Managing transition in Yemen

An assessment of the costs of conflict and development scenarios for the future

This paper has been produced to support the Government of Yemen and the international community in designing a transition plan for the country. The political crisis and conflict situation in Yemen has led to a sharp decline in economic output beginning in 2011—a decline from which Yemen is estimated to recover only in 2015, if favorable conditions apply. Moreover, the impact of the crisis on the poor is dramatic. Findings from this analysis suggest that

  • 54.4 percent of Yemeni people live in poverty (compared with 34.8 percent in 2006 and 42.8 percent in 2009) and
  • 61.0 percent of Yemeni children under five are malnourished (compared with 57.9 percent in 2006).

If no decisive action is taken, poverty and food insecurity are likely to further increase. Looking forward, there remain uncertainties and risks about the transition pathway. The space to launch major policy reforms may be limited during the transition period.

But reversing the heavy economic and social costs and leveraging the political transition for rapid socioeconomic development in Yemen will require substantial investments and significant reforms. Model simulations show that

  • An additional US$2.4 billion1 to $4.8 billion of investments are needed over the next four years to accelerate (non-oil) economic growth to 7–8 percent annually and bring poverty and malnutrition down to precrisis levels.
  • An additional $3.0 billion to $6.5 billion will be required to sustain and accelerate these growth and poverty reduction gains until 2020.

About 8 percent of the additional investment should be targeted to agriculture; 55 percent to investments in roads, electricity, water, and other infrastructures; and 37 percent to transportation, communication, health, education, and social transfers to make best use of Yemen’s growth potential. To ensure that public spending is directed to support growth, reduce poverty, improve inclusion, and address food insecurity, the following are areas of priority:

  • Rethink energy subsidies
  • Redynamize the business climate
  • Reduce qat production and consumption
  • Improve food security risk management and make food imports more competitive
  • Implement the national water strategy
  • Target public investment and improve service provision
  • Launch high-level awareness campaigns and leverage the policy dialogue with civil society
Author: 
Breisinger, Clemens
Ecker, Olivier
Al Riffai, Perrihan
Engelke, Wilfried
Al-Bataly, Abdulmajeed
Published date: 
2012
Publisher: 
International Food Policy Research Institute (IFPRI)
Series number: 
1210
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