Home / Pencil / Eritrea’s New Capital And Social Control through Currency Change

Eritrea’s New Capital And Social Control through Currency Change

Countries usually announce change of currency to (a) stabilize a wobbly banking system, (b) to fight hyper-inflation, (c) to opt for currency substitution due to joining a regional or international currency or (d) to assert sovereignty. On November 3rd, the Eritrean regime announced that it will be issuing new currency and that Eritreans have six-weeks to surrender old currencies in exchange for new Nakfa at a 1:1 ratio. Four reasons have been given—officially and semi-officially—for this decision. They are (1) to fight the black market; (2) to fight inflation; (3) to increase currency circulation; (4) to fight contraband and corruption. This poses the following questions: Are the measures it is taking adequate? If they are not adequate, why, and what must be done? This is what we will try to address in this editorial. But to help us all understand where we are, we need to begin with the state of Eritrea’s economy.

Since the government has no published budget and no reports (or reporting mechanism), Eritreans often rely on international financial institutions to understand the state of the economy. The problem is that the financial institutions, themselves, give wildly varying numbers. Three years ago, the pro-regime websites couldn’t get enough of the Economist Intelligence Unit (EIU) forecast that Eritrea’s economy would be among the fastest-growing in the world for 3 consecutive years. But of late, even those with bullish forecasts, like AfDB have tempered their forecast. Another problem is that some of the reports are lagging and infrequently updated.

I. GDP Growth

For GDP growth, we will use that of the International Monetary Fund: Real GDP Growth Projections for 2015. According to IMF, the revised growth rate for Eritrea is estimated to be 0.2%. We realize that the IMF is not popular with some segments of Eritrea—we are using it because it updates its forecasts frequently. Those who are skeptical of the IMF (because, according to pro-regime websites, a senior Ethiopian at the bank manipulates the data to make Eritrea look bad) can reference the World Bank and the Africa Development Bank. The IMF categorizes states as oil exporters, middle income countries (MICs), Low Income Countries (LICs) and Fragile states. Along with Liberia, Comoros and Zimbabwe, Eritrea is a member of the four fragile states club which will experience a less than 2% GDP growth—mostly due to drop in copper prices, its single export—for 2015; catastrophic for a nation whose population is growing at 3% annually.

What is even worse is that GDP is calculated by using the USD equivalents of Nakfa at official exchange rates. According to the World Bank, Eritrea’s GDP for 2014 is USD $3.858 billion. Let’s now see what happens if we are to use the real (market) exchange rate: it would be $3.858 * $15 (official)/$60 (unofficial). That is: Eritrea’s REAL GDP is ¼ of what is published: it’s less than $1 billion USD. This takes us to the second issue: black market.

II. Black Market

One of the reasons given for introducing the new currency is to bring to control the black market. The real question is: why is Eritrea one of only eight African countries that has a fixed exchange rate? The rest of the world has moved to a market (floating) exchange rate and has virtually eliminated the black market. Some economists (like Friedman) have also argued that a country that has a floating exchange rate does not even need to have reserves. However, following the 1998 financial crises in SE Asia, many countries maintain high reserve of US dollar and Euro to fend against currency manipulation. Moving away from the fixed exchange would eliminate the black market in Eritrea and give the bank’s coffers much-needed hard currency. Issuing new currency only kicks the can down the road—after a short period, the black market will come roaring back. We can only assume that the reason the government sticks with the fixed exchange is because it wants to manipulate the size of its GDP, and to have hard currency that exists in a parallel market—also controlled by the ruling party. That is, the black market exists to allow the ruling party to dominate the economy, to maintain a cloak of secrecy and to avoid any transparency or accountability.

III. Fight Corruption

According to Transparency International, Eritrea ranks 166 out of 175 countries in the least corrupt ranking. Put another way, there are only 9 countries that are more corrupt than Eritrea now. What is even worse is that the rank has been steadily getting worse since 2010 moving from 123, to 134, to 150, to 160 and now 166. Corruption is measured by the perception of the public sector. This suggests that corruption is endemic and part of the public sector culture now, not the least of it being due to income disparity between the haves and have-nots (one of the highest in the world) and that public sector employees do not have livable wages. In fact, it is hard to imagine how an Eritrean who has no Diaspora support can make a living in Eritrea.

IV. Inflation

Eritrea’s inflation rate has varied between the extremely high recorded in 2009 (34.70) to the high recorded for 2014 (11.6%.) In fact, only four African countries—Central African Republic, Ghana, Malawi and South Sudan—have markedly higher inflation rates than Eritrea. This, no doubt, is tied to shortage of goods and inflated money supply.

Money supply, also called M2, is the sum of “currency outside banks, demand deposits other than those of the central government and the time, savings, and foreign currency deposits of resident sectors other than the central government.” Basically, it is cash and cash equivalent that is highly liquid.  M2 is measured as a percentage of the nation’s GDP. Eritrea’s M2 is 115.6% of its GDP. Recall that Eritrea’s GDP (at the official exchange rate) is $3.86 billion USD. This means its M2 is $3.86*115.6% = $4.46 billion. That is, again using the official exchange rate, 62.44 billion Nakfa that is circulating in Eritrea. That is how much new currency will have to be issued from a 1:1 exchange. To be sure, there is no absolute rule that says that high M2 leads to inflation—in fact some of the most dynamic economies (China, Hong Kong, Japan) have high M2. There is a consensus, however, that high M2, coupled with shortage of goods, with no budget constraint, or sound monetary policy is a contributor to inflation. Because of lack of available data, we are unable to run basic econometric models to analyze the impact of these macroeconomic variables on the Eritrean economy.

V. Contraband

Where there is a shortage of goods—and government policies that create shortage of goods, as is the case in Eritrea—contraband will thrive. For the last year that data is available, 2012, Eritrea’s Balance of Trade (trade deficit) was $461 million. This is because after 2010, with Bisha mine going to production, Eritrea became a one-commodity-export-economy, whose bulk of GDP is generated by one mining company.

Its import of a variety of essentials—equipment, wheat, pasta–is more than double the export. Coupled with this is the Party competing with the Government and the People: with the government issuing ill-advised and wrong decisions that empowers contraband trade, which is controlled by the ruling party.

VI. Conservative Banks

One of the arguments made for changing the currency is that the government wants to introduce a culture where people use all the tools of modern banking including checks and electronic cards. There are two problems here. Firstly, for the most part, Eritrea’s banks—just like the rest of its institutions—are not managed by technocrats but political hacks. Secondly, and related to that, Eritrean banks have one of the lowest loan-to-deposit ratio. Let’s look at both.

With a dysfunctional central bank, Eritrea’s monetary policies are not formulated to stabilize the economy and create trust; they are created to ensure that the regime’s’ coffers are the main beneficiary as a way of perpetuating its rule. For decades, that policy has created a stagnant economy resulting in unemployment, inflation, and poverty–the symptoms of bad fiscal and monetary policies and a reflection of a lack of management of money supply and the underlying problems associated with it. Consequently, a parallel unofficial economy flourishes, which encourages and rewards contraband, human trafficking and smuggling, currency black market, money laundering, and corruption at the highest levels, especially by the high ranking military officers who are involved in all sorts of illicit activities. Even Canadian mining company Nevsun engages in a militarized commerce in which the regime provides them with free labor, security protection, and transportation for hard currency.

A 1997 interview that was conducted with Berhane Abrehe, the former minister of finance, Weldai Futur, the IMF loaned consultant, and Girma Asmereom, the then-upcoming PFDJ diplomat, shows the big gap between what was promised by the Eritrean government, and what has transpired. Berhane Abrehe explained the issue of currency in a professional manner; Weldai Futur emphasized the differences in the approaches of both the Eritrean and Ethiopian governments; meanwhile, Girma, who has no training in the field, kept emphasizing how the Eritrean government wants to encourage free trade, and that it does not want to tell traders how to conduct their business transaction, sprinkling his statements with high sounding words like “globalization” and “free trade”. Time proved that those terms are alien to the PFDJ regime which was never for free trade, nor for relaxing its grip on the economy, but always focused on suffocating the business community, which it sees as a competitor not as an engine that powers the national economy the regime is supposed to manage. In hindsight, we now know that the PFDJ was opposed to Ethiopia’s insistence of using LC, (Letter of Credit) to document trade transactions because it had every intention in engaging in illicit cross-border trade to benefit PFDJ business enterprise and not the Eritrean people– a position that contributed to the 1998 war. Having failed to deliver peace and prosperity, Eritrea’s sole legal party is now insisting on trying to document and control all financial transactions of its own people. And by doing that, it will further damage the already crippled economy.

The banks which are run by political appointees—which is to say, personally by Isaias Afwerki—are, in turn, not in the business of serving their depositors—the people—but Isaias Afwerki and his Party. For 2013, the last available report, the loan-to-deposit ratio of Eritrea is 23.3%. To put this in perspective, only South Sudan had a lower ratio of 15.2%. That is to say, for every $1,000 in deposit, the Bank only lent $233. To put this in perspective again, the median loan-to-deposit ratio for Sub-Saharan Africa is 87.2%. In short, Eritreans have no incentive to go to the Bank as it is unlikely to extend credit to them. Even those who could put their properties as collateral for loans simply cannot do any kind of business because of the chronic shortage of goods, stagnant economy, and inability to compete with PFDJ business enterprises. And if it did, there are no investment opportunities and whatever little opportunities there are, they are reserved for PFDJ conglomerates. And now, with a fiat, the government wants to change people’s behavior without offering an incentive for them to do so.


Under a normal government, the antidote to the underlying cause of the challenges Eritrea faces are rule of law, good governance, administrative competence, transparency, well-functioning media to inform the public in exposing corruption, and free and meaningfully regulated free enterprise.

The adoption of a market based exchange rate, which would attract inflows of private capital and foreign exchange, is the only way to remove the expanding gap between the official and parallel market exchange rates. Many developing countries have tried and failed to maintain a fixed exchange rate. African countries that still have fixed exchange rates are: Cape Verde, Comoros, Eritrea, Lesotho, Namibia, São Tomé and Príncipe, South Sudan, and Swaziland.

Such draconian and coercive undertaking of major currency exchange exercise–remember, if every Nakfa is surrendered, that is 62.4 billion of it being counted, exchanged, documented, witnessed, audited– would have been unnecessary as the underlying issues would have been addressed by the institution found in an open, politically stable, democratic society that aims at maintaining an independent central bank that benefits the economy and not the intelligence entities.

People are overwhelmed by the corrupt environment that the regime created, they are trying to make a living, and now they will be impoverished or arrested. Even the ardent regime supporters who often use the black market when vacationing in Eritrea will find a way to circumvent the rules as they will not be happy to be required to exchange their money at a fraction of the black market rate.

As a result, the Eritrean Nakfa has become as good as a USA penny (down from 12 cents in 1998); its purchasing power is eroded, and such a situation doesn’t encourage investing or doing business. The decision to change the currency in such a haphazard way will result in a higher inflation, higher exchange rate and more corruption that will kill the already damaged economy.

In short, with all powers concentrated under one man, Eritrea does not have institutions that can ensure macroeconomic stability, control inflation, exchange rate stability, attracting foreign investment and supporting economic growth. Unless the government embraces institutionalism, accountability, transparency, the only way it will get people to do what it wants them to do is through its coercive powers. And that, as every failed communist nation has demonstrated, is no way to grow and develop.

About Awate Team

The PENCIL is awate.com's editorial and it reflects the combined opinions of the Awate Team and not the individual opinion of team members.

Check Also

Dam On The River Nile

The Horn of Africa region saw two weeks of hectic travels. And Eritrean officials travelled …

  • AOsman

    Dear Awatista,

    Can anyone give us a summary of what is written in tigrigna at Assena, am too slow to read it all.


    On the assenna radio, Mr Kubrom is asking people to reject the new Nacfa. This should have come immediately after the notice, not in the middle of the two weeks when many have made a decision to follow suit. And how do you reject a currency that is already in circulation? OK the 100Notes maybe the excpetion.

    Bad timing, too slow a response even a useless call…..

    embi belu ybl allo – keshrifiwo zeykaAlu embi ilna yiblu allowu 🙂

    If the opposition were to endorse his call, would they accept the old currency, when there is a change of government???



    • Semere Andom

      Hi Osman:
      I listened to it, to be honest, it is unhinged. His series of previous interviews were informative, but this one is a stinker.
      Although the motive of the PFDJ is not clean for changing the Nakfa, what Mr. Dafla said borders on what ails PFDJ and Isaias: lunacy . He is calling on people to pick a fight on a Nakfa, he calls it an opportunity for standing up. It is not going to happen, the people will be tamed and will line up for days to exchange their money, some will outsmart PFDJ, most will lose
      When their kids were rounded up and beaten in front of their eyes, when the disabled were murdered in their back yard, when Haile DiruE in Germany basically told them to “disobey us, challenge us”, when Wedi-Ali gave them the opportunity to disobey, when Lampedusa spilled their blood to wake them up from the permanent repose, even Arbi Harnet failed, opportunity for disobedience in Eritrea is 25 years old, like independence she was born in May 24 Mr, Kibrom is picking Naka for disobedience , it will not happen.
      What am I saying, even Bitweded gave them the opportunity from inside,while the spies listened on, he gave them the credit for his release, that was not true, he was praising them, “abey belkan keyblunna etom endaba”
      But I undertand
      Sal reply:-)

      • AOsman

        Dear Semere,

        When people are hit in their pockets, they react more than anything. The change of Nacfa could have sparked something, the government was taking a big risk and they have put some measures to cool down the generals and they knew that the opposition were toothless (Nitricc broke all our teeth).

        There was an opportunity to delegitimize the government, but such move could have only be done with a strong/united opposition. My issue with Kubrom is that his call has came too late and worse by a person who cannot give a guarantee that in future the old notes will be acceptable. So people will just do what is in their interest, that’s ensuring the Nacfa in their hand is not void….that’s 6 days to go


      • Berhe Y

        Dear Semere,

        I think we have discussed this before and I am not sure I agree here. You see, you are expecting each individual person to get outraged by the action of the regime and revolt. The problem is, the individual before go out and take such action needs to be convinced and believe that he will be successful, otherwise why take the risk knowing that he will be the next target.

        So to overcome this, what we need is a revolution. But revolution do not just simply happen without, plan, organization, action.

        Below you will find from wiki how, how to start a revolution and ten steps that needs to happen.

        I think we need to seriously do self assessment and figure out where we are in these steps, and if all are fulfilled then how do our people take the biggest step which is taking ACTION.

        I wish here at AT university we dedicate time and energy and some dedication to help achieve these steps.


      • saay7

        Hey Cousin iSem:

        A “stinker” that’s is “bordering on lunacy”? That’s harsh. I am taking your Book of Adjectives for a month:)

        People assume that K Dafla is a technocrat and when, as he did here, he deviates from technoratic analysis, then he must be out of his element. What if the assumptions are wrong and he is a strategic thinker? (It’s none of your business how I know:)

        Now ask yourself, what does a political strategist hope to gain by saying what K. Dafla said?

        Happy thanksgiving day! A day when we inexplicably eat a fat bird and Americans eat an overheated GaAt duba.


        • Semere Andom

          It is my business how you know, technocrats think alike and compare notes;-) you are one as per AH remember?
          Well, adjective, adverbs modify verbs and nous and someone in your other field (creative writing) called them lazy, apparently he is wrong 😉
          Happy American Thanks Giving day!

          • saay7

            Hey iSem:

            Here’s Salem Solomons adjective-free report for VOA.

            It makes the same points that AOsman and Haile TG have been making for a month now.


            Now to go back to K Dafla, here’s one clue for you: just because people are addressing “kbur hzbi Ertra” don’t assume that the entire population is their audience:)


          • Semere Andom

            Thanks Sal;
            I really get/know what you mean by ” just because people are addressing “kbur hzbi Ertra” don’t assume that the entire population is their audience:)”
            And HaileTG and AOsman and this “adjectiveless” piece make good sense: the only problem is the setting where it is taking place. It will not shake PFDJ, it should have in normal circumstance. Those with connection (as you and I put it before), the generals and others will getaway with it, some will outsmart the systems and make business out of it, many the unconnected will be cashiered, they will lick their wounds curse PFDJ with “edkum aytsaanu” and move on with their lives, then one day they will decide, “zbeluka giberlom wey addegom hiddegelom”. I am not making this up, I am basing it on the patterns of the last 15 years
            Eritreans will endure this too, that is what I am saying, we all, opposition, PDJ supporters agree on this, “tetsawerrinetna wahis awettina kibhal aysemaekan dikka atta”;-)

            The analysis of our AOsman and HG made good sense, but their subjects are wrong. You were maybe having fun in Egypt but when I was an errand boy in the “hajjabarda place” and when the supply of sugar, an ingredient in almost everything in Sudanese diet was short, students would demonstrate, schools will be closed and the dictator although he disappeared high profile politicians could not dare touch a woman’s son because he protested, she would slap him with her “jezzma”
            It has been said, the the leader of the Communist Party, Ibrahim Nuggud hid in plain sight in the country side from the dictaor and they only knew he was alive when his wife got pregnant, his people, his tribe protected him. Wedi Zere and Bahlbi were given away by their own tribe and blood relatives to the hyena.

            Type away cousin, but not the Sudanese has an organized labor force answer 😉
            My conjecture, and am sure it is false, and I hope it false is this: whom ever Mr. Daffla was addressing, probably an elite with lots of money will find away to cash in, they will not seize this opportunity to become a catalyst for disobedience , they will be taken care. And the grain seller in the street unlike the Tunizian veggie merchant will not burn himself in protest outside Askalu’s office and if he did, the Asmarinos, Mendeferino’s and Kerenino’s and Nefasitinos will unite in, “shiwey ewkko ab Sawa kolo mesmar godillato nera”
            That is unhinged, you are murmuring, borrowing from me, I know 😉

            Now I dare you to find one adjective in this comment, please do not write L.T and iSem “gets ngets;-)

          • Amanuel Hidrat

            Hi Sem,

            Don’t you think Saay will be a good technocrat in the finance and budgeting areas to supersede the opaque PFDJ budgeting system in the forth coming of transitional period. I think he is one from the pool of technocrats we have – a candidate for the team of technocrats who might lead the transitional period, provided if he start to believe the need of systemic structural change in the nature of governance. [Saay it is not a provocation, it is only between me and Sem]. Happy thanksgiving day for all awatistas who reside in the USA. By the way I have a draft of an article pertinent to the subject on hold, waiting the right time to post it.

            [Saay, please note to the link brother Berhe has posted about a revolution. In the list of warning, it says “if structure to takeover are not in place, innocent people might suffer.” That warning also refers to our endeavors – the struggle for justice and change in our nation Eritrea, thereby, if we don’t have a structure of a system to takeover the current system, we will be doomed to a cycle of dictatorship. Don’t you think so?].

            Amanuel Hidrat

    • AOsman

      Dear All,

      DIA tightening the noose or looking for scapegoats, read the development reported on Assenna



  • Kokhob Selam

    Dear Awate friends,

    ሓላፊ ባንክ ኤርትራ ኣቶ የማነ ተስፋይ ተኣሲሩ ዝብል ጽንጽንታ ኣሎ እዛ ምቅያር ባጤራ ተምጽኦ ኣለዋ !

    “ትማሊ ኣብ ሰዓታት ድሕሪ ቐትሪ ኣማሓዳሪ ባንክ ኤርትራ ኣቶ የማነ ተስፋይ ካብ ስርሑ ሞቑሕ ኣእትዮም ወሲዶሞ ኣለዉ።

    ቅድሚ ሕጂ የማነ ደስኪሉ ዝብል ወረ ብብዙሕ ክስማዕ ጸኒሑ እዩ፣ ብተደጋጋሚ ንመንግስቲ ከምዝነቅፍ’ውን ይፍለጥ፣ ስለምንታይ ክሳብ ሕጂ ጸኒሑ ዝብል ሕቶ ሓደ ካብቲ ምኽኒት ክኸውን ዝኽእል በዓል ቤታ ንወይዘሮ ኣዜብ ስለዝኾነ እዩ። ወይዘሮ ኣዜብ ማለት ሓላፊት ምርምርን ስነዳን ህግደፍ ኮይና እምንቲ ኣገልጋሊት እቲ ስርዓት እያ።

    ናይ ሕጂ መእሰሪ የማነ ተስፋይ እንታይ ምዃኑ ኣይተፈልጠን፡ ምስዚ ምቕያር ናቕፋ ዝተኣሳሰር ብልሽውናዶ ይኸውን ዝብሉ ገለ ገለ ወገናት’ውን ኣይተሳእኑን። ኣብዚ ግዜዚ ዝለዓል ዘሎ ካልእ ሕቶ፡ እዛ ምቕያር ባጤራ ንኻልኦት ላዕለዎት ሓለፍትን ሰብ ጽሩራን ህግደፍከ ክትልክሞምዶ ትኸውን? ” በሉታ :: እዋእ ነይረ ድየ ባሶ !

    • PTS

      I just read similar claim in denai’s DMB from someone whose IP address indicates from Eritrea. The writer says the bank manager was arrested in front of employees and customers. True or not, one thing is true and that is Isaias humilates his critics in front of people. He lacks the basic human decency to respect one’s privacy. I hope one day it will be his turn to be publicly humiliated.

      • Kokhob Selam

        Dear PTS,

        don’t trust IP address, it can be changed. He might be in US. Ha ha ! you remind me when Mahmuday said that I am in Norway and I am not.

        in regard to IA..not only him all dictators never stop Humiliating till the end. one of the characteristics of dictators. Why is that? I really don’t know why they don’t feel that will come back to them and all get humiliated at end of the film. I think they Knew this will happen when they start being dictators but they become crazy when they get supporters and forget to live in peace and honest with themselves and that in turn make them blind. credit is to their supporters, Lol. one of the reasons we struggle long is to change or destroy the mind of the cheating force first, so not to allow any ground for another dictator. … see, dictators are also victims..Lol !

        • PTS

          Can you change IP addresses? Wrong! You can’t!
          Remember the system changes IP addresses from location to location. Sometimes it slightly changes even if you log in back to the same computer/location. But that is the system. Users do not have the ability to change ip addresses. It is controlled by your internet provider.
          No objection on your second paragraph.

          • Kokhob Selam

            Dear PTS,
            Since we agree both in 2nd paragraph, that is the main subject. TKS

          • House of Stark

            Hi PST
            If you have money, you can change your IP addresses every month even every day. you can be in USA and have an IP addresses of say Eritrea or UK or any other country within IP addresses.

          • Berhe Y

            Selam House of Stark,

            Do not want to make this too technical, but how do you change your ip address if you have money or not? Do you have the zombie computers in mind? I know about IP spoofing but for an average user, not sure it’s possible.


          • Semere Andom

            Hi BY:

            I am not sure about with money, but forget spoofing, that is too hard, a literate user can use Tor and he can make it appear it if is coming from India and even NSA was unable to anonomize Tor connection as per Snowden. But lately I think they paid CMU a million dollars to crack the exit nodes that the university run and it is controvertial and there is law suit and accusations and counter acusstions going on.

            for those concerned about privacy can try and play with the followunbg

            duckduckgo.com for search instead of goolge, but you cannot use ducduckgo as verb

            You can use tor to browse anonomously : https://www.torproject.org/

            Read about the Carnige Mellon: http://www.wired.com/2015/11/carnegie-mellon-denies-fbi-paid-for-tor-breaking-research/

          • saay7

            Hi BY:

            I have a video of my cousin iSem arguing with someone about the unreliability of IP addresses and that they can be faked and he can show you how it can be done by 2:00 today:



          • Berhe Y

            Hi Saay,

            Thanks. Will check it out later, though I wont be surprised by cousin iSem.
            Have a good weekend.


          • Berhe Y

            Thanks SA,

            I didn’t know about Torproject, but it looks like one is required to install a client and it uses encryptiong to secure your traffic and relay your requests.

            I said for an average user, someone in the Internet cafe in Asmara browsing the internet..how he can change his IP address that simple?


          • Semere Andom

            We will talk later, so Sal will not eavesdrops (is the v silent Sal?;-))
            Torpojoect is good, no need to install, just download.

  • haileTG

    Selamat Awatista,

    If you still haven’t been to the bank to change your old Nakfa, here are few of them for your viewing pleasure 🙂

    New One Hundred Nakfa

    New Ten and Twenty Nakfa date showing as 24-05-15


    • PTS

      The people and government of Eritrea decided Eritrean languages on Eritrean currency was not appropriate?
      Actually that is a good idea. If you were to add two more languages, the appearance won’t be as neat.

    • saay7

      Hailat and AOsman:

      Hailat, you copied the flip side of the 100 Nakfa which doesn’t show the print date. According to the additional information to the additional information of the proclamation:

      Denominations of 1, 5, 10, 20, 50 must have a May 24. 2015 to be legal tender and;

      Denominations of 100 must have a May 24, 2011 issue date to be legal tender.

      Now we all know that the small denominations are widely cieculated and therefore deteriorate quicker and have more frequent new issue dates. (Every 7 years: 1997, 2004, 2011, 2015);

      The 100 Nakfa was apparently re-printed in 2011 but never distributed. It’s going to be distributed now. So, Haile TG and A Osman: why did the gov print currencies and 4 years ago and why did it wait until now to distribute it.


      • haileTG

        Hello saay,

        ኣንታ ሳልሕ፡ አዚኦም ኣበይ ይፍለጡ፡ ንኮንጎ ኣለቂሖሞም ነይሮም ይኾኑ :-)..haha

        Seriously though, that is something I noticed when the new currency was unveiled as needing a magnifying glass from now on:) It seems to me that something had happened in 2011. If you remember then the new year 2011 was held with big fanfare where IA was seen walking through the crowed to the stage at Bahti meskerem. It was a year PFDJ was confidently claiming economic boom was about to rain on Eritrea that year. A year earlier, IA had announced that Eritrea was food self sufficient and hunger was to be a thing of the past. Obviously, they must also have had new money printed in that year. Nevsun poured its first gold ore in late 2010 and its first commercial shipment was in 2011. But, hang on, what happened in between? Why weren’t the newly printed Nakfa distributed for circulation? These are questions that can be gleaned from insiders in the presidential office. However, it appears to me that it was a case of typical miscalculation of one sort or another that rendered PFDJ to issue “additional information” back then too, i.e. to prevent the money from entering circulation. OK, it is a blind stab in the dark (the best one at that)…haha


      • PTS

        SAAY, Hailat,
        On a lesser question, what is the print date of the coins? The coins are changing also?
        But boy, those smallers notes will create big headaches for families accross Eritrea for years to come. If grandpa buys something and gets a change of 9 one bills, is he really going to check print dates one by one? Impractical!
        What I am still not sure is, is the color and design still the same? Because EriTv keeps saying “eventhough it is not hard to distinguish, inspect the print date”
        If they’re the same, what does the regime benefit from chaos? I don’t get it.

        • saay7

          Hi PTS:

          If past is prologue, when they changed the currency from 1997 to 2004, they changed the background from dark green to dark blue. Maybe that’s what they mean by “even though it is not hard to distinguish.” Of course, every normal country the world over (including Eritrea in 1997) allows the old currency and new currency to be legal tender for a transition period. But Eritrea 2015 is not a normal country. So grandpa has to check the print date:)


      • AOsman

        Dear SAAY,

        The 100 Nakfa was apparently re-printed in 2011 but never distributed.

        Is the above miya-miya, I will try to check on that…..if the problem of hoarding money was a an issue then, circulating the new 100 notes would have been a futile exercise, those who were stashing millions, would have replaced the low denominations in their safe with the new 100 notes and taken the currency out of circulation in no time. This may be the main reason for holding and it explains the shortage of 100 notes.

        Some news from 2011 that I pick from old gedab archives and others, may have directly or indirectly affected the situation/economy in Eritrea (it may help us extrapolate something):

        – DIA ailing from liver, nearly died 🙂 (bBrku ketenfis jemiru)
        – Libya in turmoil (main oil supplier)
        – Egyptian Revolution (peak in human trafficking to Israel)
        – Gold mining live and kicking
        – The 2% payment dwindles (2% tax collection restricted in UK)
        – Eritrea accused of arming rebels (NATO Navy Captures Armament-Filled Ship, Bound For Eritrea)
        – EU disengages (PFDJ decides to stop the foreign aid programme)


        • saay7

          Hey AOsman:

          There was also a big one that you and Haile TG didn’t include: “Sanctions 2.0”:)


  • Mesfin

    Dear Hope:

    Thank you for the reply but it did not answer my question. It rather shows that you don’t understand the root cause of the problem we (Eritreans) are in. It is all because of us and not because of others. You are blaming Ethiopians and others. This means that you need to change your attitude for good. I am advising you. My advice: Source of your problem is you and you have been attracted to it. You didn’t see it on time. Now, let me stop there. Your attitude won’t take us anywhere or bring us any good. 30 years of war did not produce what it intended to produce. It only managed to push our colonizers. But, it produced dictators. Eritrean intellectuals are trying to fix things that were broken long time ago.Our grandfathers fell in the trap that Ethiopians prepared for them (meaning for us-todays’ generation). Be in the intellectual group and understand the root cause of our problem. Stop blaming Ethiopia. We, Eritreans need to fight our thinking. Ethiopians don’t need us anymore. They are far better without us. They will benefit if we become their good neighbor. If not, they have already made good relationship with their neighbors such as Kenya, Djibuti, and S. Sudan. You should good jealousy of the progress they have shown to the world. What do we have to be proud of? The answer: Nothing. Our productive youth are fleeing from the country and PFDJ members are happy with it. If I am wrong, I stand to be corrected.
    One more: I am a new comer and my real name is Mesfin.


  • haileTG

    Selamat Awatista,

    The bank of Eritrea has released a second round of “additional information”. After the coming two week period, only an amount of Nakfa 20,000 or less can be exchanged. In the original stipulation, the bank had said that up to 5 million could be counted and deposited even after the two week period until the Nakfa expiry date that was originally stipulated in the proclamation as Dec. 30th but later changed to Dec. 26th via another “additional information” that was released by the bank last week.


    The above amendment of the proclamation means that all businesses will hold on to their old nakfa until Dec. 28, the second round of depositing because they will be short of cash for a foreseeable time in the months ahead.

    • AOsman

      Dear HaileTG,

      Lets summarise this process:

      1) 18/nov/15 to 2/dec/15 minus two Sundays
      Deposit amount over 20K – any less we don’t have time for you – VIPs not poor person to cause unecessary queue 🙂

      2) 2/dec/15 to 28/dec/15
      First Deposit amount up to 20K only

      3) 28/dec/15 to 30/dec/15
      Second deposit up to 20K only – second chance bought to avoid people coming last minute and allow them to trade up to 20k after first deposit)

      While all the above are about depositing, withdrawal is limited to 20k per head.


      You bought an example about the smart Asmarino trying to make much from the brief period where Old and New are both in circulation. According to the first notice all those who have something in their account can withdraw from day one (only 20K), it seems with the new rule they will have to wait up to the 2nd Dec to withdraw. In effect, the issuing of new currency will be in the last 4 weeks.

      In the 4 weeks, one who is loaded can spread the love and give poor people 20k each to exchange for little reward, then go back and buy more at lesser exchange (new vs old) and call spread more love :).

      4 weeks where a poor person has one chance, plus another at the end……..in practice if such game is played, it will overwhelm the banking system, except one way……………….no point mentioning it.


      • Fnote Selam

        AOsman and Haile,

        Do you guys have any info how the new Nakfa difference from the old in appearance, design, size etc….? Because these can create another dimension of confusion to many Eritrea….


        • PTS

          EriTV just said you have to look at print dates. For the new currency, print date for the 100 bills is May 24, 2011 (what!?) and for 50 and all the way to 1 nakfa, the print date is May 24, 2015.
          Interesting. So the 100s were printed over four years ago. Hmmm…

          • Berhe Y

            Hi PTS,

            Otherwise they are exactly the same?


          • AOsman

            Dear PTS,

            Thank you for the link. Even though weird, it is good news as it is more manageable for both sides.

            The panic should now subside, hopefully the price hike will be controlled and the poor people can go back to daily life challenges.

            In future, there is an extra burden of checking the dates (unless the older notes are recognizable by their condition)



          • Abraham Hanibal

            Hi PTS,

            According to the website I link below, there were four issues of the Nakfa banknotes until the year 2012. The third issue consisted of ONLY the 50 and 100 nakfa notes; and guess the date; it was the exact date which is now being announced by the regime for the new 100 nakfa bills-May 24, 2011. May be we can say that there is no change in the 100 nakfa notes, anyway?


          • saay7

            Hi PTS:

            Well. Thank God the literacy rate in Eritrea is 100% and the print date so very clear–appearing right under the camel and only on one side of the notes. Problem solved 🙂

            “correction”, “addendum” are alien terms in Isaias Eritrea so we will just have a series of “additional informaton”, un-numbered, un-dated.

            About the invalidating all 100 notes printed prior to 2011, it appears to me that someone swindled from the swindler freshly minted notes and by the time the swindler realized he had been swindled, it was five years later.


          • AOsman

            Dear SAAY,

            How is it that they have been swindled if they are accepting a currency already in circulation? Hope was making similar case, with the spicing that Weyane were at play. But now that theory does not hold water, unless I am missing something…
            For 100 notes, maybe 2011 is the latest print or they did not have the capacity to issue even the 20K on demand. Knowing the consequence, they have relaxed on the 100 notes to keep the market to functioning.

            In any case this is looks Plan B, a retreat.

            I think HaileTG made a case about issue with printing, the only problem with that theory is such glitch would have known earlier before the notice to change. Then why would they go ahead with the announcement, it does not make sense.

            Could it be by recalling old notes and issuing less back to the market (with the remaining registered as deposit), they want to control inflation. The opposite of quantitative easing? The brief spike in prices could have shock them.

            On checking dates: When warlords in Somalia started printing money the print date was important to discriminate the fakes against the pre-1991 official notes. But over time the shilling was so devalued and due to lack of money in circulation, Somali started accepting even the fake currency for transactions. I think there is a point, when the cost of printing is close to the value of currency, the currency has an inherent value that makes it usable.

            Blind people had a way of checking various Nacfa denomination, now they will not be able to differentiate old from new…..HARFAF GENZEB AYQIBELIN IYE, is their temporary solution.


          • saay7

            Hey AOsman:

            Again, you and Haile TG have been stellar on this issue.

            Now, mine is a little reporting and a lot of speculation on this issue.

            My argument has been that this is to go after a few people with unusually large amounts of money and that these people are unconnected (or no longer connected) with the regime. Getting the people to submit and to disclose how much money they have is just the added bonus to the “Ornek”-obsessed police state.

            Hope was looking beyond the wrong border; the real action is in Eastern Sudan where Nakfa is virtually legal tender among the contrabandists and smugglers. Those, in my view, are the real targets, as well as anyone who has gotten rich without kissing the PFDJ ring. They are not going to be returning their money for exchange: they will buy whatever goods/services they can now and lose the rest.

            I am speculating that all the $100 currency in their hands is from pre-2011. And that will be the money that will be off circulation as of 1/1. Unless of course we have another “additional information.”


          • AOsman

            Dear SAAY,

            The likeliest candidate for “additional information” is: did we say may 24, 2011? We meant May 24, 2015!” for the valid Nkf 100.

            It did occur to me that blaming the newsreader or confusion would bring them back to play, but imagine one person who has deposited his notes, all except the 100s from 2011, how would they block him from a second deposit?

            We are left to speculate….one more to throw

            The EU funding was stopped in 2011 and is likely to resume now. How would a government that is about to receive an injection of money at 40 million Euro a year make much out it using the pegged exchange system (4:1) approx 30 million Euro to pocket, 10 million Euro to spend.



          • saay7

            Hey A Osman:

            But that EU-fund-to-Eritrea headline from summer evolved to EU Africa Trust Fund to 27 African countries in the fall. The pledged amount is 1.8 billion Euro and it appears that every African country that an African has crossed on his/her path to Europe is going to get the funding.

            But funding does not equal cash. Nobody gives cash anymore:) Its capacity building, training, nutrition, food security, border building, vocational training. Of course if you get funding for all of the above, then you have less demand for hard currency part of which is being used now to import wheat, for example.



          • Hope

            Greetings Prof Dr SAY!
            I guess you are the BEST in al aspects though not sure in Medicine!
            Let me correct you here on the role of the TPLF and its Agents in the abuse of our Nacfa:
            I did not say that Nacfa was circulated amd has value in Ethiopia but the TPLF and its Agents have bought milions of USD with the old Nacfa -be it in the USA,Eritrea,Ethiopia,
            the Sudan , Europe,etc!
            I put the ones you mentioned on the third level!

          • Abi

            Hi Hope
            At least your nakfa has been used for a good couse. Buying dollars for TPLF . You should be happy about it. They always outsmart you.

          • Saleh Johar

            Then what is preventing you from doing the same, amassing Ethiopian Birr and buying a lot of Dollars? That is called currency trading, and they do it in the open, it is not a crime to buy and sell currency. Check out Wall street, or any financial broker/agent online–they will offer you currency trading products.

            Hope, currency ceased being limited to a medium of acquiring goods and services, long time ago; it is a product that anyone can buy and sell (though I have a strong view against that ugly capitalist manifestation)

          • AOsman

            Dear Hope,

            SAAY is telling you where the game is to be played. If anyone is to change the old currency to $ in anticipation of replacement is someone with inside knowledge or the government (PFDJ). As an example, as the contraband between Eritrea and Sudan is active, those from Eritrea (PFDJ) knowing they would invalidate the old currency, could start pushing out the old notes in exchange for commodities. Then check mate them….well we read about government officials from Eastern Sudan visiting Asmara and returning without agreement (my guess is they were told forget mass representation, each one need to come with sack load to deposit….it will remind you of the 90s)

            As for those doing exchange business elsewhere around the world, many of them have strong connection at home. It is not complicated to catch their reps at home….so what stopped the government from doing it?


          • AOsman

            Dear SAAY,

            Relevant information that I saw on facebook (Arbi Harnet)

            ….Freedom Friday Activists have noted an unusual tension inside Eritrea related to commodity prices, in light of recent changes to the Eritrean currency. There is said to be stringent checks on buses that come from Sudan, affecting people who try to make a living by importing small quantities of food items and household perishables across the border. Recently troops stopped around 10 such buses coming to Eritrea from Sudan and confiscated food items being brought back by Eritreans who had travelled to Sudan.


            Also to exchange/deposit money in Asmara, you need to be holder of Resident’s ID that was issued recently.


          • saay7

            Hey A. Osman:

            …And to get the resident ID u had to be current on all your “national obligations”?

            I don’t know if Awates Chief Correspondents to Eritreas Treasury office, AOsman and Haile TG have addressed this:

            The “additional information” to the “additional information” which had been previously added (hey, currency is all about adding) says that the new currency is will have the following print dates:

            All denominations except 100 (1. 5, 10, 20, 50) will have a 24/5/15 print date;

            All 100 denominations will have print date of 24/5/11

            The additional information gave the following additional information: “although it will be clear to see the difference [between old and new Nakfa]….”

            Now, is there any other possibility than that the new 100 Nakfa was printed in 2011 and sitting in vaults?

            To test this theory, SGJ opened the Awate vault and all our 100 Nakfa were from 24/05/1997 (the first issue) and 24/05/2004. Now I know our sample is small (only 3 million Nakfas) but has anyone seen any post-2004 100-bill Nakfa?

            Bonus question to Haile TG: why does the new National ID require people to disclose their blood type? Is mandatory blood donation part of the new “national obligation”? * And is “Eritrean blood type” an acceptable answer?


            * never mind. I think it’s so YPFDJ types can tell a Sawa recruit “I bled for my country!” 🙂

          • AOsman

            Dear SAAY,

            I did not know that there was a resident’s ID until my last post, I am catching up on many things :).

            As for the foreigners/non residents, God help them…..3 million in Awate vault? I see why Eritrea was short of cash :), wait few years you can sell them as MEZEKERTA.

            Guessing on the “blood type” – For a nation on war footing (God forbid), knowing the blood type of your army personnel in advance helps, don’t you think it is useful information to keep, unless the test is a simple procedure. The follow up question is, who owns a testing lab in Eritrea?
            Anyway, I would not mind giving information about my blood type, I don’t think the majority of Eritreans would be worried about such information, more so the other details about their asset ownership………..ab da HGDF metemeti kihiliweka yeblun.

            How is the Nacfa depositing going, any news?


          • Fnote Selam

            Haile and PTS,

            This actually makes me think that this currency change has nothing to do with finances or economy. It is either a distraction (from IA’s supposed illness?) or just another mechanism to control and discombobulate the public (u know the strategy they r so proud of ….if they complain about electricity, cut the food/water etc…).


        • haileTG

          Selamat FS;

          I think the question was answered by PTS. However, I like to add that this whole thing was being concocted to serve ulterior motives by the regime. For example, in 2014 bank of Eritrea changed the currency and there were two versions in circulation until the older one was supposedly removed eventually. Refer the link:


          Now, how did they removed the older version then if the currency was being hoarded?? Yet, what is the reason for making less obvious and superficial change now? hmmm…

    • Mahmud Saleh

      Ahlan HTG
      Remember what you said at the beginning of the news: That additional “clarifications” would soon follow. Also I did remind SAAY not to bet on his 20 Nakfas because the government could change its mind before the introduction period was over. Now, look at this “additional information”. I mean it is a major change, not just a minor additional information. That’s what looks like to be ruled by decrees, my friend. I’m afraid the original proclamation will be unidentifiable by the end of the transaction period.
      እንታይ ግድኻ፡ መንግስትና ኣብ ቅድድም ዘሎ እዩ ዝመስል።

      • saay7

        Hala MaHmuday:

        I don’t know: I didn’t see any atomic weights; I didn’t see currency counting machines. Just bank tellers counting notes manually (do they even have that wet sponge to wet the fingers?) like they are at Idaga Ekhli. And this is supposed to take care of billions worth of notes, manual counting? We shall see, said the blind man:)


        • Mahmud Saleh

          Marhab SAAY
          ” ኣብረሀተይ ኣበይ እዩ ዝቑጸር እቲ ገንዘብና?” በለት ጓል ቀሺ።
          “እንድዒ፡ ንስኺ ትሕሺ ኢለ እንድየ ናባኺ መጺአ” በለት ኣብረሀት ጓል ገረንቺኤል ክሻ ናቕፋ ኣብ ዝባና።
          ” ወሪዱኒ ጓል ቀሺ…” መለሰት ኣምለሰት ጓል ቀሺ።

        • Fnote Selam


          wet sponges? melhas nabey miskede…lols. I am not that old to be a seinfeld fan, but the other day i happen to see an episode where constanza’s girl friend (fiancee?) died because she licked toxic glue on a cheap envelop when she was putting wedding invitations together….

          May be this currency change is secret plan by pfdj to kill all bank tellers in Eritrea…..


          • haileTG

            Selamat saay and FS

            Just imagine how the new date verified note authentication would transform the art of counting a wad of money in Eritrea. You will need to check the small print dates in each note. Meaning, the money in the wad must always be in certain orientation and you don’t need finger wetting because the aim is to confirm that each note has the correct date. So you’ll need to slow down instead. Now even the clip shared by PTS shows the bank tellers using a wrong counting approach because they were finger clipping the wad down the middle and flipping each note from the top right corner edge with the other hand’s thumb. Hmm..

          • AOsman

            Hi HaileTG,

            That’s from new year on, now they can receive even mixed currency.

            New Year, new resolution…

            Eritrean will know the smallest details of their beloved currency as they will be forced to be more attentive. The poor will survive, the rich will slow down, PFDJ will have slowed down the gap between the poor and the rich from accelerating…:)

            AWET NHAFASH!


          • saay7

            Hi TG and all:

            You know how in the US they lift the currency to make sure there is an embedded thread to make sure it is not counterfeit? Eritreans will just have to look for the print date located in the fourth quadrant:)



      • haileTG

        hey Mahmuday,

        I tried but failed to impress upon my hgdefite friends that it is only their wishes and dreams that they are in full control of. The operational and implementable component of those wishes and dreams are partially out of their control. For that crucial folly by misconception, they keep on failing at almost all ventures that they announced. At the same time, we are afforded the opportunity to peek and predict their next move. Sadly, they’re still stuck in believing that they are in full control.

        ሓደ ሓሰን ዝብልዎ ናይ ቀደም ወደ’ስመራ፡ ሓደ እዋን ዘይሓሰቦ ሚእቲ ሽሕ ዶላር ረኺቡ። መቸም ሻጥር እንድዩ ከምጽእ ከሎ፡ ኣብ ሓንቲ እንዳ ቡን ኮፍ ኢሉ በይኑ ይጸባጸብ። ይብለካ፡ “ኣነ ሕጂ ከደ እንተተባህለ፡ ዓሰርተ ዓመት’የን ዝተርፋኒ። ስለዚ፡ ንዓመት ዓሰርተ ሽሕ እናጥፋእኩ፡ እዘን ሚእቲ ሽሕ ሌክሱስ ክናበረለን እየ። ዋላ ዘመድ፡ ዋላ ዓርኪ፡ ዝግድሸኒ ዘይብለይ። ብድሕሪኡ ብሰላም፡ ጽቡቕ ኣሕሊፈ ይሓልፍ።” ኢሉ መቸስ ይኣትዋ ነታ መደብ። በዚ ከይደን ዘይተባህለ፡ እተን ዓሰርተ ዓመት፡ ነተን ሚእቲ ሽሕ ለኻኺመን ይሓልፋ። ሓሰን እንተበልካ፡ መሊሱ ጥዕዩ ከም ጎበዝ ዱብ ዱብ ይብል! ኣዋእ..እንታይ ይገበር፡ ናብታ እንዳ ቡን ተመሊሱ ይሓስብ እሞ “ዌዌ.. ሕጂ ሓሰን፡ ኩሉ መደባትካ ጽፉፍ’ዩ ነይሩ” ይብላ ነዛ ነብሱ “…ግን ርኢኻ’ለኻ ሓሰን፡ ሕሳብ ከተዋራርድ ከሎኻ ኢኻ ተደርቢሽካ።” ኢሉ ምስዛ ነብሱ፡ ተዓዚሩ ከይዱ ይብሉኻ። ነገር ህግደፍ ድማ፡ ሕሳብ ብግቡእ ከየወራረደት ጠርበሽበሽ ተብዝሕ ኣላ 🙂

    • Solomon Haile

      Selamat HTG,

      Funny I misunderstood the additional info/amendment just as you did , wrote a paragraph from an entirely different angle than yours and had to erase it after rereading the additional info on aha air. Unless you are reading additional info different from your link. The statement is delaying less than Nfa20k by two weeks. That does not necessarily mean that you can not deposited in excess of the 20k throughout the entire six weeks. Am I tired or should you re read the info as well as what you wrote? TsaTse

  • Rule of Law

    Dear Hope
    Is this your real name then? I never said I am an Eritrean have I? Why would I be ashamed of my Tigrean linage? You have to understand that had it not been for the unfortunate events that put you and me in separate borders there would not have been such a thing as Tigrean or Eritrean.The blood is not just mixed but of the same gene. Is it a paradox to you that wedi afom happens to be a 100% Tigrean? Don’t be too much “proud” of who you are.