The cost of living in Eritrea is very low, estimated at $525 per month, which is 2.22 times less expensive than the world average. The Rent Index is 7.53, indicating very affordable rental costs.

The property price to income ratio is 15.5 years, indicating a very expensive housing market relative to local incomes. The rental market, however, appears more affordable with a Rent Index of 7.53.

Average incomes are very low, with the average after-tax salary reported at $94.1 per month, sufficient to cover only 0.2 months of living expenses. The majority of the workforce in national service earns significantly less, around $30-40 USD per month.

Eritrea has a progressive income tax system with rates ranging from 2% to 30%. A sales tax of 4% on goods and 10% on services is applied. Eritrean nationals abroad are subject to a 2% rehabilitation and recovery tax on their worldwide income.

Eritrea's business environment is highly challenging, ranked 189 out of 190 economies for ease of doing business. The economy is tightly controlled by the state, with most significant enterprises being state-owned, and foreign investment is severely limited by strict regulations and a lack of transparency.

Eritrea lacks a comprehensive state-provided social security system for unemployment, illness, old age, or disabilities. Formal social protection programs are minimal, covering only 8.4% of the population, with a heavy reliance on traditional family support and diaspora remittances.

Eritrea does not have a formal deposit insurance scheme. The banking sector is state-controlled, underdeveloped, and lacks transparency. Monthly bank withdrawals are severely restricted to 5,000 Nakfa (approximately $333 USD), and there is no infrastructure for ATMs or credit/debit cards.