Reforming Investment Law in Eritrea: A Pathway to Sustainable Economic Development

by Chrispas Nyombi, Ronald Kaddu

Abstract

(Addendum 04/12/2025) This paper critically examines the investment landscape in Eritrea, highlighting the urgent need for legal reforms to enhance its attractiveness to foreign direct investment (FDI). Despite Eritrea's strategic geographic position and potential economic advantages, its investment climate remains hindered by political instability, authoritarian control, lack of transparency, and inadequate legal protections. Employing a benchmarking model, the study compares Eritrea's investment laws with those of successful nations, identifying best practices and areas for improvement. Key recommendations include establishing an independent judiciary, enhancing regulatory transparency, simplifying investment approval processes, strengthening investor protection mechanisms and building an enabling political environment. The paper underscores the importance of aligning Eritrea's investment framework with international standards to foster a conducive environment for economic growth. By addressing these fundamental issues, Eritrea can leverage its natural resources and strategic location to stimulate sustainable development, ultimately improving the welfare of its citizens. This research not only fills a significant gap in the existing literature on Eritrea's investment law but also provides actionable insights for policymakers, investors, and international organisations seeking to engage with Eritrea's economy.

The article "Reforming Investment Law in Eritrea: A Pathway to Sustainable Economic Development" is now available as part of the TDM 2 (2025) Special Issue The African Continental Free Trade Area Agreement (AfCFTA) (Vol. III) here (sign in to download)