Eritrea is vulnerable to recurrent droughts and variable weather conditions due to its geographical location in the arid Horn of Africa region. Slower economic growth and the residual effects of war also perpetuate the vulnerability of approximately two thirds of the population (AfDB, OECD, UNDP, 2014).
It is estimated that in a year of good agricultural production, the country can produce a maximum of 70-80 percent of its annual cereal requirements, and in a bad year, as little as 20-30 percent (ADB, 2011). This situation makes 80 percent of the population directly vulnerable as their livelihoods largely depend on subsistence agriculture and pastoralism (National Statistical Office, 2010 Eritrea Population and Household Survey).
On average, the country suffers a drought every three to five years (FAO). The Government of the State of Eritrea maintains that El Niño has not had serious negative effects beyond the ordinary droughts the country experiences. Eritrea’s annual economic performance has been constrained by variable climate conditions; economic controls (limited foreign investment outside the mining sector, reduced aid inflows); the unresolved border dispute with Ethiopia; and a decline in remittances and scarcity of foreign exchange.
The Eritrean economy remains depressed and will operate below potential in 2016-17 due to a lack of capital, near absence of private sector participation and foreign investment (except in the mining sector) and unfavourable government policies (Economist Intelligence Unit, 2016; African Development Bank, 2015). Nevertheless, annual real GDP may grow from about 1.8 percent in 2015 to 3.4 percent in 2017 driven by growth in the mining sector. A second mine, Koka, in addition to Bisha Mine, commenced commercial production in January 2016 (Economist Intelligence Unit - EIU, 2016). However, the marginal economic gains are yet to materialize into improved living standards for the general population. Inflation is expected to increase from 10.1 percent in 2015 to an average of 12.3 percent in 2016-17. A decline in remittances is expected due to the imposition of sanctions, although the largely unofficial remittance inflows are difficult to analyse (EIU, 2016). Lack of foreign currency may reduce capacity to import food that the country relies on to offset perennial food deficits. In light of the acknowledged 2015/2016 poor harvest period, as well as economic constraints, food insecurity is a concern (FAO 2016).
Eritrea is also vulnerable to natural hazards such as floods, volcanic activity, earthquakes, desert locust infestation and disease outbreaks.
Population influxes are also placing additional stress on the country. According to UNHCR as of Feb 2016, Eritrea hosts 2,426 refugees (2,359 camp-based Somali refugees and 67 urban-based refugees of other nationalities).