Eritrea, the Most Isolated Country In Africa, May Finally Be Opening Up


Eritrea, a small country of 5 million people in the Horn of Africa, has been one of the most isolated countries in Africa almost on par with North Korea. Similar with North Korea, Eritrea has a single party government and one of the worst human rights records and freedom of media on the continent. It has been run by the same president, Isaias Afwerki, since gaining independence in 1993 and had also been under UN arms sanctions since 2009. Asset freezes and travel bans imposed by the UN have also made business development difficult.

Relations with Ethiopia, Eritrea’s biggest neighbour, have historically always been testy and culminated in a war in 1998 that officially ended in 2000. However, relations between the two countries remained icy and have even resulted in skirmishes over the years, most recently in 2012. The war and political strife have left its mark on the economy, and Eritrea remains very undeveloped with a GDP per capita of under $1500.

Improving Relations with Ethiopia

In June of 2018, the new Prime Minister of Ethiopia surprised the region by saying Ethiopia would finally accept the peace agreement signed back in 2000. This was followed by the first flight in July 2018 from Ethiopia to Eritrea in nearly 20 years, signalling an era of renewed cooperation between the two neighbours. Then in September, land border crossings were opened that allowed for free travel between the two countries. This has led to a reported 10,000 refugees from Eritrea escaping to Ethiopia, but the official word from Ethiopia is that the borders would remain open.

Somalia Also Joining The Party, Djibouti Still Ongoing

With Ethiopia approving a thaw in relations, Somalia has also joined peace negotiations and the three countries are now trying to form a Tripartite agreement. The leaders of the three countries are currently doing face-to-face talks in Uganda, meaning the Horn of Africa is set to be more stable than it has been in decades.

Border security has been the main point of contention, but the potential economic benefits of political stability in the region are expected to make it all worthwhile for the three parties.

However, negotiations with Djibouti are still ongoing and there have been no breakthroughs yet. But with the thawing of relations between the other countries in the region, the momentum is positive.

The UN Trusting TheĀ Progress

With the progress in Eritrea since June, the United Nations voted in November to remove most of the outstanding sanctions on Eritrea (although Somalia continues to be under most of them). This includes the asset freeze and travel ban and is an opportunity for Eritrea to rejoin the world community after years of being isolated.

How To Invest In Eritrea and the Horn of Africa?

With the Horn of Africa looking to be finally turning the corner, it may be presenting a golden investment opportunity if stability can continue. It is admittedly a big if, but the other main issue is that after years of strife and poor economic development, there are no large stock exchanges in any of the Horn of Africa countries. Neither Ethiopia, Eritrea, or Somalia have stock exchanges, although Ethiopia technically has a commodity exchange.

For some time now, Ethiopia has been the largest country in the world without a stock exchange. With the new leadership and focus on reform, talk has once again began about opening an exchange as it is a natural way of reducing government stakes in major state-owned enterprises, especially as the economy transitions away from being so command-led.

Even if there were stock exchanges set up, it is still much too early to look into investing in these countries as their past history has not been reason for much optimism. However, they are all moving in the right direction with the peace accords, and if regional economic cooperation becomes a new focus for the Horn of Africa, we will be keeping a close eye on the progress all of these countries.


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