Eritrea: Family's Party Loyalty Pre-requisite To Acquiring Business Licenses

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Gedab News

By Gedab News
Jun 28, 2005, 13:17 PST

Effective this month, June 2005, the government of Eritrea has started administering a new and significantly more intrusive form to those who want to apply for new business licenses or renew their current licenses. These new requirements are even more meddling than the ones decreed in April 2003, which brought about the destruction of Eritrea’s private sector.

In addition to the usual questions that are normally contained in these kinds of forms, the new document introduces a lengthy set of questions related to the applicant’s family members both within and outside Eritrea. The questionnaire asks for names, birthdates, country of residence, addresses, ID cards, passport numbers (both Eritrean and of adopted country/country of residence) and whether each family member had performed national service and been meeting “national obligations.” For family members living abroad, the date on which they left Eritrea and their exit visa numbers are also required.

Given these burdensome requirements, there are almost no applicants for new licenses and the form is essentially being distributed to applicants seeking license renewal. There are indications that the completed forms will be subjected to a protracted vetting process that includes investigating all listed family members, particularly those living outside Eritrea, before deciding on the ‘eligibility’ of the applicant for renewal. This is because many applicants were told to enquire about the status of their applications in five or six month’s time (November/December 2005).

It seems that the new procedure is aimed at canceling altogether the licenses of the majority of business enterprises. Meanwhile, there are long queues for almost every food stuff in the so-called "fair-price stores", the Soviet-style party-owned co-ops, which have replaced the privately-held businesses. Almost everything is rationed and citizens are required to show coupons.

Background

This is the third time within the past two years that the Government of Eritrea has decreed increasingly onerous rules. In April 2003, it issued a lengthy application process, including a requirement that all businesses provide annual audited financial statements, which was allegedly designed to eliminate undercapitalized companies. In February of this year, the government halted issuing import permits to the business community which resulted in the total paralysis of the private sector. This current directive targets all but the most loyal party loyalists.

None of these demanding rules apply to the ruling party’s conglomerate, Red Sea Trading Corporation (RSTC), a secretive organization which reports to no one but the president and his hand-selected lieutenants. There is no transparency in its governance: not even senior members of the party receive financial reports of the company. Recently, in response to criticism from the private sector that it enjoys favorable treatment including a tax-exempt status, RSTC announced that it plans to utilize internal and external auditors—a requirement that has been mandated on the private sector at least since 2003.