ASSESSMENTS

Eritrea Creaks Open the Door as Fears of War Recede

Oct 12, 2018 | 09:00 GMT

The harbor in Massawa shows some of what Eritrea has to offer to investors as a transportation hub and tourism magnet.

A picture taken on July 22, shows a private boat with the Eritrea flag in Old Massawa harbor, 60km of the Eritrean capital Asmara. - Eritrea's dormant port hopes for revival after Ethiopia and Eritrea in July 2018 declared an end to two decades of conflict, rapidly restoring diplomatic ties and flights between their capitals. Decades of conflict, sanctions and isolationist policies have seen trade shrivel up in the port city, whose harbor is still lined with bombed-out buildings from Eritrea's war of independence from Ethiopia, achieved in 1993.

(MAHEDER HAILESELASSIE TADESE/AFP/Getty Images)

Highlights

Reconciliation between Ethiopia and Eritrea will be a boon for regional stability and enhance the investment profiles of both countries.
As the security threat from Ethiopia diminishes, Eritrea is likely to focus on developing its manufacturing, mining and tourism industries.
Foreign investment, however, will remain limited until the government in Eritrea enacts significant political and economic reform, including improving its human rights record.

Massive political and economic changes in Ethiopia are having an impact far beyond the regional heavyweight's borders. Nowhere have these changes been more evident than in Eritrea, Ethiopia's erstwhile, decades-old nemesis. As renewed ties between Addis Ababa and Asmara deepen, transport arteries are once again open, bilateral trade is up and cost-prohibitive natural resources are in play. All of this begs the question: is Eritrea a frontier market worth digging into?...

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