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Eritrean Businesses: Between Loyalists and Others

In recent months, the Eritrean government has been carrying out a heightened surveillance on the Eritrean commercial sector, and reports of spies working for the security departments is focused on merchants and traders suspected of transacting in cash, in violation of the government directive that requires them to deal in checks and not in cash.

Since the government announced its decision to change the currency in November 2015, the amount of cash deposited in the banks has been extremely low compared to the amount issued by the banks to individuals and businesses.

Business people suspected of stashing cash are being harassed, and in considerable cases, they have been arrested and their business closed.

Bank account holders are allowed to withdraw a monthly maximum of 5000 Nakfa in cash from the banks which they have to account for by showing stubs of checks proving how they spent the money. Those who cannot provide proof of expenditure are denied the right to withdraw the monthly allowed amount regardless of the balance in their accounts.

Unknown number of spies have been added to the spying units to surveil the activities of the commercial sector to monitor the flow of cash. The spies who usually linger near businesses suspected of stashing Nakfa currency, to estimate the size of transactions of the businesses, are compensated for their services with small perks in the form of ration coupons or the opportunity to stay in cities instead of military camps.

If a business didn’t deposit cash or check equal to the amount of the transactions estimated by officials who depend on the laymen reports of the spies, will be asked to explain or account for the discrepancies between the estimated and deposited cash.

Taxes are usually imposed on businesses based on such haphazard estimations by laymen and spies.

Due to the excessive interference by officials, and the anti-business policies of the government, many people have chosen to close their businesses while a few others continue to sell their inventories to trusted clients in the black-market.

Businesses that are apprehended doing business behind the back of the government and its spies face severe punishments.

The Nakfa that was officially trading at around 15 to the dollar in 2015 (60 in the black market), is currently trading for about 22 to the dollar.

Corruption and Expropriation

When government officials target a business establishment, they devise plans and create excuses to burden it with high tax estimations, penalties, and restrictions to an extent that it becomes impossible for it to continue operating. Once the burden of penalties and fees becomes too heavy, government officials expropriate the business establishments with the pretext of failing to pay amounts owed to the government. Such acts of abuse and corruption makes it possible for the business to be sold to beneficiaries mostly based on nepotism.

In a policy that is not commonly known, the Eritrean government allows the inheritance of businesses only by spouses when a husband or a wife dies. However, if both die, the government takes ownership of the businesses license. Children are not allowed to inherit the business of their deceased parents.

Eritreans consider that policy as “a stealth systematic way of confiscating the business by officials for the benefit of their proteges or relatives.”

In the last two decades, the Eritrean government has created a business class of loyalists working in partnership with senior officers who also find a way to evict households from their residences and take it over for themselves or their relatives.

Related reading:
Eritrea’s New Capital And Social Control through Currency Change

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  • FM

    HMRC sends inspectors pretending to be customers in order to catch businesses who underdeclare their income to avoid paying taxes. If a developed country like UK does it, it’s ok. However, if Eritres does it, it’s a crime. People, respect yourselves first to be respected by other. If you don’t respect your own county and your people don’t expect to be respected by others!!

  • Nitricc

    Hi all; i can try to understand the level of corruption around the world let alone a country like Eritrea. but what i have a great deal of time to understand and grasp is what just happened in the USA. how can this happen in the united states of America, how?
    https://www.youtube.com/watch?v=NfkjbE8rHxM

    • Mez

      Dear Nitricc,

      You better listen to what the superpower say, & don’t look what it do–if you want to keep your house calm and peaceful with itself; that is why it is USA.

      There is a saying for another social process: ቄስና አስተማሪ
      የሚናረውን ሥማ እንጂ
      የሚአደርገውን አትይ።

      Thanks

      • Nitricc

        Hey Mez; i know what you saying but this happened in America and American citizens were attacked with wanna be dictator. I am very concern where the country is heading. if the distraction of check and balances are in serious crises but now American citizens are getting beat-up in American soil by thugs. it is very concerning. If the US didn’t take action about this matter, i think it is very dangerous to America’s future. Amazing America going backward. I know Trump likes dictators and i won’t be surprised Trump will invite PIA lol. I can’t wait to see the reaction of the Eritrean opposition. Trump loves Putin, he likes Turky’s wanna be dictator, he said he will be honored to talk to north korean leader and next he will invite PIA. hahahah. how do you feel if Trump invited PIA?

        • Mez

          Hi Nitricc,
          “how do you feel if Trump invited PIA?”

          It is a possible scenario; the thing is: what can PIA offer?

          Answer: for all practical purposes–NOTHING?

          Thanks

          • Selam Mez,

            Erdogan is a paranoid dictator, an islamist, a romanticizer of the past ottoman empire, and therefore, extremely dangerous. Trump is a paranoid president of the only world power, who has the right to push the button and put on fire the whole world, a supremacist and a dictator in his little ways, whenever he can get away with it. Dictators are comfortable in the presence of other dictators. If it were not for what you said “what can IA offer?’, compared to erdogan, IA is less of a paranoid.
            Trump was dancing the sword dance in SA. Not that there is any problem with that, whatsoever, simply that for $110b and much more to come in the future, they could have asked him to strip, and he would have done so. God help yemeni civilians, who are going to see saudi bombs raining on their heads. Iran has no problem, because it can defend itself.

  • Anis Idris

    Salaam to All,

    God knows what will be the near Future for Eritrea and Eritreans, but as if now, two groups of Eritreans is taking affect. One group of young men/women leaves Eritrea to the Unknown Destiny as Refugees to everywhere risking their Lives and the Second Group some Non Resident Eritreans with Money who are living in North America, Europe, the Arabian Gulf and Australia moving and investing in Addis Ababa, Ethiopia. To get Healthy Economy you must have Supply and Demand between the People and the Government can collect Taxes from everybody. For now, Let us hope the best for Eritrea.

  • Selamat AT,

    As they say “it ain’t personal, its just business.” WRONG. There is more ways to skin the cat, though why would any one want to skin the cat.

    Dub2ueces

    • Paulos

      Selam Tsatse,

      Only two ways if it is Shrodinger’s cat.

  • Kokhob Selam

    Dear Awate Team Hi,

    The above article starts and ends on mentioning .”the Eritrean government ” as if the mafia group of Asmara has system.
    the mistake nation “Eritrean” WHAT do you say?

    • Selamat Kokhob Selamat,

      Which part of a deal has been struck don’t you understand?

      Adjust accordingly!

      tSAtSE

      • Kokhob Selam

        Selamat GitSAtSE ,

        Why, Worry to this level?

        • MerHaba Kokhob Selam,

          Not worried at all. Just staying consistent with “growing the pie” principle. I respect AT’s position, but you know I am not AT. I am an Awatista Individual giving and taking just like you.

          Adjust accordingly!

          Dub007X2ueces
          tSAtSE

          • Kokhob Selam

            MerHaba GitSAtSE,

            That is addressed to our team too…

            Adjust accordingly!

            KS…

    • KBT

      Selamat
      To my disappointed clueless friend her, ERITREA is a sovereign country member of the United Nation with a legitime government that protects the integrity and sovereignty of it people, so it’s not a selfappointed
      So called opposition funded according to wikileaks by CIA trought the endowment for democracy that will change that my friend,

      • Kokhob Selam

        Dear KBT

        • KBT

          Selamat
          Eritrea is a sovereign state member of the United Nations
          ABAY TIGRAY IS DEAD please stop your propaganda
          Bring rule of law in your own country first ,let me remind you that you are under marshal law .

          • Kokhob Selam

            Dear KBT Selamat..

            pet ?
            marshal law ?

            KS..

        • KBT

          Selamat
          You can call it legitimate or not legitimate it won’t change anything
          Even your TPLF with all the west support couldn’t do anything let alone you a pet

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