The Hidden Price of Remitting
How the Eritrean Regime Turned a Lifeline into a Tool of Authoritarian Power
For millions of families across the world, remittances, the money sent home by relatives working abroad, are a lifeline. They pay for food, medicine, and education, often bridging the gap between poverty and survival. But in Eritrea, one of the most closed and repressive nations on Earth, these same lifelines have become chains.
A country once hailed for its hard-won independence now stands as a stark reminder of how an authoritarian state can twist even acts of care into instruments of control.
A Theory Tested by a Relentless Regime
In 2018, political scientists; Albertus Escribà-Folch, Covadonga Meseguer, and Joseph Wright, proposed a provocative idea: that remittances sent to citizens in autocratic states can empower opposition movements and spark pro-democratic protests. Their logic was simple, more money from abroad means more resources for dissent.
But Eritrea, ruled since independence by President Isaias Afwerki, defies that logic. Despite being one of the world’s most remittance-dependent nations, with transfers from abroad accounting for nearly a third of its GDP, the country has seen no pro-democratic uprising. Instead, Afwerki’s regime has turned the global flow of money into a mechanism of surveillance, coercion, and dependency.
The “North Korea of Africa”
Eritrea sits on the Horn of Africa, bordered by Sudan, Ethiopia, Djibouti, and the Red Sea. Its 30-year war of independence against Ethiopia ended in 1993, ushering in hopes for democracy and reconstruction. Those hopes quickly evaporated.
President Afwerki, a former guerrilla commander trained in Maoist China, established a one-party state under the People’s Front for Democracy and Justice (PFDJ). Elections were never held. The press was silenced. Thousands disappeared into military conscription or secret prisons.
By the early 2000s, Eritrea had become known as the “North Korea of Africa”, a nation with no free media, no NGOs, and one of the most pervasive systems of surveillance on the continent.
An Eritrean migrant I interviewed described the effect vividly:
"One TV channel, one newspaper, one party."
As the regime tightened its grip, hundreds of thousands fled. By 2000, roughly 1.5 million Eritreans, or about 42 percent of the population, lived abroad. Their remittances, sent home through formal and informal channels, became the backbone of the country’s economy.
Turning Lifelines into Leverage
At first, most Eritreans sent money informally, via trusted networks known as hawala. In a hawala system, a local agent collects money from the sender, instructs a counterpart elsewhere to pay the recipient, and later settles accounts through goods, services, or reciprocal transfers, entirely bypassing banks and official channels. These systems bypassed the state entirely. But that independence soon drew Afwerki’s attention.
In 2005, his government banned the use of foreign currency within Eritrea, requiring all exchanges to go through state banks at fixed rates. A decade later, in 2015, a major currency reform forced citizens to swap their old banknotes for new ones. The old currency was made illegal, and anyone holding more than 20,000 Nakfa (around €1,230), such as many hawala agents, had to justify the source of their funds to the authorities.
The move wiped out hawala networks overnight. It also forced families to channel remittances through a single state-run bank, Himbol Financial Services. Himbol became the regime’s financial gatekeeper, offering below-market exchange rates, monitoring transactions, and limiting withdrawals to around 5,000 Nakfa (€287) per month, barely enough to survive.
With private financial enterprises outlawed, Eritrean families became wholly dependent on either the state or the remittances the state allowed them to receive.
The 2 Percent Diaspora Tax
The regime’s control did not stop at its borders. Abroad, Eritreans face a unique demand: a 2 percent “diaspora tax” on their income.
In theory, this tax funds development projects back home. In practice, it serves as both a source of hard currency and a tool of loyalty enforcement. Eritreans who pay the tax receive a special ID, allowing them to send money home through official channels, or to access government services. Those who refuse are branded traitors.
Many pay not out of loyalty, but out of fear. Non-payment can mean being denied visas to visit family, losing property in Eritrea, or even having relatives at home harassed by security forces.
The tax also divides the diaspora. Those who pay it become part of the pro-regime community, able to send money and attend government-organised festivals abroad. Those who refuse risk being cut off, both financially and socially, from their loved ones at home.
Silencing the Exiled
Exactly how many Eritreans abroad oppose the regime is unknown. Many flee the country as refugees, enduring an arduous journey, often through Sudan, the Sinai, and Israel, before eventually reaching Europe. Once they obtain citizenship in their new country of residence, many begin paying the 2% “diaspora tax,” which allows them to send money to their families or visit Eritrea.
This paradox, leaving Eritrea as refugees yet re-entering pro-regime circles after resettlement, makes it extremely difficult to determine how many in the diaspora privately oppose the government while still complying with its financial demands.
Those who refuse to pay the 2% tax face severe restrictions on sending money home. With most formal remittance channels closed to them, and internet access in Eritrea limited to a few monitored cafés in its capital Asmara, alternative transfer methods are nearly impossible.
Some resort to travelling to neighbouring countries like Sudan or Ethiopia to meet family members in person. Instead of sending cash, they bring goods such as phones or clothes that can be taken back across the border.
This dynamic isolates the anti-regime diaspora and reinforces the government’s grip. By controlling financial flows, the regime ensures that even those living freely abroad remain entangled in its system of surveillance and coercion.
The Regime’s Double Gain
The Eritrean government has turned remittances into a dual weapon. At home, it keeps citizens dependent by controlling who can receive money and how much. Abroad, it taxes loyalty and cuts off dissenters.
The result is that remittances, rather than empowering the opposition as Escribà-Folch, Meseguer, and Wright suggested, have strengthened the regime’s foundations. The money that should have fuelled independence has become another stream of revenue for authoritarian survival.
Under this system, both sides of the remittance exchange, the sender and the receiver, are drawn into a web of dependency. The diaspora funds the state through taxes and fees, while the population inside Eritrea remains too economically vulnerable to risk protest.
A Nation in Suspended Silence
Three decades after independence, Eritrea remains a nation frozen in time. Its people depend on relatives abroad for their daily survival, but that flow of money is carefully policed by a regime that fears its own citizens more than any foreign enemy.
The result is a paradox. Remittances sustain life in Eritrea, yet they also sustain the dictatorship. The very money that could fund change instead helps maintain the status quo.
Until Eritreans can freely send and receive money without state interference, the promise of remittances as a force for democratic transformation will remain just that, a promise unfulfilled.
Author: Robert Mensing
Note
- Most of the information in this article is drawn from an interview conducted on 13 May 2024 with an Eritrean migrant currently residing in the Netherlands. For safety reasons, the interviewee has chosen to remain anonymous. An audio recording of the interview is available upon request.
