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ERITREA BUILDING A BRIGHT FUTURE IN AFRICA By forming strong bonds with Beijing, Eritrea is developing its infrastructure and economy. ritrea is a young country with a golden future as it looks to exploit its wealth of untapped natural resources and build a strong relationship with China in lucrative sectors such as mining, fisheries, and tourism. Located on the shores of the Red Sea and bordered by Ethiopia, Sudan, and Djibouti, Eritrea is becoming increasingly self-sufficient and emerging as a promising destination for foreign direct investment (FDI) in a range of industries and markets. The country’s gross domestic product is expected to rise 2.5% in real terms this year, and a further 5% in 2010, due, in part, to the commencement of operations of the Bisha mining project in the western region. Under the leadership of President Isaias Afewerki,
the country is growing its presence in the global business arena as it rebuilds infrastructure, invests in modern information and communications technology (ICT) for banking networks, and develops free trade zones to attract foreign business interests. Mining in particular is attracting global attention, with foreign companies undertaking exploration projects across Eritrean terrain. As a key trade and investment partner, China is leading several major mining projects for gold, silver, copper, and zinc. The mining sector is also pioneering the move to privatization as the government begins to embrace liberalization and free market policies. “There is huge potential in our mining sector and we hope to harvest the benefits of gold extraction in the third quarter of 2010,” the President says.
A Commercial Bank in Every Sense A universal bank that caters for all sectors of the economy, including agriculture, domestic trade, finance, transport, and fisheries, the Commercial Bank of Eritrea (CBE) is committed to a dynamic financial sector in Eritrea. With a mission to provide credit facilities for Eritreans to realize their business dreams, the Bank enjoys an 80% share of the market, making it the largest commercial institution in the country. General manager Yemane Tesfay is convinced, however, that Chinese participation will add extra value and efficiency to the Bank and its clients, especially in terms of ICT and human resources. “There is certainly room for a Chinese bank to take 2030% equity in our bank and run it responsibly, and if this were to happen, it would be managed in a commercial fashion as a profitmaking institution,” he says. Public confidence in CBE has enabled it to grow by more than 10% annually in terms of deposits and it was voted one of the top 100 African banks by The Banker magazine in 2008. The Bank accepts foreign currency deposits in major convertible currencies and has a branch presence in all major towns. “As long as the government has an appetite for the liberalization of the financial sector, I believe foreign banks will be interested in sharing the market with us,” Tesfay explains. “In my 29 years in the banking sector, I am still committed to developing the necessary incentives to make commercialization the focal point of this bank, and lead by example. We have the potential to be the bank of choice in this country—especially with a foreign bank as partner.” Commercial Bank of Eritrea PO Box 219, Asmara, Eritrea Tel: +291 1 121844 Fax: +291 1 121849 email@example.com www.cber.com.er
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the mining and fisheries sectors develop, 060 “As so will the finance and insurance sectors— everything is interlinked. As a stable, proud, and united country, I invite Chinese investors to participate in the building of a nation and the development of a partnership that is mutually beneficial.” Bonds between Beijing and Asmara—the capital of Eritrea—are already strong. “Our trade relationship with China has grown from 5% to 65% and trade is what ultimately symbolizes partnership,” says President Afewerki. “Through the development of ‘hardware’ such as infrastructure, business, trade, and investment, we are building a functioning economy that works in synergy with our ‘software’: our skilled labor and human resources. “The possibility of future growth is here and we need a viable partner to develop our value-added potential and raise it to a new level in terms of productivity.”
Flying to Dubai, Jeddah, Rome, Cairo, Khartoum & Karachi firstname.lastname@example.org Tel: 291-1125500/01
Commerical Bank of Eritrea general Education is a key pillar of the government’s manager, Yemane Tesfay, says foreign banks strategy and by forming closer ties with will further improve the sector by bringing in Chinese businesses, Eritrea will benefit fresh ideas, new services, and modern ICT. greatly from the transfer of technology and “Foreign banks, such as those from China, innovative ideas that will boost the economy will be very welcome here as they will allow and raise people’s living standards. value-added services to mushroom for our President Afewerki believes Eritrea’s clients throughout Eritrea,” he explains. strategic location close to major international A composite company with a range of life shipping lanes is one of many competitive and non-life products and services, including advantages that his country of 5.5 million policies for motor, fire, livestock, and accident people can offer overseas investors. New free trade zones are among the many forward“I invite Chinese investors to participate thinking measures that have in the building of a nation through a been set up to encourage mutually beneficial partnership.” FDI. They offer investors President Isaias Afewerki a range of new facilities and many fiscal benefits such as lower taxes. One such zone cover, the National Insurance Corporation of in Massawa is expected to make the port city Eritrea Share Company (NICE) dominates a key regional gateway for trade. the growing insurance sector. “We look As the guardian of the financial services forward to establishing a connection with the sector, the Central Bank of Eritrea oversees insurance market in China as their market is regulatory reform and is working hard to huge,” states NICE general manager, Zeru loosen the government’s reins on the sector. Woldemichael. “The mining sector will “By 2014, we expect to have completely flourish very soon and we will need some liberalized the financial sector and have strong support and reinsurance, possibly foreign banks operating alongside local banks from a Chinese counterpart.” in Asmara and Massawa,” says the Bank’s Meanwhile, flag carrier Eritrean Airlines acting governor Kibreab Weldermariam. wants to expand and become a regional “There are many competitive advantages leader in the aviation sector. “We have a lot of in Eritrea for foreign companies. We invite market potential that gives us a competitive Chinese investors and partners to play a part advantage,” says CEO Kubrom Dafla. in the development of our financial sector, especially when it comes to human resources, financial services, and ICT expertise.” by Business Focus www.businessfocus.org.uk
Bank of Eritrea’s Efforts Are Shaping The Country’s Economy The Central Bank of Eritrea is one of the country’s most important institutions, with a mandate to regulate and supervise a young banking and financial services industry and attract fresh foreign direct investment to further boost economic growth. Established by proclamation on March 5, 1993, the bank is at the heart of Eritrea’s emergence on regional and global markets. The country is blessed with a vast array of natural resources including gold, silver, potash, copper, and zinc. By establishing appropriate departments, investing in the building up of technical and professional capacity, and modernizing information technology, regulations and laws, the Bank of Eritrea has made significant progress toward maintaining a sound financial system and greater macroeconomic stability, without compromising its objectives. “This has been our greatest challenge, but we are confident that in time we will become a strong and modern central bank,” says Kibreab Weidemariam, acting governor of the Bank of Eritrea. “Both the bank and the government recognize that it is essential for foreign partners to enter the sector if we are to continue the significant progress we have made during the last 18 years of independence and to play our role in rebuilding the country’s economy.”
In liaison with the Bank of Eritrea, the government has worked hard to open up the economy in a range of sectors and industries. It recently established a free trade zone, for example, and is set to take full advantage of its strategic location on the Red Sea trading route Kibreab Weldermariam, Acting Governor
as it explores ways of increasing its competitive edge. Lucrative opportunities also exist in tourism, agriculture, fisheries, and mining, with the Central Bank helping to finance new infrastructure and programs to attract major foreign investments that will provide employment and so raise living standards of people throughout the country. “The Bank of Eritrea Act makes special provision to attract foreign investment and aims to instill confidence in investors,” Weldemariam says. “It allows foreign investors to fully operate their foreign currency accounts, as well as repatriate 100% of all profits.” Weldemariam points to Eritrea’s membership of the IMF and the World Bank as further evidence of its economic development and political and social stability.
Bank of Eritrea PO Box 849, Asmara, Eritrea. Tel: +291 1 123033 36 Fax: +291 1 123162
Eritrea Report 09 2009