An Economic Lesson We Can Learn from Eritrea
http://markdarius.com/news/an-economic-lesson-we-can-learn-from-eritrea
In the midst of the banking crisis and credit collapse, one country's
development policies stand out as a lesson to the rest of us
By: Mark D. Juszczak
Eritrea, a war-ravaged land of extremes in the horn of Africa where the per
capita GDP hovers around $2 a day, is an unlikely place to find lessons in
economic development for wealthy western nations. And yet, in the midst of
a global **credit** meltdown and a crush of pollution related ecological
phenomena that are wrecking a higher and higher economic toll, it appears
that our persistent paradigm of growth for growth's sake is reaching its
limit.
Eritrea stands out, despite a strong grip on power by the country's sole
party, People's Front for Democracy and Justice, for one distinct principle
that has **managed** to persist above the pressure of both internal and
global politics. This principle is a strong commitment to self-reliance and
virtually zero debt.
Given the unsustainable cheap price of credit over the last several years,
this is of specific interest. But, if one examines the context of credit in
Africa, a clearer picture emerges. Africa currently spends about $15
billion a year on **debt** repayments, mostly from loans given by
international agencies. In addition, for every $1 that African countries
receive in grants, they pay back $13 in interest on debt. Without going
into the history of this debt crisis, it is sufficient to say that prudence
and a long-term perspective on sustainable growth were not at the forefront
of policy makers and government leaders.
Eritrea, on the other hand, has taken a different path since its
independence in 1993: one that can stand out both within Africa and to the
rest of the developed western world as an example. Since its independence
Eritrea has been ruled by the guerilla hero of their struggle with
Ethiopia, President Isaias Afewerki. The President has rejected most
foreign aid and promoted an agenda of internal development: by and for
Eritreans. Although there have been sporadic periods of long bread and milk
lines and the economy remains largely subsistence, with over 80% of the
population working in farming and herding, a number of distinctly visible
results have produced a unique national profile – one that is a time
capsule on the surface and a design for a sustainable future at its roots.
The New York Times ran a series of travel articles on Eritrea over the past
two years. While the articles highlighted distinct tourist attractions, one
paragraph stood out: "In 1994, the Eritrean government decided to rebuild
the railway. It had hardly any money, and it asked for none. Retired
railway workers, some in their 80's and 90's, came forward, and eight steam
engines were painfully rebuilt, the parts made from smelted brass and iron.
Eritreans were asked to return any parts they found. The lines, tunnels and
bridges were repaired and rebuilt by hand. [The reporter visited] the
workshops where the old men show me the ancient lathes and cutting machines
that they have used to restore two more steam engines. They recycle and
melt scrap metal to make parts."
There are several economic and ecological principles that the Eritrean
approach to the restoration of the railroad demonstrates:
-a preference for skills building of the native workforce instead of opting
for turn-key solutions by foreigners that may be more modern but do not
provide opportunities for self-development
-a respect for the intelligence and competence of Eritrean nationals by the
Eritrean government
-a zero-debt approach to ground-up development
-a model of development that produces a smaller carbon footprint than
focusing on building highways and importing foreign automobiles through
credit
-a tremendous pride in the craftsmanship and durability of Eritrean made
goods and services
-a closed loop approach to industrial projects: zero-debt and zero-waste.
These principles might appear insignificant to the technological race that
liquid capital is producing in powerful western economies, but they are the
cornerstone of sustainable growth. Eritrea barely sips on the hydrocarbon
economy. Although this might appear to be its weakness it is really a
strength. It's nearly five million people consume approximately 5000
barrels of oil a day or 1/3 of a barrel per person per year. To put this in
perspective the US consumes approximately 68 barrels of oil per person per
year, over 200 times as much per person.
Precisely because it does not yet have a cumbersome hydrocarbon based
infrastructure or development model, there is a great opportunity for
Eritrea to develop a 'natural capital' economy from the ground up –
focusing on conservation, solar energy, converting its steam powered rail
network to electricity and developing an extensive inter-modal transport
network focused on the human dimension of scale.
At the same time, Eritrea stands out as an unusual example of wisdom and
prudence in government. We could all learn lot from its example.
Received on Thu Oct 31 2013 - 14:44:25 EDT