Tag Archives: World Bank

Some Notes on Eritrea’s Economy

According to the recently published Global Economic Prospects, a World Bank Group flagship report, the year 2016 was marked by stagnant global trade, subdued investment, and heightened policy uncertainty. For 2017, a subdued recovery is expected, with receding obstacles to activity in commodity exporters and solid domestic demand in commodity importers. Additionally, weak investment is weighing on medium-term prospects across many emerging markets and developing economies (EMDEs). Although fiscal stimulus in major economies, if implemented, may boost global growth above expectations, risks to growth forecasts remain tilted to the downside.

 

For Eritrea, GDP growth was slightly above 4% in 2016, outpacing the global average, as well as GDP growth in the advanced economies, developing economies, and Africa (see figure 1). As well, Eritrea’s projected growth for the next several years is expected to outpace global projections (see figure 2). Importantly, such economic growth can be central to poverty reduction and the realization of broader development goals. Moving forward, Eritrea can address several areas in order to sustain positive economic momentum and enhance overall development.

 

Manufacturing and skills development

 

An area Eritrea should prioritize is manufacturing and skills development. As Eritrea continues to grow and integrate into the broader regional and global economy, it is vital to raise and vary exports, moving away from low-value added and potentially unstable primary products. Manufacturing is essential to growth, and with rapid technical change and global economic integration, it is becoming important as a means of modernizing and diversifying the economic base.

 

Consequently, focusing on and investing in technical and vocational programs and human capital development are key since they can help build and refine the population’s skills and capabilities to compete within fiercely competitive markets. Notably, advanced skills are not just a requirement for “hi-tech” sectors; even supposedly “simple” areas such as apparel, footwear, and basic engineering products require a degree of skills to compete. Of further importance, a skilled, knowledgeable workforce dramatically improves the investment climate since trained, skilled workers create an attractive economic environment for investors.

 

Beyond their necessity for competing in regional or global markets, Eritrea should invest in technical and vocational skills programs and human capital development since they help in the fulfillment of a range of fundamental human rights, significantly contribute to social inclusion, can considerably raise productivity and earnings (particularly of the working poor), reduce unemployment, increase the efficiency of entrepreneurs, and play positive, influential roles in crime and poverty reduction (AfDB; BCG; World Bank 2014).

 

The importance of technical and vocational skills and human capital development is particularly apparent in relation to skills gaps. Skills gaps are prevalent across much of the developing world – such as in Eritrea – and they persist despite generally high unemployment rates. Potential workers, lacking the skills and training required by various industries, remain idle and unproductive. An insightful case is Sri Lanka; while the country has the most educated workforce in South Asia, with 87 percent of citizens completing secondary school, its workforce is not equipped with the right skills to be machine operators, technicians, sales associates, and managers (World Bank 2014). In this context, vocational and technical training programs can provide workers with the vital skills required by dynamic, evolving economies, and can ultimately help address problems of unemployment and lack of productivity (BCG).

 

Notably, skills acquired from or honed within technical and vocational programs are especially significant for youth. Young people frequently remain at the end of the job queue for the formal labor market because they lack adequate skills and experience (Boateng 2002). With little access to formal employment, youth may instead turn to the informal sector. While the informal sector can frequently offer certain tangible benefits, it can also be characterized by long, unpredictable hours and limited protections, returns, safety, or security. More problematically, youth unemployment can also potentially lead to emigration, or crime and other harmful or dangerous behaviors, such as sex work or illicit drug use.

 

Overall, vocational and technical programs and human capital development are critical elements in encouraging and accelerating development, inclusive growth, and poverty reduction through economic transformation and job creation (AfDB). Moving forward, Eritrea should continue to invest in vocational and technical programs, and seek to enhance their overall effectiveness and impact. Doing so will require firm political commitment, the ongoing participation and cooperation of local and international partners, sustainable financing (especially for infrastructure and equipment), and the foresight to ensure that expansion does not dilute the quality of training.

 

To augment impact, the potential for enterprise-based training should be explored, while technical and vocational programs should be carefully assessed, diversified, and matched with the skills required by the labor market, possibly with the active participation of employers (Kanyenze, Mhone and Spareboom 2000; World Bank 2014). An illustrative example is the system of productivity councils that was a fundamental component of the rapid growth and success of the East Asian economies. Specifically, the system involved the specific skills profile required by the private sector being fed directly into the curricula of the educational and technical sector.

 

Finally, the Eritrean government and relevant stakeholders can further develop awareness campaigns illustrating that technical and vocational programs are an important means of empowering individuals to fully develop their capabilities and tangibly improve their lives. Importantly, these campaigns will help garner greater attention and participation, while counteracting potential obstacles related to perceptions of the alleged low prestige of technical and vocational programs.

 

Fisheries

 

Eritrea’s coastline on the Red Sea is approximately 1200 kilometers, making it one of the longest in the world, with approximately 1000 kilometers more coming from its numerous islands on the Red Sea. Notably, the waters of the southern part of the Red Sea are highly productive and rich in biodiversity, with substantial populations of over 1000 species of fish. Commercially valuable fish include groupers, snappers, emperors, lizardfish, breams, jacks, trevallies, mackerels, tunas, sharks, sardines, and anchovies.

 

However, while the region, which includes hundreds of islands as well as the major ports of Massawa in central Eritrea and Assab in the south, has a potential yield of 80000 metric tons of fish per year, Eritrea’s annual total capture production remains quite low. Thus, not only can the fisheries sector play an important role for poverty reduction, employment, income generation, food security (e.g. through reducing the need to depend on food imports to fill gaps), and nutrition (e.g. fish products are an important source of animal protein and essential micronutrients for balanced nutrition and good health), it also holds the potential to be a significant export industry and thus contribute to overall development and growth.

 

It is imperative, however, that Eritrea develop this sector in environmentally-friendly, sustainable ways. Proper management can avoid pollution and destructive fishing practices, ultimately ensuring the continued productivity of coastal waters and future growth, food security and jobs for coastal communities.

 

Tourism

Globally, the tourism industry accounts for about 10% of global GDP and one out of every 11 jobs. Tourism is an important foreign exchange earner, and many countries encourage tourism to help promote development and economic growth. The conclusion that tourism benefits nations’ economies applies both to developed nations and developing countries, although the effect may be stronger for less-developed countries with a relatively simple economy – such as Eritrea (Sahli and Carey 2013).

For Eritrea, a country blessed with a warm, hospitable climate, rich cultural heritage, and great natural assets, the tourism sector holds enormous potential to reduce poverty and enhance economic growth. However, the country must remain committed to the continued development of basic infrastructure (e.g. roads and airport facilities). Furthermore, the experience of countries that have developed successful tourism sectors (e.g. the Association of Southeast Asian Nations [ASEAN]) can offer important lessons for Eritrea, particularly in terms of improving connectivity, visa facilitation, and services. While tourism can promote growth and development, Eritrea must also make efforts to minimize or avoid potential adverse effects (e.g. on environment, cultural heritage, or local communities).

 

Figure 1

2016-gdp-growth

Source: World Bank 2017

Note: GDP Growth, Constant 2010 USD

Figure 2

economic-prospects

Source: World Bank 2017

Note: GDP Growth, Constant 2010 USD


World Hepatitis Day 2016: Examining Eritrea

July 28 is World Hepatitis Day (WHD), one of eight official global public health campaigns marked by the World Health Organization (WHO). WHD aims to raise global awareness of hepatitis and encourage prevention, diagnosis and treatment. Viral hepatitis – a group of infectious diseases known as hepatitis A, B, C, D, and E – affects hundreds of millions of people worldwide, causing acute and chronic disease and killing close to 1.4 million people every year.

 

The year 2016 is particularly important in the global fight to eliminate hepatitis. Earlier this year, on 28 May, 194 WHO Member States made a historic commitment to eliminate viral hepatitis by 2030. During the 69th World Health Assembly, governments unanimously voted to adopt the first ever Global Viral Hepatitis Strategy, signalling the greatest global commitment in viral hepatitis to date. The strategy sets a goal of eliminating hepatitis B and C by 2030 and includes a set of prevention and treatment targets which, if reached, will reduce annual deaths by 65% and increase treatment to 80%, saving 7.1 million lives globally by 2030. Furthermore, as part of the commitments made during at the 69th World Health Assembly, Nohep, a global movement to eliminate viral hepatitis, is being launched on 28 July to bring people together and provide a platform for people to speak out, be engaged, and take action to ensure global commitments are met and viral hepatitis is eliminated by 2030.

 

Hepatitis, which is an inflammation of the liver, can be self-limiting or can progress to fibrosis (scarring), cirrhosis or liver cancer. Although hepatitis viruses are the most common cause of hepatitis, other infections, toxic substances (such as alcohol and certain drugs), and autoimmune diseases can also cause hepatitis. Globally, viral hepatitis affects approximately 400 million people, with 6-10 million newly infected annually.

 

While hepatitis is a global problem, sub-Saharan Africa is particularly burdened. For example, hepatitis B prevalence is highest in sub-Saharan Africa and East Asia, where between 5-10% of the adult population is chronically infected, while with a prevalence of between 5-8% and an estimated 32 million people infected with the hepatitis C virus (HCV), sub-Saharan Africa has the highest burden of the disease in the world (Karoney and Siika 2013; Schweitzer et al. 2015). Moreover, sub-Saharan Africa has a high prevalence for the other viruses as well due to generally poor sanitary conditions and hygienic practices, lack of access to safe water, and poor awareness and education.

 

Eritrea’s efforts to combat hepatitis have involved a multidimensional, cost-effective, pragmatic approach and broad participation. A range of general public health and development initiatives that have been undertaken have helped to combat the prevalence and spread of hepatitis in the country. These include: sexual health education; widespread advocacy and awareness campaigns; the provision of condoms, the expansion of access to basic sanitation and safe, clean water, particularly in rural areas; improved disposal of sewage within communities; and harm reduction programs.

 

Another vital step has been immunization and vaccination which, according to the WHO, is, “the most effective and cost-saving means of prevention.” For many years in Eritrea, immunization and vaccination programs have been conducted through an array of cooperative agreements with various international organizations and partners, including the United Nations Development Programme (UNDP), UNICEF, the WHO, and the GAVI Alliance. These partnerships have increased important supplies such as vaccines, syringes, and other materials, while strengthening support for the development, production, and dissemination of social mobilization materials, regional plans, and logistics.

 

In 2002, Eritrea introduced childhood immunization against hepatitis B as part of the Ministry of Health’s Expanded Program on Immunization, which also delivers immunization for children against seven other vaccine preventable diseases (i.e. Tuberculosis, Diphtheria, Whooping Cough, Tetanus, Polio, Measles and Homophiles influenza type B). According to recently updated data from the WHO and UNICEF, national HepB3 coverage (measuring the number of third doses of Hep-B vaccine administered to infants) in Eritrea is approximately 95%. By comparison, the global average national coverage rate is 87%, while the average for Africa is 81%. In terms of Eritrea’s neighbours, national coverage rates are as follows: Djibouti 84%; Ethiopia 86%; Kenya 89%; Somalia 42%; South Sudan 31%; Sudan 93%, and Uganda 78%.

 

Table 1: East Africa National HepB3 Coverage Rates 2015 (WHO 2015)

HepB3Coverage2015WHO

 

Hepatitis B vaccination programs are particularly important because they gradually result in the reduction of HBV-related chronic hepatitis, liver cirrhosis and hepatocellular cancer. Ultimately, Eritrea’s vaccination programs have played an important role in reducing the prevalence and spread of hepatitis, and recent research studies estimate that the country’s prevalence of hepatitis B is approximately 2.49%, the lowest in Africa (Schweitzer et al. 2015).

 

Table 2: East Africa Estimated Hepatitis B Virus Prevalence (Percentage)

HepBPrevalence

 

Overall, Eritrea’s multifaceted efforts have had a positive impact in combating and controlling hepatitis. With renewed commitment, effective immunization, vaccination, and prevention programs, an expansion of treatment and health services, as well as continued support from international partners, Eritrea can move towards eliminating viral hepatitis and continue to protect and improve the health and development of its greatest asset – its men, women, and children.

eritrean newborn - health


World Bank Global Economic Prospects Report: Quick note on Eritrea’s 2015-2017 Outlook

The World Bank cut its forecast for global growth this year. According to its semiannual Global Economic Prospects report,[i] released today in Washington, the world economy will expand 3 percent in 2015, down from a projection of 3.4 percent in June.[ii]

Developing economies are expected to see an increase in growth from 4.4 percent in 2014 to 4.8 percent and 5.3 percent in 2015 and 2016, respectively. For Sub-Saharan Africa (SSA) specifically, the period 2015-2017 is expected to see real GDP growth (from previous year) of 4.6, 4.9, and 5.1 percent. Influential factors include infrastructure investment, increased agriculture production, and buoyant services, however the positive outlook is subject to downside risks arising from a renewed spread of the Ebola epidemic, violent insurgencies, lower commodity prices, and volatile global financial conditions.

For Eritrea, the next 3 years, according to the report, are projected to produce real GDP growth of 3.0, 4.0, and 4.3 percent. These projections are slightly lower than those by the United Nations Department of Economic and Social Affairs, which projects Eritrea’s growth to be 7.3 and 6.8 percent in 2015 and 2016.[iii] However, even with the discrepancy, the sharp global oil price decline will support improvements in Eritrea’s trade balance (since it is an oil- importer). Specifically, across 2014-2017, the changes in its trade balance due to terms of trade effects are expected to improve by approximately 3 percent of GDP, amongst the largest in SSA (on the whole, SSA is expected to be adversely affected by the sustained decline in commodity prices).

Overall, for Eritrea, as well as other low-income, developing countries, such economic growth can be central to poverty reduction and broader development goals. For example, between 1970 and 2010, growth in average per capita income accounted for three- quarters of the income growth of the poor.3 In particular, a significant part of poverty reduction was attributed to growth in labor income.[iv] Increases in labor income are associated with a reduction in poverty through at least two channels. First, growth in the agricultural sector, the primary source of income for the poor, raises incomes more than growth in less labor-intensive sectors, in particular the natural resource sector. Second, the movement of labor from the low-productivity agriculture sector to the higher-productivity manufacturing and service sectors raises labor incomes, including of those of the poor.[v]

REFERENCES

[i] http://www.worldbank.org/en/publication/global-economic-prospects

[ii] http://www.bloomberg.com/news/2015-01-13/world-bank-cuts-global-growth-outlook-with-u-s-lone-bright-spot.html?hootPostID=67b113847d7c95651fe373d6cfe324d7

[iii] www.un.org/en/development/desa/…/geo201410.pdf

[iv]a) Inchauste, G. J.P. Azevedo, B. Essama-Nssah, S. Olivieri, T. Van Nguyen, J. Saavedra-Chanduvi, and H. Winkler. 2014. “Understanding Changes in Poverty.” World Bank, Washington, DC.

b) Inchauste, G., and J. Saavedra-Chanduvi. 2013. “Opportunity Knocks: Deepening Our Understanding of Poverty Reduc- tion,” In Understanding Changes in Poverty, ed. Gabriela Inchauste, João Pedro Azevedo, B. Essama-Nssah, Sergio Olivieri, Trang Van Nguyen, Jaime Saavedra-Chanduvi, and Hernan Winkler, 1–12. Washington, DC: World Bank.

[v]a) Kuznets, S. 1955. “Economic Growth and Income Inequality.” American Economic Review 45 (1): 1–28.

b) Chenery, H. 1979. Structural Change and Development Policy. New York: Oxford University Press.

c) Ngai, L. R., and C. Pissarides. 2008. “Employment Outcomes in the Welfare State.” CEP Discussion Papers 0856, Centre for Economic Performance, London School of Economics.

 


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