Interview of President Isaias with local media(Part VI)

His excellency President Isaias Afwerki conducted an extensive interview with the local media from 27 to 30 of December, 2011, regarding global, regional as well as local issues. Excerpts of the sixth part of the interview follows:

Y. E. President, could you please explain on the plan in hand in regarding harbors and ports in connection with communications?

Priority is of course focused on the ports of Massawa and Assab. Indeed, feasibility studies have been made with Chinese companies to implement massive projects in the Massawa port, and that is the priority. If we are to say we have a port for any domestic and regional purposes, it is obvious that we need to expand the port of Massawa. Besides, it is hard to endorse sectors such as industry, tourism, agriculture and mining without properly expanding the port. Likewise, in an equally significant manner, studies are being conducted to expand the port of Assab as well. This plan is being enhanced envisioning the prospects ahead provided the active land and water transport communications are ensured between the two ports. Furthermore, expanding bays and harbors is also among our mapped out plans in line with these two grand projects. This may include the harbors in Idi, Tio, Gela’lo as well as other bay towns. In addition, with the construction of roads from Massawa to Karora, construction of jetties along the way in the coastal areas would be inevitable. There are also airport programs that should go in line with these. By far, the Massawa Airports will require extra work to reach the standard for local, regional and international flights as one of the biggest airports in the country. Whereas if we take the Asmara International Airport, it is obvious that it cannot be expanded further for obvious reasons; but definitely, it requires a lot of work until the works on the Massawa airport finalizes and becomes ready for activities. As a matter of fact, a feasibility study was conducted 10 years ago which takes into consideration the expansion of airports that would align with the ring roads being put in place in Asmara. Agricultural activities being utilized in the highlands of Eritrea should also be considered with the expansion of the airports. The western part of Eritrea is also another case. A studied plan is also at hand to construct a standard airstrip in the town of Tesseney that would be utilized for domestic and regional flights. The collective plan for the expansion of ports and airports are being worked upon to excel maritime, air and land transport facilities. Studies for many of these programs have been finalized while some are still pending. Yet, we shouldn’t expect the program implementation to be finalized within two three years; rather, they will be executed phase by phase in an organized manner. Meanwhile, it shouldn’t be forgotten that we need to upgrade our human resource potential and ensure transfer of know-how to make these programs pragmatic. After all, it is not only the putting together of the infrastructure that matters; operating the new system and taking good care of the new facilities is even a bigger issue of importance. It is not wise to go along with the implementation of the infrastructure just because the capital is at hand and the machineries are available. The role of capable human resource is of utmost importance. Hence, the issue of human resource development is a program that goes parallel with these projects.

Agricultural activities and exploitation of mineral resource, from the experience of many other countries, especially the third world, have not proved to have brought economic prosperity. Leaving administrational flaws aside, analyses from experts attribute this issue with the failure to reinforce the sector of mining with trade and industry. Do you agree to this point? And what is Eritrea’s strategy in the development of trade and industry?

I wouldn’t simply say if I agree or disagree with this analysis. But the actual scenario is that any sector of economy cannot by any miracle sustain all by it self at this point in time. We spoke of Africa and various regions of the continent. If you are to say that you have a real economy then you should be part of the world’s market, and to do that, you need to develop the sectors of trade and industry. It is not practical to endorse few sectors and overlook other domains and by doing so tend to develop the entire economy. It is not something you get to choose of, it is rather the only practical system prevailed by new world paradigm. What do you sell and in which world market? Are you a consumer who imports everything from outside? One of the problems of having mineral resources at hand is that you end up being a consumer, which is a very risky trend. In this case you should be able to be a producer, even the smallest items. We talk about food security, but even this subject is a strategy which requires a stage by stage procedure. If we take seeds for instance, we cannot say we are in a position to harvest enough for ourselves and reserve ample for export purposes. We should be able to export even in a smaller scale. We have different cash crops such as cotton, vegetables fruits and fish. We should be able to boost these crops and export by getting into the world market. We also need to be presentable in the market both quality wise and price. Without doing so, it is not realistic to say that you have unshakable domestic economy. Hence, all the economic activities undertaken under different sectors need to be a part of regional and international markets. But, taking your share from mining activities and depositing in banks wouldn’t enable you become a sustainable economy. Unremitting enhancement should be done in the sector by endorsing agriculture and agro-industry. Technically, putting the needed infrastructure in place would enable you facilitate domestic economic activities and look at your economy in a regional and international perspective. Having ports, airports and roads is therefore the key factor in endorsing communications with the rest of the world as well as develop trade and investment ventures. It is also not possible to boost the economy by only concentrating on agriculture and its industry, because manufacturing is a necessity as well. Manufacturing plants on metal, electronics, plastic and the rest should also be worked upon. Accordingly, nurturing a skilled and educated human resource is important because the more human resource is developed the more the population becomes productive, no matter the size. Yet again, the productivity and manufacturing ability of the population should not be confined in the domestic activities. We may not have reached that level, but what we are working on our development framework is to achieve that level. It is not just importing and exporting, but investing in foreign lands also goes parallel with this. If we make some capital, we should be able to think beyond our boundary and invest internationally. Besides that is the only way we can introduce our economy to the rest of the world and provide energy to our economy to work with other economies in partnership. What we don’t really accept here is the zero-sum scenario. Leaving a foreign investor alone while exploiting your own resources and letting them go two folds richer while you are two steps down is not a system that promotes partnership. Hence, developing domestic economy in a way that caters trade and investment partnership is the key factor. Even domestic economy shouldn’t be outlined by only considering domestic activities, because it cannot be ensured without trade and investment. The profit margin between the items you produce and export as well as the ones you import should somehow be promising for your own partaking. It is even preferable to have replacements for the goods you import. In other words, the goods you import should not be consumable but fair and quality goods that would have input in your own economy. Indeed, our trade and investment ventures as well as the economy at large are in its embryonic stage. The economic growth should be seen inseparably with the massive trade interaction with the rest of the world. If you say no to this system and only focus on the domestic economy, then you will leave no room for growth and the economy suffocates. In a nut shell, you cannot prove domestic growth without ensuring regional and international trade interaction. In this case I wouldn’t dare say there is trade and investment. But how do we elaborate it? I mean it could be supported by statistical methodology. Nonetheless, all I can say at this point is that we need to work harder because we have not yet reached an effective stage in regional and international trade interaction.

Can you please tell us about what have been planned to be achieved in the short term, middle term and long term in relation to meeting the demands associated with housing problems?

The Ministry of Public Works has the specifics (numbers) related to this issue. The plan is a very comprehensive one. The number of houses that have to be built yearly in the environs of Tessenei,  Gherset, Golij, O’mhajer, Haikota environs, some other areas that have not yet achieved the status of a town, Massawa and Asmara environs, in the different parts of the Southern and the Anseba regions have been generally described in the strategy. Thinking about the standard of the houses we intend to build and the materials needed for realizing these projects, can the goals contained in the strategy be materialized within the specified time frame? Are the raw materials as well as the manpower needed for realizing these goals easily available?  Since these things have to be further detailed and studied, it would be premature to exactly tell what tasks will be achieved step by step in stage one, two and three.

How can we assess the contribution of the major projects that have been planned to conserve water for catalyzing productivity? Taking into account our agricultural and marine resources, generally how far has been achieved in exploiting the potential for exporting food in its different forms, instead of limiting ourselves to meeting local food demands?

We are in a stage of exploring what can be done in connection to this aspect of the economy. For instance, if we take the activities associated with fisheries, we do not export. Apart from what is exported through contraband, yet we have not been able to develop the capacity to exploit this kind of resource. In this regard, it is not possible for us to do everything alone. Hence, there must be foreign investment and we need to work in partnership with others. In this case, the relative roles we have to play can be improved little by little through time.    

While exporting fish, it would not be advisable to limit ourselves to exporting raw fish. Rather we need also to export processed fish. However, in the latter case we need to consider the capacity required to achieve this objective. In other words, there must be appropriate tools that enable us to freeze fishes properly so that what we eventually process can be reliably acceptable for export. For what is consumed locally as well as for what we have to export, we need to ensure that the quality of what we produce should meet the desired standard; we must be competitive so that we can effectively join international fishery markets. 

The challenge is that we do not have the required competency and the experience to do these things. Let alone being competitive in world markets, we have not been able to effectively participate in nearby markets. For this reason, fishery contributes nothing considerable to our GNP.

We have some plans related to agricultural industry, which includes horticultural products. We have considerable potential for exporting flowers. We had to practice this in many parts of the country. However, the technology, appropriate infrastructure, manpower with the right skills and transport services required for doing this are not in place at this moment. As a result, we have not been able to make sustainable the initiatives related to cultivating flowers. In this regard much has to be done to competitively take part in regional and international markets. We can also cumulatively improve the small-scale practices associated with the above concern. In connection to vegetables, we have not been able to produce products that have the desired quality and quantity for export. Even the factories for processing these products are not well-established. We also have adequate animal resources for potentially providing adequate meat products. In addition to meeting local demands, we have also considerable potential for exporting such products. But we have not been able to exploit such opportunities to the desired extent.   

What have been described above are just examples. Generally, we do have a considerable potential for export almost in every aspect of our agricultural resources if we are able to produce goods that have the required quality and quantity. Still much has to be done for our products to be export quality.   

The price of agricultural productions such as milk, meat and banana, when brought to the market, are exaggerated. Why does this happen?

It is the failure of our controlling mechanism. In domestic markets the government should work in the interest of consumers. This is what is known as consumer protection. The government should protect consumers. One may not understand the tricks and crisis that exist between producers and consumers. The producers are not satisfied when selling their products; the consumers are not satisfied as well. At times, having enough money, consumers may not get the things they wanted in the market. Except some few opportunities, which are again limited in the main cities, we dare not say that there exists enough beef meat to buy.  At other times there are a range of products for which consumers could not reach at all even if they were home produced items for consumption.

The government, thus, should work as a regulatory function, but then it does not mean that it should regularly intervene in the market. The government has the responsibility to know what has been produced? The way and the expenses made on a certain product. What about the sales, and the service taxes?  Again the government has the responsibility to know the demand and supply of various products, and their distribution in the market.
In this case what is much of a concern is the action of the intermediaries, or the dealers between the producers and consumers. The government has failed to possess the mechanism to control and regulate the damages inflicted in the market as a result of them. They are the ones who should be responsible in the prices exaggeration and market instability. Hence, there must be a system that can bring them on the right track; the government must establish a system and or institutions to control and regulate these irregularities, or otherwise they will come up in a different form and impose more harm on producers and consumers.
Producers, on their part, may want to directly bring their product to the market; which means that they may not want to come through the dealers. For that to happen it would be attractive if producers are made to join to an established association so that all beneficiaries — producers, consumers, or the dealers—would fairly share the service. Additionally, the government should create a suitable infrastructure that serves the producers, and consumers. In the meantime it is worth building a favorable economic system and or economic culture for it.

Do the taxes paid by the service-providers match with that of their income? If not, what could be the problem?

It may have a lot of explanations. There are a variety of excuses in connection with licenses. Some say that the government refused to provide licenses; others complain for the delay of licenses renewal, and so on and so forth. In an attempt to enforce such policies, however, a country needs to have a qualified human resource so that the institutions’ capacity grows hand in hand with it. Otherwise, it is not about circulating new proclamations or so. In a situation such as this one must also know that the question of corruption, which is one of the biggest problems. It is an action that pops up when the institutional capacity happens to get looser. Despite the fact that it may not meet our expectations, the existing human resource and the concerned institutions are working diligently to the level of their capacity on matters that are connected with taxes matching with income.
But then again, a variety of government bodies may also have the belief and philosophy that tax payers would feel responsible to pay their tax that matches with their income on time to the concerned government offices. I have the belief that it could be a sign of a civilized culture if private service providers happen to pay their tax that match with their income in the absence of receipt on time. In the presence of a dealer that harms producers and consumers, however, it is difficult to make use of this philosophy of taxes collection. Hence, the above-mentioned concerned institutions themselves must strengthen their capacity to make this happen. Publishing new proclamations is not enough; one also needs to raise the public consciousness for it is the sum of both that we can create a stable environment. Once this is done, every service providers —producers, dealers, consumers– would share a fair benefit out of the market. Hence, this must be an issue that needs a comprehensive and or an integrated solution.

At one time you explained that the government had the plan to make restructuring in the institutions, and financial policies of the country. Why, and what exactly does this include? Again what can we expect out of it?

Someone may try to examine it in three pages or two. When we say fiscal, however, we have this understanding: In a state of a given gross national expenditure and national income, when the formulation of government budget is seen relative with the programs outlined together with the expenses done and the income attained out of it, they are policies and programs outlined not only based on the present and past judgments but also they are policies and programs charted out depending on the upcoming state of affairs. Moreover, the issue of monetary policy itself is becoming a matter of debate. In this case, there may exist a variety of point of views, but it is difficult to conclude that this is right and that is wrong. If we see the monetary policy of the exchange rate of Nakfa as a currency, it has a motive behind it with the belief that if Nakfa exchange rate is strong then the economy of the country is strong.

On the contrary, many others have the belief that if the exchange rate of Nakfa is low and an exporting economic system exists then it is to the advantage of the country. For that reason, there could be a general belief that the exchange rate of a currency does have its own advantages.  Hence, in conclusion, one may ask to know the power of Nakfa in the existing market; one may also ask to discover the purchasing power of Nakfa in the market as compared with the sum of the money in the pocket of the various economic levels in the country — low income, no income, middle income, and the few good income. What about if we compare the exchange rate of the currency with the various other currencies in our region, and with the strong currencies in the world? Everyone knows the official exchange rate of Nakfa. Of course Nakfa’s exchange rate needs to be attuned. Exchange rate adjustments such as the case of Nakfa, however, can not be done in a hurry. Of course there may be a certain general understanding on that matter, but then one needs to make a careful study when choosing to stabilize a certain policy. A lot has been said about a market; and several ideas have been exchanged for that matter. To make it practical, we, on our part, tried to see the various options available so that we would pick up our choice. It is, therefore, on the process; the deadline for it has not been defined.

In the end, I can say that we don’t have financial institutions that would accommodate for all the monetary and fiscal services and other institutions properly. Parallel to the economic development problems, it demands hard work to think to free yourself from depending on solicitude alms so as to manage your economy and fulfill the country’s demands with the overall different challenges and many other arising pressures, you need to establish outstanding financial and bank institutions to overcome all these problems.  But this was totally nominal if not inexistent. In order such a system to cop up with the outlined policies, there needs an improvement in the overall capacities; there also needs proper improvements in the regulating policies. All the working policies should step equally with the existing juncture and go far more beyond it. When specialists present their studies on paper, these policies will for sure be stabilized. What we need to put in mind is that there needs time to study it all. There is nothing incorrect to know and ask as to what, why and how the general development of these policies are heading.