Housing Finance in Eritrea

Overview

Eritrea is a Horn-of-Africa country with an extensive coastline along the Red Sea, bordering Djibouti to the south-east, Sudan to the west, and Ethiopia to the south. Most of its famous Italian colonial architecture has largely been preserved, especially in the capital city of Asmara, despite the many years of war with Ethiopia. The country has a population of 3.6 million, an annual population growth rate of 1.3% and unemployment rate of 7.9%, based on 2019 figures.[1] Eritrea has never conducted a population census and therefore when diaspora population of approximately two million[2] is considered, the total population of the country is estimated at more than 6 million.[3] Eritrea has a ranking on the Human Development Index, a summary of human development, of 180 out of 190 countries.[4] The country is governed by a totalitarian, one-party dictatorship and the president has held office since 1993. At the time of writing this profile, Eritrea was forcibly mobilising army reserves to fight Ethiopian Tigray rebels in support of the Ethiopian government.[5] Given the enforced mandatory military service up to age 55, many Eritreans have been thrown into war without notice, leading to wide national outcry.

Eritrea has one of the lowest urbanisation rates in the world, with most of the population involved in subsistence rural agriculture because of a lack of employment and housing opportunities in urban areas. The urbanisation rate as of 2011 stood at 36%[6]. Thus, the main agricultural activity entails crop production and mixed farming, mostly rain-fed.[7] The reliance on rain-fed farming has exposed the country to climate change risks such as famines and droughts. Nonetheless, Eritrea’s economy has rebounded from numerous shocks in the recent past, such as COVID-19 and locust invasion.

The Africa Development Bank (AfDB) observes that the economy registered a growth rate in Gross Domestic Product (GDP) of 2.9% in 202, a sharp recovery from the 0.6% contraction documented in 2020.[8] According to the AfDB, economic growth was driven by a surge in private consumption as well as industry and services. The AfDB 2022 economic outlook for the country projects GDP growth of 4.7% in 2022 and 3.6% in 2023, largely driven by world-wide surges in the price of metals. This is because 98% of Eritrea’s exports constitute zinc and copper ores or concentrates.[9] Despite the growth projections, the AfDB predicts that the Russia-Ukraine war will trigger an increase in food and oil prices, causing the inflation rate to rise to 6.2% in 2022 before easing to 3.5% in 2023.

Eritrea has endured more than three decades of conflict with neighbouring Ethiopia, leading to significant damage to most of the country’s urban centres.[10] Consequently, the Habitat World Map links the acute shortage of housing  to the conflict inducing migration of people from urban to rural areas. The urbanisation  is observed to span the agricultural belt and along the major roads leading towards Sudan and Ethiopia.[11]

The development of urban centres along the agricultural belt is consistent with Eritrea’s known reliance on rain-fed agriculture which led to an increase in deforestation, degradation of land, and smallholder farmers’ vulnerability. This vulnerability is aggravated by the country’s susceptibility to climate change issues such as El Niño which is a climate pattern that describes the unusual warming of surface water and is not predictable in pattern but affects ocean currents and the health of coastal fisheries.[12] Eritrea experienced El Niño from 2008 to 2021, with five major droughts which has recently affected more than 3.3 million residents.[13] Eritrea is one of the four (including Djibouti, Ethiopia, and Somalia) countries located in the Horn of Africa, a region of the world considered highly susceptible to climate change.[14] Sudden heavy or intense rains often afflict the region, stifling farming and livestock production as well as fishing ecosystems, effectively aggravating already existing civil conflicts.[15] According to the World Meteorological Organization (WMO), the Horn of Africa is projected to suffer its fifth consecutive failed rainy season, which will worsen the impact of the close to 40 years of ongoing drought in the region.[16]

[1] World Bank (2022). Macro Poverty Outlook for Eritrea: April 2022 – Datasheet (English). Macro Poverty Outlook (MPO) Washington, D.C.: World Bank Group. https://documents.worldbank.org/curated/en/099034404262212018/IDU0cabb70bc0029d04eb70a9450a3d9f613b1cd. (Accessed 31 August 2022)

[2] UN Habitat (2008). Eritrea: National and Cities Urban PROFILE- Asmara, Massawa & Mendefer. https://unhabitat.org/sites/default/files/2020/10/eritrea_-_national_and_cities.pdf (Accessed 7 September 2022). Pg. 7.

[3] Wikipedia (2022). Demographics of Eritrea. https://en.wikipedia.org/wiki/Demographics_of_Eritrea (Accessed 21 September 2022).

[4] World Bank (2022). Macro Poverty Outlook for Eritrea: April 2022 – Datasheet (English). Macro Poverty Outlook (MPO) Washington, D.C.: World Bank Group. https://documents.worldbank.org/curated/en/099034404262212018/IDU0cabb70bc0029d04eb70a9450a3d9f613b1cd. (Accessed 21 September 2022).

[5] BBC (2022). Eritrea’s mass mobilisation amid Ethiopia civil war. 16 September 2022. BBC News. https://www.bbc.com/news/world-africa-62927781. (Accessed 17 September 2022)

[6] World Bank (2021). Urban population (% of total population) – Eritrea.  https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?locations=ER. (Accessed 30 August 2022)

[7] Rena, R. (2007). Agriculture development and food security policy in Eritrea-an analysis. African Journal of Food, Agriculture, Nutrition and Development, 7(5). Pg. 4.

[8] AfDB (2022). Eritrea Economic Outlook. https://www.afdb.org/en/countries/east-africa/eritrea/eritrea-economic-outlook#:~:text=Outlook%20and%20risks,increased%20international%20prices%20for%20metals. (Accessed 30 August 2022)

 [9] Workman, D. (2021). Eritrea’s Top 10 Exports. World’s Top Exports. https://www.worldstopexports.com/eritreas-top-10-exports/ Accessed 17 September, 2022).

[10] Habitat-World Map (2019). Eritrea. https://habitat-worldmap.org/en/pais/africa/eritrea-2/. (Accessed 30 August 2022).

[11] Habitat-World Map (2019). Eritrea. https://habitat-worldmap.org/en/pais/africa/eritrea-2/. (Accessed 30 August 2022).

[12] El Niño. National Geographic Resource Library El Niño | National Geographic Society (Accessed 11 September 2022)

[13] AfDB (2022). Eritrea Economic Outlook. https://www.afdb.org/en/countries/east-africa/eritrea/eritrea-economic-outlook#:~:text=Outlook%20and%20risks,increased%20international%20prices%20for%20metals. (Accessed 30 August 2022)

[14] Muggah, R. (2021). Climate Threats Are Multiplying in the Horn of Africa. 8 December 2021, Foreign Policy. https://foreignpolicy.com/2021/12/08/climate-security-council-africa-horn/ (Accessed 17 September 2022)

[15] Muggah R. (2021). Climate Threats Are Multiplying in the Horn of Africa. 8 December 2021, Foreign Policy.  https://foreignpolicy.com/2021/12/08/climate-security-council-africa-horn/ (Accessed 17 September 2022)

[16] WMO (2022). Greater Horn of Africa faces 5th failed rainy season. 25 August 2022. https://public.wmo.int/en/media/news/greater-horn-of-africa-faces-5th-failed-rainy-season (Accessed 17 September 2022)

Access to finance

Reliance on subsistence farming makes access to finance difficult, increasing the risk of default because of a lack of appropriate collateral to secure loans. Previous studies suggest that the country’s credit markets are marked by significantly high loan collateral requirements, mutual mistrust and rigid credit policies that broadly hinder access to finance.[1]

The financial services sector in Eritrea is small and continues to be dominated by three commercial banks (Commercial Bank of Eritrea, Eritrean Investment and Development Bank and Housing, and Commercial Bank of Eritrea). The banking sector is regulated by Bank of Eritrea, the country’s central bank.[2] Notably, two of the three commercial banks are state owned while the third is owned by the ruling political party. While neighbouring countries such as Kenya and Djibouti have vibrant private commercial banking sectors, in Eritrea banking is fully state controlled with little or no access to digital banking. In the absence of liberalisation of the banking sector, access to credit is greatly curtailed and funding alternatives are scarce. With only two main microfinance organisations (the Southern Zone Saving and Credit Scheme and the Saving and Micro Credit Program), Eritrea’s micro finance sector is largely underdeveloped, taking the form of rotating credit groups which mostly charge high interest rates [3]. On top of having only three commercial banks, having four microfinance institutions in total severely limits women entrepreneurs’ access to credit.[4] Moreover, women (especially married women) are sometimes denied credit due to religious and cultural practices.[5]

Mortgage interest rates in Eritrea average 10% a year.[6] While this rate may appear to be affordable by African or regional standards, the high rates of poverty coupled with need for loan collateral  are a major barrier to obtaining home loans.[7] The banking sector has been assessed as being weak with regard to the Basel III international regulatory framework and this creates greater vulnerability to global external shocks such as COVID-19.[8] Additionally, the financial services sector has minimal digital presence, which means that most of the information about the sector has to be gleaned from third-party sources. In contrast to many countries, Eritrea appears to have no credit reference bureaus, underwriting services, or bond markets.

[1] 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.

[2] Wikiwand (2022). Banking in Eritrea. https://www.wikiwand.com/en/Banking_in_Eritrea (Accessed 10 August 2022).

[3] Habte, R. (2016). The Impact of Microfinance on Household Livelihoods: Evidence from Rural Eritrea. PhD Thesis, University of Western Cape. http://etd.uwc.ac.za/xmlui/bitstream/11394/4885/1/Habte_at_phd_ems_2016.pdf (Accessed 3 September 2022). Pgs. 30-36.

[4] Women Connect (2022). Access to capital for Eritrean women entrepreneurs https://www.womenconnect.org/web/eritrea/access-to-capital/-/asset_publisher/k61avZZYhIU5/content/saving-and-micro-credit-program-smcp. (Accessed 10 August 2022)

[5] Tully, S. (2006). The exclusion of women from financial services and the prospects of a human rights solution under Australian law. Australian Journal of Human Rights, 12(1), 53-82. http://www.austlii.edu.au/au/journals/AUJlHRights/2006/4.pdf. (Accessed 10 August 2022)

[6] Statista (2021). Prevailing mortgage interest rates in Africa in 2021, by country.  https://www.statista.com/statistics/789843/mortgage-interest-rates-africa-by-country/. (Accessed 30 August 2022)

[7] 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.

[8] UNDP (2020).  Rapid Assessment: The Socio-Economic Impacts of Covid-19 In Eritrea – Preliminary Findings.  May 2020. https://www.undp.org/sites/g/files/zskgke326/files/migration/africa/UNDP-rba-COVID-assessment-Eritrea.pdf (Acdcessed 1 September 2022). Pg. 13

Affordability

 

High poverty and unemployment likely greatly impair home affordability in Eritrea, though the absence of credible data sources in the country makes it difficult to determine an accurate poverty rate.[1] The World Bank estimates a poverty rate of 70%. The official unemployment rate in 2021 rose to 8% from 7.44 % in 2020.[2]^,[3] Of the employed population, 31.5% works in the informal sector. The Eritrean population mostly comprises rural subsistence farmers with low disposable incomes. The agriculture sector accounts for 80% of employment opportunities .[4] While agriculture is a major provider of employment opportunities , there is no evidence of large-scale commercial farming. This suggests that such employment is in the informal subsistence farming away from the major urban centres.

Given the estimated average monthly after-tax salaries of Nkf11 595 (US$773)[5] in Eritrea, renting or buying a house  can be difficult for citizens. It costs Nkf5 625 (US$375) to rent a one-bedroom apartment in Asmara’s city centre and Nkf4 995 (US$333) for a similar house located away from the city centre. Moreover, the data obtained from Numbeo shows that renting a 3-bedroom house in the Central Business District of Asmara would cost Nkf7 365 (US$491) and Nkf11 250 (US$750) outside the city centre.[6] These figures are close to, or over 50% of the average income and therefore commercial renting is unattainable for most Eritreans. According to Numbeo, the price per square meter when buying an apartment in the city centre is Nkf15 750 (US$1 050) compared to Nkf15 450 (US$1 030) outside the city centre. It is difficult to estimate the cost of buying land in Eritrea because all land is state owned.

It is estimated that 60% of the Eritrean population is within working age and therefore the country has a labour supply capacity of 77.5%.[7] According to Eritrea’s labour laws, a contract of employment may be entered into by any person aged 14 years and older.[8] With a sizeable segment of the population young and also working in the informal sector, incomes are uncertain, and mortgage commitments cannot be guaranteed.

[1] World Bank (2021). The World Bank in Eritrea. https://www.worldbank.org/en/country/eritrea/overview (Accessed 15 August 2021).

[2] Statista (2021). Eritrea: Unemployment rate from 1999 to 2020. https://www.statista.com/statistics/807967/unemployment-rate-in-eritrea/ (Accessed 1 September 2022).

[3] Trading Economics (2022). Eritrea Unemployment Rate. https://tradingeconomics.com/eritrea/unemployment-rate#:~:text=Unemployment%20Rate%20in%20Eritrea%20is,macro%20models%20and%20analysts%20expectations. (Accessed 10 August 2022)

[4] Sawe, B.E. (2018). What are the biggest industries in Eritrea? World Atlas Economics. https://www.worldatlas.com/articles/what-are-the-biggest-industries-in-eritrea.html. (Accessed 18 September 2022)

[5] Numbeo. Property Prices in Asmara, Eritrea. https://www.numbeo.com/property-investment/in/Asmara-Eritrea. (Accessed 1 September 2022).

[6] Numbeo. Property Prices in Asmara, Eritrea. https://www.numbeo.com/property-investment/in/Asmara-Eritrea. (Accessed 1 September 2022).

[7] State of Eritrea (2018). Eritrea’s Labor Force Survey: Understanding Jobs, Gaps, Productivity, and More. 3 November 2018. Ministry of Information.  https://shabait.com/2018/11/03/eritreas-labor-force-survey-understanding-jobs-gaps-productivity-and-more/#:~:text=The%20survey%20also%20indicates%20that,engage%20within%20the%20informal%20economy (Accessed 15 August 2021).

[8] Proclamation No. 118/2001 The Labour Proclamation of Eritrea. https://www.ilo.org/dyn/travail/docs/493/The%20Labour%20Proclamation%20of%20Eritrea%20No%20118%20of%202001.pdf. P. 6 (Accessed 18 September 2022

Housing supply

According to Eritrea’s Ministry of Information, over 80% of the country’s population makes a living from agricultural activities such as farming and animal herding.[1] While in most African countries migration from the country to the cities is the norm, in Eritrea the opposite happens, due to a shortage of employment opportunities in Eritrean cities.  The government appears to be making efforts to develop affordable housing, but there is no evidence to confirm online media reports. In 2019 there were reports that Eritrea was building 50 000 units to be delivered within three years. but there is no indication that this has been delivered or even that construction has been initiated.[2] According to the United Nations Habitat, urbanisation rates in Eritrea are quite low and most towns are small with limited services compared to other African countries where “urbanisation of poverty” is high.[3] Thus, it is not clear whether the 50 000 units would be fully occupied upon completion. Nonetheless, given the large number of diaspora population, the diaspora may return or invest in a house at a much faster rate once the units are available.

Eritrea has been referred to as a “diaspora nation” as it is estimated that 2 000 000 Eritreans (more than 50% of the population) live abroad either as asylum seekers, and political or economic refugees.[4] The lack of employment opportunities in urban areas coupled with the dispersion of the majority of the population to the diaspora have contributed to low demand and supply for housing . In effect, with most of the population living in rural areas, the housing is largely traditional, constructed using locally available materials such as mud, wood, and grass.  This aggravates the risk of deforestation, further worsening environmental problems. Low urbanisation means fewer informal settlements in the urban areas. Nonetheless, the few slums in urban areas are known for overcrowding, lack of basic social amenities, and high poverty rates.[5] Labour construction costs are modest, with construction workers earning on average Nkf1 730 – Nkf11 700 (US$115 – US$780).[6]

The State of Eritrea has, for years, imposed restrictive rights and obligations on diaspora Eritreans looking to obtain permission to build houses [7]. Broadly speaking, for many, having a house in one’s home country is culturally valued and holds memories of home, citizenship, and a sense of belonging.[8] Thus, the systems in place to restrict diasporans from building houses  are being used to thwart progress in growing households and housing infrastructure. The thinking is that Eritrea and similar governments use housing as a tool to make housing difficult to obtain for non-residents and thus to discourage emigration.[9] Regardless of these restrictions, many houses in Eritrea are bought by diasporans who do not live permanently in the country.

[1] State of Eritrea (2019). Economic growth and the development of Agriculture. 10 August 2019. Ministry of Information. https://shabait.com/2019/08/10/economic-growth-and-the-development-of-agriculture/ (Accessed 24, August 2022).

[2] Madote (2019). Eritrea to build 50,000 affordable homes. http://www.madote.com/2019/11/eritrea-to-build-50000-affordable-homes.html (Accessed 1 September 2022).

[3] UN Habitat (2008). Eritrea: National and Cities Urban PROFILE- Asmara, Massawa & Mendefer. P.7. https://unhabitat.org/sites/default/files/2020/10/eritrea_-_national_and_cities.pdf. (Accessed 5 September 2022).

[4] Harnnet (2019). EPDP Assessment Shows Eritreans in Exile/Diaspora to be over Two million. 10 August 2019. http://www.harnnet.org/index.php/articles-corner/refugee-center/item/5737-epdp-assessment-shows-eritreans-in-exile-diaspora-to-be-over-two-million. (Accessed 8 September 2022).

[5] UN Habitat (2008). Eritrea: National and Cities Urban PROFILE- Asmara, Massawa & Mendefer. P.7. https://unhabitat.org/sites/default/files/2020/10/eritrea_-_national_and_cities.pdf. (Accessed 7 September 2022).

[6] Salary Explorer. Construction / Building / Installation Average Salaries in Eritrea 2022. http://www.salaryexplorer.com/salary-survey.php?loc=67&loctype=1&job=17&jobtype=1. (Accessed 8 September 2022).

[7] Belloni, M. (2021). Remittance Houses and Transnational Citizenship: Mapping Eritrea’s Diaspora–State Relationships. Africa Spectrum, 56(1), 59-80. (Accessed 1 September 2022).

[8] Boccagni, P. and Pérez Murcia, L.E. (2020) Fixed places, shifting distances: remittance houses and migrants’ negotiation of home in Ecuador. Migration Studies 98(1).

[9] Collyer, M. (2006) Transnational political participation of Algerians in France: extra-territorial civil society versus transnational governmentality. Political Geography 25(7): 836–849

Property Markets

Eritrea uses the Cadastre system to register the rights of individuals to own plots of land and buildings; it is used to guarantee the security of ownership of property by the citizens. The Cadastre system was inherited from Italian structures set up under colonial rule of Eritrea between 1890 and 1941.[1] According to the latest World Bank Doing Business report, the registration of property in Eritrea entails 11 procedures over a period of 78 days at a cost of 9% of the property value.

Eritrea is one of the poorest countries in the world, with 53% of the population living below the poverty line.[2] Poverty rates are especially high for women who have to confront systemic gendered poverty structures. The high poverty rates have negative implications for property markets as people have low disposable incomes and impaired purchasing power. Because Eritreans who have emigrated have more diverse access to employment opportunities outside of the country, they account for most home buyers and owners. Nonetheless, all land in Eritrea is state owned[3] and can be confiscated at any time by the State for political reasons or by corrupt state actors. There are several real estate agents in the country, most of them foreigners making the process of buying and selling property easier. However, there is evidence of government (and the ruling party) interference in property markets by unilaterally determining rent payable through corrupt and opaque approaches. Therefore, the rental prices that property owners can charge are being determined by the government and largely not at market rates.[4] With government and political interference as well as state ownership of land in property and rental markets, real estate developers are not highly incentivised to invest in the Eritrean property market.

[1] Weldegiorgis W. (2009). The Cadastral System in Eritrea: Practice, Constraints and Prospects. September 2009. International Federation of Surveyors. https://www.fig.net/resources/monthly_articles/2009/september_2009/september_2009_weldegiorgis.pdf. (Accessed 15 August 2022).

[2] Price, E. (2020). Eritrean Women Fight Gendered Poverty. 17 June 2020.The Borgen Project. https://borgenproject.org/tag/poverty-in-eritrea/#:~:text=Out%20of%20175%20countries%20in,requires%20has%20to%20be%20imported.%E2%80%9D. (Accessed 15 August 2022).

[3] Kibreab, G. (2009) Land policy in post-independence Eritrea: A critical reflection, Journal of Contemporary African Studies, 27:1, 37-56.

[4] Awate Team (2017). Eritrean Economy: Increased Control of Real Estate. 14 September 2017. Gedab News. https://awate.com/eritrean-economy-increased-control-of-real-estate/. (Accessed 9 September 2022).

Policy and Legislation

Legal Notice No. 31/1997 provides for a regulation procedure to be applied in land allocation and administration.[1] Further, Article 3 of the Land proclamation No. 58/1994 states that Eritrean land is state owned,[2] while Proclamation No. 95/1997 provides for the registration of land and other immovable properties.[3] Proclamation no. 58/1994 seeks to:

“…reform the system of land tenure in Eritrea, to determine the manner of expropriating land for purposes of development and national reconstruction, and to determine the powers and duties of the land commission” [4]

Eritrea has formulated a range of legal and policy frameworks that enhance gender equality and empowerment of women to own property and do business. For instance, National Gender Framework and Action Plan 2015-2019; Gender Policy 2000; Land Proclamation 58/1994 as well as Nationality Proclamation No.112/1992 guarantee equal citizenship and nationality rights between men and women.[5] To guarantee equal employment rights, equal pay for equal work of similar value, Labour Proclamation No. 118/2001 was enacted; and lastly, Proclamation No.128/2002 gives women the right to carry out any business and hold any license without the need to seek the consent of the husband or the father. These laws provide for equal status at marriage and equal access to land including the capacity to own the land as well as removal of discriminatory practices upon death or divorce.[6] Hence, save for Muslim women (guided by sharia law) the wife is entitled to half of the marital property upon the death of the husband irrespective of her contribution to the acquisition of such property. [7] These legal provisions imply significant effort at addressing the cultural bottlenecks that hinder women from owning and/or inheriting property in Eritrea. Conversely, there is no evidence to suggest that the laws are followed in dealing with the apparently entrenched cultural practices.

[1] ILO (2022). Eritrea: Legal Notice No. 31/1997 – ILO. https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/91367/105933/F76950587/ERI91367%20Eng.pdf. (Accessed 24 August 2022).

[2] FAO (2022). PART II — Corrected Translation of Land Proclamation. http://extwprlegs1.fao.org/docs/pdf/eri8227.pdf (Accessed 24 August 2022).

[3] FAO (2022). FAOLEX Database: Eritrea. https://www.fao.org/faolex/results/details/en/c/LEX-FAOC008227/ (Accessed 24 August 2022).

[4] US Department of State (2022). 2015 Investment Climate Statement. https://2009-2017.state.gov/e/eb/rls/othr/ics/2015/241552.htm  (Accessed 24 August 2022).

[5] Women Connect. Access to legal aid for women in Eritrea.  https://www.womenconnect.org/web/eritrea/legal-aid/-/asset_publisher/u55eVXPvntdY/content/national-union-of-eritrean-women-nuew- (Accessed 4 September 2022).

[6] Tekle, T. (1998). Women’s Access to Land and Property Rights in Eritrea. United Nations Development Fund for Women. https://mokoro.co.uk/wp-content/uploads/womens_access_to_land_eritrea.pdf (Accessed 18 September 2022).

[7] Tekle, T. (1998). Women’s Access to Land and Property Rights in Eritrea. United Nations Development Fund for Wome.n https://mokoro.co.uk/wp-content/uploads/womens_access_to_land_eritrea.pdf  (Accessed 18 September 2022).

Opportunities

Eritrea does not appear to present substantial opportunities for active foreign investor participation given the nature of the ruling elite government’s control over private businesses and real estate. The United States of America (USA) considers Eritrea not conducive to US investments because even where opportunity exists in the extractive/mining industries, the state fully controls the private sector.[1] According to the US State Department, Eritrea is plagued by a myriad of issues which deter trade and investment, such as unreliable power supply, complex and variable import regulations, restricted transportation links (both road and air), insufficient port facilities, controls on profit repatriation, restrictions on in-country movements, and the near impossibility of securing construction permits save for government-sanctioned projects.[2]

Eritrea is a party to the Paris Agreement of 2015 on climate change. Thus, the country’s Nationally Determined Contribution (NDC) focuses on mitigating the effects of climate change through renewable energy sources.[3] Eritrea’s energy sector is putting emphasis on the use of clean energy solutions including solar and geothermal power.[4]  Investors may consider investment in renewable energy given the energy problems documented in this profile and the country’s commitments to the Paris agreement. Renewable energy could be more sustainable for the country given its locality, with available land space favouring solar energy. This sector could attract better investment from foreign private sector funders or through government-to-government partnerships.

While much development opportunity exists, the government does not court potential investors – rather the opposite. Restrictions also increase the risk of low investment returns. Investment may take the form of public-private partnerships in real estate infrastructure development, in the opening of new markets through mining activity, exports and imports, and energy supply. Risks could be mitigated through government-to-government pacts offering investment protection guarantees.

The size of the Eritrean diaspora presents further opportunity for investors to tap into because this segment of the population has relatively higher disposable incomes and a cultural incentive to have a house in their home country. Residential properties could be developed specifically targeting the diaspora.

[1] US Department of State (2015). 2015 Investment Climate Statement – Eritrea. https://2009-2017.state.gov/e/eb/rls/othr/ics/2015/241552.htm (Accessed 4 September 2022).

[2] US Department of State (2015). 2015 Investment Climate Statement – Eritrea. https://2009-2017.state.gov/e/eb/rls/othr/ics/2015/241552.htm (Accessed 4 September 2022).

[3] Climate Watch (2022). The State of Eritrea – Nationally Determined Contributions (NDCs) Report to UNFCCC. https://www.climatewatchdata.org/ndcs/country/ERI/full (Accessed 17 2022).

[4] UNDP Climate Promise (2021). Renewable energy Eritrea’s best bet to a resilient future. 20 December 2021. https://climatepromise.undp.org/fr/node/128 (Accessed 17 2022).

Availability of Data on Housing Finance

Eritrea presents significant data challenges given the country has minimal digital presence. Even the central bank and the country’s only three commercial banks have no websites. The country is governed by a totalitarian dictatorship and the public is generally hesitant about sharing any information or exercising free speech for fear of retaliation by the state. Consequently, the available data is largely outdated and may be inaccurate. Government control over the financial sector makes it difficult to obtain the most up-to-date data on housing finance in Eritrea. There is no evidence any government institutions or associations in the country collect housing data .

Green Applications for Affordable Housing

Electricity is available mainly in larger cities. Most rural dwellers use firewood and diesel generators as well as other traditional sources of energy.[1] Based on 2020 estimates, 80.7% of Eritreans[2] have no access to basic water services or clean water.[3] The Eritrean Electricity Authority supplies 90% of the power from two diesel power plants using old distribution networks which frequently fail.[4] According to the United States Agency for International Development (USAID), the country’s national electrification rate is 32%, with 17% located in rural areas and 83% in urban areas. [5] Eritrea has made substantial efforts in providing hygienic and affordable sanitation facilities as well as notable progress in Water, Sanitation and Hygiene (WASH): the United Nations Development Programme (UNDP) observed a reduction in open defecation from 90% documented in 2010 to 40% in 2019.[6]

[1] Mwaniki, E. and Habteab, A. (2018). Eritrea powers 40,000 people and businesses in off-grid areas. 28 September 2018. UNDP Eritrea. https://undpafrica.medium.com/eritrea-powers-40-000-people-and-businesses-in-off-grid-areas-5828b2fe3e66 (Accessed 18 September)

[2] Reid, K. (2020). 10 worst countries for access to clean water.8 April 2020. World Vision. https://www.worldvision.org/clean-water-news-stories/10-worst-countries-access-clean-water (Accessed 22 September 2022).

[3] Ha, M. (2020). How Does Eritrea’s Lack of Clean Water Affect its Poverty Issue? 1 September 2020. The Borgen Project. https://borgenproject.org/eritreas-lack-of-clean-water/. (Accessed 18 September 2022)

[4] USAID (2017). Eritrea Power Africa Fact Sheet https://2012-2017.usaid.gov/powerafrica/eritrea#:~:text=Eritrea’s%20power%20is%20supplied%20through,that%20do%20not%20have%20electricity. (Accessed 9 September 2022).

[5] USAID (2017). Eritrea Power Africa Fact Sheet https://2012-2017.usaid.gov/powerafrica/eritrea#:~:text=Eritrea’s%20power%20is%20supplied%20through,that%20do%20not%20have%20electricity. (Accessed 9 September 2022).

[6] UNDP (2020). Rapid Assessment: The Socio-Economic Impacts of Covid-19 In Eritrea – Preliminary Findings.  May 2020. https://www.undp.org/sites/g/files/zskgke326/files/migration/africa/UNDP-rba-COVID-assessment-Eritrea.pdf. (Accessed 4 September 2022). Pg. 5.

Websites

UN Habitat www.unhabitat.org

African Development Bank www.afdb.org

Central Intelligence Agency www.cia.gov

International labour Organisation www.ilo.org

Madote www.madote.com

Numbeo www.numbeo.com

United Nations development Programme Africa www.undp.org

Women Connect www.womenconnect.org