afrol News, 21 May - The World Bank has approved a US$ 60 million loan to Eritrea, to help the country recover from the border war with Ethiopia. Eritrea needed help to be able to demobilise soldiers and retrieve their livelihoods, reverse the economic and social slowdown and reallocate public resources to social and economic investment in the country.
Although Eritrea is one of the poorest countries in Africa (GDP per capita of US$ 200) with very low social indicators, an arid climate and very few natural resources (livestock, marine resources), Eritrea's economy was growing well before the war. "It is hoped that following demobilization and reintegration, the country will rapidly retrieve these levels," the World Bank reports.
Since the onset of peace, Eritrea's reconstruction and rehabilitation has made progress, with early support from the international community. As the human rights situation is rapidly deteriorating, international support is however decreasing. Several donors are withdrawing from Eritrea.
Several projects however still need funding to secure the fragile Eritrean-Ethiopian peace. "The Eritrean Demobilization and Reintegration Project (EDRP) will support a comprehensive Eritrean government program to demobilize and reintegrate 200,000 of the approximately 350,000 soldiers under arms over a 2-year period, and provide support for economic and social integration of both ex-soldiers and civilians affected by war," the World Bank notes.
- The removal of troops from the defence payroll will reduce the burden on the government budget by an estimated US$ 60 million a year, relinquish valuable manpower into the economy and liberate much-needed public funds for economic development and social investments, according to the Bank. "The total cost of the program is estimated at US$ 197 million." The project will consist of three phases—demobilization, reinsertion and reintegration.
Eritrea, one of Africa's youngest states, was founded in 1993, having earlier been in turn an Italian colony, a British protectorate, and an Ethiopian province. The country's recent history is one of conflict with neighbouring Ethiopia. The latest conflict, which lasted 2 years (1998-2000), was particularly destructive, leaving 1.1 million people displaced. Approximately one third of the country's entire labour force was under arms. To the effects of the war were added the consequences of a drought, which left food production capacity severely impaired and 1.76 million people in need of varying levels of food aid.
A Peace Accord was signed on 12 December 2000, which settled the dispute over the 390 km border area. Since then a UN peacekeeping force has been deployed and most donors temporarily resumed development activities in Eritrea.
Sources: Based on World