Entrepreneurship: A Catalyst to Eritrean Economy

Published on 19th June 2007

The World Bank’s strategy Reaching the Rural Poor focuses on improving the lives of those living in rural areas. Economists affirm that entrepreneurship is key to rural development.

Eritrea is one of the smallest countries in Africa with 66.5 per cent of its population living below the national poverty line. More than 75 percent of Eritreans live in rural areas, practicing agriculture as their main occupation. The Eritrean economy has not recovered from the shocks of its border conflict with Ethiopia. The country therefore, faces a number of challenges such as maintaining macro-economic stability, providing better education and health facilities, gender inequality, unemployment, attracting Foreign Direct Investment and adapting to a changing trade environment.

It is important to establish a Small Business Development Bank (SBDB) in Eritrea to fund indigenous businesses, promote entrepreneurship and combat under-capitalization. In Eritrea, SMEs are generally categorized as firms with less than 100 employees. Apart from downturns generated by the border war with Ethiopia, other bottlenecks such as under-capitalisation, difficulties in accessing bank credits and high bureaucratic procedures still plague the country.

The country’s college of Social and management Sciences-Hal hale produced only 11 advanced Diploma Graduates in Small Business Management in July 2006. To encourage enterprise development among young Eritreans, Eritrean Institute of Technology (EIT) and other institutions of higher learning ought to concentrate on commercial and entrepreneurial skill based programmes. In line with this, the College of Business and Economics (CBE) - Hal hale (currently in EIT- Mainefhi) should  introduce many entrepreneurship and business programmes.  The academia should make business studies core courses, develop ties with local businesses and hold more business related activities on campus. This will help develop the interest in business.

Equity funding or venture capital, as it is widely known, has been the secret behind the growth of Silicon Valley, and fast growing  technology companies. The high number of Eritrean Diaspora (about one million), should be encouraged to invest their wealth in small up-coming businesses, thereby helping them to grow and prosper.

Eritrea has a relatively low industrial resource base. It is necessary to create a conducive environment and supporting policies which will aid  the development of rural entrepreneurs in the country. The country’s ecological conditions are ideal for growing a wide range of crops and diversifying commercial and traditional agriculture into high value horticultural crops, which have linkages with agro-industrial activities. Given Eritrea’s pleasant and varied landscape, tourism prospects are extremely buoyant and under-exploited. Several opportunities for growth  exist in the mineral sector. Keeping the positive factors in mind, the dawn of Eritrea’s rural economy lies in the hands of its small entrepreneurs.

The Ministry of Trade and Industry ascribes Eritrea’s woes to lack of credit facilities, inadequate access to development, markets and energy; lack of knowledge and self-confidence.

Rural industrialization should be based on local resources (both human and material) as well as local needs. ‘Local’ does not mean a single village; it might mean a village, a group of villages(Kebele), a district or a sub-zoba - depending on the nature of the industry and the technology used. No pre-conceived limitations should be embrsced in regard to  the use of power and technology. Rural industrialization will convert the present lopsided purely agricultural communities into balanced agro-industrial communities.

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