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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Fri Oct 15 2010 - 07:43:45 EDT
Sino-Eritrean trade ties strengthened
October 15, 2010-08:34
New equipment, technology, knowledge and skills are rebuilding a proud
nation
Blessed with large deposits of precious minerals such as gold, silver,
copper and zinc, Eritrea offers foreign investors a wealth of opportunities
in the mining sector, while the agriculture, tourism, fisheries and
manufacturing industries also possess huge potential.
President Isaias Afewerki is determined to transform Eritrea into the Horn
of Africa's logistics hub, as the country of 5.6 million people capitalizes
on its 1,151-km long Red Sea coastline and access to one of the world's
busiest trade and shipping routes.
As the African nation's preferred commodity partner, China is playing a key
role in Eritrea's socioeconomic development through the supply of aid,
capital, machinery, technology, knowledge and skills.
Chinese enterprises and equipment are also widely involved in the rebuilding
of vital infrastructure such as roads, airports, power and
telecommunications, schools and hospitals.
"Our priority has been the creation of a good climate for investment and
development," said Afewerki, who took office in 1993 as head of the People's
Front for Democracy and Justice (PFDJ).
"Eritrea can be a gateway for investment in Africa if we can take advantage
of our excellent strategic location. Our partnership with China, even though
it is in its early stages, will dramatically change the reality in this
country and give us a greater global interaction."
According to the president, the mining, fisheries and agricultural sectors,
especially cotton production, are best suited for Chinese investment as they
will utilize the country's natural resources and generate substantial
exports revenues.
"The potential for cotton cultivation is huge and a key part of our
agricultural program is the introduction of new technology," he said.
"We are developing our agricultural infrastructure and, in partnership with
China, are developing a textile industry. The initial commitment with China
for cotton exports is already in place. We have begun with very modest
programs but we need to expand them."
Tightening bonds
Chinese Ambassador to Eritrea, Li Liansheng, has welcomed these and other
positive developments as he looks to strengthen these political, commercial,
industrial and social bonds.
"The Eritrean government is trying to invite Chinese companies to make
Eritrea a trading and transportation center for Chinese goods," he said.
"There is particular potential and interest for Chinese companies in
Eritrea's strategic location at the gateway to the vital trade and shipping
route on the Red Sea."
A core pillar of Eritrea's modern economic policy is the setting up of new
free trade zones that will generate fiscal growth, create jobs, boost
government revenue and raise the country's profile on the global stage.
With a strategic location on international shipping lanes, Eritrea offers
exporters and investors easy access to foreign markets, with up to 40,000
cargo ships a year - carrying some 700 million tons of cargo - passing close
to its coast.
In order to capitalize on these commercial opportunities, Eritrea is
building a series of modern free trade zones comprising factories,
warehouses, offices, roads, airports and transport facilities. The first
free trade zone will commence operations shortly at Massawa after the
government invested millions of dollars in the transformation of 5,000
hectares of land next to a former naval base.
Chinese enterprises are among the foreign firms that will be based there and
benefit from a tax-free environment in which no direct or indirect taxes are
paid on sales or profits.
A second facility at Assab will open later this year and officials have
plans for similar developments across the country, including one focused on
agro-businesses near the border with Sudan.
The 'multiplier' effect
According to Eritrea Free Zones Authority CEO, Araia Tseggai, the free trade
zones will stoke the economy through the "multiplier" effect of employment,
training and education opportunities and act as a magnet for foreign
investors.
"We feel they are a good place for Chinese companies to secure and buy
resources from Eritrea, process them there and take them to China or use
them for their own purposes anywhere in the world," he said.
"Looking ahead to the imminent openings of the new free trade zones at
Massawa and Assab, Tseggai emphasized the importance of Eritrea's location
in the Horn of Africa and revealed that while the Massawa facility will
focus on manufacturing, the sister zone at Assab will be aimed at
transshipment-related operations and services.
"Cargo ships are always passing and this element is crucial as most of the
shipping firms will end up stopping here and picking up their produce to
wherever they are going," he said.
"Chinese enterprises always carry out relatively large projects so if the
Chinese start up businesses and logistical operations here it will be very
important for our current and future operations as they are significant
investors."
A leading figure in Eritrea's import and export sector - and an organization
that is sure to benefit from the presence of the free trade zones - is the
government-owned Red Sea Trading Corporation.
Established in 1984 as a commodities trading business, the non-profit firm
performs a wide range of operations. It handles commodities such as sugar,
grain and oil and the bulk of its trade is with China, where it is looking
for further business opportunities.
"Our priority has shifted to China - the more suppliers you get, the more
chances you have to obtain different brands of commodities and products,"
said Red Sea Trading Corporation general manager, Negash Afworki."
As the government's head of economic affairs, Hagos Ghebrehiwet is
responsible for overseeing the development of many of Eritrea's State-owned
enterprises in a range of sectors. "We have to become independent and
develop our resources," he said. "We need investment and assistance that
allows us to stand on our own two feet, as well as being mutually
beneficial."
Building connections
Meanwhile, helping firms connect to the world in today's
technology-dependent society is EriTel. The country's sole
telecommunications provider is State-owned and is committed to improving its
infrastructure and network coverage with the help of Chinese equipment,
technology and human resources.
"We have replaced the old analogue equipment across the country with new
digital telecommunications technology and have installed solar energy
systems in areas where there is no electricity so that the mobile systems
work 24 hours a day," EriTel general manager and CEO, Berhane Tesfaselassie
said.
"The Chinese are helping our development in many areas and I really
appreciate their contribution to Eritrea's telecommunications sector and
their cooperative and understanding attitude."
Such technological improvements are a key component of the growth of the
Housing and Commerce Bank of Eritrea.
Founded in 1994, the Asmara-based bank offers individual and business
customers a wide range of financial products and services such as savings
and deposit accounts, private and commercial loans, plus international money
transfers.
"Even though 60-70 percent of our activities and transactions are still
involved in real estate, we do provide all the normal services that a bank
should offer," said Housing and Commerce Bank of Eritrea General Manager,
Berhane Hiwet Ghebre.
"We are trying to open new branches in remote areas so everybody can benefit
from our banking services and we really care about corporate social
responsibility."
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