Development Challenge Other Donors FY2001 Program / Activity & Budget Information Summary Tables Program Summary Work Force Data Program/Sector Summary USAID Search: Eritrea Previous Years' Activities 2000, 1999, 1998, 1997 Thursday, 09-Nov-2000 13:55:03 EST

Introduction

Eritrea remains a high priority for the U.S. government. Despite the current conflict with Ethiopia, Eritrea's proximity as the gateway into eastern Sudan, its key position in the U.S. government's Front Line States Initiative and the access it could provide Ethiopia to the Red Sea are strong and valid reasons why it is in the U.S. national interest to preserve Eritrea's security, stability and continued economic development. Eritrea is an active participant in the Greater Horn of Africa Initiative (GHAI). Its focus on African-led development continues to represent--because of Eritrea's demonstrated spirit of self-determination and self-reliance--an appropriate model on which to build a sustainable secular, participatory and open market-based economy.

The struggle for independence ended after thirty years in 1991 and Eritrea became, by referendum, Africa's newest country in 1993. Eritrea's economy grew an average of 6% per year from 1994 to 1997, with little or no inflation. During 1998, the procedures for privatization, business registration, taxation and operation underwent significant revision. All Eritrean legal codes are being harmonized in accordance with the new constitution. These and other changes resulted from Eritrean-led consultative meetings with the World Bank, the International Monetary Fund and donors in which these organizations reviewed Eritrea's National Economic Policy Framework Paper (NEPFP). This seminal event, the first ever undertaken by an African country on its own initiative, also began the process of building better partnerships with the donor community.

In mid-1998, the Eritrean transition was interrupted by the border conflict with Ethiopia. Two hundred fifty thousand civilians were displaced and the destruction of infrastructure has been massive. More than 73,000 ethnic Eritreans have been forcibly expelled from Ethiopia and more are expected. Reforms of the electoral law and the scheduled national elections have been temporarily postponed. The momentum that was building to attract domestic and foreign investors suffered a setback due to insecurity. Eritrea, which had the lowest external debt in Africa, has incurred an unknown debt to pay for its new armaments.

To revitalize the program, USAID is focusing on rebuilding staff levels and reestablishing program support linkages diminished by two ordered departures. At the same time, the difficulties of the last 18 months have spawned a new pragmatism among GSE officials which, coupled with Eritrean self-reliance, has created an environment in which a more balanced partnership can be re-established and given the chance to flourish.

USAID provided timely humanitarian assistance to Eritrea in FYs 1998 and 1999. Through OFDA, USAID supplied 28,000 urgently needed blankets for internally displaced persons (IDPs) and expellees through Norwegian Church Aid. USAID also provided emergency assistance grants totaling $2.05 million to Africare and UNICEF at a value of $1.01 million in FY1998 and $1.17 million in FY1999. The Africare program improved shelter and expanded health services in IDP camps. UNICEF provided supplementary food for displaced children under five and, with the Ministry of Health (MOH) and the World Food Program (WFP), established a surveillance system to monitor nutritional levels of children in the 31 IDP camps. While the combined response was prompt and considerable, it fell short of the Government of the State of Eritrea (GSE) expectations.

The Development Challenge

The GSE has set high goals against the realities of the devastated infrastructure and the limited human resource capacity it inherited at independence. This, coupled with the insistence that the GSE alone is ultimately responsible for the direction of its country's development, has resulted in the expectation that its partnerships with the donor community be real in practice. USAID intends to meet the challenge through its mutually beneficial investment partnership with the GSE by focusing on health and population, economic growth and food security, and governance and human capacity development. USAID will participate in building the future of a country critical to a turbulent region and strategic to U.S. interests. Eritrea has a self-interest in an alliance with the United States. The United States has a self-interest in a stable, secular friendly country on the Red Sea.

At independence, most of Eritrea's primary health care services were offered "in the shade of a tree." High infant and maternal mortality rates, iodine deficiency disorder (which causes mental retardation), malnutrition and infectious diseases were undercutting Eritrea's efforts to rebuild a modern nation. Disciplined investment by the MOH has created a network of basic health facilities that are clean, well organized, and stocked with basic pharmaceuticals. With this basic infrastructure in place, the highest priority is to upgrade the capacity of health workers and management systems to deliver effective and sustainable primary health care services.

The high priority assigned to enterprise development by the GSE is based on the need for an explicit program to minimize tensions among the various elements of the new civil society by providing links to opportunities for economic growth, particularly increased income. Growth and civil society development link directly to the GHAI goals of food security and crisis prevention. The fundamental challenge that remains is to build a sustainable basis for growth, income generation and employment in a nation just now initiating a transition to an open, private-sector led economy.

Eritrea inherited a system of governance characterized by a very low-level of institutional and human capacity, making the development of a democratic government difficult. Well targeted capacity building investments from USAID are expected to help Eritrea establish a system of accountable governance at all levels. So far, USAID investments have supported the formation of a democratic constitution, revision of all Eritrean legal codes, and improved training for public officials. USAID and the University of Asmara are finalizing the conceptual framework for an innovative contracting mechanism, recently approved by USAID/Washington, that will serve as a streamlined and expedited basis for multiple, long-term linkage partnerships with a consortium of U.S. universities. Once the first linkage is signed in the second quarter FY2000, the main thrust of the program will, over the subsequent period, focus on implementation. USAID and the GSE are currently revising this objective to take advantage of opportunities for supporting more gender-sensitive, human resource capacity formation.

Other Donors

Currently, the major donor in Eritrea is the World Bank. Its program of planned annual commitments amounted to approximately $70 - $80 million in 1999 and is projected at that same level in 2000. The United Nations Development Program (UNDP) and the United Nations Children's Fund (UNICEF) also manage sizeable assistance portfolios in Eritrea. Bilateral donor contributions reach $70 million. Italy, the European Union, Denmark, the U.S., Norway and Germany are the major donors. The U.S. provides about 15 percent of the total bilateral donor assistance.

Through modest and carefully targeted initiatives, USAID assistance has leveraged significant support from these donors in such sectors as health, judicial/legal reform, institutional capacity building, financial sector institutional strengthening, public administration and human resource development.

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