Eritrea: the Hole on the Currency Argument

The Italian public hasn’t acknowledged the racist and violent history in its former African colonies, state some historians. They attribute the problem to Italian institutions, such as the media and the education sector, for portraying the colonial officers and soldiers as brava gente, or good people. In the same manner, the Eritrean public hasn’t recognized the predatory and extractive nature of the tegadelti/yeakealo, who allegedly fought for the poor, the meek and the humble. Predation and extraction has been the policy, which sustained the armed struggle and the state that followed it. However, the public doesn’t seem to use this as an icon; it is in total confusion.

The rebels had no respect for the right of property, or for that matter any other-right during their long sojourn. Had the public affirmed that, identifying the enemy wouldn’t have been difficult. Instead, the public in Eritrea and abroad immerse themselves in too many gossips, and the elite in analyzing and dissecting the symptoms of the system.

The legitimacy and rational for it is put into question. All the hyperactivity is futile, however. As Kibrom Dafla said, the regime works in the dark. It is so secretive that, it doesn’t even publish the state budget. Hence, the context and the affliction with such type of mental blindness has prevented them to see the hole in the discourse about the currency subject in Eritrea.

Recently, a person in Asmera had been contacted to collect some remittance money from the agent of a money-wiring agency in the United States. They had to do it in secret and in a hurry for fear of being arrested by the regime. However, they had to contend with a huge amount of small denomination of one and ten Nakfa bills. Not surprisingly, the beneficiary who is less dexterous in counting money than the agent; was short changed, or robbed of some of the money. All this because the large denomination of 50 and 100 Nakfa were unavailable. These type of bills are averse to Zuro-hagerka.

This anecdote is a good illustration of the insecurity in the country. The irony is that, the state itself traffics in contraband goods, uses black market money in a major way. What happened to the purportedly law abiding citizen in Eritrea?

In the mid-90s of the last century, Eritrea had the highest per capita of people, who hold bank accounts in Africa. When the 30-years war ended, the Eritrean diaspora rushed to help its impoverished families. They needed a secure method of remitting money. The sudden rise of using banks was, therefore, an influence from outside.

Twenty years after the growth of this banking tradition, the regime publishes a decree for a new Nakfa currency. According to the government, the rational for the Nakfa tender is to encourage the public and businesses to use checks. The thing is, why did the public shy away from the banks, and reverted to putting his savings in mattresses? What made it stop from leaping into mobile banking? It is wide common in Kenya, now.

Let’s venture further. The new Nakfa has the same value as the old. The regime has “no need” for confidence building. All seems business as usual or is it not. Why would a government, which often practices bartering discover all of a sudden the need for checking and a dependable means of banking? This alleged promotion of checking is therefore, incoherent.

The state of Eritrea runs a command economy at home; utilizing tens of thousands of people under a slave-like condition; eviscerating the private sector and livelihood of Eritrean families. Abroad, it likewise works in the dark, and extorts money from indeterminate number of diaspora Eritreans, who ironically sustain the families impoverished by none other than the regime under discussion.

Hyperinflation, low exchange rate, counterfeit money weren’t mentioned in the decree at all. Suppose they were; what then? The regime can’t fight the hyperinflation without freeing the factors of production: land, capital, labor, knowledge. The regime can’t fight the low exchange rate without import-substituting industries. The regime can’t fight the hyper-inflation, while keeping the exchange rate of the old Nakfa the same; the policy of the equally extractive Zimbabwe state. It didn’t even consider it as a bandage solution. The economy is not suffering from a sizable counterfeit money (we aren’t told, if it was); what purpose does the new serve, then. We are confounded.

It is likely; the regime is after people, who practice contraband and therefore hoard money. An absurd cause, for the regime that does the same on a large scale. It seems the command economy is threatened not by the already dead private sector, but by other entities, which mushroomed under the aegis of the state. Desperate for its survival, the extractive state, is mostly likely to expropriate some of contrabandists and traffickers. What will be the aftermath?

The prediction that, the new rags-to-riches will confront the regime; resulting in some form of freedom is nothing but a delusion. The famished and terrified subjects of the totalitarian state will stay quiet and indifferent. They can’t even protect their children let alone any money saved in cans and mattresses.

In the 1960s, children in Asmera would occasionally find strange looking coins with a hole on them. Shillings and Maria Theresa dollars had replaced the Lire; following the defeat of Italy by the British troops. The holes were there, because base metals were scarce during the Second World War. The pragmatic British therefore made these coins for the natives. It is easy for portability. A hole of a different nature had appeared in the minds of the generation that playfully flipped those coins.

Having been unable to see the hole, that is, the economy of political and economic extraction; having normalized the condition, we observe them stumbling and groping into visions of either the destruction of the criminal and contraband syndicates or the regime, or both. In a country, where no bread-riots (a common occurrence in the African continent) were at any time tolerated, an impending currency-riot is foretold. It appears that, the utility of Nakfa as a symbol of a revolution; has yet to exhaust itself. What explains this malady?

Yemane Ghebreab, a senior apparatchik of the regime had an interview with BBC reporters. In his office, a row of books are displayed on his desk, and one of them is How Nations Fail.  The book assigns the blame for the failure of nations to extractive economic and political governance. This cadre is sitting on it without realizing it, said one Ethiopian observer. This surreal world of the cadre is also shared by some of the public and elite in Eritrea.

In contemporary Eritrea, critical thinking seems as scarce as the base metals during British military administered Eritrea. In the same manner, the alleged social capital, which is supposed to have sustained the war for independence is taken for granted. The fact is however Eritrea, just like Albania after the fall of communism; had experienced the Pyramid Scheme; an extortion practice that robbed the money of many people, including the money of some families, who received pittance money in compensation for their “martyred” children.

The end for the hole in the Eritrean currency debate and beyond seems to be too distant.