Likewise, the developmental impact of remittances in the Eritrean economy is estimated to be no less, if not higher. The thesis attempts to capture the role of remittances as development instruments in the Eritrean economy.
ERITREA'S LOCATION .1 Geographic Location
Climate
In the good old days, in addition to the hospitality of these climatic conditions, seasonal changes helped people to enjoy growing crops on both sides of the country, in the lowlands and highlands. But since Eritrea has never been without war, especially in the last four decades with the exception of the seven years immediately after independence, the people these days are barely surviving on their daily food consumption.
Population
POLITICAL BACKGROUND .1 Eritrea under Italian Rule
- Eritrea under British Rule
- Eritrea under Ethiopian Administration and the Root Cause of Eritrean Migration
- The Role of the Eritrean Diaspora in the Struggle for Independence
- Post Independence Eritrea - The Government of the State of Eritrea
The history of Eritrea's struggle for independence is incomplete without mentioning the role played by the Eritrean diaspora. The second step was to encourage the diaspora to return to the liberated area of the country and become personally involved in the struggle (Dessalegn, 1996; Hiteng, 2000).
ECONOMIC BACKGROUND
Agricultural Sector
Agriculture as a source of food consumption was therefore not sufficient to meet the required annual food demand of the country in the last four years. For example, the mountainous and dry regions of the northern, eastern and western escarpments of the country are not only unfavorable for crop production, but also densely populated.
Industrial Sector
The contribution of the manufacturing sector to GDP grew from one hundred and thirty-seven million Nakfa in 1992 to 266 million Nakfa in 2001. Therefore, industrialization based on export promotion is seen as a way out of the quagmire created by four decades of neglect and deliberate destruction of the country's economy.
Service Sector
The National Insurance Corporation of Eritrea (hereinafter - NICE) is another non-bank financial institution, which plays a major role in the financial transactions of the country. Financial sector improvement is measured by the percentage contribution of the financial asset to total wealth.
DEFINITION of REMITTANCES
- International Labour Organisation (ILO's) Definition of Remittances
- Migration Policy Institute (MPI's) Definition of Remittances
- Multilateral Investment Fund's (MIF) Definition of Remittances
- Bannock Consulting Firm's Definition of Remittances
Remittances are the expression of deep emotional ties between family members separated by geography and borders, and they are the manifestations of the constant interactions of these family members, regardless of the distances between them. Domestic remittances are those sent by migrant workers who have left their home town or village to work elsewhere in their home country (for example, rural-urban migration, sometimes called national remittances). According to this definition, remittances are transfers of cash rather than goods, but it recognizes that the imports or purchased goods are on the spot as common practice.
Generally, remittances are money sent by foreign-born workers to their relatives and/or communities abroad.
WHY DO MIGRANTS SEND REMITTANCES?
REMITTANCES: their importance and share of a country's GDP
- International Remittances and their Comparisons to Other Financial Flows International migration and remittances have come to play increasingly important role in
- Remittances from the Perspective of Individual Countries' Economic Indicators
- The Role of Remittances on Individual Recipient Households Income
- Communal Remittances
Since flows of remittances are less volatile than foreign investment, future flows of remittances can also be used as collateral agreement by the government of the state of Eritrea to access international capital markets. High percentage of remittances devoted to consumption reflects that migration and remittances are part of the strategies of individual migrants and their families to escape poverty and raise their standard of living. What influences their decision to pay or not is how much they have saved and the reliability of the person taking the money to relatives in the home country.
AFFORD (2001) citing Libercier and Schneider (1996), estimated that over 60 percent of the infrastructure in Kayes villages can be attributed to the diaspora in France.” Similarly, the construction of the University of Hargeisa by Somalis.
REMITTANCES and THEIR ASSOCIATED NEGATIVE DRAWBACKS The potential benefits of remittances are not without some drawbacks. Remittances
REMITTANCES AND THEIR ASSOCIATED NEGATIVE CHARACTERS The potential benefits of remittances are not without some drawbacks. In Ghana, 70 percent of remittances are used for recurring expenses - school fees, health care, etc. First, from one perspective, where a country emerges from severe drought or protracted civil or cross-border wars, there may be a decline in remittance flows.
This is why there are differences in the flow of remittances from one country to another.
MICRO-ECONOMIC DETERMINANTS
- An Implicit Family Loan Arrangement
- The Altruistic Behaviour Theory
- The Implicit Co-insurance Arrangement
- Enlightened Self-interest Theory of Remittances
The model explains that the migrant's utility is influenced by the well-being of his/her family members who remain at home." The model's claim is: Germenji. An increase in the income gap between the (sender) migrant and (receiver) household will increase the likelihood and magnitude of transferred income, while reducing the income gap reduces both. 34; Remittances, as part of an intertemporal, mutually beneficial contractual arrangement between the migrant and the household in the country of origin, are based on investments and risks, and are also voluntary and self-enforcing.' insures the migrant against the early uncertainties associated with migration, but then the migrant takes on the role of insurer to enable the rural household to undertake riskier ventures with higher returns. assist in accumulation and maintenance of assets are additional considerations for self-enforcement."
Finally, remittances can be seen as part of a mutually beneficial arrangement between the migrant and his or her family back home."
MACRO-ECONOMIC DETERMINANTS
Factors in the Host Country
- Direct Factors Related to Transfer Channels
- Indirect Factors
Despite strict controls on these transfer channels, the flow of remittances to Pakistan has indeed increased after September 11, 2001. Therefore, for the above reasons, the flow of remittances to developing countries could be underestimated. There are a number of indirect factors in the host country that can influence the flow of remittances.
Not only do women dominate in domestic work, but many of the field jobs also require female migrants over men, and this impacts the flow of remittances.
Factors in the country of Origin
- Other factors
- The Eritrean experience of Transfer Channels
An equally important factor in the flow of remittances is the inflation rate in the domestic market. During the first years of independence, there were exchange rate differences between commercial banks and Himbol. Most of the latter MTOs are small family businesses or social networks that connect the diaspora with their relatives in the homeland.
Nequtas, TNB's counter offices that disburse money to individual family members of the recipient, have also opened in local government sub-areas.
SOCIAL NETWORKS AS DETERMINANTS
Furthermore, the honor or status given to the family in the communities of both the host and home countries depends on the role, participation and contribution of the family in the projects of the communities and in the mentioned occasions. Most of the time, illegal migration to neighboring countries is the result of unclear information spread through these networks. These groupings of the same ethnicity, religion or region could create more problems by polarizing the political situation in the home country than the groupings that consist of diversity.
The next chapter will focus on the policy measures taken by the government of the State of Eritrea to attract this money and influence its use in the domestic economy.
REMITTANCES AS DEVELOPMENT TOOL
GOVERNMENT POLICIES to INFLUENCE the FLOW of REMITTANCES Remittances, as financial resources injected into an economy, deserve careful attention
- Cuban experience
- The Indian Experience
- The Egyptian Experience
Second, various US governments have also introduced equally parallel measures to stem the flow of remittances into the country. Therefore, it started implementing policy measures to influence and thereby increase the flow of remittances into the country. However, Cuba's efforts to increase the flow and use of these remittances have not always been smooth sailing.
However, whatever measures a host country takes to stem the flow of remittances are futile and uncivilized.
THE ERITREAN EXPERIENCE
- Nominal Income Tax
- Franco- Valuta and Savings Account in Foreign Currency
- Free of Import Duty
- Institutionalising the Eritrean Diaspora
According to this proclamation, every Eritrean raised in the diaspora is obliged to pay 2 percent of his/her annual income to the country. This policy partially explains the country's semi-fluctuating exchange rates and monetary stabilization policy. In addition, HCB facilitates financing for those who can afford to pay a 25 percent deposit to build a house in the country.
Since the outbreak of war with Ethiopia in 1998, the government has taken the initiative to institutionalize and mobilize Eritreans in the diaspora for the second time.
The INVESTMENT CLIMATE and DIASPORA FINANCING in the ERITREAN ECONOMY
- Treasury Bonds
- Stock and Shares
- Eritrean Diaspora and the Development Program
Those industries that remained in government hands were also made public under the privatization policy of the Eritrean State Government. According to the website Shaebia (2004) starting this year the two largest companies (Asmara Brewery and National Insurance Corporation of Eritrea (NICE) are selling their shares in the open market to Eritreans inside and outside the country. This company offers a a third of its assets for sale on the open market to the public.
During these periods, the recreational facilities in the major cities of the country are full of people and are fully engaged with these tourists.
CONCLUSION
Small amounts are also used to revive public facilities and increase the recipient country's government budget. They were also encouraged to establish associations that would take care of the conditions in the communities affected by the war. As a result, diasporas engage in lobbying for various government projects with international bodies and groups of non-governmental organizations.
Likewise, remittances are also blamed for brain drain from the less developed to the more developed countries and for changing the spending habits of the local population.
RECOMMENDATIONS
Dahli, AH, 2004 Border conflict between Eritrea and Ethiopia: its origins, development and long-term effects, http://www.Shaebia.com [accessed 17 June 2004]. Latino communities and in Latin American countries http://www.thedialogue.org/programs/country/central_america_remit.asp [Accessed June 20, 2004]. Mechanisms, Costs and Development Impact, http://www.iadb.org/mif/v2/files/SolimanoEC.doc [accessed December 2012.]
Small Enterprise Development Journal: March 2004 http://www.livelihoods.org/hot topics/docs/remittance.pdf [Accessed 8 September 2004].
