The year 2016 started by giving us a glimpse into a new phase in which Eritrea has embarked. With the restructuring process being put in place since December 2015 to rectify and restructure the economic distortions and anomalies—as President Isaias Afewerki explained during his interview with the National TV last week— changes in terms of currency and prices drop of basic commodities as well as increase in civil servants’ wages are among the shift we can already witness.
Hence, 2016 is surely an important year for the national economy in line with the 25th year’s jubilee anniversary of the country. Economic development, thus, as a national priority, is reflected through the strengthening of cooperation with governments on bilateral grounds, international organizations as well as multilateral institutions.
One of them is the European Union, a partner institution since the independence of Eritrea. Over the last year, relations between Eritrea and the EU were at the center of media attention.
Why such enthrallment by mainstream media and individuals? It seems that the relation between the two actors is new to many. However, some may fail to look back towards their history of cooperation since 1995.
Thus, what makes it unique this time around? News headlines stressed that ‘the EU is only interested in stopping migration’, ‘the EU only looks at the economic interests’, ‘the EU’s interest is in Eritrea potential in oil’ and the list goes on.
However, we witnessed numerous attempts to reverse the strengthening of EU-Eritrea collaboration were futile.
Indeed, as many may have heard, an agreement was signed between the European Union and the Government of Eritrea on the 28th of January 2016 at the Ministry of National Development in Asmara.
This newly signed agreement between the Government and the Union is a move forward in this partnership for development. The agreement known as the National Indicative Program (NIP), under the 11th European Development Fund (EDF), will surely strengthen the ongoing work between the institution and the country. The signing of a €200 million framework will allow the program to be implemented within the next five years.
This Thursday morning, the staff at the Ministry of National Development rushed to arrange the setting of the signing ceremony while the protocol officials confirmed final details before the arrival of the high delegation composed of the Ambassador for the EU, Mr. Christian Manahl, and Mr. Koen Doens, Director for the Eastern and Southern Africa bureau of the EU.
Also in attendance were resident ambassadors of the EU countries along with the Eritrean Ministers of Foreign Affairs, Mr. Osman Saleh, Energy and Mines, Gen. Sebhat Ephrem and National Development, Dr. Giorgis Teklemikael. The atmosphere was serene and positive.
The two-yearlong process bore fruit on the auspicious day. After a short discussion between stake-holders on the future implementation of the program, the signing ceremony commenced with remarks by Minister Dr. Giorgis Teklemikael (press statement below) followed by the Ambassador for the EU, Mr. Christian Manahl. The numerous stakeholders were seen holding their mobile phone and camera to capture the historic moment. Smiling and greeting one another, the event came to an end with a rooftop lunch at the Ministry.
This endorsement is, as Ambassador Christian Manahl expressed during his remarks, “a continuity of previous collaboration and this 11th EDF will strengthen the relation, which comes as an important milestone to Eritrea and it is not a coincidence that it is line with the upcoming celebration of Eritrea’s 25th year jubilee of its independence”.
Certainly, the word ‘continuity’ is the motto of all stakeholders involved. The cooperation between Eritrea and the EU was not only strengthened by the deal but took a step forward in partnering for development.
In context, the European Commission has been operating in the country since 1995, making it one of the first foreign diplomatic missions established in Eritrea. Over the last twenty years, the EU has been an important actor in socio-economic development of Eritrea through the implementation of agreements and programs such as the Country Strategy Paper (CSP) and, as stressed above, commonly known as the National Development Initiative Program (NIDP).
The EDF is an important package of developmental assistance worth €40 billion in total allocated to 79 African Caribbean and Pacific (ACP) countries by the European Commission, Mr. Koen Doens explained. He went on to explain, “ by being a partner country, Eritrea, this signing of the NIP translates the cooperation with the EU into real money to be utilized in specific areas prioritized by the Government of Eritrea and the EU”.
Various programs for socio-economic development have been implemented in addition to those for governance and enhancing the capacity building of Eritrea’s institutions via projects like the one called ‘support community courts in Eritrea’. In other words, the 11th EDF is the succession of previous programs starting from the 7th EDF, which focused on rehabilitation, reconstruction and manpower training programs.
From the 10th EDF onwards, the focus shifted more towards economic development rather than rehabilitation.
The signing of the 11th EDF, thus, centered on energy for powering growth and on strengthening national institutions. With €175 million allocated to energy, the actual overview of activities and budget allocation bifurcates into two principle sectors: “energy for development” and “governance and public finance management”.
Quantitatively, about 87.5 percent of the budget will be earmarked for energy resource development through various energy-related programs, including those designed to improve socio-economic development through usage of clean, reliable, sustain¬able and affordable energy.
Under this framework are the following programs: growing access to energy for farming and fishing communities; employing photovoltaic and wind standalone systems for social sector institutions; and taking on studies and exploration for the geothermal field. Among the list of programs are provisions for the rehabilitation of distribution grids in Asmara and Massawa. According to Mr. Doens, the grids will “link up social services, households in both urban and rural settings, hospitals and schools to electricity”.
As part of the international framework to combat the effects of climate change, investing in renewable energy was, undoubtedly, key to the EU as well as the GoE. In fact, Eritrea has immense potential in terms of energy supply.
As Eritrea currently imports in terms of energy supply, this shift towards renewable energy will be a win-win situation to both Eritrea and the EU by creating sustainable supply of energy while protecting the environment. Besides, the EU’s economy is ex¬port-oriented and by defining this common agenda for development will strengthen cooperation on a commercial level between Eritrean and the 28 member states.
In addition to the focus on energy for development, the second principle sector will concentrate on governance and public finance management. In line with the structural changes planned by the Government of Eritrea, Ambassador Manahl indicated that about 10 percent of the package, or €20 million, will be earmarked for the following: supporting and strengthening ministries and all regional administrations; establishing a clear, statistical and data-based system to assist with ongoing financial reform; economic planning designed intently to “encourage investment, create employment and reduce migration”.
Although this budget allocation is lower than that of the energy sector, the next five years are expected to see an important shift within the financial management system. About 2.5 percent of funds, or 5 million, will be used towards a “technical cooperation facility”.
The newly signed agreement is appears to be in line with national priorities and “goes way before the migration rhetoric we hear in the media”, Mr. Doens underlined. One of the key objectives Ambassador Manahl highlighted, “is to create the conditions and encourage Eritreans living abroad to come back and participate in the development of the country”.
Ambassador Manahl also underlined, “on behalf of the EU, the process will guarantee quality and ensure that the results the government is expecting will be met while ensuring integrity by going through international tenders and get the best value for money”.
The event held this week defines the long-term collaboration between the Government of Eritrea and the European Union. After a couple of years of expert assessments and discussions, the signing of the NIP through its 11th EDF will strengthen further, on both the economic and political strata, the growing relation¬ship of Eritrea with not only the multilateral EU but also all of its member states.
What makes this particular EDF unique is Eritrea’s strong sense of ownership in designing this pro-gram, ensuring that the allocated €200 million is in line with national priorities of development.
Mr. Doens highlighted, “As my first time in Eritrea, the meeting was excellent, we can feel a sense of ownership from the government side and we can see that our counterparts are ready to play ball; it is a very solid document with a strong decision-making process.
I sense that there is a sense of ownership and willingness to now to start working to make it a real project on the ground”.
REMARKS BY MINISTER GIORGIS TEKLEMIKAEL ON THE EDF11 SIGNING CEREMONY
Mr. Koen Doens Director for Eastern and Southern Africa
Ambassador Christian Manahl
Ladies and gentlemen
Allow me to make a brief statement on the socio-economic developmental significance of this co-operation agreement pending its successful implementation.
Before I do that, however it is worth mentioning that this agreement known as EDF 11 is continuation of a series of co-operation agreements under the EDF program EU which started for Eritrea with EDF 7 i.e. soon after independence.
The previous co-operation programmes focused mostly on the rehabilitation, reconstruction and manpower training programmes and overall provided a significant support to which we are grateful to EU commission as well as some of its members who provided additional support on bilateral bases as well.
This new agreement that we have signed are a package of 200 million€, excluding the different call for proposals and it will be implemented in the period 2016-2020.In line with government priority it focuses on three major,programmes building new electricity generating capacity with related physical facilities, enhancing its management capability but the program includes also strengthening certain critical institutional capacity.
Electricity being a consumer as well as an investment good it has also a dual role in this programme. It will expand the provision of affordable and reliable electricity supply for the first time to a large segment of the rural and semi-urban household’s.The significance of this basic service to the household is considerable as it will replace the biomass and kerosene for lightning and cooking. It will help more children to participate in schooling and to learn more at home. This aspect of the program will also contribute towards the preservation of our environment.
The other significant contribution that a successful implementation of the programme will provide is in the economic and social sectors. One of the major constraints of the development in the economic and social sectors is the availability, reliability, and affordability of adequate electricity. The low level of capacity utilization in the industrial sector, the inadequate supply of electricity to the health and education sectors in rural areas are good examples of this constraint. Providing solutions to these constraints and at the same time stabilization and increased efficiency of the current provision in the existing transmission and distribution systems is a vital component of the program.
An important aspect of this programme is that, this additional production of electricity is to be generated from renewable. This is very important aspect, while on the one hand electricity is so far produced from diesels and coals which are all imported, substituting them partially will reduce the import bill significantly for the country. Several studies, though not yet complete, suggest that Eritrea is potentially very rich in renewable energy resources i.e. solar, wind and geothermal. Taking to-days signing as a first step we hope that it will open a wide area of investment opportunities not only in the energy sector but also in other sectors and the government is creating the conducive trade and investment conditions to achieve these objectives.
So let us work for more productive investment, more employment and increased productivity so that the country can reach higher level of socio economic development.