Despite recent economic growth from the mining sector, Eritrea remains one of the least developed countries in the world. The economy has yet to fully recover from the effects of previous war, leading to high unemployment, few income-generating opportunities and high levels of poverty [1]. The low level of savings and low level of capital accumulation creates a heavy reliance on external sources of finance in terms of debt and development assistance in the country [2]Foreign Direct Investment (FDI) is largely dominated by the mining sector, accounting for 96% of total FDI in 2017.

For the full and effective implementation of the Climate resilient Economy Strategy, Eritrea requires an estimated expenditure of more than USD 3,548 billion by 2030. This indicates the need for major capital investments [3].  


Key policies and governance approach

Available data indicates that for investment in environment and infrastructure, the country received Official Development Assistance that accounted to 10.34% of the country’s Gross National Income (GNI) in 2010. There is no data showing the status after 2010. In addition, Eritrea received an approved 24.3 million USD as climate finance from the multilateral climate change funds up to Dec 2020 [4].

According to Eritrea’s First Biennial Update Report, during the past years, the country has developed 25 climate-related projects through grants (80%) and loans (16%) and the remaining are mix of loan and grants. While 56% of the projects are disbursed, the remaining 46% are committed in the process of implementation. These projects are implemented by the government, civil society, and local communities. 

In Eritrea, the support received was predominantly on Adaptation programmes focusing on Land Degradation projects that account for 52% followed by mitigation (20%), a mixture of both adaption and mitigation projects (12%); and 8% for capacity building. Since 2010, the GEF Small Grants Program (SGP) in Eritrea received financial support of US$ 1,034,998 on adaptation and mitigation activities as well as Biodiversity. During this period, climate specific projects accounted for only 19% indicating that there is a need for climate specific projects in the future to mitigate the adverse effects of climate change [5].


Successes and remaining challenges

Despite the government’s strong commitment to Eritrea’s development agenda, institutional capacity gaps exist, including a lack of suitable procedures and regulatory frameworks to guide project implementation; weak managerial and technical capacities; limited coordination across sectors; and inadequate financial management (FM) and monitoring and evaluation (M&E) systems. All of which affect the ability to implement programmes and policies effectively, and to quantitatively demonstrate development impact [1] .


Initiatives and Development Plans

In 2019, the State of Eritrea became the 24th Member state of the Africa Finance Corporation (AFC). The AFC is an investment grade multilateral finance institution, with an equity capital base of US$1 billion, to be the catalyst for private sector-led infrastructure investment across Africa. The institution wants to develop projects which will significantly contribute to exports, employment, agricultural productivity and overall development of the country [6].


Goals and Ambitions

IFAD has been a key international development partner that has remained active in Eritrea’s agricultural sector. Recently, IFAD launched the Country Strategic Opportunities Programme 2020-2025, with the goal to contribute to enhancing smallholder farmers’ and small-scale fishers’ food and nutrition security through resilience-building interventions. The specific objectives include [1]:

  • Increased resilience and adaptation to climate change through sustainable management and utilization of natural resources (land and water);
  • Improved access to and use of appropriate technologies, infrastructure and services for enhanced productivity and sustainability of smallholder agricultural and fisheries systems;
  • Build institutional, community and individual capacities to enhance food and nutrition security and sustainable livelihoods.