ERITREA

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Development Assistance	$4,900,000	$4,990,000	---
Development Fund for Africa	---	---	$5,200,000
Child Survival and Disease	$6,300,000	$5,010,000	$3,833,000
P.L. 480 Title II	$ 442,000	$ 559, 000	---
P.L. 480 Title III	$4,900,000	$3,200,000	---

Introduction.

Eritrea is a diverse and progressive society emerging from the devastation wrought by its independence struggle. Its development strategy is focused on rebuilding the institutions and infrastructure destroyed in that struggle and has focused donor assistance toward reinforcing its human resource base. Eritreans are deeply committed to building a self-reliant nation, in spite of the additional challenges posed by the current conflict with Ethiopia. They have applied substantial amounts of their own resources to development efforts, such as upgrading the 275 km Keren-Tesseney national road to handle all weather conditions.

Eritrea controls two deep water ports and shipping lanes in the Red Sea. It has also been a principal life line for humanitarian assistance to the Horn region. Recognizing its political and geostrategic importance, USAID assistance to Eritrea supports U.S. interests by promoting a market-based economy, the emergence of a democratic government in this historically volatile region, and by confronting global health issues, such as AIDS. USAID's program is a linchpin of President Clinton's Greater Horn of Africa Initiative. USAID has a sound relationship with the Government of Eritrea and good working-level cooperation. The U.S. assistance program is exemplary in its engagement of Eritrea as a partner with full ownership of its long-term strategy and program implementation.

The Development Challenge.

Eritrea is focused on rebuilding its human and economic infrastructure, including education and health systems; developing a broad-based private sector; and strengthening its human, technical and management capacity. Foremost among its political goals are capable local and national government, a democratic constitution and legislature, and revitalized relationships with neighboring states. Among the country’s strengths are a motivated work force, a committed and non-corrupt government, mineral and petroleum reserves, agriculture, fisheries, and potential in manufacturing, tourism and banking.

Instability in the region has presented further challenges for the country and for USAID. The greatest is keeping the development program moving forward when USAID staff and contractors are unable to return to post to implement the program. A decision to fully restaff USAID and allow outside technical assistance to work in Eritrea would promote a return to normalcy for the development program. However, it would still take some time to bring program activities back to full implementation and delays a quick graduation from development assistance, a goal of the Eritrean Government.

The current USAID program focuses on three goal areas: Health and Population, Economic Growth and Food Security, and Governance and Human Capacity Development. In addition, USAID has provided a $1.0 million package of humanitarian assistance to the war-affected and displaced.

Other Donors.

Eritrea recently took the initiative to host a consultative group type meeting with donors in Asmara, which the World Bank viewed as a sea-change in relations with donors. In the spirit of building better partnerships with donors, the Eritrean Government presented its National Economic Policy Framework Paper (NEPFP) for the next three years. No other African country has taken this kind of initiative in drafting an NEPFP for World bank and International Monetary Fund comment and in organizing its own consultative group-type event. Donors had the opportunity to provide feedback on the planning document and indicate sectors and areas in which they would like to be involved. The current major donor in Eritrea is the World Bank which is increasing its program to planned annual commitments of $ 70-80 million beginning in 1999. The best estimate for overall donor assistance for 1998 is $60-70 million, of which the United States provided about 15%. Italy, Germany, the European Union (EU), and the United States are currently the largest donors. The Scandinavian countries, the United Nations Development Program (UNDP), and the United Nations Children's Fund (UNICEF) also manage sizeable assistance portfolios. Through modest and carefully targeted initiatives, USAID assistance has also leveraged significant support from other donors in the areas of health, judicial training, and public administration.

FY 2000 Program.

USAID’s program goal is to enable Eritrea to become a food secure, democratic, and leading nation in the region through key investments in primary health care, rural enterprise, and human capacity building. Responding to Eritrea's leadership, USAID’s "investment partnership" with the Eritrean Government will build the human capital and key institutions in these sectors which underpin successful development. Activities within these three sectors are cross-cutting, thus strengthening the effectiveness of the overall program. Eritrean ownership of the development process ensures sustainable results from U.S. assistance.

The first objective focuses on increasing use of sustainable, integrated primary health care (PHC) services. USAID assistance is improving health care service delivery in the central, southern, and western zones of the country. Technical assistance focuses on strengthening logistical, management, and financial systems and increasing the demand for health services nationally. Continued progress in 2000 will focus on promoting decentralized planning and implementation, broadening service delivery and improving the quality of health services.

Focused on growth of rural enterprises, the second objective develops agricultural and related support enterprises, with emphasis on high value exports. Activities will increase employment and rural wages, reduce transport costs, and increase demand for rural services. The FY 2000 Rural Enterprise program combines bilateral and P.L. 480 resources to support rural banking and improved financial services; facilitate trade and investment; and strengthen food security through increased domestic production, commercial imports, and the rebuilding of key rural infrastructure.

As a third objective, USAID has initiated a human capacity-building effort to strengthen accountable governance in Eritrea, which includes linkages with U.S. universities in law, journalism, and political science; support to the Constitutional Commission; in-country training for judges and local officials; and training for government officials abroad. The program for 1999-2000 will continue to develop and improve institutional capacity in Eritrea through expanded U.S. university linkage programs; increased graduate training abroad; and improved management training in Eritrea.

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ERITREA

FY 2000 PROGRAM SUMMARY
(in thousands of dollars)

USAID Mission Director: G. William Anderson

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Development	Humanitarian Assistance	TOTALS
S.O.1: Increased Use of Sustainable, Integrated Primary Health Care Services by Eritreans - DFA - CS	--- ---	200 3,833	--- ---	--- ---	--- ---	--- ---	200 3,833
S.O.2: Increased Income from Enterprises, Primarily Rural, with Emphasis on Exports - DFA	3,800	---	300	---	---	---	4,100
S.O.3: Increased Capacity for Accountable Governance at Local and National Levels - DFA	---	---	---	400	500	---	900
Totals - DFA - CS	3,800 ---	200 3,833	300 ---	400 ---	500 ---	--- ---	5,200 3,833

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ACTIVITY DATA SHEET

PROGRAM: ERITREA
TITLE AND NUMBER: Increased Use of Sustainable Integrated Primary Health Care (PHC) Services by Eritreans, 661-SO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $200,000 DFA; $3,833,000 CS
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000

Summary: The purpose of this objective is to increase the use of sustainable integrated primary health care (PHC) services by Eritreans through improving access to, quality of, and demand for, PHC services. Eritrea's basic package of PHC services includes safe infant delivery, family planning, prenatal care, immunization, the prevention and management of childhood diseases and prevention of malnutrition, HIV/AIDS and other sexually transmitted infections.

USAID has been a major provider of technical assistance and training to the Ministry of Health (MOH) since 1994 through the $15 million, five-year Eritrea Health and Population Project. This project provides specialized technical assistance, training, support vehicles, medical and office equipment and furniture, selected building renovations, contraceptives and essential drugs. Current USAID activities include technical assistance and training in decentralized planning and implementation, logistics management, the development of health finance schemes for cost recovery, service provision and capacity building. Several activities, such as 18 long-term participants at U.S. universities (in 1998) and a U.S. university linkage program with the University of Asmara-College of Health Sciences, complement and reinforce USAID's strategic objective in governance. Activities are concentrated both nationally and in the three most populated zones of the country, Gash Barka, Central and Southern. While program inputs primarily target the MOH, USAID is also working with the National Union of Eritrean Youth and Students (NUEYS) to enhance access to services, build awareness regarding reproductive health, AIDs prevention, and harmful traditional practices such as female circumcision.

Key Results: Three intermediate results are necessary to achieve this objective: 1) improved access to integrated primary health care services through improved policies, better facilities and logistics, MOH capacity building, and health worker training; 2) increased client demand for primary health care services through increased awareness of services; and 3) improved quality of primary health care services through better assessment, training, and supervision of health care workers.

Performance and Prospects: As the MOH's primary donor-partner. USAID is providing the inputs necessary for MOH and associated organizations to plan, manage and implement effective and sustainable PHC services. Achievements to date include: 1) development of Safe Motherhood Protocols, the National Drug Policy and National Standard Treatment Guidelines; 2) a 25% expansion in child immunization since 1994; 3) increased demand for family planning services; and 4) increasing domestically iodized salt (for eliminating iodine deficiency disorder) from 0% in 1994 to over 91% in 1998.

Approximately one million mothers and children under five in the three USAID target zones are the primary direct beneficiaries of these activities, although these activities have nationwide impact, benefiting an additional 500,000 mothers and children. The MOH is also a direct beneficiary of USAID technical assistance since the transfer of skills and knowledge promotes its capacity to plan and manage PHC services and a quick graduation from donor assistance.

This project is supplemented by grants to the U.S. private voluntary organization Africare and UNICEF. These grants target improved service delivery in rural areas, expanded vaccination coverage and an increase in basic maternal and child health care services. The MOH's cautious use of resources and cost recovery policy ensures sustainability of all activities. The substantial capital investment in building and equipping new rural health care facilities by the government and other donors contributes to achieving this objective.

Possible Adjustments to Plans: The closure of two major contracting agencies in Eritrea, Basic Support for Institutionalizing Child Survival (BASICS) and Opportunities for Micronutrient Intervention (OMNI), due to cost concerns by the MOH has created problems in implementing the ambitious MOH-USAID program. USAID is negotiating with the MOH to keep the remaining contracting agencies, (Family Planning Service Expansion And Technical Support [SEATS] and Population Services International [PSI]), to provide direct technical assistance and encourage the MOH to place contracting agencies directly in the Ministry’s offices, providing better activity coordination and technical skills transfer.

The conflict between Eritrea and Ethiopia has slowed progress toward achieving the objective. USAID is hampered by a lack of sufficient USAID staff at post and the curtailment of vital technical assistance (through contracting agencies and other technical experts) to implement activities and transfer needed skills to Eritrean counterparts. For example, an expert malaria survey team has missed the 1998 malaria season since they were unable to travel to Eritrea. As the situation is resolved, USAID and the MOH will revise their workplan and activity schedule to achieve their mutual primary health care objectives.

Other Donor Programs: The MOH provides the total cost of its central and local staff, salaries for medical staff at health centers and stations, and the major portion of its other operating costs. USAID works with United Nations Fund for Population Activities (UNFPA) for the USAID-funded condom social marketing activity. Through USAID grants to UNICEF, immunization rates have increased and infrastructure for salt iodination has been developed. One USAID grant to UNICEF for the procurement of essential drugs has been completed, and a second grant for the construction of three pharmaceutical warehouses is in process. World Health Organization and Italy support PHC infrastructure support, equipment, communicable disease control, human resource development and capacity building at all levels. Germany, Italy, Switzerland and the European Union have funded the construction and renovation of health facilities. The World Bank has approved a loan for construction of two regional hospitals as well as capacity-building and sustainability of health services. These are complementary to USAID's investments in the Eritrean health sector.

Principal Contractors, Grantees, or Agencies: SEATS; PSI; World Learning; Africare; UNICEF; WHO; ICRC Switzerland; a university consortium including Johns Hopkins, Berkeley, and State University of New York/Stoney Brook.

Selected Performance Measures:

	Baseline	FY2000	Target (2001)
Full immunization coverage	41% (1995)	70%	75%
Couple Years Protection in target zones	5900 (1995)	14,618	17,980
Safe Delivery	23% (1995)	40%	50%
% of service delivery points in target zones where Integrated Management of Childhood Illnesses (IMCI) is offered	0 (1994)	20%	30%
Iodized Salt use rate in communities	0%(1995)	90%	80%

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ACTIVITY DATA SHEET

PROGRAM: ERITREA
TITLE AND NUMBER: Increased Income of Enterprises, Primary Rural, with Emphasis on Exports, 661-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $4,100,000 DFA
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2002

Summary: The objective of USAID’s enterprise development program is to increase Eritrea’s capacity to generate income and foreign exchange for the purchase of food and essential capital and consumer goods. Under the Rural Enterprise Investment Partnership (REIP), this five-year, $11.6 million program of development assistance aims to help jump-start Eritrea’s critically underdeveloped enterprise sector, build rural-urban linkages, and support an export-oriented growth strategy. The REIP has two main components, the Rural Enterprise Unit (REU) and the Enterprise Investment Fund (EIF). The REU provides technical assistance to enterprises in information access, business support development, skills enhancement, technology transfer and market promotion. The EIF, managed by the Commercial Bank of Eritrea, makes local and hard currency loans available to enterprises to meet capital requirements for critically needed equipment and technology, and to increase investment, mobilize savings and expand financial services available in rural areas (the loan program will become operational in 1999). Development assistance resources under two additional elements, the Trade and Investment Facilitation Fund (TIFF) and Critical Rural Infrastructure Support (CRIS) complement the REIP program by underwriting trade missions to the United States and strengthening human resource capacity in water management, agribusiness and rural enterprise sector development. The P.L.480 food aid program, totalling $20 million to date, also supports this objective with monetization proceeds generated under Title III for secondary rural road rehabilitation and from Title II for reliable sources of water in the eastern plain. The productive capacity of Eritrea’s most important agricultural areas now enjoy improved access to urban markets. Results from investment of Title II resources have produced significant and sustainable increases in infrastructure and crop yields to the point that a major new productive area is now a source of commodities for domestic and regional markets. While P.L.480 - based financial support ends in FY 1999, the disbursement of monetization proceeds and progress towards enterprise objectives will continue into FY 2000.

Key Results: Four key intermediate results are necessary to achieve this objective: 1) increased skilled employment in enterprise through business skills and credit training; 2) increased value of domestic goods and services sold by enterprises through improved banking and financial services and business improvement loans; 3) increased value of exports from enterprises through technical assistance and loans for business improvement along with increased financial services; and 4) private sector liberalization and privatization policies implemented through support for improved monetary and fiscal policies and encouragement to rapidly privatize state-owned enterprises.

Performance and Prospects: The Commercial Bank of Eritrea has 12 additional trained loan officers who have been deployed to the bank branches in the target areas of REIP. The Rural Enterprise Unit is now providing technical assistance to enterprises. Under the TIFF, 35 individuals traveled in the region or to the United States on trade missions. These market development and export promotion efforts have increased their exposure to investment opportunities and improved technology. The resulting contract sales from these trips represent about a quarter of trade investment and facilitation costs expended to date.

The CRIS provided technical assistance to the engineers of the Ministry of Agriculture’s (MOA) small dam program and placed a Geographic Information Systems specialist in the MOA to strengthen the National Food Information System. The Title III food assistance program has enabled the Eritrean Government to meet two of its four food security objectives i.e., increasing the strategic grain reserve to 40,000 metric tons and adding 161 km of rehabilitated roads to the Ministry’s program over two years. Title II investments improving water management in Eritrea’s coastal plain have expanded the areas under cultivation significantly and increased yields to 2,700 metric tons, a 42% increase over the original target level. Some 10,000 rural households are expected to benefit directly as a result of USAID enterprise development assistance while approximately one million people in central and western Eritrea will benefit from increased market access and food availability.

Possible Adjustments to Plans: The slow start-up of REIP activities due to difficult technical and legal issues has been set back further as a result of the evacuation of many USAID staff following the border conflict between Ethiopia and Eritrea. While enterprise development remains a priority of the Eritrean Government, its view of the program has shifted in response to the 48,000 expellees, many of whom are entrepreneurs seeking economic re-establishment. Once the conflict is resolved and technical support staff is again at post, USAID will revise the current workplan with the Commercial Bank of Eritrea to map out a return to full program implementation, a process expected to take some time.

Other Donor Programs: Several donors, including Denmark, Italy, the European Union (EU) and the World Bank are providing assistance for rural road rehabilitation and agricultural development. The Food and Agriculture Organization (FAO) continues to underwrite the MOA's National Food Information System which, with the Famine Early Warning System, provides technical assistance leading to the development of agricultural statistics, creation of a data base, and an area sampling system. Under FAO’s South-South program 36 expatriates from India will work at the Ministry while its Eritrean staff pursue degrees abroad in higher education. With EU support, the Eritrean Government completed the critical $20 million Asmara-Massawa road rehabilitation project and a study of Eritrea’s air, sea, road and rail network. The International Fund for Agricultural Development is supporting a second water management system for irrigation in the eastern lowlands. The World Bank is providing a $30 million loan for the rehabilitation of the ports of Massawa and Assab and is providing $40 million for the establishment of the Eritrean Community Development Fund for rural credit.

Principal Contractors, Grantees, or Agencies: U.S. Department of Agriculture, Africare, Virginia State University, and Agricultural Cooperative Development International/Volunteers for Overseas Cooperative Assistance.

Selected Performance Measures:

	Baseline (1997)	Target (2000)	Target (2001)
Enterprises receiving loans from the EIF	0	100	1,200
Number of Enterprises receiving training and advisory services from the REU	0	200	350
Additional Km of rural roads rehabilitated	0	250	250
Established of the Strategic Grain (mt)	(1996) 0	50,000	50,000

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ACTIVITY DATA SHEET

PROGRAM: ERITREA
TITLE AND NUMBER: Increased Capacity for Accountable Governance at Local and National Levels, 661-0003
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $900,000 DFA
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2001

Summary: The purpose of this objective is to build the skills, knowledge and institutional infrastructure necessary to establish and strengthen accountable governance in Eritrea. It addresses extensive deterioration of the human and institutional resource base and acute shortages of professional manpower in the public sector. It also aims at minimizing the problem arising from inadequate capacity to plan and implement efficient delivery of government services and development programs.

The U.S. Government’s governance program in Eritrea, while supporting its human resources development strategy, is aimed at achieving Eritrea’s objective of establishing an efficient, lean and effective government. USAID-supported activities include a partnership between the University of North Carolina and the University of Asmara featuring the exchange of faculty and graduate students in law, political science and journalism along with the improvement of the University of Asmara’s facilities and equipment. USAID is planning to provide a grant under a new linkage program for management with Cornell and Western Michigan Universities that supports in-country training programs for administrators and mid level officials through strengthening the Eritrean Institute of Management and Mai Nefhi Training Center for Public Administration. A program to send selected officials to the United States and third countries for specialized training has been initiated. Progress in institutional capacity building will also be achieved through the continuation of a USAID-funded grant to the United Nations Development Program (UNDP) for training, advising, and equipping Eritrea's Central Bank to improve monetary and fiscal management. A grant to the National Council of Negro Women for building the institutional capacity of the National Union of Eritrean Women and a smaller grant to the American Center for International Labor Solidarity (ACILS) to strengthen the training center of the National Confederation of Eritrean Workers also support this objective. Together with the University of Asmara and the Ministry of Transportation and Communications, USAID expects to initiate feasibility studies for the introduction of Internet into Eritrea.

Key Results: Three intermediate results were identified as necessary to achieve this objective: 1) more effective judicial and legal processes and systems; 2) increased popular participation; and 3) improved and more effective public administration.

Performance and Prospects: USAID’s role is primarily that of assisting human resource capacity building and institutional strengthening for better public administration in Eritrea. While USAID's current activities are relatively new, three achievements are noteworthy: increased numbers of trained and qualified staff of the Ministry of Justice, ratification of the Eritrean National Constitution through a three-year participatory process with extensive civic education and outreach to all sectors of Eritrean society; and improved management in monetary and fiscal policy by the Central Bank of Eritrea.

The direct beneficiaries are the civil servants of government institutions who are expected to receive training through the United States-Eritrea development partnership as well as students who will be graduates of the University of Asmara who will be employed by national and local government. Also benefiting directly are the National Union of Eritrean Women and the National Union of Eritrean Workers, which participate in activities designed to strengthen their institutional capacities. Ultimately, the entire nation will benefit from the process of establishing good governance in Eritrea.

Possible Adjustments to Plans: USAID, at the request of the Eritrean Government, is in the process of revising this strategic objective. Although the activities described above will remain the same, the Eritrean Government would like the focus of the objective to be human capacity development, rather than governance. It sees human capacity as the key foundation for good governance and USAID sees the focus shift as an opportunity to broaden the scope of the objective in the future to include human capacity development for the private and civil sectors in addition to the public sector.

The current conflict between Eritrea and Ethiopia has arrested progress in this objective. Lack of USAID staff in country to negotiate and implement the program has created major delays. Additionally, the mandatory restriction on travel has prevented U.S. university representatives from traveling to Eritrea to negotiate and finalize linkage agreements planned to begin in Fall 1999. This could cause linkages to be delayed for a year. As the situation resolves, USAID will review and adjust the workplan with Eritrean partners, however it will take some time to normalize the program.

Other Donor Programs: The World Bank has negotiated a $60 million concessional loan program in support of the Human Resources Development Program of Eritrea and is the lead donor in the sector. The United States, although often providing assistance through intermediaries such as the UNDP and U.S. universities, is also one of the principal donors in building good governance through supporting the Eritrean Government Human Resources Development Program. Other donors, such as United Kingdom, Sweden, Germany, Norway, Canada, the Netherlands, Australia, South Africa, and UNDP have been active in Eritrea’s Human Resource Development and Good Governance programs and projects.

Principal Contractors, Grantees, or Agencies (actual and expected): The University of North Carolina; the National Council of Negro Women; ACILS; the universities of Western Michigan, Florida, Cornell, and UCLA; the African American Institute; the United States Information Agency; the National Center for State Courts; and World Learning.

Selected Performance Measures:

	Baseline (1998)	FY 2000	Target (2001)
Number of University faculty in U.S. graduate training	7	10	15
Number of lawyers trained in university Bachelor of Laws degree level at all levels of the Judiciary and Ministry of Justice	25	50	80
Number of government personnel in U.S. training programs funded by USAID	8	9	5
Number of Central Bank of Eritrea and Eritrean Institute of Management graduates working in areas of project, personnel and financial analysis and management	250/year	350/year	400/year

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