Economy of Eritrea

In agriculture employed nearly 80 percent of the population but accounted for only 12.4 percent of gross domestic product (GDP) in Eritrea. The agricultural sector has improved with the use of modern farming equipment and techniques, and dams. Nevertheless, it is compromised by a lack of financial services and investment. Major agricultural products are sorghum, barley, beans, dairy products, lentils, meat, millet, leather, teff, and wheat. The displacement of 1 million Eritreans as a result of the war with Ethiopia, and the widespread presence of land mines have played a role in the declining productivity of the agricultural sector. Almost a quarter of the country's most productive land remains unoccupied because of the lingering effects of the 1998-2000 war with Ethiopia.

As of Eritrea's substantial mineral deposits were largely unexplored. According to the Eritrean government, artisanal mining in collected 573.4 kilograms of gold, however the number of gold reserves was unknown. International observers also have noted Eritrea's potential for quarrying ornamental marble and granite. As of some 10 mining companies had obtained licenses to prospect for different minerals in Eritrea. The government of Eritrea reportedly was in the process of conducting a geological survey for use by potential investors in the mining sector. The presence of hundreds of thousands of land mines in Eritrea, particularly along the border with Ethiopia, has presented a serious impediment to future development of the mining sector.

Households consume more than 80 percent of total energy production. Electricity production in 2001 was estimated at 220.5 million kilowatt-hours. Consumption for that year was estimated at 205.1-kilowatt hours. An 88-megawatt electricity plant funded by Saudi Arabia, Kuwait, and Abu Dhabi was completed just south of Massawa in 2003, its completion delayed nearly three years by the war with Ethiopia. Annual consumption of petroleum in 2001 was estimated at 370,000 tons. Eritrea has no domestic petroleum production; the Eritrean Petroleum Corporation conducts purchases through international competitive tender. According to the U.S. Department of Commerce, opportunities exist for both on- and offshore oil and natural gas exploration; however, these prospects have yet to come to fruition. The use of Wind energy and solar power have slightly increased, due to the growth of solar power manufacturing companies in the country. The Eritrean government has expressed interest in developing alternative energy sources, including geothermal, solar, and wind power.

According to the International Monetary Fund, commercial banks in Eritrea—all government owned and operated—appear to be in compliance with prudent regulations. Although the commercial banking sector is largely profitable, mostly owing to income from foreign exchange transactions, the sector is burdened by a high proportion of non-performing loans. Core lending activities do not generate sufficient income to cover operating costs at most commercial banks.