Eritrea’s Halibet Housing Project: Diaspora Dollars Fuel Real Estate Vision

Eritrea Finds New Ways to Earn Hard Currency

Published: Thursday, 22 June 2006

It may look like a truck park near Asmara’s Halibet Hospital, but the Eritrean government has different plans. To tap into the large amount of hard currency held by its overseas community, it’s developing a major housing project.

The plan calls for 766 new two- and three-bedroom apartments with shopping centers and sports facilities. Prices range from $97,000 to $139,000 — affordable by global standards, yet far beyond reach for most Eritreans, whose average annual income is about $130.

Eritrea Halibet Housing Project

Brochures are distributed through embassies, with payments accepted in USD, euros, or pounds—but not in nakfa, the national currency.

According to the IMF, the government’s hard-currency reserves equal only one month of imports. An Asmara-based analyst noted, “This economy lives off two things: diaspora and loans.” In 2003, Eritrea paid fifty times more for imports than it earned from exports. The currency shortage stems from reduced donor loans, lost trade with Ethiopia and Sudan, and strict exchange controls.

Gold, Self-Reliance, and Regional Tensions

The crisis may ease by 2008 as Eritrea begins exporting gold and minerals projected to generate tens of millions of dollars. However, tensions with Ethiopia—its neighbor and former adversary in the 1998-2000 border war—along with rising oil prices, continue to strain the economy. The nation’s doctrine of self-reliance means it must earn hard cash for essentials like food, fuel, and arms.

Public Debt & Diaspora Dependence

By the end of 2004, public debt had soared to 214% of GDP, nearly half external. Eritrea has sought debt relief through the IMF but without success. Loans from the World Bank and bilateral donors—including the United States, China, Italy, and Middle Eastern nations—help sustain operations, yet the main source of hard currency remains the Eritrean diaspora.

Diaspora members pay a 2% income tax to maintain rights such as land ownership and housing purchases. However, these remittances are falling as younger generations lose interest. Analysts estimate remittances once made up 70% of GDP, dropping from $462 million in 2003 to $420 million in 2005.

“Without remittances, I don’t think anybody could get by,” said one resident. “Most people in Eritrea have somebody abroad.”

Controlling Foreign Exchange

Eritrea enforces strict controls to preserve foreign currency reserves. According to one analyst, “You may receive dollars in your account, but you can withdraw only in nakfa.” Unauthorized use of foreign currency is punishable by confiscation, fines up to 2 million nakfa ($133,000), and two years in prison.

Government authorization is required for international payments, and only $150 per day can be taken abroad for travel. The World Bank estimates the economy could grow by 4% annually, but warns that poverty remains widespread and defense spending excessively high due to the unresolved border dispute with Ethiopia.

Asmara City

Asmara Street View

Halibet: Pride Beyond Economics

To many Eritreans, the Halibet project symbolizes national pride rather than desperation. One online comment read, “Whenever our enemies pray for our failure, we surprise them with extraordinary achievements.”

Nam-Hun Kang, the local representative of South Korean contractor Keangnam, confirmed growing interest: “They’re buying, paying money, registering — very promising.”

— Reuters

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#life #moments — Eritrea’s story reminds us that resilience often grows where challenges are greatest.

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