Eritrea’s manufacturing industry remains relatively underdeveloped – currently accounting for a fifth of GDP – with significant room for expansion. The country has a young population and a strategic location along the Red Sea, providing advantages to develop competitive manufacturing industries.
As the limited available data indicates, Eritrea shows promise across various manufacturing subsectors. The country has a track record in light industries like textiles, food processing, and construction materials using local inputs. Upgrading facilities and developing industrial zones could attract new investments.
Eritrea faces challenges in its manufacturing sector due to a lack of basic infrastructure, stagnant entrepreneurship and outdated capital equipment. Household energy consumption in Eritrea exceeds 80% of total energy production, with efforts to diversify into alternative energy sources like wind and solar power. Efforts to modernize equipment and enhance the business environment could help unlock the untapped potential of Eritrea’s manufacturing industry.
RFC’s expertise in feasibility studies, market analysis, and developing specialized industrial parks can help Eritrea maximize opportunities. There may be potential in value-added agro-processing of crops, livestock, and fish. Developing special economic zones with reliable infrastructure and tax incentives would reduce costs and risks for investors.
Eritrea also aims to develop heavier industries. RFC’s experience in other African markets indicates mineral beneficiation and linkages to mining present opportunities. Basic manufacturing of metals, machinery, and chemicals could utilize the country’s mineral resources and growing mining sector.
With a young population, workforce development will also be crucial. RFC’s training programs and technical programs can build the skilled labour force needed. Public-private partnerships will be important to coordinate investment in human and physical capital. Overall, Eritrea’s manufacturing industry is poised for growth. With the right policies and RFC’s guidance, it could become a driver of jobs, exports, and broader development.
