has a Human Development Index country score of 0.44 (2017). The unemployment rate stands at 6.4 percent (2017), a slight improvement from the 2016 unemployment rate of 6.5 percent.
The latest available data shows that the country’s urbanisation rate stood at 22.19 percent in 2014 with the highest population density concentrated around the capital city, Asmara, and Keren.3 Eritrea is prone to tough climatic conditions such as perennial droughts and floods during rainy seasons, affecting availability of ground water resources. The country is heavily policed and any foreign visitor is advised not to criticise the government or the president in the presence of locals. In addition, a foreigner needs to make arrangements with a local travel guide/company to move around the country and obtain separate permits for almost every place visited in the country. Nevertheless, the country is rated as one of the safest in Africa and the locals are extremely friendly to foreigners.
 Bereketeab, R. (2019). The Ethiopia-Eritrea Rapprochment: Peace and Stability in the Horn of Africa. Nordiska Afrikainstitutet. http://www.diva-portal.org/smash/get/diva2:1313153/FULLTEXT02.pdf (Accessed 19 September 2019). Pg. 13
 Human Rights Watch (2019). World Report 2019: Eritrea Events of 2018. https://www.hrw.org/world-report/2019/country-chapters/eritrea (Accessed 5 September 2019).
 CIA (2019). World Fact Book. https://www.cia.gov/library/publications/the-world-factbook/geos/er.html (Accessed 5 September 2019).
 African Development Bank Group (2019). African Economic Outlook 2019. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/2019AEO/AEO_2019-EN.pdf (Accessed on 5th September 2019). Pg. 146.
 Trading Economics online. Eritrea Unemployment Rate. https://tradingeconomics.com/eritrea/unemployment-rate (Accessed 5 September 2019).
 Statista (2014). Urbanization in Eritrea 2014. https://www.statista.com/statistics/510564/urbanization-in-eritrea/ (Accessed 5 September 2019).
 Reliefweb (2019). Humanitarian Action for Children 2019-Eritrea. 30 January 2019. https://reliefweb.int/report/eritrea/humanitarian-action-children-2019-eritrea (Accessed 5 September 2019)
Access to finance
Eritrea’s economy is highly dependent on rain-fed subsistence agriculture and mining, exposing it to shocks such as droughts. The economy is highly controlled by the government, which has imposed heavy restrictions on the amounts that can be held in either bank accounts or in hand. Consequently, in December 2017 the government closed 450 private businesses, which allegedly hoarded cash and failed to transact business through commercial banks. It appears that the stringent government controls have led to the rise of parallel informal financial markets whose depth and scope is mainly unknown. Economic analysts contend that the government practice of forcing citizens to use the banking system has no legal backing and is a recipe for mistrust of the banking system.10 Banking in Eritrea is 100 percent state-owned and regulated by the Bank of Eritrea. The three banks are Housing and Commercial Bank of Eritrea, Eritrean Investment and Development Bank and Commercial Bank of Eritrea.
Microfinance is largely provided by the Saving and Microcredit Programme (SMCP) established in 1996 in response to the failure by the formal sector to serve the low-end market. According to Habte et al (2017, p.79), SMCP offers “Micro Business Loan (MBL), Small Seasonal Agricultural Loan (SSAL), Oxen Loan (OL), Irrigated Agricultural Loan (IAL), Small Business Loan (SBL) and Employee Loan (EL). Three of these loan products (SSAL, OL, IAL) target the agricultural sector in rural areas. While MBL and SSAL are accessed on group basis, OL, IAL, SBL and EL are individually accessed loans”.
The Housing Bank of Eritrea was established in 1994 to address the country’s acute housing needs by providing mortgages to individual customers and individual housing complexes. However, the available data shows that the last (Massawa) Housing Project was the last major housing project funded and completed in 2000.13 Although there has been growth in corporate bond markets in Sub-Saharan Africa, such markets are undeveloped in Eritrea. In addition, no evidence of pension-backed housing loans in the country is available. In sum, financing housing in Eritrea in the absence of formal and informal financing options would prove to be an uphill task.
 International Monetary Fund (2019). IMF Staff Completes 2019 Article IV Mission to Eritrea. 22 May 2019. https://www.imf.org/en/News/Articles/2019/05/22/pr19179-eritrea-imf-staff-completes-2019-article-iv-mission (Accessed 5 September 2019).
 Solomon, S. and Tesfagabir, T. (2018). Eritrea Closes Hundreds of Businesses for Bypassing Banks. 7 January 2018. Voice of America. https://www.voanews.com/africa/eritrea-closes-hundreds-businesses-bypassing-banks (Accessed 5 September 2019)
 Global Banking and Finance Review (2012). List of Banks in Eritrea. 13 June 2012. https://www.globalbankingandfinance.com/list-of-banks-in-eritrea/ (Accessed 22 August 2019)
 Habte A., Visser K. and Ocran M.K. (2017) The Impact of Microfinance on Household Livelihoods: Evidence from Rural Eritrea. In: Biekpe N., Cassimon D., Mullineux A. (ed.). Development Finance. Palgrave Macmillan, Cham. Pg. 73.
 Africa 2 Trust (2019). About the Housing and Commerce Bank of Eritrea. https://www.africa2trust.com/member/?l=1&c=17&sid=9645&glx=0&catid=2 (Accessed 19 September 2019)
 Mu, Y., Phelps, P. and Stotsky, J.G. (2013). Bond markets in Africa. Review of Development Finance, 3(3). Pgs. 121-135.
According to Numbeo, to buy an apartment in Asmara city centre costs Nkf16 238 (US$1076) per square metre while it costs Nkf15 665 (US$ 1 038 ) per square metre outside of CBD. In addition, renting a one bedroom apartment costs Nkf1 509 (US$100) and Nkf1 006 (US$67) in the central business district (CBD) and outside the CBD respectively. Numbeo finds that renting a three-bedroom house in the CBD goes for Nkf2 012 (US$133) with no comparable data for three-bedroom apartments outside the CBD. In a country where, according to Numbero, the average monthly net after tax salary averages Nk3 018 (US$200).
With negligible or undocumented access to home loans, only a few people can afford decent housing in Eritrea. Furthermore, previous studies on accessing credit in Eritrea observe significant challenges for borrowers, arising from stringent collateral requirements and mistrust between borrowers and lenders. A number of attempts have been made to address the challenges of collateral requirements through group lending by the Savings and Micro-Credit Program. However, these interventions have previously failed due to lack of co-ordination between the government and development practitioners.
 Numbeo (2019). Cost of Living in Eritrea. https://www.numbeo.com/cost-of-living/country_result.jsp?country=Eritrea (Accessed 2 September 2019).
 Von Eije, H., Fishazion, M. and Lutz, C.H.M. (2002). Accessing bank credit in Eritrea: Bottlenecks for small firms and the commercial bank of Eritrea. University of Groningen. https://core.ac.uk/download/pdf/12858120.pdf (Accessed 2 September 2019) Pg. 12.
 Bahta, Y.T. and Groenewald, J.A. (2006). Rural Credit for Resource-Poor Entrepreneurs: Lessons from the Eritrean Experience. Poster paper prepared for presentation at the International Association of Agricultural Economist Conference, Gold Coast, Australia, August 12-18, 2006.
The demand for housing in Eritrea far surpasses supply. This has led to the proliferation of many unlicensed houses prompting a major campaign by the government to demolish and raze the unlicensed houses. The ruling party has abrogated itself unprecedented powers in the real estate market, effectively doubling as the landlord and estate broker. This has significantly curtailed the development of house extensions (commonly known as “servizio”), which landowners let to visitors at a tidy sum. The 2018 Eritrea Country Report documents the government’s extortion of diaspora investors in the housing sector leading to the collapse of the projects. The government practice no doubt discourages would be investors in housing with negative implications for housing supply in the country.
Data on housing supply in Eritrea is scanty, curtailing efforts aimed at establishing the country’s minimum rent. The Asmara Housing Project commenced at around 2016 appears to have been completed. A 2016 FaceBook post shows that the project was for new 930 apartments, 824 villas and 192 business complexes. The lowest price for new apartment and villas was Nkf300 602 (US$19 920) while the highest price was Nkf1 887 170 (US$125 057).
 Awate (2017). Eritrean Economy: Increased Control of Real Estate. 14 September 2017. http://awate.com/eritrean-economy-increased-control-of-real-estate/ (Accessed 2 September 2019)
 BTI (2018). Eritrea Country Report. https://www.bti-project.org/en/reports/country-reports/detail/itc/eri/ (Accessed 6 September 2019).
 Eritrean Press (2016). New 930 apartments, 824 villas and 192 business complexes – For Sale in Asmara. https://www.facebook.com/EritreanPresss/posts/new-930-apartments-824-villas-and-192-business-complexes-for-sale-in-asmara-firs/530554693803796/ (Accessed 19 September 2019).
Eritrean property market appears to be dominated by foreign estate agents and mainly lists high-end properties. The foreign estate agents are mainly from Greece and include ktimatikieretrias, Interattica Real Estate & Cοnstructions and HomeGreekHome.com, among others.
From such listings, a 480 square metre piece of land located 100 metres from the Red Sea is listed at €18 000(US$203 999, or Nfk3 078 648. In contrast a 200 square metre maisonette located in Evia, Eritrea is listed for €270 000 (US5297 729 or Nfk4 493 162), which translates to €1 350 (US$1 488 or Nfk22 465) a square metre. Interestingly, all the house prices are listed in Euro with no local currency equivalent displayed, suggesting the advertisers are targeting foreign (or foreign-based) buyers.
The value of combined imports and exports for the country is 37.5 percent of GDP and the government has severely curtailed foreign investments in a number of sectors. The existence of state-owned enterprises creates market distortions in the property markets. Such market distortions in a country with undeveloped financial system and non-existent capital markets have conspired to deny long-term financing to possible homeowners and property developers.
 Homegreekhome (2019). Sales of Residential Properties in Eritrea. https://en.spitogatos.gr/search/results/residential/sale/r160/m3400m (Accessed 8 September 2019)
 Homegreekhome (2019). Sale of Land Properties. https://en.spitogatos.gr/sale_Land_Plot_Eretria__Evia_-l8311767 (Accessed 9 September 2019)
 Homegreekhome (2019). Sales of Residential Properties. https://en.spitogatos.gr/sale_Maisonette_Magoila__Eretria_-l5129969 (Accessed 5 September 2019)
Policy and regulation
Eritrea has neither an effective constitution nor the rule of law, exposing its people to arbitrary confiscation of both property and land.19 The country has institutionalised open discriminatory practices for the allocation of land, where some people obtain usufruct rights to the land backed by customary law. The 2018 BTI report observes Eritrea’s hostile policy towards the private sector, evidenced by the ownership of all economically significant companies by either the military or the government. According to the World Bank Doing Business 2019 Report Eritrea ranked as follows: starting business (187), dealing with construction permits (186), registering property (180) and protecting minority investors (174). In addition, registering property costs nine percent of the property value. These findings suggest that on regulatory issues within the control of the government, the country ranks in the bottom 15 countries globally.
 World Bank (2019). Doing Business 2019. https://www.worldbank.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-version.pdf (Accessed 6 September 2019)
Eritrea has great opportunities for investors in general and housing investors in particular, but with high-potential returns comes high potential risks. Crucially, any potential investor in the country should consider the multiple bureaucratic bottlenecks imposed by the state. As mentioned, it is the practice of the state actors to demand a share of the ownership of foreign companies investing in the country. Investors risk losing their investments in future if they are perceived to be anti-regime. For instance, in August 2019 the government took over educational institutions owned and run by religious organisations for allegedly criticising the government.
Notwithstanding the challenges of doing business in Eritrea, from a business point of view, every problem should be seen as a business opportunity. For instance, telecommunications and internet in the country is highly undeveloped and therefore (international) investors would consider credible proposals for partnering with the government to offer the services. In addition, the demand for housing far outstrips supply but the real estate is (micro) controlled by the regime and the ruling party. Private ownership of land is not allowed and the government can repossess the land and the developments therein. Perhaps, public-private partnerships between the government and (international) private investors offer potential. Nevertheless, such public private partnerships would call for International guarantees to ensure contract enforcement and government compliance.
The recently signed peace agreement between Eritrea and Ethiopia will hopefully open multiple investment opportunities in the country. For instance, the peace dividends will hopefully include the ability to import construction materials from Ethiopia at a lower cost than has been the case during decades of “no war no peace” between the two Horn of Africa countries. Importantly, the peace deal will trigger the release of government funding from multilateral and bilateral donors, easing the pressure on the government. Lastly, the peace deal has led to the lifting of many UN sanctions, paving way for foreign investors into the country.
 BBC (2019). Eritrea Seizes Schools run by Religious Groups. 3 September 2019. The East African. https://www.theeastafrican.co.ke/news/africa/Eritrea-seizes-schools-run-by-religious-groups/4552902-5259120-63gfycz/index.html (Accessed 4 September 2019)
 Africa Renewal (2019). After making peace, Ethiopia and Eritrea now focus on development. December 2018-March 2019 Issue. https://www.un.org/africarenewal/magazine/december-2018-march-2019/after-making-peace-ethiopia-and-eritrea-now-focus-development (Accessed 7 September 2019).
Availability of data on housing finance
Eritrea is one of the countries with the least number of internet users (less than one percent of total population) and minimal online presence. The country has extremely low internet connection and residents are not allowed home internet connection.
The implication of there being minimal online presence about the country’s economic activities and the country itself poses significant challenges for data access/availability. Most institutions in the country have no websites, including the (Central) Bank of Eritrea. The use of social media in the country is severely curtailed and the internet connection extremely slow. Consequently, obtaining data from social media users in the country is difficult and desktop research on the country is challenging. No official government statistics on housing finance are accessible online. The data available on Eritrea is mainly dated and extremely limited.
Bereketeab, R. (2019). The Ethiopia-Eritrea Rapprochment: Peace and Stability in the Horn of Africa. Nordiska Afrikainstitutet. http://www.diva-portal.org/smash/record.jsf?pid=diva2%3A1313153&dswid=-1627 (Accessed 5 September 2019)
Von Eije, H., Fishazion, M. and Lutz, C.H.M. (2002). Accessing bank credit in Eritrea: Bottlenecks for small firms and the commercial bank of Eritrea. University of Groningen.
African Development Bank Group. https://www.afdb.org/
Human Rights Watch. https://www.hrw.org/
Our World in Data. https://ourworldindata.org/
Trading Economics online. https://tradingeconomics.com/