Close
Eritrea: Peace leads to economic uptick in border communities

Eritrea: Peace leads to economic uptick in border communities

 Rapprochement between the governments of Ethiopia and Eritrea has led to an opening of the border, providing new economic opportunities for local communities. Giorgio Berti reports.

In June, Eritrea and Ethiopia signed a peace treaty that finally brought a close to their decades-long conflict. As the neighbours move forward in what appears to be a more amicable direction, the tentative partners have reestablished phone links, restored air travel, and reopened embassies.

On 11 September the border was officially reopened, a week after the Ethiopian cargo ship Mekelle docked in Eritrea’s Massawa, the first Ethiopian ship to do so in two decades. On 14 November, the UN Security Council unanimously agreed to lift sanctions imposed in 2009, including asset freezes, travel bans and an arms embargo.

Questions have arisen as to what this rapid detente means for border communities, as Eritreans look to exploit their newfound freedom to pursue economic opportunities with their Ethiopian neighbours.

For many, that option was previously unthinkable. Up to 450,000 lost their lives in the harrowing conflict between the two countries that began in 1961. Following Eritrean independence in 1993, a border conflict broke out which left both sides in a state of war readiness. Against this backdrop, Eritrean leader Isaias Afwerki suspended the constitution and clamped down on civil rights, leading to the country’s economic and political isolation. Many foreign investors avoided business in Eritrea as a result of sanctions. Investment slowed to a trickle, suffocating the domestic private sector and leading to a shortage of essential goods. Today, many Eritreans have little access to internet, basic health services and agricultural inputs, while staple crops cost significantly more in Eritrea than across the border: the price of teff is four times higher in Eritrea.

Detente

Afwerki’s decision to reopen the border allows Eritreans to leave the country freely for the first time in many years. This has led to tentative economic activity in border towns, including Adigrat in Ethiopia and Senafe in Eritrea. A trade in electronics and consumer goods is beginning to take hold as Eritreans take advantage of the detente to buy items that have long been difficult to acquire. Small traders spy an opportunity to cash in.

“Many loaded up cars with goods in Ethiopian border towns, and then they took the goods back to sell in Asmara,” says Geno Teofilo, head of communications for the Norwegian Refugee Council in the East Africa region.

As a result of decades of Eritrean isolation, it remains difficult to quantify the true extent of economic activity. The Associated Press reports that cement is the major commodity Eritreans are buying from Ethiopia, with a minimum of 20 truckloads leaving Adigrat daily. While foreign investment has been largely non-existent, some industries persisted amid Eritrea’s isolation. A rare sign of foreign investment is the Bisha Mining Company, 60% owned by Canadian mining group Nevsun, which extracts copper, gold, silver and zinc and commenced production in 2011.

Many in the border areas welcome an increase in trade. Gold is being mined across the border, as well as agricultural activity, and [there is] a growth of industry in Tigray,” says John Campbell, emeritus reader in the anthropology of Africa and law at the School of Oriental and African Studies, University of London.

For now, the emerging border trade remains poorly regulated, the inevitable result of decades of Eritrean isolation. A robust black market trade has long replaced legitimate commerce. It will take some time for the detente to lead to the establishment of formal trading networks.

“They are trying to figure out regulation, tariff regimes, currency – right now you have a bit of free market on the border,” says Omar Mahmood. senior researcher at the Institute for Security Studies.

Meanwhile, there are green shoots for the farming community. Many Eritreans living in border areas rely on sustenance farming to make a living, including livestock herding and growing crops such as sorghum and sesame. Isolation and sanctions have led to a lack of farming equipment and inputs on the Eritrean side, leading to renewed demand for inputs as the border opens up. Compulsory Eritrean military conscription long hollowed out the supply of labourers available to such communities, but in June, Eritrean conscripts were told that unlimited national service, which previously forced thousands of young men to flee the country every month, will last no longer than 18 months.

Why now?

Yet while border communities are encouraged by the uptick in activity, the future of detente remains unclear. Disputes over territory and military postings continue to simmer. While Ethiopian prime minister Abiy Ahmed is seen as a key figure behind detente, there is no guarantee that the country’s military and political establishment, long used to conflict with Eritrea, will continue to support the prime minister’s bold moves. 

The commitment of Eritrea’s government is also likely to be tested significantly. By opening the border, the Eritrean government is surrendering control over the movement of people and hard currency, an unprecedented move for a previously isolated regime. Given the government’s tight control of the economy and political system until now, it remains to be seen whether the Eritrean government will have the appetite to continue detente at the rapid pace of the last few months. A continuing outflow of Eritrean refugees to Ethiopia – according to the UNHCR, between September 12 and October 13, 9,905 Eritreans arrived in Ethiopia – could put a strain on ties. 

Nevertheless, observers are in no doubt that the rapprochement has the potential to reshape the prospects for border communities. They hope that early impact of detente on border communities will persuade politicians to continue down the path of reform.

 “There had been no trade between these two countries for years, and already commerce and business between them is rising quickly. A lasting peace will bring prosperity for people living on both sides of the border,” says Teofilo.

Rate this article

Written by African Business Magazine

African Business and its award-winning team is widely respected for its editorial excellence. We provide the all important tools enabling you to maintain a critical edge in a continent that is changing the world. Our special reports profile a wide range of sectors and industries including Energy, Oil and Gas, Aviation, Agriculture to name but a few.

Related Posts

Join our mailing list to receive a sharp, curated weekly round-up of African business news.

Help us deliver better content