Contributed Articles
Would Eritrea have a comparative advantage in Agricultural sector in the Horn Region?
By Berhane Asgedom
May 12, 2008, 12:36pm

Nature has endowed for some nation natural resources such as oil, minerals, for others fertile land, strategic geographical location, rich tourism potential, and for some others nothing else but arid/desert land. However, even though nature has been fair for some nations and very unfair for some others in its endowment, thanks to globalization what one country does not have could be accessed from others which have it. After all no nation is self-sufficient for one thing or another it has to depend on others.

In today’s highly interdependent global economy, it is evident that any nation in order to survive thereby realizes economic growth and development should interact competitively at regional and global level. Nation states could do this on the basis of their competitive or comparative advantage only. Simply defined a Competitive advantage is something that gives a country an edge over its rivals. And a Comparative advantage is about identifying which activities a country is most efficient at doing.

In 2004, five year back, I did a small research to find out what each of the Horn countries Comparative advantage would be if economical integrated or engaged in trade activities. During that time I had the opportunity to approach to three of the Horn countries senior government officials namely Eritrea, Ethiopia, and Sudan to share with me their view as far the issue is concerned. The response that I got was as follows: As far as Sudan is concerned the official’s opinion was that his country would have a Comparative advantage over its neighbouring countries if it specializes in Agriculture as well as in petro-industry. His rationale was: presently Sudan is the only oil producing country in the region with remarkable potential, thus the country would have a comparative advantage in petro- industry. Moreover, he argued Sudan is endowed with large and fertile arable land; hence the country could be the food basket of not only the Horn countries but also of the entire Africa region. In regards to Ethiopia, the official said; Ethiopia’s Comparative advantage in the region would be in the Agricultural sector.

Coming to Eritrea, however, the Eritrean official as well as his counter parties suggested that Eritrea’s Comparative advantaged in the region would be in manufacturing industry. As far as Eritrea is concerned, I agree to a certain degree with the above point of view precisely because Eritrea has a long history of handicraft industry, which depends on local skills and raw materials. In 1930 Italy began to establish light industries to meet the demands of the growing Italian community in Eritrea and to supplement the military project of expanding its colony in East Africa. According to World Bank (1994) by the 1930s, there were some 2200 trading companies active in Eritrea. Records show during this period, modern techniques of production were introduced, capital and expertise were injected in the economy, and infrastructures were improved to a great extent. As a result, light consumer goods producing manufacturing firms flourished. Therefore, the fact that Eritrea possesses a long experience in the manufacturing industry coupled with its strategic location in the red-sea might have influenced the suggestions of the officials. But is this the only sector where Eritrea would have competitive or comparative advantage? I don’t think so.

As you might agree with me nowadays, things are changing very fast. As a result in today’s economic order it is becoming increasingly difficult to maintain ones comparative advantage indefinitely. Thus, taking into consideration the reality of the day the validity of the above mentioned opinion requires revisiting.
As is well known the Horn region is prone to recurrent drought. Needless to say, it is a well established fact that, from the countries of the Horn region a well known famine stricken country is Ethiopia. It faced sever droughts during 1974, 1984, and 2002 resulting in human losses. And in the year 2008, according to a report by humanitarian agencies, about 8 million people would require food aid, 1 million of them urgently. This suggests Ethiopia is facing a food crisis. Moreover, reports shows that crop production has raised by 45 per cent in the past five years. Thus, the assertion of having a comparative advantage in the agricultural sector is questionable as the country heavily dependents on rain, which is not reliable, for its agricultural activities. During the past few weeks the global metrological studies predict, most parts of the Horn of Africa will experience variations in weather conditions in 2008.

Comparatively, as far as agriculture is concerned, Sudan having vast arable land coupled with long experience in the sector would be in a better position in the region.
In regards to Eritrea: Eritrea like its neighbouring countries is an agricultural state. Agriculture is the main stay of the economy. Historically, Eritrea had modern vegetables’ and fruits’ farm projects during the Italian colonial period. The Minister of Agriculture Mr. Arefayne Berhne during an interview with youth magazine (No.17 of March, 2008) explained Eritrea’s remarkable potential in the Agricultural sector. Minister Arefayne during his interview said; Eritrea possesses unpolluted environment, fertile arable land, and all-year-round suitable climate for agricultural production. Furthermore he said; one can grow different types of crops, vegetables, fruits and flowers at any given time.

It is a common knowledge that for the past few years achieving food security has been Eritrea’s priority policy in its development strategy. We are witnessing that ever since implementation of the Policy and Strategy began, results have been encouraging. According to Minister Arefayne, for instace, the 2007 national produce recorded a 15% increase when compared to the previous year. This production level virtually covers the total annual national demand according to him. It is worth mentioning that, this impressive achievement was due to appropriate policies, the extensive works on building the necessary agricultural infrastructure, and more importantly the political commitment of the government and hard work of the people and its defense force.

Conclusion: Eritrea possesses committed government, hard working people, favourable environment, and large fertile land. From market point of view Eritrea has a strategic location in the Horn region that is it is very close to many Africa countries, the Middle East, Asia, and Europe. Therefore, if Eritrea maintains the current momentum of transforming the traditional way of farming into the modern one, and if it makes extensive effort to cultivate the large area near the Gerset and Fanko dams, Molever, Af-himbol, and areas in the Maekel, Debub, and Northern red sea region, there is no reason why the country would not have a comparative advantage in the agricultural sector.

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