Nearly five years of conflict in Yemen have created a humanitarian catastrophe that has brought the country to the brink of famine. The economy has collapsed and fighting has ravaged the country’s infrastructure. The reconstruction and recovery of Yemen will demand rebuilding the economy, restoring state institutions and infrastructure and repairing the social fabric. As yet, no official, donor-led, comprehensive reconstruction process is underway.
The Development Champions emphasize that reconstruction and recovery efforts must begin immediately, even while the conflict is ongoing. Urgent humanitarian interventions should be linked to Yemen’s long-term economic recovery. The reconstruction of Yemen should aim to transform the country, and not only to restore the status quo ante. Yemenis and local institutions must be involved in this process from the planning stages to ensure legitimacy and local ownership; ultimately, local actors will be responsible for implementing these plans.
With these factors in mind, the Development Champions held in-depth discussions to develop recommendations and guidelines to ensure the reconstruction and recovery of Yemen is a comprehensive, effective process that has a long-term positive impact. This policy paper presents those recommendations. They include measures to link immediate humanitarian interventions to Yemen’s long-term economic recovery; mechanisms to address fiscal challenges and enhance social protection; guidelines to create new jobs, rebuild infrastructure and strengthen the rule of law; and strategies to enhance local governance and local inclusion in the reconstruction process.
The conflict in Yemen has created the worst humanitarian crisis in the world; this has been exacerbated by the devastation of the country’s economy. As the conflict approaches its fifth year, fighting has damaged state institutions and destroyed physical infrastructure, including schools, hospitals, road networks, businesses and homes. The state’s provision of basic services such as health care, education, water and electricity, was weak prior to the conflict, and these services have deteriorated further during the war; in addition, the state has not paid regular salaries to its civil servants since 2016. The social fabric has also been severely damaged.
The conflict has driven the collapse of Yemen’s economy and created multiple challenges for the country’s banking and financial sectors. The country’s gross domestic product has contracted by 50 percent. The Yemeni rial has lost more close to two thirds of its purchasing power, relative to the US dollar, since March 2015. The administration of the Central Bank of Yemen has been divided across frontlines since September 2016. The Yemeni government has been reliant on a $2 billion deposit provided by Saudi Arabia in January 2018 for its foreign currency reserves, with little apparent vision on how to proceed when this runs out. Yemen’s primary capital-generating sectors are not functioning at capacity, and the state has not been able to resume effective revenue collection.
You can read the full article at Rethinking Yemen’s Economy here.