Voice of Eritrea's Fourth Front

Free Trade Zone in Eritrea

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Free Trade Zones

As in many parts of the world, the main objective of establishing a free trade zone in Eritrea is to provide employment opportunities, to develop a know-how technology, to develop the human resource capacity, and to enhance foreign trade and exchange. A draft of the free trade zone design was prepared right after independence in 1993. However, following an extensive research and meeting the required preparations, it become ready in 2006. During this period, different designs were completed and work visit to similar zones in other countries was conducted in order to come up with and effective work plan.

Although we started late, time helped us learn from the experience of other countries very much,said Dr. Araya Tsegay, Director General of the Eritrean Free Trade Zone Authority. According to him, the port cities of Massawa and Assab have been declared free trade zone areas and all the needed works have been made to that end. Expanding the infrastructural work of Massawa and enhancing port services by introducing advanced technology were some of the major tasks the Government completed. In Massawa, 17 hangers of different sizes were built at a cost of 58 million Nakfa and a modern international airport and roads were also built. Regarding the oil refinery in Assab, experts from Russia have made the necessary studies in order to upgrade its standard to the highest level. The city of Tesseney, located in a strategic place and bordered by two countries, Sudan and Ethiopia, has a potential of being a free trade zone in the future.

According to the Eritrean Free Trade Zone Authorities report, Eritrea is endowed with a very rich economic potential that could make it a center of free trade zone in the region for both local and foreign investors. So far, many investors have made their investment and many others have agreed to take similar measures soon. The Eritrean Free Trade Zone Authority identifies areas based on their economic importance and believes that all regions of the country would make significant contribution to the development of the national free trade zone. Assab, for example, is located in a very important strategic part of the Red Sea. Since, there are few ports in the area, Assab has a potential of being a center for all transit works, porting and a station for fuel to all shipping lines. Moreover, it could provide water supply and adequate storage service to the 30,000 to 40,000 ships that cross the lane every year.

The Free Trade Zone will play a significant role in transferring technology to other parts of the region and goods that are manufactured and processed there could reach other African countries at a lower transportation cost. Furthermore, Eritrea has an efficient work force compared to other areas. The Eritrean Free Trade Zone has the capacity of providing a 24-hours service, thanks to the Warsay Yekealo Development Campaign.

The economic benefit that Eritrea would receive from this huge project is substantial. Employment opportunities and hard currency are some of the major ones. Different service rendering institutions will also be established that would improve the livelihood of many people. Since Eritrea is also member of different regional economic organizations, such as COMESA and CIN SAD, the trade zone will play crucial role in facilitating trade exchange among member states. Investors are required not only to have capital, but also a clear investment strategy. According to Dr. Araya Tsegay, all investors are entitled to: tax free import and export goods; free exchange of hard currencies; free from paying any amount of their income; and the Authority guarantees safety to investors who want quit their investment.

There are many institutions that have completed their preparations and are ready to work and different departments are opened to help the effective implementation of the trade activities. There are the Departments of Controlling, Clients, Standards, Emigration, and Environment. The national economic strategy in general, and the Eritrean Free Trade Zone in particular, would make Eritrea an economic center in the region in a short period of time thanks to the endeavors of the government, said Dr. Araya Tsegay.

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