The Big Push Without SMEs? Eritrea’s Development Dilemma @EritreaInsight1

Ajouté : 2026-05-25

[00:00:00]Good evening everyone. Today I want to reflect on one important section of President Isaias Afwerki's recent Independence Day speech. Specifically, the part dealing with domestic development and the economy. Like many people, I initially found the speech difficult to follow clearly. The language was broad and philosophical.

[00:00:19]There were references to productivity, infrastructure, technology, manufacturing, social services, and national participation, but fewer concrete details about timelines or implementation. Still, instead of dismissing the speech entirely, I think it is more useful to ask what kind of economic thinking may actually be behind these remarks. When we examine the speech carefully, we can connect it to two themes we discussed previously.

[00:00:45]First, the idea of a big push economic strategy. Second, the role of SMEs, small and medium enterprises, in long-term national development. At the center of the speech is one major idea.

[00:00:58]The government believes Eritrea must transition from a subsistence economy toward a more productive and industrial economy. That phrase is important. A subsistence economy is one where most people produce mainly for survival.

[00:01:11]Productivity remains low, industrialization is limited, and exports stay weak. The president appears to argue that Eritrea's long-term objective is not merely stability, but structural economic transformation. He mentions several pillars: infrastructure, housing, electricity, water access, education, health care, industrial processing, technology, and diaspora participation. In development economics, this resembles a state-led modernization framework. The issue is not necessarily the vision itself. The issue is clarity. Modern economies do not transform through slogans alone.

[00:01:50]They transform through institutions, incentives, financing systems, and productivity growth. That is where many listeners felt unsatisfied.

[00:02:00]Now, let us connect this to the big push theory we discussed previously. The big push theory, associated with economists such as Paul Rosenstein-Rodan, argues that poor countries remain trapped in underdevelopment because isolated investments are insufficient. For example, building factories without roads fails. Expanding education without jobs creates frustration. Increasing production without electricity limits growth. Development cannot happen sector by sector in isolation. The state must coordinate multiple sectors simultaneously. This is why the speech repeatedly emphasizes coordination, synergy, infrastructure, technology, social services, and national mobilization. That is very consistent with big push thinking. When the president speaks about coordination between public participation, young professionals, and the diaspora, he is describing a mobilization-based development model. Historically, several countries attempted versions of this approach. South Korea combined state planning with industrial coordination.

[00:03:02]China used centralized infrastructure expansion alongside manufacturing growth. Singapore built institutions and logistics simultaneously. The basic logic is simple. A weak private sector alone often cannot industrialize a poor country rapidly. So, the state initially becomes the organizer and coordinator of development. This appears to be the broader philosophy inside the speech.

[00:03:27]But, there is an important issue. A big push strategy works only when coordination is effective. If institutions are weak, if financing is limited, or if implementation capacity is poor, large state ambitions can stall. That is why successful developmental states did not only build infrastructure. They also built capable institutions. And that distinction matters greatly.

[00:03:50]One major limitation in the speech the relatively limited discussion of SMEs, small and medium enterprises. This matters because no modern economy develops sustainably without a strong SME sector. SMEs are not simply small shops. They are the backbone of employment creation, innovation, local manufacturing, entrepreneurship, and domestic market expansion. In most successful economies, large state projects create the foundation, but SMEs create economic dynamism. For example, a road alone does not create prosperity.

[00:04:25]Businesses using that road create prosperity. Electricity alone does not create jobs. Factories, workshops, restaurants, and logistics companies create jobs. This is where many analysts feel Eritrea's development discussion still remains incomplete. The speech mentions productivity, manufacturing, and industrial processing, but it does not clearly explain how entrepreneurs will access capital, how businesses will scale, or how local production ecosystems will emerge. Without that layer, infrastructure risks becoming disconnected from actual economic activity. This is one of the central lessons from development economics. The state can build infrastructure, but sustainable growth eventually depends on productive enterprise expansion. Even successful developmental states created space for entrepreneurs and manufacturers to grow. South Korea supported industrial firms. China encouraged local manufacturing. Vietnam expanded export-oriented production. The common denominator was not simply state planning. It was the combination of state coordination, market incentives, and productive enterprise growth. So, one important question becomes, can Eritrea successfully combine national coordination with entrepreneurial dynamism? Because SMEs are often the bridge between infrastructure and mass employment.

[00:05:47]Another important issue raised indirectly in the speech is institutional capacity. At one point, the president mentions that preparatory and coordination tasks may affect the pace of development programs this year.

[00:06:00]This is actually a revealing statement.

[00:06:03]Large developmental strategies require strong institutions. A big push model works only when planning is efficient, coordination functions properly, technical expertise exists, and policy implementation remains consistent.

[00:06:18]Otherwise, coordination itself becomes a bottleneck. This is one of the biggest lessons from modern development history.

[00:06:24]Countries do not succeed simply because they announce ambitious projects. They succeed because institutions are capable of executing those projects over long periods of time. That includes ministries, financial systems, engineering capacity, education systems, and regulatory institutions.

[00:06:43]Infrastructure alone cannot compensate for institutional weakness. And this is especially important in the modern global economy. Today's competition is not only about roads and buildings. It is also about technology, data systems, human capital, financial efficiency, and innovation capacity. So, when the speech discusses technology, young professionals, and diaspora participation, it indirectly acknowledges that development requires more than physical construction. It requires institutional sophistication.

[00:07:15]This is where Eritrea faces both opportunities and challenges. The country has demonstrated resilience and national cohesion in certain areas. But economic modernization requires continuous institutional adaptation. The challenge is no longer simply survival.

[00:07:31]The challenge is competitiveness. Can institutions support investment, innovation, productivity growth, and industrial scaling? That is the critical question. Because even ambitious national visions can slow down if institutions lack flexibility or implementation capacity. Development is not only about vision, but also execution.

[00:07:53]Another major theme in the speech is the strong linkage between national defense and national development. The president describes the defense forces as the shield and cornerstone behind development programs. This reflects a long-standing principle within Eritrean political thinking. Security and development are deeply interconnected.

[00:08:14]Historically, this perspective emerged from the liberation struggle, regional wars, sanctions, and prolonged geopolitical insecurity. From the government's perspective, national security is viewed as a prerequisite for long-term development. And to some extent, this argument is understandable.

[00:08:32]Many countries facing instability struggle to sustain economic growth.

[00:08:37]Without stability, investment declines, infrastructure is destroyed, and long-term planning becomes difficult.

[00:08:44]So, the leadership emphasizes resilience and defense preparedness as foundations for development. However, economically, this creates a balancing challenge.

[00:08:53]Modern growth also depends on labor flexibility, entrepreneurial freedom, private sector expansion, and skilled workforce retention. The more development becomes heavily centralized around security structures, the harder it can become to generate broad economic dynamism. This is not unique to Eritrea.

[00:09:12]Historically, many centralized developmental models struggled with this balance. Too little coordination creates fragmentation. Too much centralization can limit innovation and flexibility.

[00:09:24]So, the real question becomes, how can a country maintain national cohesion while also expanding economic participation and creativity? That balance is extremely important. Because sustainable modernization eventually requires engineers, entrepreneurs, researchers, manufacturers, and innovators operating within a productive ecosystem. National resilience matters, but economic transformation also requires productivity-driven growth.

[00:09:52]Another major theme in the speech is the strong linkage between national defense and national development. The president describes the defense forces as the shield and cornerstone behind development programs. This reflects a long-standing principle within Eritrean political thinking. Security and development are deeply interconnected.

[00:10:13]Historically, this perspective emerged from the liberation struggle, regional wars, sanctions, and prolonged geopolitical insecurity. From the government's perspective, national security is viewed as a prerequisite for long-term development. And to some extent, this argument is understandable.

[00:10:31]Many countries facing instability struggle to sustain economic growth.

[00:10:36]Without stability, investment declines, infrastructure is destroyed, and long-term planning becomes difficult.

[00:10:43]So, the leadership emphasizes resilience and defense preparedness as foundations for development. However, economically, this creates a balancing challenge.

[00:10:52]Modern growth also depends on labor flexibility, entrepreneurial freedom, private sector expansion, and skilled workforce retention. The more development becomes heavily centralized around security structures, the harder it can become to generate broad economic dynamism. This is not unique to Eritrea.

[00:11:11]Historically, many centralized developmental models struggled with this balance. Too little coordination creates fragmentation. Too much centralization can limit innovation and flexibility.

[00:11:23]So, the real question becomes, how can a country maintain national cohesion while also expanding economic participation and creativity? That balance is extremely important because sustainable modernization eventually requires engineers, entrepreneurs, researchers, manufacturers, and innovators operating within a productive ecosystem. National resilience matters, but economic transformation also requires productivity-driven growth.

[00:11:52]The speech also places strong emphasis on social services, particularly education, health care, electricity, water access, and housing. These are important because development is not measured only through GDP growth or industrial output. Human development matters equally. A country cannot modernize sustainably if large parts of the population lack quality education, basic health care, clean water, or reliable energy access. So, in principle, prioritizing these sectors is economically rational. Education, for example, is not simply a social service.

[00:12:28]It is an economic investment. Countries that industrialized successfully invested heavily in literacy, technical training, engineering, and workforce development. Health care is also closely tied to productivity. A healthier population is generally more productive and economically active. Access to electricity has major multiplier effects as well. Electricity supports manufacturing, communications, digital services, agriculture, education, and health care systems simultaneously. So, the sectors mentioned in the speech are strategically important. However, the challenge again returns to implementation and economic integration because infrastructure and social services alone do not automatically create economic transformation. The key issue is whether these investments generate productive economic ecosystems around them. For example, does education lead to employment? Does electricity lead to industrial growth? Do roads improve domestic trade? These linkages are critical. Development becomes sustainable when sectors reinforce one another. And this brings us back again to the logic of the big push model. The idea is not merely to build isolated projects. The idea is to create interconnected momentum across the economy. But for that momentum to become self-sustaining, productive enterprises must emerge alongside state investment.

[00:13:52]One interesting aspect of the speech is its repeated emphasis on coordination and national participation. The president stresses the importance of young professionals, the diaspora, popular participation, and patriotic commitment. This reflects a development philosophy that sees modernization as a collective national effort rather than purely a market-driven process. In many post-colonial states, this thinking became influential because leaders believed fragmented societies required centralized coordination to achieve rapid development. The argument was that national unity could compensate for limited resources. And in Eritrea's case, the liberation struggle itself created a strong tradition of collective mobilization. So, politically and historically, this language makes sense.

[00:14:40]However, modern economies are increasingly complex. Today's development environment depends not only on mobilization, but also on innovation, specialization, financial systems, technology ecosystems, and global integration. This means coordination alone is no longer enough. A country also needs systems that encourage experimentation, competition, and productivity growth. The diaspora discussion becomes especially important here. The speech highlights the importance of Eritreans abroad in supporting development. Diaspora communities can contribute through investment, skills transfer, technology, and entrepreneurship. Many successful countries benefited greatly from diaspora engagement. But diaspora participation works best when investors and professionals feel there is predictability, economic opportunity, and policy consistency. People invest when systems are stable and incentives are clear. So, the challenge is not simply encouraging patriotic participation. The challenge is building economic structures capable of productively absorbing talent and capital. That requires institutions capable of supporting both national coordination and private initiatives simultaneously.

[00:15:55]Another important point in the speech is the emphasis on value-added manufacturing and industrial processing.

[00:16:01]This is one of the most economically significant parts of the entire address.

[00:16:06]Countries rarely become prosperous by exporting raw materials alone. Long-term development usually requires moving up the value chain. For example, instead of exporting raw agricultural products, countries process food domestically.

[00:16:20]Instead of exporting minerals in raw form, they develop refining and manufacturing capacity. Value addition increases employment, productivity, export earnings, and technological learning. So, strategically, the emphasis on value-added production reflects a serious development objective. However, industrialization is extremely difficult. Modern manufacturing competitiveness depends on reliable electricity, transport systems, financing access, technical skills, technology transfer, and logistics efficiency. This is why industrialization historically required strong institutional coordination. East Asian economies succeeded because they combined state planning, export orientation, technical education, and private sector growth. Industrialization also requires scale. Factories need markets. Manufacturers need supply chains. Producers need stable regulations and financing systems. This is why simply announcing industrial ambitions is not enough. A detailed industrial policy framework is usually necessary that includes which sectors to prioritize, how to finance production, how to train workers, and how to support exporters. Without these mechanisms, industrialization can remain largely aspirational. Still, the fact that the speech focuses on value-added production rather than permanent dependence on low productivity sectors is economically significant. It suggests the leadership understands that structural transformation is necessary. The key question is whether Eritrea can build the institutions and productive ecosystems needed to achieve transformation.

[00:18:02]So after examining the speech carefully, how should we interpret it overall? I think it is important to avoid two extremes. One extreme says everything is progressing perfectly and no serious economic questions exist. The other says there is no vision whatsoever behind the speech. Reality is usually more complicated. The speech does contain a developmental philosophy. It emphasizes infrastructure, social services, industrialization, technology, coordination, and national mobilization.

[00:18:33]In many ways, it resembles elements of a state-led developmental model or big push framework. The broader objective appears to be transitioning Eritrea away from a low productivity subsistence economy toward a more industrial and modernized structure. That is a serious ambition, but ambition alone does not guarantee results. The real issue is whether the institutional and economic conditions necessary for success are actually being built because development ultimately depends not only on vision, but on systems. That includes financial systems, regulatory systems, education quality, private sector participation, industrial policy, technology integration, and institutional effectiveness. This is where many listeners felt the speech remained too abstract. There were broad goals, but fewer concrete operational details.

[00:19:26]People naturally want to understand what sectors will lead growth. How will businesses scale? How will youth employment expand? How will productivity increase? These are practical economic questions. And in the modern world, economic credibility increasingly depends on measurable implementation capacity rather than rhetorical ambition alone. Still, I think the speech becomes easier to understand once viewed through the lens of developmental state thinking. Underneath the broad language lies a recognizable philosophy, central coordination, national mobilization, and infrastructure-led development.

[00:20:02]In conclusion, I believe the Independence Day speech should be understood less as a detailed economic road map and more as a statement of developmental direction. The president appears to envision a coordinated, state-guided, infrastructure-centered path toward modernization. This resembles aspects of the big push development model we discussed previously. The emphasis on roads, housing, electricity, water, education, health care, industrial processing, and value-added production all point toward a strategy aimed at long-term structural transformation. At the same time, the speech leaves many important economic questions unanswered. How will SMEs expand? How will entrepreneurs access capital? How will institutions modernize? How will productivity increase sustainably? These are critical issues because infrastructure alone cannot sustain development indefinitely.

[00:20:57]Roads must connect productive businesses. Electricity must support industry. Education must translate into skilled employment. And state investment must eventually generate self-sustaining economic activity. That is where SMEs become essential. Small and medium enterprises are often the bridge between national infrastructure and mass economic participation. They transform public investment into employment, innovation, production, and local economic growth. So ultimately, Eritrea's long-term success may depend on whether it can successfully combine strong national coordination, institutional modernization, productive entrepreneurship, and broader economic participation. The speech clearly emphasizes resilience and national commitment. But modern development also requires adaptability, innovation, financial flexibility, and institutional efficiency. Perhaps that is the central issue moving forward, not whether Eritrea desires development. That desire is clearly expressed. The deeper question is whether the country can build the institutions and productive ecosystems capable of turning long-term ambition