Yemen: Between hardships and hopes

Risky hopes

Hopes are high that the ongoing conflict that has caused a humanitarian disaster will draw to an end, thus allowing Yemen to regain its vitality and a fresh impetus and attract again promising investments in various fields and opportunities that the country needs to achieve its economic and social development.

The World Bank estimates of March 2017 indicate that Yemen's GDP has shrunk by 40% since 2015, and that 17 million Yemenis are food insecure, roughly 60% of the total population, while 7 million others are suffering from starvation. Malnutrition rates have risen by 57% since 2015, reaching 3.3 million people.

About half of Yemen's population of 26.8 million lives in areas directly affected by the conflict. More than 21.1 million Yemenis, i.e. 80 percent of the population, need humanitarian assistance, while 2.8 million people have been forcibly displaced internally.

Basic services are very poor, and shortages of medicines and conflict prevent half of the population from accessing health care services. According to recent information from the World Health Organization, there are half a million suspected cases of cholera in Yemen, where the disease spread due to deteriorating hygiene and sanitation, and to the contamination and interruption of water supplies.

Prospects and glimpses of hope

Forecasts rely heavily on a rapid improvement at the political and security levels and the end of the ongoing conflict, thus prompting the reconstruction of the human, economic, production and social fabric of Yemen.

There are promising indicators, thanks to the record increase achieved by the General Investment Authority in 2016 in the number of registered investments, by more than 44.7% year-on-year, despite the exceptional and difficult circumstances experienced by Yemen. The annual statistical report of the Authority for 2016 showed that 55 investment projects with a capital of YER 16.3 billion and fixed assets amounting to YER 10.7 billion have been registered and were distributed across 10 governorates. These projects are expected to provide 1450 jobs, including 38 projects in the industrial sector accounting for 62.6% of the total projects, and concentrated in the extractive and downstream industries. The number of projects in the services sector totaled 14 projects with a total capital of 4.9 billion riyals, mostly in the health sector and gas filling plants. In the tourism sector, two projects were invested with a total capital of 1.1 billion riyals, in addition to an investment in one agricultural project.

The number of registered investment projects in the first half of 2017 increased by 72% compared to the same period in the previous year, bringing the total number of projects to 43. Investment capital increased by 46% over the same period, likely to generate 1293 jobs.

It is hoped that things will get back to normal in order to start the process of reconstruction, where there will be large and important areas for investment in various sectors, especially the infrastructure sector, as well as the promising traditional areas in the sectors of oil, mining, industry, fisheries, livestock, housing and tourism.

 

Foreign direct investments in Yemen according to the top 10 sectors 2012 – 2016 (US$m)

Source: Fdi markets

Major countries investing in Yemen, 2012-2016

Ibid

 

Reform needs

The following figure shows Yemen's ranking according to the World Bank indicators for ease of doing business for 2017. It is important that the reform and development process in the investment environment be launched, together with the construction and reconstruction efforts.

 

Yemen's ranking in the World Bank indicators for ease of doing business for 2017 among 190 countries

 

Source: World Bank Doing Business 2017