Business in Eritrea

A person or company starting a formal business in Eritrea normally selects the activity, obtains any sector-specific permit, submits a written application to the Ministry of Trade and Industry or its Business License Office, receives inspection approval, obtains a business license and registers in the Commercial Register. Registration may take place through the relevant Zoba or Sub-Zoba office or at the Ministry headquarters. The license identifies the business location, activity and name, and it must be displayed publicly. Separate permits may apply to activities requiring professional qualifications, grading or sector approval. Inland Revenue clearance or a no-objection confirmation may also be required. Access conditions can include being at least 18 years old, not being a public-service employee and having fulfilled national duty. Foreign investors face additional rules under Proclamations 127/2002 and 128/2002. Proclamation 59/1994 formally opens investment areas, but foreign participation in domestic retail, wholesale, import and commission agency activities is restricted unless a reciprocity agreement or a government waiver applies. Current sector access and investment terms are reported to depend heavily on government decisions, and the practical operation of the investment law is not fully transparent. The Eritrea Investment Center operates directly under the Office of the President and is associated with investment certification, technology-transfer arrangements, investment guarantees, dispute settlement and fiscal incentives. The business environment includes small family storefronts, informal micro and small activities and larger enterprises linked to the state or PFDJ structures. The informal economy is significant, although its total size has not been independently verified. Recent assessments place private-sector activity below 7 percent of GDP and estimate that about 80 percent of MSMEs are microenterprises. Mining, agribusiness, food processing, textiles, construction materials and small trade are examples of relevant sectors, but energy gaps, limited infrastructure, shortages of skilled labour, foreign-exchange restrictions and state control constrain expansion. A valid annual license, annual registration and license fees, tax compliance and compliance with water, sewerage, electricity, building, fire, health, sanitation and zoning requirements generally form part of continued operation. Under Proclamation 128/2002, a late-renewal procedure allows up to 90 days after the end of the fiscal year and may provide a further period of up to 60 days with a penalty of Nfa 2 per day. The current fee schedule is not publicly verified. A license can be transferred or assigned only with Ministry approval and proof of sale, gift or inheritance. False information, missing conditions or regulatory non-compliance can lead to suspension or revocation. For specified adverse decisions, an appeal to the High Court may be available within 30 days. Business finance is concentrated in the state commercial banking system, including the Commercial Bank of Eritrea and the Housing and Commercial Bank of Eritrea, within the framework overseen by the Bank of Eritrea. Reported private credit commonly requires collateral and may carry high interest. The Nakfa is not freely convertible, and the Bank of Eritrea controls transfers and foreign exchange. Import, export and raw-material foreign-exchange access is heavily restricted. Public evidence has not verified widespread ATM, card or correspondent-banking access, and a reported withdrawal limit is 5,000 Nakfa per month. The Micro-Credit and Savings Program, or SMCP, provides a functional financing alternative for some small activities. Official 2026 reporting describes more than 70,000 active clients, over 760 village banks and access in about 70 percent of villages, with women representing more than half of clients. A 2025 Central Region report recorded 76.5 million Nakfa distributed through six village banks to more than 11,000 customers. These figures are official self-reports without independent audit evidence. The program is community- and group-oriented and supports rural and urban small trade, agriculture and livestock; it does not replace a required business license. Historical registration benchmarks reported about six government offices and approximately 84 days, but there is no publicly verified current online one-stop registration portal, so these figures should not be treated as a current service promise. A 2020 standardized tax benchmark recorded a 5 percent sales tax, 30 percent corporate income tax, 4 percent municipal earnings tax, 30 payments over 216 days and a total tax rate of 83.7 percent. These are historical benchmark figures, not a confirmed current tariff schedule. Publicly accessible evidence also does not verify the current liquidation, insolvency, registry-exit procedure or closure costs for businesses in Eritrea.