74316 v1 Public Disclosure Authorized Joint Social and Economic Assessment for the Republic of Yemen Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized UNITED NATIONS EUROPEAN UNION ISLAMIC THE WORLD BANK DEVELOPMENT BANK Joint Social and Economic Assessment for the Republic of Yemen World Bank United Nations European Union Islamic Development Bank In collaboration with The Government of Yemen, represented by the Minister of Planning and International Cooperation UNITED NATIONS EUROPEAN UNION ISLAMIC THE WORLD BANK DEVELOPMENT BANK This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Abbreviations and Acronyms ACAPS Assessment Capacities Project CTA Chief Technical Advisor AFPPF Agriculture and Fisheries Production DCGE Dynamic Computable General Promotion Fund Equilibrium AFSED Association Française des Syndromes DF Disability Fund d’Ehlers-Danlos DFID Department for International AMPs Advanced Medical Posts Development ANC Ante Natal Care DHMT District Health Management Team AQAP Al Qaeda of the Arabian Peninsula DHO District Health Office AREA Agriculture Research and Extension DHS District Health System Authority DOTS Directly Observed Therapy for the ARI Acute Respiratory Infection Treatment of Tuberculosis ART Antiretroviral Therapy DPPR Development Plan for Poverty AWD Acute Watery Diarrhea Reduction BBC British Broadcasting Corporation DPs Development Partners BCG Bacillus Calmette-Guérin DPT3 Diphtheria, Pertussis, Tetanus3 BCM Billion cubic meters DRA Demand-Responsive Approach BDP’s Beneficiaries Development EC European Commission BEC Basic Education Certificate EEZ Exclusive Economic Zone BMONC Basic Emergency Obstetrics Center EFA Education for All CAP Country Assistance Program EIA Environmental Impact Assessment CBOs Community Based Organizations EMONC Emergency Obstetric Care CCA Common Country Assessment ERS Emergency and Rescue Services CCGT Combined Cycle Gas Turbine ESCWA Economic and Social Commission for CCT Conditional Cash Transfer Western Asia CEDAW Committee on the Elimination of Dis- EU European Union crimination against Women FAO Food and Agriculture Organization CFR Case Fatality Risk FCs Father Councils CFSS Comprehensive Food Security Survey FCS Fragile and Conflict Situations CfW Cash-for-Work FGM Female Genital Mutilation CoC Chamber of Commerce FMCs Father and Mother Councils CPI Consumer Price Index FMG/C Female Genital Mutilation Cutting CRC Convention of the Rights of the Child FTI Fast Track Initiative CSO Central Statistical Organization GAFSP Global Agriculture and Food Security CSP Concentrated Solar Power Program CSR Country Sector Report GAM Global Acute Malnutrition iii Joint Social and Economic Assessment GARWSP General Authority for Rural Water IWRM Integrated Water Resource Supply Projects Management GASSP General Authority for Social Security IYCF Infant/Young-Child Feeding and Pensions JAR Joint Annual Review GBV Gender Based Violence JICA Japanese International Cooperation GCC Gulf Cooperation Council Agency GCSI General Corporation for Social JSEA Joint Social Economic Assessment Insurance KfW Kreditanstalt für Wiederbau GDP Gross Domestic Products Kv Kilovolt GHO Governorate Health Office Kwh Kilo Watt/hour GIZ Die Deutsche Gesellschaft für LAEO Literacy and Adult Education Internationale Zusammenarbeit Organization GoY Government of Yemen LCs Local Corporations GPOBA Global Partnership on Output-Based LDCs Local District Councils Aid LIPW Labor-intensive public works GSCP Groundwater and Soil Conservation LIW Labor Intensive Works Project LNG Liquefied Natural Gas Gwh Gigawatt Hour M&E Monitoring and Evaluation HBS Household Budget Survey M&I Municipal and Industrial HFC Health Facility Committee MAI Ministry of Water and Irrigation HFO Health Facility Office MAM Moderate Acute Malnutrition HH Households MCS Monitoring Control and Surveillance HIS Health Information Systems MCs Mother Councils HIV-AIDS Human Immunodeficiency Virus- MDG Millennium Development Goal Acquired Immune Deficiency MDTFs Multi Donor Trust Fund Syndrome MENA Middle East and North Africa HMIS Health Management Information MF Micro Finance System MFIs Micro Finance Institutions HRC Human Rights Council MFW Ministry of Fish Wealth HSR Health Sector Reform MICS Multiple Indicator Cluster Survey IDA International Development Association MIS Management Information System IDPs Internally Displaced Persons MNSPR Middle East and North Africa Social IFAD International Fund for Agricultural and Poverty Reduction Development MNSPS Middle East and North Africa Public IFC International Finance Cooperation Sector IFPRI International Food Policy Research MOAI Ministry of Agriculture and Irrigation Institute MOE Ministry of Economy IIP Irrigation Improvement Project MOEd Ministry of Education ILO International Labour Organization MOEE Ministry of Electricity and Energy IMCI Integrated Management of Child Illness MOF Minister of Finance IMF International Monetary Fund MOHESR Ministry of Higher Education and IMR Infant Mortality Rate Scientific Research IsDB Islamic Development Bank iv Abbreviations and Acronyms MOHP Ministry of Public Health and PAR Portfolios at Risk Population PAWS Program Aid to the Water Sector MOLA Ministry of Local Administration PEC Public Electricity Corporation MOPHP Ministry of Public Health and PES Payment for Environmental Services Population PHC Primary Health Care MOPIC Ministry of Planning and International PHCs Public Health Centers Cooperation PMU Project Monitoring Unit MOPWH Ministry of Public Works and PPCR Pilot Project for Climate Resilience Highways PPP Public Private Partnership MOSAL Ministry of Social Affairs and Labor PRSP Poverty Reduction Strategy Paper MOWE Ministry of Water and Environment PSE Private Preschool Education (see MWE) PTSD Post-Traumatic Stress Disorder MSF Médicine Sans Frontières PWP Public Works Project MSME Micro Small and Medium Enterprises QIP Quick Import Project MTVET Ministry of Technical and Vocational RALP Rainfed-Agriculture and Livestock Education and Training Development Project MW Mega Watt RDA Regional Development Authorities MWE Ministry of Water Environment RH Reproductive Health (see MOWE) RWSSP Rural Water Supply and Sanitation NASS National Agriculture Sector Strategy Project NBEDS National Basic Education Development SABER Systems Approach for Better Education Strategy Results NCYS National Children and Youth Strategy SAF Sisters Arab Forums NFSS National Food Security Strategy SAM Severe Acute Malnutrition NGO Non Governmental Organizations SAWAS Sources of Water for Sana’a NGSES National General Secondary Education SBWMP Sana’a Basin Project Strategy SCEP Supreme Council for Education NIDs National Immunization Days Planning NIP National Irrigation Program SCMC Supreme Council for Motherhood and NSDHEY National Strategy for the Development Childhood of Higher Education in Yemen SDF Skill Development Fund NSDVTE National Strategy for the Development SFD Social Fund for Development of Vocational and Technical Education SGBV Sex and Gender Based Violence NWRA National Water Resources Authority SMART Standardized Monitoring and Relief NWSSIP National Water Sector Strategy and Transition Investment Program SMEPs Small and Medium Enterprises Promo- OBA Output-based Aid tion Agency OBGNY Obstetric Gynecologist SMEs Small and Medium Sizes Enterprises OCHA Office for the Coordination of Humani- SPM Social Protection Monitoring tarian Affairs STATA Data Analysis Statistical Software OPV Oral Polio Vaccine SWAP Sector-Wide-approach OTPs Outpatient Therapeutic Programs SWF Social Welfare Fund v Joint Social and Economic Assessment TB Tuberculosis UNHCR United Nations High Commissioner for TFC Therapeutic Feeding Center Refugees TFP Total Factor Productivity UNICEF United Nation Children Fund TFR Total Fertility Rate UWSSP Urban Water Supply and Sanitation TIMSS Trends in Mathematics and Science Project TIPS Trade and Industrial Policy Strategies VAW Violence Against Women TVET Technical and Vocational Education WACC Weighted Average Cost of Capital and Training WASH Water, Sanitation and Hygiene UK United Kingdom WDR World Development Report UN United Nations WEC Water and Environment Center UN DESA United Nations Department of Eco- WFFC World Fit for Children nomic and Social Affairs WFP World Food Programme UN Women United Nations Women WHO World Health Organization UNCTAD United Nations Conference on Trade WSSP Water Sector Support Program and Development WTO World Trade Organization UNDP United Nations Development WUAs Water User Associations Programme YFHS Yemen Family Health Survey UNFPA United Nations Populations Fund YR Yemen Riyal vi Contents Preface: UN Department of Political Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii Background to the Joint Social and Economic Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv 1.  Context Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1  The Yemeni Political and Socio-Economic Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2  The 2011 Crisis and its Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3  Assessing the Social and Economic Priorities of the Yemeni Transition: The JSEA Approach . . . . . . . . 3 2.  Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.2  Yemen before and during 2011: Evidence from Existing Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.2.1  Economic Baseline and Initial Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.2.2  Impact of the 2011 Economic Contraction on Poverty and Malnutrition . . . . . . . . . . . . . . . . . . 10 2.2.3  Perceptions of Yemenis: Evidence from Gallup World Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.2.4  Evidence from UNICEF’s Social Protection Monitoring Survey . . . . . . . . . . . . . . . . . . . . . . . . 15 2.3  Short- and Medium-Term Impact of Selective Transition Scenarios (2011-2020) . . . . . . . . . . . . . . . . . 16 2.3.1  Description of Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Economic Impact of the 2011 Uprising and the Formulation of Scenarios . . . . . . . . . . . . . . . . . 17 Baseline Scenario – The Comparator Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Slow Transition Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Accelerated Transition Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Costing of Growth Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.3.2  Alternative Development Scenarios from 2013–2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.3.3  Costing Growth Acceleration, Poverty Reduction and Improving Food Security . . . . . . . . . . . . 23 2.3.4  Costing of Selected Investments and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2.4  Policy and Institutional Reform to Generate Growth, and Reduce Poverty . . . . . . . . . . . . . . . . . . . . . 26 3.  Employment and Livelihoods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.1  Employment and Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.1.2  Baseline Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 vii Joint Social and Economic Assessment 3.1.3  Informality of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.1.4  Public Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.1.5  Private Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.1.6  Small and Medium Sized Enterprises (SMEs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 3.1.7  Support to SME Growth through Micro-Finance Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.1.8  Large Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 3.2  Related Employment and Labor Markets Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 3.2.1  Poultry Farming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 3.2.2 Fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 3.2.3  The Qat Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 3.2.4  The Coffee Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 3.2.5  High Value Fruits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 3.2.6  The Construction Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.2.7  Publicly Funded Construction Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.2.8  Privately Funded Construction Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.2.9  Supply and Service Markets Supporting Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 3.2.10  Retail and Wholesalers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 3.2.11  Greening the Yemen Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 3.2.12 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 3.3  Employment Schemes and Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 3.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Social Welfare Fund (SWF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SWF Beneficiary Development Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Social Fund for Development (SFD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Public Works Project (PWP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Main Differences between the SFD and PWP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 3.3.2 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 3.4  Food Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.4.2  Baseline Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.4.3  Current Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.4.4  Coping Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 International Remittances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Domestic Remittances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Consumption Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Decrease in Food Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Savings and Credit Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Empowerment of Women through Micro Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 viii Contents 3.4.5  Local Food Production and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Wheat Production and Subsistence Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 The Domestic Wheat Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Other Subsistence Food Cultivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Imported Wheat and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 3.4.6 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 3.5  Livelihoods for Refugees and Internally Displaced People (IDPs) . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3.5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3.5.2  Livelihood Issues Affecting Refugees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3.5.3  Livelihood Issues Affecting IDPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 3.5.4  Technical and Vocational Education and Training (TVET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 3.5.5 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4.  Expanding Social Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.1  Social Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.1.2  Social Safety Net Mandated to Provide Immediate Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 62 Social Welfare Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Conditional Cash Transfers (CCTs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Institutional Capacities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 4.2  Child Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 4.2.1  Low Birth Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 4.2.2  Child Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 4.2.3 Grave Child Rights Violations, Including Use and Recruitment of Children by Armed Forces and Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 4.2.4  Child Trafficking/Smuggling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 4.2.5  Child Marriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 4.2.6  Decreased Sense of Security and Children’s Psychosocial Wellbeing . . . . . . . . . . . . . . . . . . . . 68 4.2.7  Under Funded Child Welfare Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 4.3  Welfare of People with Disabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 4.4  Cash for Work Safety Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 4.4.1  Community Based Labor Intensive Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 4.4.2  Targeting Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 4.4.3  Feasibility at the Time of Crises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.4.4  Instruments in Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.4.5  Infrastructure for Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.5  Social Security and Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 4.5.1  The General Authority for Social Security and Pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 ix Joint Social and Economic Assessment 4.5.2  The General Corporation for Social Insurance (GCSI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 4.5.3  Challenges: Public Sector Pension Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 4.5.4  Challenges for the General Corporation for Social Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 73 4.6  Community-Based Social Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 4.6.1  The Role of Civil Society Organizations (CSOs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 4.6.2  Cooperatives Assisted their Members to Access Fuel and Needed Inputs . . . . . . . . . . . . . . . . . 74 4.6.3  Provision of Food and Services to Poor People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 4.6.4  Supporting Humanitarian Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.7  Social Fabric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.7.1  Deterioration of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.7.2  Increase in Domestic Violence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.7.3  Increased Tensions between Residents and Internally Displaced Persons . . . . . . . . . . . . . . . . . 75 4.7.4  Governorates that Maintained Social Norms Were Less Affected . . . . . . . . . . . . . . . . . . . . . . . 76 4.7.5 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 5.  Expanding Basic Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 5.1 Nutrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 5.1.1 Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 5.1.2  Crisis Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 5.1.3 Food Security and Malnutrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 5.1.4 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 5.2 HEALTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 5.2.1 Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Crisis Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Organization & Health Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Medicine and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Information Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 5.2.2 Health Emergency Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 5.2.3 Reproductive Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Destruction of Health Facilities Reproductive Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Lack of Funding for Reproductive Health Interventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Gender Based Violence and Women’s Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 5.2.4 Child Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 x Contents Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 5.2.5 Communicable Diseases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 5.2.6 Injuries Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 5.2.7 Mental Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 5.2.8 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 5.3  Water Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 5.3.1 Water, Sanitation and Hygiene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Reforms Implemented Prior to 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Long-Standing Structural Challenges of the Water Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 5.3.2 The Impact of 2011 on the Water Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 5.3.3 Rural Sanitation & Hygiene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 5.3.4 Effect on the Population of the 2011 crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 5.3.5 Water and Sanitation and Hygiene (WASH) within Social Protection Schemes . . . . . . . . . . . . . 109 5.3.6 The Future Agenda and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Water Resource Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Water and Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Water Sources for Urban Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Rural Water Supply and Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Urban Water Supply and Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 5.3.7 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 5.4  Education Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 5.4.1 Pre-Crisis Sector Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 General Sector Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 5.4.2 Preschool Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 5.4.3 Basic and Secondary Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 5.4.4 Technical and Vocational Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 5.4.5 Higher Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 5.4.6 Impact of the Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Impact on the Provision of Education Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Impact on Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Institutional Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 5.4.7 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Short-Term Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Opportunities for Longer Term Policy Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Develop Second Chance Programs for Out-of-School Children and Adults . . . . . . . . . . . . . . . . . 121 xi Joint Social and Economic Assessment 5.5  Urban Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 5.5.1 Assessment of Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Infrastructure Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 5.5.2 Institutional Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 5.5.3 Broader Context on Urban Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 5.5.4 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 5.6  Electricity Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 5.6.1 The Impact of the 2011 Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 5.6.2 The Recovery in 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5.6.3 The Physical Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5.6.4 The Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5.6.5 The Institutional Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 5.6.6 The Development Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 5.6.7 Proposed Sector Reform by Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 5.6.8 Structural Change: a Mean not the End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 5.6.9 Reforms are Critical – Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 The Short-Term Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 The Mid-Term Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Encourage Foreign Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Benefits of Private Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Increased Self-Financing by PEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 New Pricing Regime Critical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Areas for Donor Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Short-Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 Mid-Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 6.  Going Forward: Supporting the Transition Phase in Yemen – Emergency Response and Setting the Stage for Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 6.2  Design Principles for Supporting the Implementation of the Transitional Program for Stabilization and Development (TPSD), 2012–2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 6.3  Supporting Implementation of TPSD Pillar 1: the Emergency Response Phase . . . . . . . . . . . . . . . . . 145 6.4  Supporting Implementation of TPSD Pillar 2: the Medium-Term Recovery Program . . . . . . . . . . . . . 148 6.5  Supporting the Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Annexes Annex Chapter 1: Context Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 Annex Chapter 2: Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 xii Contents Annex Chapter 3: Employment and Livelihoods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 Annex Chapter 4: Expanding Social Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 Annex Chapter 5: Expanding Basic Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Annex Chapter 6: Example of a Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 Map IBRD No. 33513R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 Boxes Box 1: Petroleum Subsidy Reform in Yemen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Box 2: Al Amal Microfinance Bank Statistics pre-2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Box 3: Social Protection Programs in Yemen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Box 4: SWF Cases as of March, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Box 5: SWF Assistance is too small to meet some families’ basic consumption needs . . . . . . . . . . . . . . . . . 63 Box 6: Potential for Indexing the SWF Stipend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Box 7: A Snapshot of CCT Program in Taiz City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Box 8: Multiplier Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Box 9: Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Box 10: Pensions paid by General Authority for Social Security and Pensions . . . . . . . . . . . . . . . . . . . . . . . 73 Box 11: Pension paid by General Corporation for Social Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Poor Infant Feeding Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Box 12: High Disease Burden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Box 13: Limited Access to Nutritious Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Box 14: Impact on Health Service Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Box 15: Impact on the EPI Nationwide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Box 16: Distribution Improvement and Loss Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Box 17: Tables Table 1: Structure of the Yemeni Economy by Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Table 2: Main Macro-Economic Indicators, 2009–2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Table 3: Prevalence of Child Stunting and Annual Changes under Different Growth Scenarios, 2009–2020 . . . 13 Table 4: Confidence in State, State-Controlled, and Religious Institutions (Percent of Adults) . . . . . . . . . . . . 14 Table 5: Public Spending and Elasticities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Table 6: Changes in Macro Aggregates over the Medium- to Long-Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Table 7: Projected Growth Rates by Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table 8: Poverty and Nutrition Elasticities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 xiii Joint Social and Economic Assessment Table 9: Foreign Aid and Public Spending Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Table 10: Investment Costs for Basic Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Table 11: Yemen Investment Climate Indicators (Ranking among 183 Countries), 2012 . . . . . . . . . . . . . . . . . 27 Table 12: Key Micro-Finance Institution Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Table 13: Livelihood Assets Used For Coping Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Table 14: IDP Profiling Conducted by Danish Refugee Council in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Table 15: Prevalence of Malnutrition Compared to the Previous Surveys and 2010 WHO Projections . . . . . . . 81 Table 16: Prevalence of Morbidities in the two Weeks Preceding the UNICEF Hodeidah Survey Compare to the Previous Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Table 17: Trend of IMCI Selected Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Table 18: Cholera and Diarrhoea Outbreak . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Table 19: Crisis Related Injuries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Table 20: Overview of Education Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Table 21: Detail Breakdown of the Costs of the Unrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Table 22: Grid-based Renewable Energy Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Table 23: Indicative Costs of Electricity Production by Technology Types . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Table 24: TPSD Priorities and Estimated Financing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Figures Figure 1: Growth Trends, 2000–2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 2: Economic Growth under Stagnation, Slow and Rapid Transition . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 3: Poverty Changes under Stagnation, Slow and Rapid Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 4: Trends in Perceptions on Political and Economic Conditions in Yemen . . . . . . . . . . . . . . . . . . . . . 14 Figure 5: Conflict and Food Insecurity in Selected Areas during the Second Half of 2011 (Percent of Sampled Households) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 6: Size of Private Salaried Formal Sector versus other Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 7: Percentage of Food Insecure Households by Governorate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Figure 8: Share of Women Involved in Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Figure 9: Wheat – Domestic Production vs. Imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Figure 10: Malnutrition and Death Causes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Figure 11: Prevalence of Malnutrition in Yemen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Figure 12: Number of MAM and SAM Affected Children under Five . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Figure 13: Yemen’s Electricity Output Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 Figure 14: Forecast Power Demand in Yemen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Figure 15: Wind Resources of Yemen at 50 m above Ground Level According to Mesoscale Model (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 xiv Contents List of Tables in Annexes Table 1 Annex Chapter 2: Overview of Scenario Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Table 2 Annex Chapter 2: Correlation between Conflict and Food Insecurity . . . . . . . . . . . . . . . . . . . . . . . 162 Table 3 Annex Chapter 2: Relationship between Conflict and Food Insecurity – Fixed-Effects Logit Model Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Table 4 Annex Chapter 2: Mathematical Presentation of the Dynamic Computable General Equilibrium Model – Core Model Equations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Table 5 Annex Chapter 2: Regression Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Table 6 Annex Chapter 2: MacroSAM for Yemen, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Table 7 Annex Chapter 2: Social Accounting Matrix (SAM) Disaggregation . . . . . . . . . . . . . . . . . . . . . . . . 169 Table 8 Annex Chapter 2: Detailed Poverty Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Table 9 Annex Chapter 2: Health Program Costs for Treatment of Malnourished Children Aged 0–5 Years, at 2005 Prices in US$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Table 10 Annex Chapter 2: Foreign Aid and Total Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Table 11 Annex Chapter 4: Distribution of SWF Recipients per Governorate . . . . . . . . . . . . . . . . . . . . . . . . 180 Table 12 Annex Chapter 5: Incidence Rates for Selected Communicable Diseases . . . . . . . . . . . . . . . . . . . . 184 Table 13 Annex Chapter 5 – Water: Implementing the Agenda: Links to Reform Priorities, Readiness, and Impacts in the Recovery Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Table 14 Annex Chapter 5 – Water: Impact of 2011 Crisis towards General Education Repair and Rehabilitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 Table 15 Annex Chapter 5 – Water: Crisis and Cost of Rehabilitation and Equipments, 2011 . . . . . . . . . . . . . 191 Table 16 Annex Chapter 6: Example of a Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 List of Figures in Annexes Figure 1 Annex Chapter 2: Relationship between Child Stunting Prevalence and GDP per Capita in Low- and Middle-Income Countries, Fitted by Locally Weighted Polynomial Regression (dashed line) and Fractional Polynomial Regressions of Degree One (solid lines) . . . . . . . . . . . . . . 165 Figure 2 Annex Chapter 2: Percent of Yemeni Enterprises Evaluating Constraints as “majorâ€? or “very severeâ€? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Figure 3 Annex Chapter 2: Losses Due to Investment Climate Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . 173 xv Preface: UN Department of Political Affairs It gives me great pleasure to present this publication and the signing of the Transition Agreement (The Gulf and collective effort by the World Bank, United Nations, Cooperation Council Initiative and Implementation the European Commission, and the Islamic Develop- Mechanism) in Riyadh on November 23, 2011 through ment Bank to support Yemen to overcome daunting which a peaceful transfer of power from the President development challenges. to the Vice-President was secured as part of a two-year Yemen is emerging from a year of significant unrest transition period. and turmoil. The wave of popular uprisings that swept I am pleased to note that Yemenis have taken impor- across the region in 2011 erupted in clashes in Yemen, tant steps to move the transition forward. A Government contributing to a protracted political stalemate and com- of National Unity was sworn-in in December 2011, and pounding the already longstanding challenges faced. on February 25, 2012, Vice-President Hadi was sworn Yemen’s history is characterized by a high degree of in as the new President of Yemen by an overwhelming fragility as a result of longstanding disputes, grievances, majority. The elections marked the successful comple- and lack of development. Several conflicts have been tion of the first phase of Yemen’s transition. running concurrently, including a Houthi insurgen- The Joint Social Economic Assessment comes at cy in the North, a separatist movement in the South, a serious juncture in the transition and serves as an as well as a serious threat posed by groups associat- important initiative from the international community ed with Al Qaeda. in support of the Government’s path toward stability With a view to fostering a peaceful resolution of and development. It underscores both the challenges the situation in Yemen, UN Secretary-General Ban Ki- and also the opportunity to help address the politi- moon engaged his good offices in 2011. With a small cal, security, and economic challenges. By ground- team, I have visited Yemen regularly since March 2011 ing the assessment in a detailed analysis and careful in the exercise of the Secretary-General’s good offices, projections, the assessment is able to identify criti- holding regular in-depth consultations with all sides cal priority areas for support and offers a framework in Yemen with a view to moving the political process for more coherent international assistance. The JSEA, forward. In October, the Security Council spoke with thus, provides an invaluable platform for the Govern- one voice in adopting Security Council resolution 2014 ment and its partners to address the grave challenges (2011) which called for a political settlement in order and lead the country toward greater stability, securi- to achieve a peaceful political transition of power. In ty, and development. November, the government and opposition requested that I facilitate face-to-face negotiations. This media- Jamal Benomar Special Adviser tion effort resulted in a Yemeni-led process of mediation to the Secretary-General on Yemen xvii Background of the Joint Social and Economic Assessment The Origin of and Approach to the policies and plans, foremost the Transition Plan, and Joint Social Economic Assessment last, but not least, for the support received from the Yemen Government, stakeholders, and representatives This assessment of Yemen’s social and economic situ- from civil society organizations when conducting this ation was conducted in response to a request received assessment. The teams operated within a fluid secu- by the World Bank from the Ministry of Planning and rity situation and were generally subjected to the still International Cooperation (MoPIC) on December 20, fragile overall security situation, which prevented vis- 2011. The request asked for the performance of a social its outside of Sana’a. and economic assessment of the situation in Yemen after While there is no agreed methodological approach the signing of the Transition Agreement of November toward such a joint assessment, the joint team adopt- 23, 2011, and the forming of a Government of National ed a pragmatic approach. Generally, the team was Unity on December 7, 2011. The World Bank informed guided by the need to establish a quantitative and/ its partners—the United Nations, and the European or qualitative baseline of the situation in Yemen prior Union, and the Islamic Development Bank—consis- to the crisis of 2011 to be able to measure the impact tent with the Joint UN/EC/WB Joint Declaration on of 2011 political crisis. The Joint Social and Econom- Post Conflict Needs Assessments.1 A joint team met in ic Assessment (JSEA) was meant to take stock of the Yemen, Sana’a, with the Yemeni authorities from Feb- current situation in terms of economic activity and ruary 2–16, 2012 to discuss the approach and the divi- outlook; state of essential services delivery; institu- sion of the work. All participants agreed on general tional and service infrastructure; livelihoods, with a terms of references which gave the Bank the responsi- focus on vulnerable groups including youth; griev- bility for the overall coordination and the topics “Con- ance mechanisms; and justice and issues of equity. text Review,â€? “Socio-Economic Development,â€? and The JSEA was also guided by the opportunity—going “Services and Institutional Infrastructure.â€? The UN forward—to build a more nuanced, strategic, and covered the topic “Human & Institutional Capacity,â€? coherent approach for deploying external and domes- and the EU the topic “Livelihoods.â€? tic resources more effectively, in furtherance of stabil- The teams of all three institutions were present in ity, social cohesion, and transition. Sana’a, Yemen from early March to late April, 2012, Furthermore, the JSEA drew on data and informa- at various intervals and in various compositions. The tion gained from reports produced by the Government, teams or sub-teams exchanged views and progress civil society, and multilateral institutions and bilater- reports with the authorities from a range of Minis- al development partners, as well as information gath- tries (see also the Acknowledgements), stakehold- ered through direct consultations in Yemen with both ers, and representatives from civil society organiza- tions. The team members are grateful for the open and 1 See also the web-page of the World Bank (http://web.world- frank exchange on the impact of the 2011 crisis, inter- bank.org) and search for “UN/EC/WB Joint Declaration on Post pretations of its meanings, the explanation of current Conflict Needs Assessmentsâ€?. xix Joint Social and Economic Assessment Government and non-Government stakeholders. Field Given the JSEA’s prime purpose to take stock and visits, as mentioned above, could not be undertaken. inform the transition process, through the first half of However, to the extent feasible, concerted efforts were 2014, the focus of the JSEA is selective by nature. Although made to interact with Yemeni citizens from geographi- a longer time horizon is ever present in terms of plan- cally diverse origins, especially with regard to the top- ning, in terms of prioritization or recommendations, ics covered by the Livelihood themes. the shorter horizon is at the forefront. The selectivity is The overall guidance and strategic oversight of the further underlined by the very short time frame under JSEA was ensured through a joint steering committee which the joint JSEA team had to operate—essentially comprising MOPIC, the UN Resident Coordinator, the two months closely following the signing of the Transi- World Bank Country Manager, and the Head of the EU tion Agreement—and the limited accessibility of many Delegation as well as the representative of the Islamic locations in Yemen. However, the team relied on many Development Bank. The Steering Committee met twice sources and was granted broad assistance from with- during this process. The teams also interacted inten- in the Government from its own institutional networks, sively with the Government team elaborating the Eco- and the wider donor and non-governmental institutions nomic Transition Plan. community, which helped mitigate these limitations. xx Acknowledgements This Joint Social Economic Assessment (JSEA) was and Ms. Dragana Ostojic, for constructive cooperation prepared by a team from the World Bank, the United and numerous useful policy discussions. Nations, the European Commission, and the Islamic The team is grateful for the close and productive Development Bank. The team of the United Nations cooperation of the Government of Yemen during the was led by Blerta Aliko, UNICEF; the leader for the preparation of this joint assessment, with particular European Commission team was Sarah Gray, and the reference to H.E. Dr. Mohammed Saeed Al-Sa’adi, Islamic Development Bank was represented by Mr. Minister of Planning and International Cooperation Ahmed M. Elsadig (Country Manager). The World (MoPIC); H.E. Mr. Sakhr Abbas Al-Wajih, Minister of Bank team was led by Wilfried Engelke (MNSED). The Finance (MoF); Dr. Mutahar Al-Abbasi, Vice Minister- overall lead role was with the World Bank, Wilfried Head of Technical Committee (MoPIC); Eng. Abdul- Engelke. However many more helped and contribut- lah H. Al-Shatter, Deputy Minister for Project Program- ed to this assessment. ming (MoPIC); Dr.  Mohammed Al-Haweri, Deputy The Steering Committee for the JSEA under the Minister for Studies & Economic Forecasts (MoPIC); overall leadership of His Excellency Dr. Mohammed Mr. Omar Abdulaziz Abdulghani, Deputy Minister for Saeed Al-Sa’adi, Minister, Ministry of Planning and Development Plans (MoPIC); Mr. Ali M. Al-Shatter, International Cooperation provided very valuable guid- Deputy Minister for Planning and Statistics (MoF); ance. The team is equally grateful for advice received Mr. Jalal Omar Yaqoub, Deputy Minister for Foreign from the other Committee members, the ex-Resident Financial Relations (MoF); Mr. Ali Gubran Mohammed Coordinator of the United Nations in Yemen, Jens Toy- Al-Shamahi, Director General of the Budget (MoF); berg-Frandzen (until end-March 2012), and the cur- Mr. Khaled Saeed, Head of World Bank Porfolio Mon- rent Resident Coordinator, Ismail Ouldcheikhahmed, itoring Unit–Director General Agriculture & Fisheries the Country Manager for the World Bank in Yemen, (MoPIC); Mr. Mohammed Mused, Education/Projects Wael Zakout, and Philippe Jacques, Head Develop- Sector (MoPIC); Mr. Ali Kaed Ali, Health/Projects Sec- ment Cooperation of the EU Delegation to the Repub- tor (MoPIC); Mr. Natheer Al-Qershi, WASH/Projects lic of Yemen. Sector (MoPIC); Mr.  Sulaiman Al-Kataberi, General Mrs. Anna Tully (OPCFC) and Mr. Sateh Chaf- Director of Policies (MoPIC); Mr. Abdulmajeed Al-Bat- ic El-Arnaout (MNSUR) were the peer reviewers for uly, Head of Socio-economic-Forecasts (MoPIC); Mr. this operation. Mr. Bernard Funck (Sector Manager); Mansoor Al-Basheri, Socio-economic-Forecasts Sector Ms. Manuela V. Ferro, Sector Director MNSPR; Messrs. (MoPIC); Mr. Omar Mohammed Saleh, Director Gen- Wael Zakout (Country Manager) and A. David Craig eral Macro-economic Policies (MoPIC); Mrs. Eman Al- (Country Director) provided guidance and internal over- Hamami, Director General Livelihood/Gender-Devel- sight. Excellent administrative support was provided opment Plans Sector (MoPIC); Mr. Abdulkafi Omar, by Loubna Ennadir (MNSPR). The team wishes also to Institutional & Human Capacity–Development Plans express its special appreciation to the IMF team com- Sector (MoPIC); Dr. Merna Hassan Nasser, Program prised by Messrs. Al-Atrash (Head), Mr. Abdul Naseer Assistant with Dr. Al-Shatter; Mr. Khaled Shamlan, xxi Joint Social and Economic Assessment National Accounts–(CSO, MoPIC). Mr. Mosleh Al Toali, Core Team Member–EU. Philippe Jacques, Counsel- DG Planning–MoPHP; Mr. Rashad Al Sheikh DG Policy– lor, EU Delegation to Yemen; Sarah Bernhardt, Health MoPHP; Hamood Naji–MoE; Hamoud Al-Seyani–MoE; Team Member–EU. Hamood Naji (MoE); Hamoud Al-Seyani–MoE; Talal The Islamic Development Bank: Ahmed M. Els- Al-Qadasi–GARWP; Abdullah Al Dailami, SFD Dep- adig, Country Manager; Mohammad Ahmed Zubair, uty Managing Director, Khalid A. Moheyddeen (SFD Principal Economist, Country Programs Department, Senior Donors Relation Officer), Osama M. Alshami Eri Al Mansoub, IsDB Yemen. (SFD, Unit Head Micro Enterprise/Credit), Lamis Al- The World Bank: Wilfried Engelke, Kanishka Bal- Iryani (SFD; Head of Programming and Evaluation), asuriya, Spyridon Demetriou, Nabila Assaf, Amir Alt- Abdul Aljalil Alshamere (SFD, Labour Intensive Works hibah, Arun Arya, Olaf Smulders (Context Review and Program); Mansour Al-Fayadhi, (SWF, Executive Direc- Socio-economic Development Component), Spyros tor) and Abdul Karim A. Salah, (SWF, Director Gen- Demetriou (Coordination), Suhar Al-Zubairy (Sup- eral of Policies). port), Kamel Braham (Education), Abdulrahman M. The United Nations (UN): Blerta Aliko Team Lead- Abdullah Al-Sharjabi (Education), Axel E. N. Baeumler er–Human and Institution Capacity (UNICEF); Hiba (Urban Infrastructure), Ali Khamis (Urban Infrastruc- Ahmed, Core Team Member–UN Focal Point (UNDP); ture), Naif Mohammed Abu-Lohom (Water Infrastruc- Rachel Dore-Weeks, Gender/Peace Building (UN ture), Bekele Debele Negewo (Water Infrastructure), Women); Tammy Smith, M&E Specialist (UNICEF). Jianping Zhao (Electricity, Energy), Naji Hatem, Livelihoods: Anas Roudies (UNHCR); Gamal Alja- Pierre Rondot (Rural Infrastructure/Livelihoods), Lia bi (UNHCR);Erin Mooney, (UNHCR); Federico Negro, Sieghart (Environment), Quentin Wodon (Special Pov- ILO Geneva; Jean-François Klein (ILO); Jaime Are- erty Impact Analysis), and Ipek Alkan (summary). valo, Post-conflict/Livelihoods (ILO); Lara Uhlen- In addition, a team from the International Food Pol- haut, Member-Employment and Labor (ILO); Manas icy Research Institute (IFPRI) made major contribu- Bhattacharia, CTA of the Labor Market Information tions to chapter 2 “Macroeconomic and Social Impact project (ILO); Nanduri Sateesh, Livelihoods Special- Analysis of the 2011 Crisis in Yemen and Alternative ist (UNDP); Sevil Serbes, Gender Specialist (UNDP); Transition Scenarios.â€? The team led by Clemens Bre- Sadig Elamin (UNHCR); Social Protection/Child Wel- isinger (Research Fellow) and comprised of Perrihan fare: Ghada Kachachi; Health/Nutrition: Agostino Mun- Al-Riffai (Senior Research Analyst) and Olivier Ecker yiri (UNICEF); Ahmed Abdul Latif WHO); Eiko Narita (Research Fellow) assessed the poverty and nutri- (UNFPA); Melaku Maru (UNHCR); Mona Almudhwa- tion impacts of the crisis and elaborated the macro- him (WHO); Rajia Ahmed Sharhan (UNICEF); Tareq economic transition scenarios. Financial support for Saeed Saleh Al-Madhaji (CSO/UNFPA); Wisam Al- this work from the European Union and the Interna- Timimi (UNICEF); Education: Belqis Al-Dabbi (UNI- tional Fund for Agricultural Development is grateful- CEF); Hema Vinod (UNICEF); Insaf Abdu.Qassem M. ly acknowledged. Sana’ad (Consultant); Mohamed Bile (UNICEF); WASH: We thank Syviengxay Creger for substantial sup- Ghassan Madieh (UNICEF); Nasser Al Eshawi (Con- port in formatting this report and the team at The sultant); Sami Saeed (UNICEF). Word Express for an excellent typesetting job. And The European Union (EU): Sarah Gray, Team Lead- there were many more others who would need to be er–EU Consultant; Lamis al-Iriyani, Member-Social acknowledged for their kind assistance, help, expla- Welfare–EU Consultant; Francis Whitwell, Member- nation of issues, or simply their kindness extended to Employment and Labor, EU–Consultant; Silke Nikolay, the team during this process. xxii Executive Summary Introduction is to assess the social and economic impact of the cri- sis in Yemen, and to identify challenges and key pri- In the wake of the Arab Awakening movement in Yemen, orities for early interventions, primarily for the transi- after almost a year of security, political, and economic tion period, which is expected to stretch into the first crisis the country has embarked on a political transi- half of 2014. tion, including preparations for an inclusive, participa- tory, and transparent national dialogue process, based Yemen’s Socio Economic Situation on the Gulf Cooperation Council (GCC) Initiative and Prior to the 2011 Crisis the Agreement on the Implementation Mechanism for the transition process in Yemen, in accordance with Yemen is one of the poorest countries in the Arab region the initiative of the GCC (called the “Transition Agree- with a per capita GDP of US$1,160, and faces a wide mentâ€?) signed in Riyadh on November23, 2011. A Gov- range of developmental challenges. The Human Devel- ernment of National Unity was formed and confirmed opment Index (UNDP, 2011) ranks the country 154th by the Parliament in early December 2011. Presidential out of 184 countries assessed. The country has one of elections were held on February 21, 2012 and President the highest population growth rates globally, at three Abd Rabbuh Mansur Al-Hadi was sworn in soon after. percent. This increases the demand for educational The second phase of the transition period is anticipat- and health services, drinking water, and employment ed to continue over a two-year period, during which opportunities. Yemen faces a severe water shortage, time: all parties and stakeholders are expected to par- with available ground water being depleted at an alarm- ticipate in a National Dialogue; a new constitution will ing rate. Its oil production and reserves are declining, be drafted; and the army and security establishments with severe fiscal consequences. The Yemeni econo- are to undergo a reform. The transition will end with my is caught in a jobless slow growth cycle leading to the holding of general elections—to be held under the stagnant per capita incomes and rising levels of unem- new constitution—and the inauguration of a new Pres- ployment, particularly among the youth. Social devel- ident of the Republic of Yemen. opment indicators, such as child malnutrition, maternal While the implementation of the Transition Agree- mortality, and educational attainment remain discour- ment is largely on track, the gains achieved so far are aging. The population living below the national pover- fragile and significant challenges remain ahead. ty line was 35 percent in 2005/2006, with poverty more This Joint Social and Economic Assessment (JSEA) widespread and persistent in rural areas; since then has been prepared in response to a request from the the rate is estimated to have increased to 42.4 percent Ministry of Planning and International Cooperation in 2009 (MOPIC, 2011). There are large gender dispar- (MoPIC), and was undertaken jointly by the World ities, with significant gaps in women’s access to eco- Bank, the United Nations, the European Union, and the nomic, social and political opportunities. As indicated Islamic Development Bank. The JSEA’s main purpose by its first and second MDG Reports, Yemen was not xxv Joint Social and Economic Assessment expected to meet any of the MDGs. The weaknesses in The reduction in fuel availability, particularly diesel, governance exacerbated the development challenges. further aggravated shortages in electricity and water The mass protests and armed conflict that marked supplies. The repeated sabotaging of the pipelines in the country in 2011 represented the culmination of the Mareb and Ras Issa areas and continued road inse- simultaneous political, social, and economic crises sit- curity led to a sharp decrease in crude oil production uated within an overall difficult regional environment. by about 25 percent in 2011. The agricultural, service, Reaction to these crises from different groups of actors, and industrial sectors faced significant cost increas- including the politically aligned and non-aligned opposi- es for inputs such as irrigation, transportation, and tion in both the north and the south, prompted diverse marketing, which ultimately reduced production and alliances with different interests and divergent political exports. Production processes were disrupted, leading aims. Militants from Al-Qaeda in the Arabian Peninsu- to the closing of businesses and dismissal of workers. la (AQAP) and armed tribesmen took control of broad The fiscal deficit increased to around US$1.4 billion, areas in the south. The mass unrest and revolts against while foreign exchange earnings from tourism, devel- the Government during this period emerged from, and opment aid, and foreign direct investment all declined. were catalyzed by, conditions of acute societal fragili- Poverty, already rising at the time the crisis ty stemming from sectarian, tribal, and regional divi- broke out, is estimated to have further increased sions which have been building up over the past few from 42 percent of the population in 2009 to 54.5 decades and were exacerbated by deepening poverty, percent at the end of 2011.2 This has been accompa- lack of gainful employment opportunities (particular- nied by an increase in the number of female-headed ly for the youth), and by loss of faith in a State that households. According to the U.N. World Food Pro- was increasingly seen as not being capable meeting gram (WFP), approximately 45 percent of the popu- the pressing social and economic needs. lation (10 million people) was food insecure in March 2012, a significant increase from the nearly 32 percent The Impact of the 2011 Crisis of food insecurity in 2009.3 Nearly one million chil- dren under age five are acutely malnourished. Accord- The 2011 mass protests in Yemen demanded bet- ing to the UNHCR, an estimated 806,600 people are ter governance, voice, and economic opportunities, now considered most vulnerable due to current and and culminated in a simultaneous political, social, previous conflicts, including children who have been and economic crisis exacerbating an overall difficult directly involved in or affected by the infighting and country environment. Although the causes underly- violence, as well as 213,000 vulnerable returnees and ing the Arab Awakening are complex and multi-facet- war-affected persons in the north, 203,900 refugees ed, economic and governance factors are particularly and asylum seekers,4 and approximately 150,000 dis- salient. While the protests were initially led by stu- placed people in the South.5 At the same time, social dents and young Yemenis giving voice to their griev- ances and demands for a better Yemen, they turned 2  Some of the increase in poverty might well be due to structur- quickly into a mass movement including many parts of al causes which were possibly aggravated by the crisis. 3  U.N. World Food Program (WFP) released preliminary findings a complex Yemeni society. The immediate impact has of the recently completed Yemen Comprehensive Food Securi- stressed the fragile stability of the country and caused ty Survey (CFSS) on March 14, 2012. a still unfolding humanitarian emergency. 4  “2011 UNHCR Country Operations Profile–Yemen.â€? UNHCR The deepened conflict situation caused sig- Global Appeal 2011 Update. 5  Escalated fighting in Abyan Governorate, southern Yemen, nificant disruptions in the supply and production displaced approximately 1,800 people in March 2012, accord- chains, causing economic activity to contract by ing to the U.N. Office for the Coordination of Humanitarian almost 11 percent, leading to higher unemployment. Affairs (OCHA). xxvi Executive Summary service delivery has been dramatically affected across current state of peace in the country remains, howev- Yemen, including health, education services, and the er, tentative and the opportunity towards a transition functioning of social safety nets, leaving the vulnera- must be viewed against longstanding challenges that bility of a large part of the population non-addressed, Yemen continues to face on the security, political, and and contributing to loss of livelihoods. The dramatic economic fronts. Looking forward, the key policy agen- and immediate negative impact of the 2011 crisis on da identified by the JSEA is as follows: individuals’ health and wellbeing can be directly traced to Yemen’s chronic under-development, particularly of Economic Growth basic social services. The impact of the 2011 crisis manifested itself in Restoring and accelerating economic growth in multiple ways across different sectors. The events of Yemen will be critical in the short term, and is a 2011 led to a cut in power supplies by half, and further prerequisite for human development in the long weakened a financially weak energy sector. Transmis- term. Yemen needs to overcome its sluggish growth sion lines were damaged many times and the lack of record of four percent during the last decade to meet fuel in 2011 seriously disrupted the operations of most the demand for gainful employment that played a power plants. Long-term power outages across broad major role in the uprisings, especially among the youth, swaths of the country interrupted health service pro- but also to address exclusion, inequalities, and high vision, including the vaccination cold chain. The con- levels of poverty. Creating employment and income flict caused significant delays in the implementation opportunities for underemployed Yemenis, includ- of on-going and planned power generation, transmis- ing more than 45 percent of the young adult popula- sion and distribution projects, which will further wors- tion, will be key during the transition and its after- en the already acute power supply situation in coming math. Reforms will have to focus on measures that years. Similarly in the water sector, public programs open up economic opportunities, promote competi- and services suffered widespread disruptions, with an tiveness, and facilitate productive investment. Grad- immediate impact on the availability of water supply, ually ending the policy of untargeted energy subsi- sanitation, irrigation, or extension services for agri- dies will eliminate pervasive economic distortion that culture. In addition, health and education, schools, are obstacles for growth, and will free public resourc- and health centers were temporarily closed and sec- es for productive public investment. While acceler- tor infrastructure was damaged, severely impacting ated growth takes time to set in and produce results, basic social service delivery. In addition, urban cen- the required reforms should be easier to carry out if ters, primarily Sana’a and Ta’iz, endured direct dam- they are backed by substantial resources and support age to public property and suffered significant losses in the short term. due to foregone municipal revenues. Beyond peace and security, a sustainable growth strategy requires accelerating private sector devel- The Agenda Ahead opment. Improving the business and investment cli- mate through a review of the regulatory framework Reigniting economic growth, generating employ- and other means, particularly with regard to services, ment, providing tangible improvements in liveli- would be critical entry points. The anticipated entry hoods, improving equitable access to social ser- of Yemen into the WTO would be a good step in this vices, building effective public infrastructure, and direction. The process has helped to improve trans- considerably strengthening institutional capacity border transactions and alignment with WTO estab- at the local and central level are thus essential pre- lished norms. Determined policy reforms are also need- requisites for a successful transition in Yemen. The ed to make Yemen’s private sector more competitive xxvii Joint Social and Economic Assessment and less dependent on the state and its resources. Government to strengthen key public sector institu- Last but not least, offering the many small- and medi- tions, policies, procedures, and capacity at the dis- um-sized informal enterprises better operating condi- trict, governorate, and central level. The best plan tions and access to finance would improve the liveli- would be to begin at the local level with practical hood of many Yemenis. Efforts in this regard will not steps toward improving service delivery, and ensure be effective if the conflict situation in Yemen cannot more participation and voice of concerned Yemeni be addressed. citizens in local governance. Options for strength- The Government should carefully gauge the possi- ening decentralization based on the Local Authority bility for public private partnerships in larger public Law of 2000 to improve governance and service deliv- infrastructure investments. Yemen’s public resources ery could usefully be discussed within the upcom- will remain limited for the foreseeable future, and the ing national dialogue. capacity of the Government’s services will take time to improve. Both constraints are arguments to make Livelihoods best use of public sector financing ability and techni- cal capacity where appropriate and feasible. The pos- Creating employment and sustainable livelihoods sible form and range of mutual engagement should be is critical to address acute grievances and to avert creatively explored. a humanitarian emergency. Key issues to address in Reforms to improve the public financial manage- this regard include improving food security, addressing ment system are critical to support growth and for vulnerable groups, as well as urgent actions for a rapid absorbing the available resources more effectively. and equitable increase in jobs. Reducing the depen- Enforcement of tax laws, substantial strengthening of dence on the agricultural sector for low productivity the revenue and custom authorities, transparent bud- employment and income in favor of creating more pro- get execution free of discretionary interventions, and ductive opportunities, including in the industrial and instituting effective internal control mechanisms are services sector, would be imperative in this regard. key areas of focus. Procurement mechanisms have Yemen is experiencing a very high level of food improved but need further attention as corruption insecurity, with increasing food prices. The agricul- remains pervasive. Although achieving results in this tural sector is producing a fraction of the country’s policy area takes time, aiming for results today sends needs and would not be able to produce enough to the right signal. reduce the country’s dependence on food imports. Improving governance and implementing effec- The food import regime in Yemen should be reviewed tive transparency and accountability mechanisms with regard to its competition and efficiency (given (e.g., the recently adopted access to information the high retail margin compared to other countries) legislation) is also critical. Governance and public and corrective measures taken to improve access to sector weaknesses are a key constraint for Yemen to food. Ultimately food security will be mainly advanced realize its development and growth goals, as under- through an increase in jobs and an improved social lined by the 2011 protests. A significant overhaul of safety net. the governance system is needed to enable the Yemen Investing in women’s employment and capacities civil service to effectively perform core functions and is a fundamental cross-cutting issue for transition- deliver services. In addition efforts need to be under- al development in Yemen, and is crucial to address taken to generate greater diversity in governance issues of food security and nutrition. Promoting edu- structures. This includes targeted policies and mea- cation and building skills among rural women are key sures to increase the number of women in decision- to improving agricultural and non-farm productivity, making and governance positions. This requires the hygiene practices, and food security including nutrition, xxviii Executive Summary particularly at a subsistence household level. Wom- should be addressed at the national level. The inter- en’s employment rates remain low in Yemen, while national experience in dealing with tobacco consump- global data shows that increases in the labor partici- tion offers lessons which could inspire the dialogue pation of women in conflict-affected areas are associ- on Qat in Yemen. ated with increases in overall household and commu- nity welfare, measured in terms of higher per capita Expanding Social Service Delivery consumption.6 The Social Fund for Development (SFD) and Pub- Access to social services—already poor prior to the lic Works Programs (PWP), along with the Social crisis—has further deteriorated, leading to wide- Welfare Fund (SWF) are effective tools in the short spread and acute vulnerabilities. This could have a term to deliver basic services and create jobs and significant impact on social cohesion and livelihoods. income, and are key pillars of the social safety net While the social challenges are vast, the Government’s for the medium and long term. These institutions capacity to deliver and meet social aspirations is low. assist the livelihoods of the most vulnerable through- Low capacity, moreover, is met by low governance stan- out Yemen, in particular female-headed households, dards. The transition period must yield a roadmap for and should be supported and scaled up further. While how the resources and the human capacity available the the institutional capacity of SFD, PWP, and SWF in the country could be better aligned, on the nation- should be strengthened (in support of effective cash al, regional, and local level in order to deliver better transfer schemes, improved targeting mechanisms services to the Yemeni population. and better monitoring and evaluation systems) the Poverty and the cycle of conflicts exposed chil- these institutions are considered good instruments, dren in Yemen to heightened risks and vulnerabil- which could absorb increased levels of donor fund- ities throughout the crisis. Prior to 2011, one third ing (although the issue of future sustainability should of Yemen’s 12 million children were considered vul- not be ignored). nerable.7 The crisis Yemen went through during 2011 In recent decades Qat production and consump- has made the situation of the most vulnerable chil- tion has become an important element of liveli- dren even more precarious, exposing them to various hood and social life, while the negative impact of forms of violence, abuse, and exploitation, including Qat remains to be addressed. In 2009, there were child labor, child marriage, child trafficking, irregular over 600,000 small-scale Qat farmers in Yemen, which cross border movements, and smuggling.8 As the root accounted for more than half of all small-scale farmers. causes are directly linked to poverty, measures allevi- Most of the Qat, however, is produced on large scale ating poverty are of prime importance. Consideration farms using irrigation. In total Qat provides employ- should also be given to strengthening the legal norms ment to one in seven working Yemenis. Qat production, in favor of protecting children’s well being. however, taxes scarce water, using around 40 percent During 2011, the number of refugees that entered of available resources, and benefits from the energy Yemen reached the highest level ever recorded, while subsidy, whenever irrigation is involved. Qat consump- at the same time, the total number of IDPs increased tion has social and health implications. By diverting resources away from food production, the steady rise 6  Women reinvest 90 percent of their income in their families of Qat production adversely affects also food security, and communities, compared to men who reinvest only 30 per- both at the national and the household level. Although cent to 40 percent of their income. Phil Borges. 2007. Women Empowered: Inspiring Change in the Emerging World. New York the production and consumption of Qat is a fact of life 7  Yemen Social Protection Strategy, 2008, page 45. in Yemen, the negative social, health, and economic 8  Secondary data review for Yemen. OCHA, page 35, Septem- externalities, and especially the indirect subsidization, ber 1–15. xxix Joint Social and Economic Assessment in both Sa’ada and Aden. In 2011, over 103,000 peo- under-nutrition, and control of low birth weight—which ple arrived in Yemen, mostly from the Horn of Africa; should be taken up as high priority areas. the highest annual rate since UNHCR started gather- While access to education has been successful- ing statistics in 2006. A total of 215,707 were regis- ly advanced in the past decades, there are serious tered by December 2011. In addition, there is a total of qualitative shortfalls, and girls’ access to education 463,452 Internally Displaced Person (IDP) registered, a remains a serious challenge. Yemen maintains a frag- number which doubled in 2011. The refugees and the mented administrative system for education with major IDPs challenge the fragile service delivery capacity in disconnects between strategies and associated invest- Yemen further. Providing access to livelihood assets is ments at different levels. A national vision that artic- essential. While solutions are offered it is important ulates the education and skill needs of the economy that livelihood considerations and development of the and the society, and the choices that must be made to hosting communities are fully integrated in the poli- provide these skills, is urgently needed. In the imme- cy approach. Support of the Government and build- diate future, schemes to encourage teachers to work ing policy capacity, in particular for the IDP admin- in remote areas, facilitate school feeding programs, istrative units, to implement the policy will also will improve school water and sanitation facilities, and be essential. conditional cash or in-kind incentive programs with- Civil Society Organizations (CSOs) are important in the framework of social welfare strategies must be in complementing service delivery, providing social implemented to encourage the most vulnerable fam- protection services, opening opportunities for jobs, ilies to send their children to school. While schools and creating demand for better governance. CSOs are being restored where needed, children from dis- and their networks should be strengthened and encour- placed families should be supported to have access to aged to play such roles wherever possible, in support existing schools in their host communities. Similarly of government efforts and effectiveness. to the health sector, training of more female teachers is urgently required. Close attention should be paid to Expanding Basic Service Delivery equity in access to services, particularly gender dispar- ities. Despite progress over the last years, in 2008, gen- Yemen is seriously undersupplied with health ser- der parity in education remained low (0.66 for basic, vices and health service workers. Increasing access 0.45 for secondary) and youth female literacy (ages to health services by developing and deploying human 15–24) stands at only 70 percent (as compared to 95 capacity, especially female health workers, and under- percent for males). taking rigorous health workforce planning, must take Water sector governance is very weak and con- priority over building physical capacity in the peri- tributed to the rapid decline of water resources, od ahead. which are expected to run dry within one to two Malnutrition is pervasive and needs multisec- decades in the densely populated highlands. Tradi- toral interventions. A staggering 58 percent of chil- tional collective institutions have largely been over- dren under age five are chronically malnourished and taken by individual appropriations of the groundwater at high risk of cognitive impairment and death from resources, and modern laws and regulations are prov- treatable diseases, such as acute watery diarrhea and ing highly ineffective in the face of weak enforcement measles. Even more starkly, 966,000 children are affect- of legislation. As a result, after thirty years of appar- ed by acute malnutrition. The National Nutrition Strate- ent abundance, water availability is declining rapidly gy9 provides for a set of actions—including nutrition for emergency situations, improved water, sanitation and 9  National Nutrition Strategy for Yemen (draft); Family Health hygiene, school nutrition, control of child and maternal Directorate, Primary Health Care Sector, MOPHP. xxx Executive Summary and non-renewable resources are expected to run out would be first steps towards improving such servic- within one to two decades in the densely populated es and thereby build examples of better governance. highlands.10 Urban centers like Ta’iz could serve to establish a ref- Working with the local communities is most erence case. promising, linking investment with improved gover- Improved access to regular power supply is nance. In rural areas, the Demand-Responsive Approach imperative for any growth scenario. Although the (DRA), driven by working with communities, has conflict created a serious power crisis in 2011, the been successfully introduced over the last decade and poor performance of the electric power sector is not expansion of coverage is being achieved. Attention is a product of the crisis. Over the last decade, the elec- needed to ensure efficiency, quality, and sustainabil- tric power sector in Yemen has been characterized by ity. Concerning water management in rural areas in complex governance systems, poorly performing state- agriculture, the challenge is to do better in supporting owned institutions, inadequate capacity, lack of invest- farmers in (i) more efficient use of groundwater for irri- ment, and weak financial management. Direct and indi- gation; including through investment in modern infra- rect subsidies to the power sector hurt the poor most, structure; (ii) adapting cropping patterns; (iii) integrat- diverting scarce fiscal resources away from other crit- ing the water resource management from the local to ical growth and poverty alleviation areas. the central level; and (iv) developing flexible support Even as subsidies are scaled back, substantial mechanisms for poorer rainfed and livestock areas. new investment in the power sector would be need- Concerning the urban areas, the problem of sourcing ed to satisfy continued rapid demand in the next and managing of water reserves requires an engaged two decades.11 However investments will not yield and integrated approach, including (i) working with results unless a major reform of the governance of communities to establish water rights; (ii) strengthen- the sector is undertaken, with a view to shrinking ing the possibility of transfering water from agricul- the role of the Government and unbundling the sec- ture to municipal and industrial use; (iii) working on tor to provide better opportunities for private sector supply management; (iv) prioritizing solutions for the involvement. Other areas of focus include creating an greatest problem areas: Sana’a and Ta’iz; and (v) work- institutional framework with effective checks and bal- ing on demand management to contain demand. The ances, reducing power system losses, increasing the Government should implement regulations governing efficiency and availability of existing generation capac- access to groundwater, and aim to close the wide gap ity, developing renewable capacity, increasing the bill in water and sanitation services between urban and collection rate, updating the rural electrification strat- rural population, including with the above. egy facilitating finance for expansion in the electricity Investment in the water sector can only be effec- sector, and least-cost-generation expansion. tive if the institutional capacity of the sector is con- tinuously enhanced. Low-cost investments in behav- 10  For example, Sana’a water utility has to drill about six new ior change initiatives related to improved sanitation deep wells every year to replace drying wells. 11  The latest Power Development Plan (2009-2020) forecasts a and hygiene will offer rapid and high-impact returns. total capacity demand of 3,102 MW, at an annual growth rate Improving local governance and addressing poor of 10 percent over the next decade. New capacity of 3,538 MW urban service delivery should accompany infrastruc- will need to be added to the grid by 2020 to replace the retiring ture and financial support. Supporting greater empow- units and accommodate this growing demand with sufficient erment and accountability as well as transparency in capacity margin. The total investment required for building the needed generation capacity and the associated transmission local governance, improving coordination across insti- and distribution facilities is estimated to be over US$5 billion. tutions responsible for local services, and addressing Demand projections are based on an average GDP growth rate fragmentation of urban service delivery institutions of 6.5 percent up to 2020. xxxi Joint Social and Economic Assessment The Transitional Program for recover only to pre-crisis levels under a slow transi- Stabilization and Development, tion scenario, the poverty rate may remain at about 2012–2014 50 percent of the population by 2020. In such a sce- nario, US$3 billion in external financing would still be In late June 2012, the Government of National Unity required in total from 2013 to 2016. This is an amount of the Republic of Yemen launched the ‘Transitional equivalent to what the country has typically received Program for Stabilization and Development (TPSD)â€? in recent years in form of external financing, 80 per- for 2012–2014. The TPSD describes the challenging cent of which was from official aid sources. security environment, the precarious social and human- Effective and timely implementation of the reform itarian situation in Yemen, the fragile financial posi- policies and recovery agenda outlined above would tion the Government faces, and calls for an emergency allow broad based growth to accelerate to 6.7 percent response and support by the international donor com- annually for the immediate transition period (2013 to munity (see also chapter 6). The TPSD proposes paral- 2016) and reach eight percent for the period 2017 to lel implementation of an Emergency Response (Pillar 2020. Under this high case scenario (accelerated transi- 1: short-term priorities), and the initiation of a medi- tion), poverty could retreat to 31 percent of the popula- um-term Economic Recovery Program (Pillar 2: medi- tion by 2020. Even with decisive progress in the ability um-term priorities). Given the challenging condition of the Yemeni Government to mobilize public resourc- for success, both the Government and the donors need es as well as target and manage spending efficiently, to prioritize measures, programs, and operations that additional external resources-both private and pub- help toward conflict abatement, improve economic lic-would be required to finance the ensuing domestic conditions, provide rapid relief to the Yemeni people, investment. This external financing would amount to and assist in alleviating budgetary pressures during about US$1.9 billion annually12 (2013 to 2016), with that the period 2012–14. Donors should review their pro- level declining to US$1.6 billion annually for the later grams to also allow for quickly disbursing aid to sup- period (2017–2020). The mix between private and pub- port political, humanitarian, and economic recovery lic would evolve over time as the country develops an and contribute quickly to improving Livelihood con- enabling environment for private capital inflows. Initial- ditions. When supporting TPSD implementation, it is ly, the sources are likely to be mostly of public origin. vital to reduce the risk of strategic failure arising from Given the constraints and uncertainties under improper sequencing of aid and aid flows, and from which the transition is taking place, one can- the dispersion of donors in multiple activities, either not exclude that policy progress could be more singularly or jointly. uneven. In such a scenario, growth would be slow- er and more narrowly based, reaching possibly 5.6 Outlook and Financing Requirements percent annually for the immediate transition peri- od (2013 to 2016) and 6.3 percent thereafter (service Given the challenges, business-as-usual will not sector–led transition). In such a case, poverty reduc- address Yemen’s long-term development and pover- tion would fall back to the estimated level prevailing ty reduction goals. Yemen’s economy grew on average at a rate of four percent annually over the last decade. 12  This does not include financing for reconstruction costs This was not enough to prevent poverty from rising (short term priorities) as suggested by the Transitional Program for Stabilization and Development. The calculations focus on from 36 percent of the population in 2006 to an estimat- the dynamic relationship between investment and growth over ed 42 percent in 2009. Recent developments may have time, but not on the growth impact of a short term capital influx brought that level up to 54 percent. If growth should (reconstruction). xxxii Executive Summary before the crisis only by 2020. External public financ- friends of Yemen. While the JSEA provides analy- ing to the amount of about US$1-1.2 billion would sis of Yemen’s most pressing needs, it is the Govern- initially be required annually to sustain such a sce- ment’s Transition Plan that will offer the roadmap nario from 2013 to 2016. This financing requirement by which Yemen can emerge from crisis stronger would decline thereafter. and better able to ensure equitable and sustainable development for its people. The implementation of Conclusion the Transition Plan and donor support should bal- ance humanitarian assistance, early recovery, recon- Putting Yemen on a path of recovery to prosper- ciliation, and peace-building efforts in the short run, ity will not only require a strong commitment with support to decisive policy actions and reforms and ownership from the Government and People that would underpin sustainable and inclusive devel- of Yemen, but also coordinated support and sig- opment, improved governance, and social protection nificant financial resources from all partners and in the medium to long term. xxxiii Context Review 1 1.1  The Yemeni Political and for employment and income mostly relied on informal Socio-Economic Context services, marginal agricultural activities, and migrant work and remittances for a large part of the population, At unification of North and South Yemen in 1990, the which is up to 70 percent rural. However, oil produc- state-society relationship in North Yemen had evolved tion has declined considerably since its peak in 2001. very differently from the one in South Yemen. This Nonetheless, rising and high international oil prices distinction built upon a society that was already struc- since the mid 2000s helped to counteract most of the tured differently due to contrasting resource endow- reduced oil production (except for 2009), keeping the ments. The fertile land in parts of the south led to state financially afloat, albeit subjected to the volatili- social relationships based on settled land ownership, ty of international oil prices. While the strategy of the while the aridity in the North made it unsuitable for former regime helped to extend and consolidate power, agriculture and forced tribes to organize themselves it was at the expense of building the foundations for around strong tribal confederations based on military future economic opportunities, sustainable and inclu- superiority to survive. Therefore, at unification, the sive growth and equity, and viable institutions. North had very strong tribal structures operating inde- At the same time, the political and econom- pendently from the state while the South had an ideo- ic record of the former government was long con- logically oriented strong state, controlled by one party sidered broadly successful. It balanced the inherited with the tribes playing a subdued role. It did not take political, social, Arab, and Islamic traditions and real- long for these differences to come to the surface after ities in Yemen with a set of modernization strategies unification as each side tried to impose their influ- for building a modern central state, which provided ence on the other. As a result, the South attempted for a unified army and security services, offered some to secede in May 1994, which led to a brief Civil War enhanced access to education and health services, that ended in July 1994 with a military victory of the and developed the nucleus of a modern private sector Northern forces. from a large informal and atomistic economy and a few The oil rent facilitated in the unified Yemen quasi-monopoly arrangements organized around crit- the “politics of patronage,â€? the financing of devel- ical imports (food, energy, defense equipment, etc.). opment, and contributed to relative stability. As the While the modernization on the political and social central state became the main pillar of modernization front advanced (by forming a set of modern institu- in Yemen, the political powers in place practiced pol- tions and especially through progress in access to edu- itics of patronage using the oil rent to support, limit, cation), development of the economy and a competitive or undermine the voice of various political and social private sector to match the demand for employment forces in Yemen (tribes, clans, regional, political, and fell victim to the overall emerging political culture. religious groups), fracturing social cohesion in Yemen. By balancing the various political actors and interests The income from oil resources compensated for the in Yemen with a web of patronage, creating alliances fiscal shortfall of an underperforming economy, which and solutions mainly for the short term, and favoring 1 Joint Social and Economic Assessment compensation through financial flows instead of sup- were exacerbated by deepening poverty, lack of gainful porting a framework for the creation of public wealth employment opportunities, particularly for the youth, and broad based growth, the former regime stifled and by loss of faith in a State that was increasingly opportunities for equitable and sustainable growth. seen as not being capable meeting the pressing social The mixed outcome of Yemen’s development and economic needs. strategy, leading to weak institutional structures The United Nations and the Gulf Cooperation and poor governance results, became increasingly Council have helped to bring about a peaceful tran- apparent after 2000 and translated into rising social sition in Yemen. Backed by member-states and based and political tensions and fragmentation of identi- on an initiative of the Gulf Cooperation Council (GCC), ties and allegiances. These contributed to a series of negotiations between the Government and opposi- conflicts with the Al-Houthies in the north, demand tion groups, facilitated by the good offices of the Sec- for more autonomy or even independence by forces retary-General, culminated in the signing of a Transi- active in the former South Yemen, and the emergence tion Agreement13 on November 23, 2011. The signatory of Al-Qaeda-linked activities in Yemen. Increasing parties agreed on a cessation of hostilities and the start tensions and the inability of central state institutions of a two-year transition process. The first phase of this or the patronage system to address the causes of the transition period (December 2011–February 2012) was fragmentations and rising associated conflicts brought marked by the formation of a Government of Nation- into question the stability of the state. While oil pro- al Unity in early December, and the departure of Pres- duction declined since early 2000, the non-oil econo- ident Saleh on February 23, 2012. my largely underperformed, remaining at an annual The peace process has been initiated but has not growth rate barely above the population growth rate. yet been achieved. Despite these milestones, the com- In essence, as the context for conflict expanded, the plete end of armed conflict, removal of roadblocks, resource base continued to shrink. and the return of all armed forces to barracks have yet to be achieved. Nonetheless, urgent economic 1.2  The 2011 Crisis and its Resolution stabilization measures were taken and the organiza- tion of Presidential elections in late February 2012 was The mass protests, violent clashes, and armed con- concluded with the inauguration of Abed Rabbo Man- flict that marked the country in 2011 represented sour Hadi as the newly elected President of Yemen.14 the culmination of simultaneous political, social, The transition is envisaged to take two years and and economic crises situated within an overall dif- will end with general elections. The second phase of ficult regional environment. Reaction to these crises the transition period is anticipated to continue over a from different groups of actors, including the politi- two-year period, during which time: the State is expect- cally aligned and non-aligned opposition in both the ed to host a National Dialogue; a new constitution is north and the south, and a renewed Al-Houthi rebel- being drafted; and the army and security establishments lion in the north, prompted diverse alliances with dif- will undergo reforms. The transition will end with the ferent interests and divergent political aims. Militants holding of legislative and presidential elections—to be from Al-Queda in the Arabian Peninsula (AQAP) and armed tribesmen took control of broad areas in the 13  The Transition Agreement‘s legal title is: GCC Initiative and south. The mass unrest and revolts against the Govern- the Agreement on the Implementation Mechanism for the Tran- ment during this period emerged from, and were cat- sition Process in Yemen, in accordance with the Initiative of the Gulf Cooperation Council (called the “Transition Agreementâ€?). alyzed by, conditions of acute societal fragility stem- 14  The Presidential elections were conducted in a largely peace- ming from sectarian, tribal, and regional divisions had ful environment with unexpectedly high levels of voter partici- have been building up over the past few decades and pation (around 60 percent), particularly from the youth. 2 Context Review held under the new constitution—and the inauguration to other political, security and governance priorities. of a new President of the Republic of Yemen. Measures supporting livelihoods and gainful income At this point in time stability in the country are important for early confidence-building and “sig- remains fragile, and the transition must be viewed nalâ€? commitment that demonstrates that Government against longstanding challenges that Yemen con- intentions are backed-up by concrete actions. Accompa- tinues to face on the security, political, social, and nying these measures with transformation of key insti- economic fronts. These challenges are intertwined; tutions could help create a virtuous cycle that would addressing the social and economic factors underlying move Yemen away from violence and fragility, and the broader security and political crisis are critical for help engender both security and prosperity. Equally, (1) stabilizing the country in the near term and sup- efforts to begin addressing gender inequalities could porting the reconciliation process enshrined in the Tran- help to build confidence. sition Agreement, (2) contributing to the development Finally, the JSEA acknowledges the importance of of a new governance system for Yemen, and (3) laying governance issues and institutional capacity develop- the foundations for long-term equitable development. ment as key cross-cutting considerations. As reflect- ed in the WDR 2011, building capable institutions is 1.3  Assessing the Social and essential for preventing future sources of conflict, and Economic Priorities of the Yemeni managing tensions and other stresses. In the case of Transition: The JSEA Approach Yemen, reducing corruption and improving account- ability and transparency, while at the same time deal- The transition provides an opportunity to take steps ing with the pluralistic nature of Yemeni society in an toward correcting Yemen’s development path. The equitable fashion, will be critical in addressing some events of 2011 and the transition period in Yemen require of the issues that exacerbated tensions and shaped the a re-assessment of development priorities for the tran- nature of the 2011 crisis. sition period and beyond, for the Government as much The subsequent chapters in this document provide as for its development partners. Rather than pursuing a more detailed analysis of the impact of the 2011 cri- a traditional development agenda, the transition pro- sis, with a focus on assessing and identifying priori- vides an opportunity to take steps toward correcting ty areas for policy action within the framework of the Yemen’s development path and begin to address the Government’s Economic Transition Plan. The chap- institutional deficiencies that contributed to the crisis. ters are organized around the following key themes: The JSEA incorporates lessons from the 2011 World Development Report on Conflict, Security and • Economic growth. Restoring and accelerat- Development (WDR 2011, see also Annex 1). In the ing economic growth in Yemen will be criti- context of Yemen, immediate progress in the area of cal in the short term, and as a prerequisite for jobs and livelihoods is critical in order to address highly human and institutional development in the politicized social grievances and prevent an escalation long-term. Key issues assessed in this regard of humanitarian emergencies. At the same time, foun- are the required levels of investment to restore dations for restoring economic growth and expanding and accelerate growth, sectoral priorities for fiscal revenues will be essential for enabling a range growth, and priority measures to ensure effi- of political and governance reforms, improving legiti- cient use of resources and enhance sustainabil- macy of state institutions, and providing capacities to ity, inclusivity, and responsiveness to urgent achieve other key transition milestones. short-term needs; The JSEA also considers social and economic • Jobs and Livelihoods. Rapidly increasing requirements during the transition period in relation employment and sustainable livelihoods is 3 Joint Social and Economic Assessment critical to address acute grievances and inequi- include priorities for improving equitable access ties, and avert a humanitarian emergency. Key to services, and measures to strengthen capac- issues assessed in this regard include priorities ities of providers; and for improving food security, addressing vulnera- • Expanding basic service delivery. Signifi- ble groups (in particular the unemployed, youth, cant material damages to key services (includ- female-headed households, women, children ing key public services such as health, educa- and victims of state actions), as well as prior- tion, urban services, water, and electricity) and ities for rapid and equitable increase in jobs; institutional weaknesses constitute an impedi- • Expanding social service delivery. The impact ment to economic growth, and improved live- of the crisis on access to social services (which lihoods, and the provision of basic services. were already low and of poor quality prior to Key issues assessed include institutional con- the crisis) has led to widespread and acute vul- ditions, investment priorities, and the modali- nerabilities, which significantly impacts social ties to ensure equitable distribution and rapid cohesion and livelihoods. Key issues assessed resumption of services. 4 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios 2 2.1  Introduction poor. Armed conflict can increase death rates of chil- dren up to 24 times through malnutrition, disease The Arab Awakening has initiated political and eco- and displacement, and one additional month of war nomic transition processes in several countries, includ- exposure significantly decreases children’s nutrition- ing Tunisia, Egypt, Libya, and Yemen. The citizens of al status compared to non-exposed children (ESCWA these countries have demanded a change in the polit- 2010; Bundervoet et al. 2009). Equally, armed con- ical leadership in the quest for more freedom, dignity flict is associated with elevated levels of violence and justice. Economic factors also played a role in the against women. uprisings, including growing unemployment, especially The short-term socio-economic impact of the 2011 among the youth, rising inequalities and high levels of crisis poses a huge challenge to Yemen. Throughout poverty. While many people took to the streets in the 2011, conflicts in various parts of the country have hope for jobs and better lives, the short-term impact led to disruptions in the supply of production chain of the transition have led to even higher unemploy- and higher prices have affected all economic sectors. ment and possibly an increase in poverty as is the case The reduction in fuel availability, particularly for die- in Yemen. This is because the uprisings have in their sel, has further aggravated shortages in electricity and first round led to slower economic growth or even to water supplies. Power cuts became so frequent that a contracting economy. Fiscal deficits have increased, in some areas of Yemen the power was only avail- limiting the policy options, and foreign exchange earn- able four hours per day (MoPIC 2012), if at all. The ings from tourism, development aid, and foreign direct repeated sabotaging of the pipelines in the Mareb investment have all declined. and Ras Issa areas and continued road insecurities Past international experience shows that the have led to a sharp decrease in crude oil production economic and social costs of conflict are high. Col- by about 25 percent in 2011 and altered transporta- lier (2007) calculates that one year of conflict reduc- tion costs (MoPIC 2012). These disruptions had far es a country’s growth rate by 2.2 percent at a global reaching repercussions throughout the economy. The average. For Arab countries the average cost may be agricultural, industry, and service sectors faced sig- even higher. One year of conflict is estimated to cost nificant cost increases for inputs such as irrigation, 3.5 percent of per capita GDP and between five to transportation, and marketing, ultimately reducing ten years in their social development, including life production and exports. Production processes were expectancy, immunization rate, and human devel- disrupted leading to the closing of businesses and dis- opment (ESCWA 2010). Conflict negatively affects missal of workers in both the public and the private food security through a decline in agricultural pro- sectors. Public goods and service delivery has been duction, trade, and income (Deininger and Castagni- affected across Yemen, including health, education, ni 2006; FAO 2000), and vulnerable groups in society and social safety nets. often bear a disproportionate burden of these devel- Transition in Yemen requires action and vision opmental costs, especially children, women, and the from the government and participation from all 7 Joint Social and Economic Assessment stakeholders. While transition in Yemen will be a chal- 2.2 Yemen before and during 2011: lenge, it provides also for new opportunities that need Evidence from Existing Data to be seized in the coming years. This assessment presents alternative transition pathways to support 2.2.1  Economic Baseline and Initial Trends policy makers, civil society, and international part- ners in their quest and support for growth, employ- The services and the oil sector are the dominant eco- ment, poverty reduction, and food security in Yemen. nomic sectors in Yemen. Table 1 provides an overview More specifically, this analysis first reviews the exist- of the structure of the economy before the 2011 cri- ing evidence on the economic performance and social sis. Agriculture made up 11 percent of Yemeni GDP, impact before and during 2011. It then uses an econ- the industry sector contributed 43 percent, with the omy-wide Dynamic Computable General Equilibrium oil sector share contributing 19 percent. The servic- (DCGE) model with poverty and nutrition micro sim- es sector contributed close to 46 percent of GDP, and ulation modules to develop and quantify the short trade and transport together made up 20 percent of and medium growth and poverty reduction scenari- GDP. The oil sector remains substantial and contributes os for Yemen. The last section highlights areas where almost one fifth of the country’s GDP. Both the agri- policy reforms are needed to support the realization cultural and industry sectors are import reliant, with of these scenarios. import intensities of 45 and 39 percent, respectively. Table 1: Structure of the Yemeni Economy by Sector Private GDP consumption Export Export Import Import share share share intensity share intensity Agriculture 11.1 22.8 5.4 10.1 28.5 44.9 Cereals 0.8 10.1 0.1 1.6 19.5 88.3 Cash crops 3.6 7.6 1.1 7.6 6.4 36.4 Qat 3.5 5.1 — — — — Livestock 2.2 — 0.4 3.4 2.6 22.6 Fishery 1 — 3.8 59.3 0.1 2.8 Industry 43.2 45.4 94.4 36.6 71.6 38.9 Oil and gas 19.4 1 79.1 92.3 — — Food processing 3.5 27.3 2 5 28.5 52.5 Other industry 12.7 15.6 13.3 15.7 43.1 46.7 Electricity and water 1.2 1.5 — — — — Construction 6.4 — — — — — Services 45.8 31.7 — — — — Trade and transport 20 12.5 — — — — Other private services 11.3 13.3 — — — — Education and health 5.8 5.9 — — — — Other public services 8.7 — — — — — Total 100 100 100 17.2 100 23.1 Source: Yemen DCGE Model. Note: GDP shares are for 2009. Import intensities are calculated as shares of total domestic consumption (final and intermediate). Export intensities are the ratios of exports to domestic production. 8 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Figure 1.  Growth Trends, 2000–2011 60 50 40 Growth per annum (%) 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 –10 –20 Total Services Total Industry (excl. Hydrocarbon GDP) Agriculture, forestry, ï¬?shing Total GDP Non-hydrocarbon GDP Hydrocarbon GDP Source: IMF estimates and Author’s calculations. Industry makes up close to 72 percent of the import share of exports of just under six percent of the total. bill with food processing alone using up 28.5 percent About 50 percent of Yemen’s total private consumption of Yemen’s import value. is on food (including agricultural and food process- Aggregate consumption is reliant on imported ing). Losing the foreign exchange revenue potential food and oil exports finance these imports. Aggre- of the oil sector would put into question the ability gate consumption is heavily reliant on food and agri- to import the required quantities of food products. cultural products while hydrocarbon exports are the Providing services is the main economic activity prime source for foreign exchange. Yemen is heavi- besides the oil sector. Before the political crisis in 2011, ly food import dependent. Fifty-seven percent of all Yemen maintained a stable, albeit modest, growth pat- imports are food and agricultural products. Close to a tern throughout the 2000s (Figure 1). Growth spikes fifth of total imports are imports of cereals, thus mak- are mainly triggered by the changes of the international ing Yemen very susceptible to global food price vol- price of oil and as in 2010, by the initiation of produc- atilities, especially with a diminishing oil supply and tion at a large liquefied natural gas investment (Yemen overall diminished foreign exchange earning potential. LNG). Figure 1 shows that growth in the agricultural The oil and gas sector provided the bulk (about 70 to sector has been declining and growth in the industrial 80 percent) of foreign exchange earnings for Yemen sectors (excluding oil) and the non-hydrocarbon sec- over the last decade, followed closely by agriculture’s tors as a whole has been almost non-changing. The 9 Joint Social and Economic Assessment only sector that appears to be growing mildly but rel- beneath their 2010 level. Whereas exports of hydrocar- atively more than the other non-oil sectors is the ser- bon products have continued throughout most of 2011, vices sector. they are expected to decrease in 2012 due to lower pro- The political crisis in 2011 led to a sharp drop in duction and lower international prices (IMF 2012; EIA economic growth in 2011 of about 11 percent. The 2012), negatively impacting also Yemen’s fiscal bal- countries capacity to mobilize resources domestically ance. The current account deficit is expected to reach remains limited in the short term. 3.3 percent of GDP in 2012. The fiscal balance in Yemen is heavily reliant on The economic disruptions of 2011 will also impact the hydrocarbon sector. By 2011, the fiscal deficit in price outcomes in 2012. The CPI rose from 12.5 per- Yemen reached 4.3 percent of GDP. (Table 2) Reve- cent in 2010 to 23.2 percent 2011, indicating a sharp nues from the hydrocarbon sector declined despite increase in the overall price levels. Food prices rose sig- the increase in the global price of crude oil. Export nificantly primarily as the result to reduced domestic revenues from oil decreased in 2011 relative to GDP supply and reduced imports that were further exacer- (Table 2) and Yemen faced shortages in crude oil bated by transport and distribution disruptions due to production and the production of cooking gas due the conflict situation in Yemen and the deficient phys- to security deterioration that led to the disruption of ical infrastructure, both factors that adversely affected the major pipeline Mareb-Hodeidah, decreasing the the overall supply chain. Rising fuel costs led to count- oil production, supply, and revenue earning potential less production disruptions as well as steep increases for the government (IMF 2012). All other fiscal reve- in transport costs, sometimes reaching as much as 100 nue generating components suffered, too, as the result percent in urban areas and by twice as much in rural of the conflict. Tax evasion exacerbated the shortfall areas (MoPIC 2012). Temporarily, domestic gas pric- in non-hydrocarbon taxes, and a significant reduc- es rose to three times their 2010 levels, gasoline pric- tion in foreign grants and loans by close to 60 per- es by 600 percent, and diesel prices rose up to by 800 cent and 70 percent, respectively, added to the gov- percent during 2011 (MoPIC 2012). The current price ernment’s dwindling revenues (MOPIC 2012). On the level is largely determined by the current lack of a nor- expenditure side, even though total expenditure and mal and efficient distribution network, respective of net lending fell in 2011 over 2010, nonetheless, public the widespread smuggling of hydrocarbon products, wages and salaries rose by close to 20 percent in 2011 especially for diesel. (MOPIC 2012).15 The significant reductions in exter- nal aid and the need to contain government spending 2.2.2  Impact of the 2011 Economic led to a substantial reduction in public investment, Contraction on Poverty and Malnutrition helping to control the fiscal deficit, at the expense, however, of development objectives. The 2011 economic contraction (Figure 2) led to an The current account deficit fell from 10.2 percent estimated increase in poverty to 54.4 percent (Fig- of GDP in 2009 to 3 percent in 2011. The decline is ure 3), affecting urban households relatively more mainly attributable to an increase in the export earn- than rural households. The conflict has sharp- ings of the hydrocarbon sector and to a decrease in ly driven down household income through higher imports, reflecting the depressed demand. Exports of non-hydrocarbon goods fell from 5.7 percent of GDP in 2009 to 2.4 percent in 2011 (Table 2), which reflects 15 Only 20 percent of the increase in wages and salaries was the regular annual increase, the rest were increases that were given the impact of the conflict situation on the overall eco- public sector employees for public appeasement at the onset of nomic activity. Non-hydrocarbon exports are expect- the conflict, a policy that was implemented throughout the Arab ed to marginally increase in 2012, however, still well World in 2011 (Breisinger et al. 2011). 10 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table2: Main Macro-Economic Indicators, 2009–2012 2009 2010 2011 2012 (Annual percentage change) Real GDP 3.9 7.7 –10.5 –0.9 Non-oil real GDP 4.1 4.4 –10.0 –1.6 Consumer prices (end of period) 1/ 8.8 12.5 22.7 16.1 Consumer prices (period average) 1/ 3.7 11.2 17.6 17.1 (In percent of GDP) Investment and savings Gross capital formation 13.5 11.6 5.5 11.1 Of which: nongovernment 7.0 7.0 3.5 7 Gross national savings 3.3 7.9 2.0 10.1 Of which: nongovernment 7.0 7.3 4.4 11.0 (In percent of GDP) Public finances Total revenue and grants 25.0 26.0 24.6 29.7 Hydrocarbon revenue 14.6 16.4 16.1 16.1 Non hydrocarbon revenue 8.4 8.4 7.4 9.5 Tax revenues 8.0 6.6 5.2 6.5 Grants 0.4 1.2 1.2 4.0 Total expenditure and net lending 34.6 30.1 29.0 34.7 Subsidies and transfers 10.9 10.8 9.9 12.1 Subsidies 8.2 8.7 7.9 8.5 Petroleum product subsidies 7.7 8.2 7.4 7.9 Transfers    2.6 2.1 2.0 3.6 Capital expenditure 6.5 4.6 1.9 4.1 Fiscal deficit 10.2 4.0 4.4 5.0 (Annual percentage change, unless otherwise indicated) Monetary sector Credit to private sector –4.8 8.2 –16.9 7.0 (In percent of GDP, unless otherwise indicated) External sector Exports of goods 23.3 25.2 26.3 23.1 Hydrocarbon exports 17.6 20.8 24.3 20.6 Non hydrocarbon exports 5.7 4.4 1.9 2.5 Imports of goods 31.3 28.0 24.7 24.4 Hydrocarbon imports 7.8 7.1 9.0 7.0 Services, net –3.6 –2.3 –2.2 –2.5 Workers’ remittances, net 4.4 4.8 4.0 4.1 Current account balance 10.2 3.7 3.5 1.0 Overall external balance 4.5 3.6 4.1 0.3 Exchange rate (YR/US$) 202.9 219.6 213.8 — Source: IMF, and authors’ calculations 11 Joint Social and Economic Assessment Figure 2: Economic Growth under Stagnation, Figure 3: Poverty Changes under Stagnation, Slow and Rapid Transition Slow and Rapid Transition 10 60 8 55 Poverty rate (%) Economic growth in non-mineral 6 50 4 45 economy (%) 2 40 0 35 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 –2 30 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Initial –4 –6 Accelerated transition –8 Service-led transition –10 Industry-led transition Agriculture-led transition Accelerated transition Slow transition Service-led transition STAGNATION Industry-led transition Source: Yemen DCGE Model, 2012. Agriculture-led transition Note: Estimate. For a discussion of the scenarios see Section 2.5. Slow transition STAGNATION Source: Yemen DCGE Model, 2012. also reflect the partial breakdown of normal supply chains due to the conflict. Rural poverty rises from its very high pre-crisis level of 47.6 percent further unemployment and/or falling wages for public and to 59.0 percent in 2011. private sector wages at all skill levels. In addition, Child malnutrition has increased, too, although prices for major goods and services such as food it is less responsive to economic shocks than pover- and fuel have risen, as a consequence of lower and ty. According to the model-based calculations sum- irregular supplies, thus reducing households’ real marized in Table 6, the prevalence rate of child stunt- income. Household expenditure, on which pover- ing increased by more than two percentage points ty is calculated, has also sharply declined. Overall between 2009 and 2013 (or around 0.7 percentage household expenditures declined by 16.8 percent in points per annum) from an already very high level of 2011. Urban households suffered even higher losses 59.4 percent in 2009 (MOPIC 2010). In general, the (18.7 percent) compared to rural households (13.8 rate of child stunting is much less sensitive to econom- percent). In terms of poverty impact, urban house- ic shocks than the poverty rate, primarily because of holds are relatively and absolutely more affected than the relevance of non-income factors for nutrition out- rural households. Urban poverty rose sharply by 13.3 comes and the long-run nature of the nutrition indica- percentage points from 29.9 percent in 2009 to 42.4 tor that was used. A recent survey by the World Food in 2011, which may reflect the fact that much of the Program estimates that at the end of 2011, 44 percent uprisings took place in urban areas while many rural of the Yemen population suffered from food insecuri- areas may have been affected only indirectly. It may ty, up from 32 percent in 2009. 12 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table 3: Prevalence of Child Stunting and Annual Changes under Different Growth Scenarios, 2009–2020 Annual Change (percentage Prevalence Rate (percent of children under 5) points) 2009 Baseline 20111 20131 20201 2013–20201 Baseline 59.4 59.2 58.9 58.0 –0.13 Stagnation 59.4 61.0 61.7 61.8 0.02 Slow transition 59.4 61.0 61.5 60.4 –0.16 Agriculture-led transition 59.4 61.0 61.4 60.4 –0.14 Industry-led transition 59.4 61.0 61.4 59.4 –0.30 Service-led transition 59.4 61.0 61.4 58.4 –0.43 Accelerated transition 59.4 61.0 61.3 57.0 –0.63 Source: Yemen DCGE model and micro simulation models (2012). 1 Estimate. For a discussion of the scenarios see Section 2.5. 2.2.3  Perceptions of Yemenis: Evidence from ethnic minorities in 2011. This share has dropped by Gallup World Poll two-thirds since 2007 (Figure 4). Since the first Gallup survey in 2007, confidence in most state and state-con- The Gallup World Poll provides rich information on per- trolled institutions is at a record low in 2011, while it ception held by Yemenis about the political and economic was already at very low levels even before the recent situation between 2007–2011. It does not measure gov- political crisis. In 2011, around 40 percent or less of ernment performance, economic conditions, household the adult population had confidence in the local police, welfare, etc. directly but rather interviews people about financial institutions, and the media, and even less their perceptions regarding these factors. Hence, it also than 30 percent in the judicial system, healthcare sys- adds an important dimension to the analysis by captur- tem, and the honesty of elections (Table 4). The vast ing people’s sentiments that appear to be particularly majority of people seem to only trust religious institu- relevant in the context of analyzing conflict impacts. tions and—at least until mid-2011—the military. Com- The data show that Yemen’s political and economic pared to 2009, confidence in all state and state-con- conditions had been deteriorating prior to 2011. While trolled institutions has declined significantly with the confidence in the national government grew slightly dur- exceptions of the media and, perhaps surprisingly, ing and after the global food and fuel crisis, it plummet- the judicial system. Strikingly, people lost most con- ed in the course of the recent uprisings (Figure 4).16, 17 fidence in the national government and its ability to In 2011, less than 40 percent of the adult population conduct fair elections, whereas religious institutions had confidence in the national government. Another indication of increasing government failure in providing 16  See Breisinger et al. (2010) for more information on the growth security, fostering inclusiveness, and facilitating social and poverty effects of the 2007-08 global crisis. 17  The 2011 observations in Figure 4 are averaged from two sur- equity is the degree of protection of minorities. Only vey administrations in February–March and June–July (that is 12 percent of the Yemeni adult population considered after the outbreak of the recent uprisings). The data therefore their city or area as a good place to live for racial and captures parts of the impact of the revolution. 13 Joint Social and Economic Assessment Figure 4: Trends in Perceptions on Political and Economic Conditions in Yemen 60 60 50 50 Percent of adults Percent of adults 40 40 30 30 20 20 10 10 0 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Conï¬?dence in national government Growth in local economy expected Female Female Male Male Protection of racial/ethic minorities Satisfaction with standard of living Female Female Male Male Source: Based on Gallup Worldview (2012). Note: The presented indicators are based on the following questions and answers: Confidence in national government: “In this country, do you have confidence in each of the following, or not? How about national government?â€?–“Yesâ€?. Protection of racial/ethnic minorities: “Is the city or area where you live a good place or not a good place to live for racial and ethnic minorities?â€?–“Good placeâ€?. Growth in local economy expected: “Right now, do you think that economic conditions in the city or area where you live, as a whole, are getting better or getting worse?â€?–“Getting betterâ€?. Satisfaction with standard of living: “Are you satisfied or dissatisfied with your standard of living, all the things you can buy and do?â€?–“Satisfiedâ€?. The surveys were conducted in face-to-face interviews with men and women aged 15 years or older. The data are representative at the national level and for both gender. See Gallup (2011) for more information. gained confidence. Overall, the Gallup survey data con- widespread but rapidly increasing in recent years. As sistently suggest a strong trend of governance erosion. noted above, this pessimism has unfortunately been The Gallup World Poll further suggests that gov- borne out by facts. People’s satisfaction with their liv- ernance and economic conditions are closely correlat- ing standards fell continuously after 2009. While more ed in Yemen. A vast and, since 2009, rapidly growing than half of the adult population (53 percent) was sat- majority of adults expect a worsening of the nation- isfied with their standard of living in 2009, only one- al and local economy. Down from 23 percent in 2009, third (34 percent) was satisfied in 2011. When asked only 11 percent of the adult population in 2011 fore- about their standard of living in the future, most people saw improving economic conditions in the city or area expected worsening of their situation compared to the where they lived (Figure 4). When interviewed about present status. This trend is consistent over the period the conditions of the national economy, the responses 2007-2011, and the largest drop appeared in 2009 in yielded absolutely identical levels in 2009 and 2011, and view of the rising recession. In general, women have judged by the 2009 and 2010 Gallup perception data, been continuously more optimistic than men with a negative economic trend for the national economy respect to most of all analyzed factors. However, it is was anticipated. Accordingly, satisfaction with the stan- not evident from the Gallup data that younger Yemenis dard of living in Yemen has been shrinking drastically. have been consistently less confident in state institu- Pessimism about the economic conditions and, tions, less satisfied about their standard of living, and even more so, standards of living has not only been therefore less optimistic about the future then elders. 14 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios insecure households and the prevalence of households Table 4: Confidence in State, State-Controlled, and Religious Institutions affected by conflict, particularly in urban areas (Fig- (Percent of Adults) ure 5). Furthermore, when dividing the total sample   2011 Change from 2009 into households affected by conflict and non-affected National government 39 –16 households and showing the trends in food insecuri- Honesty of elections 29 –14 ty of the two household groups separately, the graph Judicial system 29 6 reveals that the food situation among affected house- Financial institutions 38 –4 holds is much more volatile. Healthcare 29 The food security situation appears to have dras- Local police 39 –8 tically deteriorated also in areas that are not direct- Military 65 –3 ly subjected to violent clashes. Indirect transmission Religious organizations 88 5 mechanisms are the influx of internally displaced peo- Media 41* 8 ple (IDPs), conflict generated price surges, and severe Source: Based on Gallup Worldview (2012). fuel shortages (OCHA & ACAPS 2012). Econometric Note: *2010 estimate. The presented estimates are based on the following question and answer: estimation21 results suggest that expanding conflict “In this country, do you have confidence in each of the following, or not? How about …?â€?–“Yesâ€?. clearly increases food insecurity, while the gener- al risk of conflict in the neighborhood seem to mat- ter more for the individual household than the direct 2.2.4  Evidence from UNICEF’s Social exposure to conflict (Table-2 Annex Chapter 2). In Protection Monitoring Survey addition, the household food security level seems to respond instantaneously for the most part, as insig- To investigate the dynamics between conflict and food nificant or relatively weak coefficients of the lagged security in 2011, this section consults data from a very variables imply. recent, small-scale Social Protection Monitoring (SPM) The percentages of households with children afraid panel survey carried out by UNICEF (2012) at the of playing outside and with a hungry family member are local level and which was repeated in short intervals (biweekly), allowing for a high frequency monitoring 18  The answer to the question of whether children in the house- of the well being of a particular household over time hold are afraid of playing outside serves as proxy variable for and thus for analyzing household responses to shocks direct exposure to conflict and the answer to the question of at a point in time.18 The following analysis makes use whether anybody in the household experienced hunger serves of 14 rounds of the SPM survey that were conducted as variable to assess household food insecurity. Both questions between July 1, 2011, and January 1, 2012 (calendar were addressed to the person in charge of childcare and meal preparation, who were female in all cases. week 26-52), and hence cover the second half of 2011, 19  In each round, 120 households were interviewed with 40 when conflicts intensified and spread over the coun- households from each survey site. The total sample (including try.19 Survey sites include urban areas in Sana’a Gov- all 14 rounds) contains 1,680 observations for the food insecurity ernorate, urban areas in Al-Hodeidah Governorate, and variable and 1,621 observations for the conflict variable. At the time of the surveys, no children were present in 59 households. rural areas in Amran Governorate. 20  See Table 1 (Annex Chapter 2). As expected, conflict and food security are corre- 21  To detect causality in the data, a simple fixed-effects logit lated for the total sample as well as for each gover- model is applied. Food insecurity is modeled as a function of norate subsample.20 The correlation is highest in the conflict, controlling for fixed effects (between locations and over time) and a uniform trend in the data. Several specifica- sample from urban Al-Hodeidah and lowest from rural tions are tested, considering time lags in household food secu- Amran. Graphical presentations of the trends sug- rity response to conflict and spillover effects of conflict appear- gest a close co-movement of the prevalence of food ing in the neighborhood. 15 Joint Social and Economic Assessment Figure 5: Conflict and Food Insecurity in Selected Areas during the Second Half of 2011 (Percent of Sampled Households) Total Sana’s (urban) 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 26 28 30 32 34 36 38 40 42 44 46 48 50 52 26 26 28 30 32 34 36 38 40 42 44 46 48 50 52 Al-Hodeidah (urban) Amran (rural) 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 26 28 30 32 34 36 38 40 42 44 46 48 50 52 26 28 30 32 34 36 38 40 42 44 46 48 50 52 Children afraid Hunger in family Source: Based on UNICEF (2012). Note: The calendar week is assigned along the x-axis. based on the following questions (addressed to the equilibrium (DCGE) model for Yemen is used. The children’s care taker): model links the Yemen’s macroeconomic parame- “During the past two weeks have you or any fam- ters, economic sectors and households via factor and ily member experienced going to bed hungry due to commodity markets and runs from 2009 to 2020. The lack of food?â€?–“Yesâ€?. “During the past two weeks has DCGE model also links to a microeconomic simulation any child become afraid of playing outside?â€?–“Yesâ€?. matrix to assess the impact on poverty and nutrition (welfare factors). It is thus a useful and informative 2.3  Short- and Medium-Term Impact tool for evaluating alternative future economic scenar- of Selective Transition Scenarios ios which essentially tries to capture the central con- (2011–2020) ditions for economic growth, poverty reduction, and reduction in child malnutrition. The model is described For the assessment of the short and medium-term in detail in Annex Chapter 2, while the following sec- impact of transition, a dynamic computable general tion describes the scenarios. 16 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios 2.3.1  Description of Scenarios to grow at the economy-wide growth level of four per- cent per annum. Economic Impact of the 2011 Uprising and the Formulation of Scenarios Slow Transition Scenario The macroeconomic impact of the uprisings during For the slow transition scenario it is assumed that no 2011 on growth, poverty, and food security is cap- additional external assistance is provided in addition tured in the IMF’s assessment for 2011,22 which con- to the annual level observed over the last decade. Fur- cludes a contraction of the economy with –10.5 per- thermore, it is assumed that the government’s capaci- cent, reduced government spending (at a rate of 12.2 ty to reform remains limited and therefore TFP growth percent, as well as transfers to households with –23.4 remains slow. Both factors limit the growth prospects. percent, and reduced remittances of –9.5 percent in 2011 (see also Figure 1 and Table 2). To impose a –10.5 Accelerated Transition Scenarios percent reduction in economic output on the DCGE model, total factor productivity is shocked uniformly All transition scenarios are the same until end 2012 across all sectors in the model by –12 percent. For 2012, (see above). From 2013 onward, four different transi- the IMF’s projections are matched (re-modeled). They tion scenarios are developed to assess the impact of project a growth rate of 1.6 percent for non-hydrocar- possible transition paths: bon growth (see also Figure 1). To impose this aggre- gate growth rate on the model, Total Factor Productiv- • For the agriculture-led transition scenario we ity (TFP) growth is allowed to recover slowly across assume an increase in TFP growth across all all sectors in 2012 with recovery to reach baseline lev- agricultural activities by one percent annually els from 2013 on. For the slow transition scenario it from 2013 to 2020 to reflect early gains from is assumed that no additional external assistance is recovery and additional investments in the provided in addition to a level observed over the last sector. Agricultural TFP growth thus remains decade, and the capacity for reform remains limited, slower than in other sectors, given the limits thereby limiting the growth prospects. of agricultural potential in Yemen. The under- lying rationale of this scenario is that there is Baseline Scenario – The Comparator Scenario still unexploited agricultural potential and that this potential can be realized by additional The baseline mirrors a calculated trend, along which investments and factor combination, especial- Yemen may have developed as if there was no 2011 cri- ly by increasing water productivity and struc- sis moment and therefore no transition period but nor- tural policy changes within the sector. mal average development as prior to 2011. This baseline • Industry-led growth scenarios project TFP (business-as-usual) serves to calibrate the basic param- growth in electricity, water, construction, min- eters in the model and follows Yemen average annual ing (excluding oil and gas), food processing, growth rate of four percent over the last decade (Fig- and other manufacturing sectors of four percent ure 1). It is assumed that this growth is driven by gains annually from 2013 to 2020 (in addition to the in total factor productivity (TFP) in the non-agricul- two percent in the baseline). The underlying tural sectors by two percent annually. Population and the labor force are assumed to grow at three percent, IMF Press Release No. 12/121, April 4, 2012: IMF Executive 22  annually. Government consumption spending, trans- Board Approves US$93.75 Million Disbursement under the Rapid fers to households, and remittances are all presumed Credit Facility for the Republic of Yemen. 17 Joint Social and Economic Assessment assumption is that public spending on elec- to remain conservative it is then assumed that the elas- tricity, water, roads, and other infrastructure ticity for investments in agriculture and growth is as accelerates growth in construction and other low as the lowest found elsewhere in the world which industrial sectors directly and indirectly.23 is the regional estimate for Latin America (Fan et al. • The service-led growth scenario also assumes 2012), amounting to 0.006, compared to 0.082 glob- four percent annual TFP growth rates from ally. For the industry sector, the global investment-to 2013-2020 (in addition to the two percent in growth relationship is used and adjusted for the size the baseline) in trade, transportation, other pri- of the industrial sector in Yemen (Table 5). For the ser- vate services and social services. This reflects vice sector, the elasticity used is that which was esti- the large potential for improving trade (e.g., mated by Breisinger et al. 2012 for whole of the Arab upcoming WTO membership) and transport world. This approach yields a investment spending systems and related gains from promising to growth elasticity for industry-led growth of 0.207 sectors such as tourism. In addition, given and for service-led growth of 0.309. Furthermore, for the low levels of major health and education- all three cases it is assumed that the calculated aver- al outcomes for Yemen, there is huge scope ages reflect an optimistic scenario or a high efficien- for expanding the related public services for cy of public spending (high spending efficiency). To improving social outcomes. consider a more pessimistic scenario, the assumption is that the above mentioned elasticities are only half, The “accelerated transition scenarioâ€? combines the which, by definition, would then translate into the need assumptions of all three sector-led scenarios to assess for additional public spending to generate the same their joint impact. It thus reflects an optimistic scenario, growth level as mentioned in the above mentioned in which Yemen reaches a growth level of 8–9 percent case of more optimistic sector-growth-elasticities, or annually from 2014 to 2020 (high growth scenario). the investment amount would need to be doubled to achieve the same level of growth under the high effi- Costing of Growth Acceleration ciency of public spending hypothesis. To relate the changes in overall growth projected Accelerating growth requires significant amounts of by the DCGE model to the additional level of public additional investments in addition to the baseline sce- spending required to achieve the targeted growth, we nario. To assess the size of additional investment spend- divide the additional non-oil growth under the tran- ing required, an elasticity-based three step approach sition scenario relative to the slow transition scenario is applied.24 In the first step, public spending patterns in Yemen are calculated by sector for the three-year 23  Infrastructure spending obviously also benefits agriculture period from 2008 to 2010 inclusive, based on MOPIC and service sectors and these linkage effects are captured in data (2010) (Table 5). In the absence of Yemen specif- the DCGE model. ic data that would allow for the calculation of elastici- 24  It is important to note that the approach taken makes sever- ties of overall growth to sector-investment growth, the al assumptions. First, it assumes that investment sectors can be matched to economic sectors. However, in reality that is more data produced by Fan et al. 2012, and Breisinger et al. difficult: for example investments in hospitals and schools would 2012 are used and which may best reflect Yemen’s spe- fall under the health and education budget, but the construction cific conditions (Table 5). As suggested by Breisinger activity would contribute to growth in construction (or indus- et al. 2011, there seems to be no positive relationship try). Second, it assumes that most growth in one investment sector benefits the respective economic sector, while especial- between investments in agriculture and growth in the ly in the longer run, for example investments in services also Arab world. Taking a more positive perspective, it is benefit other sectors, an effect that is only partially captured assumed that a positive relationship exists for Yemen; by the CGE model. 18 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table 5: Public Spending and Elasticities Public investment Total spending Elasticity of overall growth to 2009 2010 (in million US$) sector investment growth (in percent of total public Sector investment) Optimistic Pessimistic Agriculture and fisheries 3.5 1.8 584 0.006 0.003 Agriculture 3.2 1.5 Fisheries 0.3 0.3 Industry 54.4 68.8 5,394 0.207 0.103 Electricity and water 18.5 46.4 Public works, roads and housing 23.8 16.1 Other 12.1 6.3 Services 42.1 29.5 3,706 0.309 0.154 Transport and communication 4.2 4.3 Education and health 10.4 7.5 Social safety net 9.9 3.7 Other 17.7 13.9 Total 100.0 100.0 9,683 Source: Authors’ calculations based on MOPIC 2010. Total spending by sector is estimated based on the average public investment shares by sector from MOPIC for the years 2008–2010 and which are matched with aggregate figure for public spending for these years as published by the IMF. by the elasticity of nonoil growth to sector invest- 2.3.2  Alternative Development Scenarios ment growth: from 2013–2020   This section presents four scenarios to project poten- (1+ growth of nonoil GDPTransition Scenario,t 100)  tial future outcomes for Yemen in terms of economic   (1+ growth of nonoil GDPslow transition,t  growth paths, poverty, and malnutrition.  100)  elasticity of nonoil growth to sector investment grow wth The economic contraction in 2011 heavily affects medium- and long-term growth in Yemen under all Results show that public investment spending scenarios (Table 6). Except for the accelerated tran- on agriculture will need to increase between 7.4– sition scenario, average growth in private consump- 14.9 percent annually, public investment spending tion, exports, and imports between 2013 and 2020 is on roads, electricity, water, and other infrastructure lower than it would have been without the downturn by 5.7–11.4 percent annually, and public investment in 2011. Average annual growth for all sub-scenarios is spending on transportation, communication, health, 0.3 and 1.6 percentage points lower than in the base- education and social transfers by 6.3–12.5 percent line scenario. Only under the Accelerated Transition annually, on average.25 As discussed previously, the assumption for the baseline scenario is that public 25  To calculate the absolute amounts of additional spending spending grows consistently with the average annual required per year, the sector baseline investment amounts are GDP growth rate at four percent per annum. Results augmented with the resulting amount calculated applying the are reported in Table 7. required growth rates in investment spending in each year. 19 Joint Social and Economic Assessment Table 6: Changes in Macro Aggregates over the Medium- to Long-Term Average Annual Change 2010–2020, (in percentage points) Initial Base1 Stagnation Slow Agric-led Industry-led Service-led Accelerated transition transition transition transition transition GDP (C + I + G + E – M) 100.0 3.9 1.4 2.3 2.3 2.9 3.6 4.5 Private consumption (C) 84.3 3.9 1.0 2.2 2.4 3.0 3.3 4.3 Investment (I) 13.7 1.8 4.3 3.1 1.6 2.3 5.5 5.6 Government 14.9 4.0 –0.9 2.0 2.1 2.1 2.1 2.1 consumption (G) Exports (E) 28.6 3.0 2.3 2.0 2.0 2.2 2.8 3.2 Imports (M) 41.5 2.7 1.7 1.9 1.9 2.0 2.5 2.8 Source: Yemen DCGE model, 2012. Note: 1“Baseâ€?(-line) is a calculated scenario for comparison and which assumes (1) continuation of the previously observed average growth rate (four per- cent) business-as-usual, and (2) no economic contraction in 2011 (no 2011 crisis event). scenario, is average annual growth higher than in the path the country will take from 2013 onward. Figure 2 baseline scenario, implying that only if the conditions shows how the non-hydrocarbon growth rate is expect- for the accelerated transition scenario are assembled, ed to perform under alternative transition scenarios.26 Yemen can catch up to and rise above the level that Agriculture-led growth accelerates economy-wide may have been achieved in the absence of the conflict growth throughout the whole transition, albeit at mod- related economic contraction in 2011. est levels. Model results suggest that the agricultural Table 7 summarizes the growth outcomes under sector in such a scenario will grow between 2.0–2.3 the different possible scenarios. If no action is taken percentage points above the slow transition scenar- and political instability continues (stagnation), Yemen io, in which no additional investment (other than the is likely to suffer from low growth for years to come. If usual level observed in the past) in the sector is under- stagnation continues, then the economy-wide growth taken. However, agriculture-led growth is less effec- rate is projected to drop to 1.4 percent annually, well tive in accelerating economy-wide growth than indus- below the population growth rate of three percent. try- and service sector led growth (Table 7). The main All sectors would perform below their baseline levels, reason is that the relatively low share in GDP (around where agriculture is the most resilient sector with pro- 11 percent) of the agricultural sector limits its contri- jected growth of 0.1–0.3 percentage points below the bution to overall growth. Also, given the severe water slow transition scenario, compared to 1.3–1.6 percent- constraints in the country, initial gains in agricultur- age points and 2.3–2.5 percentage points for industry al growth can most likely not be sustained over time, and service sectors, respectively. and agricultural growth recedes from 2015 onward, Even if the economy bounces back to pre-crisis but will stay above the slow transition scenario level. level growth rates from 2013 onward (equal to slow Growth led by industry, which is driven by con- transition; business-as-usual but conflict situation has struction (excluding oil and gas), food processing, ended), it will take at least up to the year 2015 until Yemen reaches its pre-crisis GDP level of 2010. Thus, the 2011 crisis throws Yemen back by five years in 26 The description focuses on the non-oil growth rate since esti- mates about the future of oil growth are highly uncertain. Most terms of economic development. analysts agree that oil resources are depleting, yet some argue Growth acceleration is urgently needed to make up that there are substantial gas reserves that may be able to at for the lost half decade, yet it is not clear which growth least partly offset the losses from oil. 20 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table 7: Projected Growth Rates by Sector Initial 2010 2011 2012 2013–16 2017–2020 Stagnation Growth 100.0 3.9 –10.0 –1.3 2.8 2.9 (no transition) Agriculture 11.0 2.8 –10.3 –1.3 2.5 2.6 Industry 43.3 5.0 –3.5 –0.5 3.8 3.6 Services 45.7 4.5 –13.3 –2.0 2.1 2.2 Oil 19.4 2.1 –10.4 –0.9 3.0 3.4   Non-oil 80.6 4.4 –10.0 –1.4 2.7 2.7 Baseline – Slow Growth 100.0 3.9 –10.0 –1.3 4.0 4.0 transition Agriculture 11.0 2.8 –10.3 –1.3 2.8 2.7 Industry 43.3 5.0 –3.5 –0.5 5.1 5.2 Services 45.7 4.5 –13.3 –2.0 4.6 4.6 Oil 19.4 2.1 –10.4 –0.9 2.6 2.2   Non-oil 80.6 4.4 –10.0 –1.4 4.5 4.6 Agriculture-led Growth 100.0 3.9 –10.0 –1.3 4.2 4.0 transition Agriculture 11.0 2.8 –10.3 –1.3 4.8 5.1 Industry 43.3 5.0 –3.5 –0.5 4.3 4.5 Services 45.7 4.5 –13.3 –2.0 4.7 4.5 Oil 19.4 2.1 –10.4 –0.9 2.2 1.3   Non-oil 80.6 4.4 –10.0 –1.4 4.6 4.6 Industry-led transition Growth 100.0 3.9 –10.0 –1.3 5.0 5.2 Agriculture 11.0 2.8 –10.3 –1.3 2.4 1.6 Industry 43.3 5.0 –3.5 –0.5 6.9 8.0 Services 45.7 4.5 –13.3 –2.0 5.6 5.6 Oil 19.4 2.1 –10.4 –0.9 2.2 1.4   Non-oil 80.6 4.4 –10.0 –1.4 5.6 6.0 Service-led transition Growth 100.0 3.9 –10.0 –1.3 5.6 6.3 Agriculture 11.0 2.8 –10.3 –1.3 3.6 2.5 Industry 43.3 5.0 –3.5 –0.5 6.8 7.8 Services 45.7 4.5 –13.3 –2.0 6.6 7.3 Oil 19.4 2.1 –10.4 –0.9 2.7 3.4   Non-oil 80.6 4.4 –10.0 –1.4 6.3 6.9 Accelerated transition Growth 100.0 3.9 –10.0 –1.3 6.7 8.0 Agriculture 11.0 2.8 –10.3 –1.3 3.9 2.4 Industry 43.3 5.0 –3.5 –0.5 9.0 10.9 Services 45.7 4.5 –13.3 –2.0 7.7 8.8 Oil 19.4 2.1 –10.4 –0.9 2.5 2.8   Non-oil 80.6 4.4 –10.0 –1.4 7.6 8.9 Source: Yemen DCGE model 2012. 21 Joint Social and Economic Assessment other manufacturing, and electricity, water, and min- Under this scenario, both rural and urban poverty ing, accelerates over time and substantially pushes the would continue to increase by 7.9 and 11.3 percent- non-oil growth rate to six percent in 2020, 1.4 percent- age points respectively by 2020 compared to the slow age points higher compared to the slow transition sce- transition scenario (see Table 3 Annex Chapter 2). All nario (Table 7). The industry sector itself accelerates its three sector-led growth scenarios (agriculture, indus- growth between 1.8 percentage points above the slow try, and service sectors) substantially reduce nation- transition levels from 2013 to 2016 to 2.8 percentage al poverty by 1.5, 6.9, and 8.5 percentage points by points, during the period of 2017–2020. Industry-led 2020 respectively compared to the slow transition growth also has positive spill-over effects to other sec- scenario. Under the accelerated scenario, a combina- tors, especially the service sector. The service sector, tion of growth in all sectors and thus the most opti- particularly trade and transport sectors, also strongly mistic scenario, national poverty can be reduced to benefits from industry led growth and expands about under 31 percent in 2020. In this case poverty levels by over one percentage point faster annually compared would reach their 2009 levels in the year 2015. Urban to the slow transition scenario,. and rural poverty reduction rates are the same under Under the service-led scenario, non-oil growth the accelerated scenario, primarily because industry by 2020 is even higher, reaching 3.6 to 4.2 percent- growth has a substantial spillover effect on the rest of age points above growth under the slow transition the economy, and both the urban and rural poor ben- levels (Table 7). This is because the service sector is efit from such growth. In the slow transition scenar- the largest sector in the economy whose share of GDP io, poverty is estimated to reach 51 percent by 2020, reaches 46 percent and has strong backward and for- with urban and rural poverty rates being at 38 and ward linkages to other sectors. Higher productivity in 56 percent respectively. trade, transport, communication and social services Industry and service sector-led growth has the lowers costs and accelerates growth in agriculture by strongest poverty reduction effect in Yemen. Compar- 0.8 percentage points between 2013–16, and industri- ing the poverty/growth elasticities (Table 8) shows that al growth by 1.7 percentage points compared to the among the sector-led growth scenarios, the industry- slow transition scenario. led and service-led growth scenarios have the stron- Combining the growth acceleration in agriculture, gest poverty reducing effect. One percent of indus- industry and service sectors would bring Yemen quick- try- or agricultural-led growth reduces poverty by 0.6 ly back to pre-crisis levels and put it on an accelerat- percentage points, compared to a 0.52 under service- ed growth path. Under this scenario, non-oil annual led growth. This can mainly be explained by higher growth rates reach 7.6 percent on average in the first returns to production factors owned by the poor, espe- phase (2013–2016) and then 8.9 percent in the sec- cially unskilled labor (agriculture, construction, trans- ond phase of the recovery (Table 7). The simultane- port, manual work). ous investment (and policy) push in all non-hydro- Child stunting reduction is much less respon- carbon economic sectors would generate synergistic sive to growth than poverty reduction, and accelerat- effects that translate into a higher growth level com- ed growth in combination with special programs27 is pared to the other scenarios. needed to decrease child stunting. Assuming a con- Poverty outcomes of alternative transition sce- stant child stunting-growth semi-elasticity of 0.139,28 narios range between a national poverty rate of 59.6 the reduction in the prevalence of child stunting is percent in the worst case and 33.6 percent in the best case scenario by 2020. If no immediate action 27 See also the section on nutrition interventions. is taken, poverty is bound to continuously increase 28 For the estimation of the elasticity, see Annex Chapter II, after 2011 and may reach close to 60 percent in 2020. section B 2. 22 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table 8: Poverty and Nutrition Elasticities Non–oil GDP average Annual cchange per capita growth (percentage points) (percent) Arc semi–elasticities   2013–2020 2013–2020 2013–2020 2013–2020 Poverty Child Poverty Child stunting stunting non–oil growth non–oil growth Baseline –0.61 –0.13 1.44 –0.43 –0.09 Slow transition –0.82 –0.16 1.51 –0.54 –0.10 Agriculture-led transition –0.92 –0.14 1.55 –0.60 –0.09 Industry-led transition –1.70 –0.30 2.83 –0.60 –0.10 Service-led transition –1.93 –0.43 3.70 –0.52 –0.12 Accelerated transition –3.09 –0.63 5.47 –0.56 –0.11 Source: Yemen DCGE and Nutrition Models 2012. driven by the rate of growth generated under the dif- scenario, an additional US$798 million (7.1 percent) ferent scenarios. Accordingly, the highest reduction would have to be allocated to agriculture, US$6.0 bil- in child stunting is achieved under the Accelerated lion (53.2 percent) to industry and US$4.5 billion (40.1 Transition scenario. From 2013 to 2020, the rate falls percent) to services. 31 The results make a strong case by around 4.3 percentage points to 57.0 percent in for improving efficiency and effectiveness of the public 2020, or 0.63 percentage points per annum (Table sector, which could reap considerable gains in terms 8). In other words, accelerated growth is needed to of achieving more with less resources or achieving bring down the child stunting rate to the 2005 level, the same growth outcomes with less resources (see a rate which has risen since then as a result of the Section 2.3.4). 2007/08 global food, fuel, and financial crisis, and To stabilize the economy and bring growth and the 2011 uprisings. Given the low child stunting- poverty levels back to pre-2011 levels, by 2015 addi- growth elasticity, nutrition-beneficial investments tional financial resources of between US$5.4 to US$7.8 and target nutrition programs are needed in addition billion are needed between 2013 and 2016. Assuming to strong economic growth, to significantly reduce that public spending efficiency may not significant- child malnutrition. ly improve in the short-term and applying the higher bound estimate, about US$691 million would have to 2.3.3  Costing Growth Acceleration, Poverty be allocated to the agricultural sector, US$2.4 billion Reduction and Improving Food Security for investments in roads, electricity, water, and other infrastructures, and US$1.7 billion in transportation, Achieving these ambitious growth targets will require communication, health, education, and social trans- public investment spending29 of US$12.3 to 17.6 bil- fers. Both the high and low efficiency scenarios sug- lion over the next eight years, depending on the public gest that about seven percent of the total should be spending efficiency (Table 9).30 Yemen’s past experi- ence in translating public spending into growth out- 29  In addition to the projected US$6.3 billion external resourc- comes and its low ranking in the governance indica- es that would be invested in Yemen between 2013 and 2020 in the business-as-usual case. tors may suggest that assuming the less optimistic 30  See also Annex Chapter 2, Table 10, for an estimate of total spending efficiency may be more realistic, certain- investment. ly for the next four years. Under the low efficiency 31  In addition to the investment required for baseline case. 23 Joint Social and Economic Assessment Table 9: Foreign Aid and Public Spending Efficiency (Baseline and additional growth enhancing spending) Percent Growth Growth of total (in percent) (in percent) additional 2013 to 2017 to   2013–2016 2017–2020 Total spending 2016 2020 Baseline scenario (1) 2,978 3,365 6,343 — 4.0 4.0 Agriculture-led (2) 4.2 4.0 Low efficiency 691 107 798 7.1 High efficiency 345 53 399 7.5 Industry (electricity, water, roads etc.) (3) 5.0 5.2 Low efficiency 2,351 3,645 5,996 53 High efficiency 1,176 1,822 2,998 56 Services (communication, transport, social) (4) 5.6 6.3 Low efficiency 1,738 2,776 4,514 39.9 High efficiency 837 1,116 1,953 36.5 Accelerated growth scenario (2) + (3) + (4) 6.7 8.0 Low efficiency 4,780 6,528 11,308 — High efficiency 2,358 2,992 5,350 — Total foreign aid low efficiency 7,758 9,893 17,651 100 6.7 8.0 (1) + (2) + (3) + (4) Total foreign aid high efficiency 5,336 6,356 11,692 100 6.7 8.0 Source: Staff calculations. invested in agriculture, 54 percent for roads, electrici- would this make Yemen more independent from for- ty, water, and other infrastructures and 39 percent for eign assistance, it would also help avoiding the “aid transportation, communication, health, education, and curseâ€? that could undermine the incentives for insti- social transfers. tutional reform and structural change. Continuous While providing support to Yemen until 2016 high level of aid inflows bear the risk of an apprecia- clearly takes priority, it is also important to note the tion of the exchange rate (Dutch disease), export ori- longer term need for additional investments. Sus- ented sectors like agriculture can suffer, and thus the taining and further accelerating growth and pover- full growth potential remains underexploited because ty reduction beyond 2016 to 2020 will require sub- of distorted incentives. stantial additional investments of US$3.0–6.5 billion. Given this longer time horizon and assuming signif- 2.3.4  Costing of Selected Investments and icant improvements in Yemen’s governance, it may Programs be realistic to assume an improved spending efficien- cy for this case, which would mean under the high- To help translate the aggregate sector-level cost esti- er spending efficiency hypothesis that an additional mates into projects, Table 10 presents a selection of cost investment of about US$1.8 billion for infrastructure estimates for investments in the agriculture, trade and and US$1.1 billion for services are required. Apart transportation, and health and education sectors. These from improved governance, Yemen should also strive investments specifically tackle issues of lacking water for improving the tax collection system in order to be storage capacities for irrigation; poor physical access able to increase domestic sources of funding. Not only to local markets, health facilities, and other required 24 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Box 1: Petroleum Subsidy Reform in Yemen Petroleum subsidies strain public finances, distort markets, and provide only a blunt tool in the fight against poverty. Subsidy induced distortions lead to misguided price information and ensuing investment decisions and are likely to slow adaptation of new energy/water saving technologies. On the consumer side, it is usually the better-off households that disproportionally benefit most from petroleum subsidies, thus undermining social equity. Therefore, many countries such as Chile, China, Ghana and Iran have successfully reformed their subsidy schemes over the past years. Yemen had also started to reduce its petroleum subsidies before the political crisis in 2010 due to a combination of declining oil revenues and the high fiscal costs of sustaining the subsidy. Before the political crisis, petroleum subsidies in Yemen made up more than 20 percent of the government budget, more than total spending on education, health and social transfers combined. The rising cost of the fuel subsidy also had an adverse impact on the public investment program in infrastructure, including for transportation and telecommunication. Investment for development was largely externally financed (about two to four percent of GDP). In 2011, spending on petroleum subsidies remained high at about US$3 billion and is likely to remain at these levels at given prices. The results of a dynamic computable general equilibrium model support a comprehensive petroleum subsidy reform in Yemen. Yet, reforms must be well designed, because phasing out subsidies without complementary measures may lead to an initial drop in growth and a spike in poverty. Reform would create the much-needed fiscal space for the government to finance growth-enhancing measures, such as investments in utilities, transport, trade, and construction sectors. Such investments combined with efficiency gains are projected to accelerate economic growth between 0.1 and 0.8 percentage points annually. Faster phasing out of subsidies leads to higher growth gains. In addition to investment, targeted social transfers will need to be scaled-up to compensate the poorest and the most food insecure from the short-term real income losses. Accompanying measures compensating the poor for the loss of income resulting from the energy subsidy reduction can avoid an increase in poverty. But the reform will also broaden options for pro-poor growth in Yemen. Thus, for the short and medium term, petroleum subsidy reform offers great opportunities to scale up social transfers and to create the platform for a restructuring of productive, industrial, and service value chains, which could be exploited by enabling domestic and foreign private investment. Source: Breisinger, Engelke and Ecker 2011. services typically available in urban centers; water scar- and insufficient schools. All listed costs account for city and poor hygiene from inappropriate sanitation present costs of separate investments, while a concert- conditions; lacking electrification and power shortag- ed approach towards building infrastructure, covering es; insufficient and inadequately equipped health facil- several sectors simultaneously, is likely to reduce the ities for targeted nutrition-relevant service provision; overall unit costs due to synergistic effects. 25 Joint Social and Economic Assessment Table 10: Investment Costs for Basic Table 10: Investment Costs for Basic Infrastructure Infrastructure Basic infrastructure Costs (US$) Basic infrastructure Costs (US$) Agriculture Governorate hospital 330,000 Irrigation scheme1 Referral hospital 464,000 Water harvesting reservoir (including 33,700 School open cisterns, closed tanks, spring Construction of classroom, per unit 16,000 protection works, fencing, protection walls, sedimentation basins, conveyance canals, Sources: (1) Own calculation based on IFAD (2010), specific for Yemen; (2) Hutton and Bartam (2008), for selected MENA countries; (3) Compernolle water drawing pipes), average cost per unit (2005), specific for Yemen; (4) Ogawa (2004), specific for Yemen. Trade and transportation Note: Costs are reported as estimated for the year of the study. Road network1 Asphalt main road, per km 70,100 Feeder unpaved road, per km 37,800 2.4  Policy and Institutional Reform Health and education to Generate Growth, and Reduce Water and sanitation Poverty Non-mechanized community spring water 50 system, per capita1 Piped drinking water connection in the 6 Investing in growth acceleration will be the key for house through drinking water network, per Yemen to overcome the deep economic crisis and capita2 reduce poverty and food insecurity. However, scaling- Piped sewage water connection in the 19 house through sewage network, per up public spending as discussed above will have to be capita2 complemented with significant institutional and policy Combined drinking water and sewage 21.5 reforms. Policy reforms are urgently needed to (a) cre- water connection in the house through networks (full coverage, gradual), per ate fiscal space so that more can be spent on enhancing capita2 productivity (infrastructure, education) and generat- Electricity1 ing employment, including through employment pro- Community electricity scheme with 37 grams that add to infrastructure building. (Construc- generator, per capita tion); (b) improve the quality of public spending and Health facilities3 the implementation capacity, including through more Construction (new), per unit reliance from the private sector, and by offering more Health unit 40,000 participation in implementation to targeted groups, Health center 180,000 Rural hospital 860,000 local communities, and civil society; and (c) attract pri- Governorate hospital 3,225,000 vate investment to support private sector-led growth. Referral hospital 4,000,000 Reform petroleum subsidies: The Government of Upgrade and equipping, per unit Yemen made a first step toward reforming petroleum Health unit 27,000 subsidies by increasing fuel prices in 2010. Howev- Health center 77,000 er, simply phasing out the petroleum subsidy would Rural hospital 450,000 increase food insecurity because higher fuel prices Governorate hospital 900,000 affect farmers and the urban food insecure most. To Referral hospital 2,500,00 address this social concern during the reform period, Maintenance (annual), per unit the ample budgetary savings from such a reform should Health unit 3,350 be used to finance a combination of direct transfers Health center 12,850 and productivity-enhancing investments, targeting vul- Rural hospital 65,500 nerable households and in particular, female-headed 26 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios households. Transfer payments alone only curb the Yemen). It is important to note that to achieve pro-poor rise in food insecurity in the short run, but the addi- growth in the long run, such growth needs to be both tion of public investments in infrastructure (related socially and environmentally sustainable. Socially sus- to utilities, transport, trade, and construction) fosters tainable means that benefits from growth need to be food security and sustainable economic growth. The shared widely among the population. Environmental combination of direct transfers and investment is a sustainability is especially important for Yemen given promising strategy for joining the subsidy reform with its fragile natural resource base, especially water and the promotion of sustainable development. Transfers, land resources.32 investments, and resulting long-term productivity gains Tax Qat production and consumption. A tax on complement each other and lead to reduced food inse- Qat could yield triple benefit, including additional tax curity and poverty (see Box 1). revenues, water savings for non-Qat agricultural growth, Improve the investment climate. Improving the and health benefits to the people. Agriculture, which can investment climate often involves political commit- make an important contribution to rural development ment to reform rather than receiving financial resourc- and food security, is constrained by the lack of water; es, which makes it an attractive low-cost option for water scarcity and contamination threaten the health accelerating growth, reducing poverty and enhancing of many households. And in all of this, Qat emerges employment. Table 11 shows there is room for improv- as the major culprit, consuming more than 40 percent ing the investment climate. Yemen currently ranks 99 of Yemen’s water supply. Thus, sharply reducing Qat out of 183 countries in creating a favorable invest- consumption is vital for avoiding drought, achieving ment climate, yet several key indicators are signifi- non-Qat agricultural growth, and meeting Yemen’s food cantly below the international average. While Yemen security goals. However, measures to reduce Qat con- ranks high in its favorability for starting a business sumption may meet sharp resistance among Yemen’s and dealing with construction permits, improvement population. Policy measures will require a communi- is needed in the areas of access to credit, investor pro- cation campaign to provide comprehensive informa- tection, and tax requirements in order to to unleash tion on their necessity and urgency. The benefits of a private sector-driven growth, especially in promising Qat tax will outweigh the difficulties of implementa- sectors (see also Annex Chapter 2, Private Sector in tion. The additional tax revenues should be invested in agriculture and water infrastructure and used for the promotion of alternatives to Qat production, such as Table 11: Yemen Investment Climate Indicators cereals and coffee production, and processing of agri- (Ranking among 183 Countries), 2012 cultural products. Ease of doing business 99 Improve food security risk management. Yemen Starting a business 66 is very vulnerable to global food price shocks and Dealing with construction permits 35 disasters, so the country must develop appropriate Getting electricity 52 risk management mechanisms. First, the cereal import Registering property 55 market must be made more competitive. Currently, the Getting credit 159 market is dominated by a small number of importers, Protecting investors 133 which increases local cereals prices even in relatively Paying taxes 116 Trading across borders 118 32  The paragraphs on investment climate, public spending effi- Enforcing contracts 38 ciency and oil subsidies are based on the National Food Security Resolving insolvency 114 Strategy (NFSS). See the 7-Point action plan here: http://www. Source: World Bank 2012. ifpri.org/sites/default/files/publications/yemennote1en.pdf. 27 Joint Social and Economic Assessment stable economic circumstances. Appropriate laws and improved water quality; (2) managing environmental regulations that increase competitiveness will make impacts, including promoting environmental protec- an important contribution to improving food security tion and building partnerships with the private sector and lower food prices in Yemen. Second, the govern- on effluent and waste water; (3) developing water- ment should hedge against extreme price fluctuations resource and water-use efficiency by protecting user caused by emergency situations such as the 2007–08 rights; (4) delivering efficient, low-cost projects on a global food crisis. This can be achieved through nation- demand-driven basis by enhancing the efficiency of al grain reserves, regional grain reserves, or hedging project implementation, improving coordination, and in international markets. For any type of risk manage- decentralizing; (5) strengthening institutions to allow ment, an effective market-price-monitoring system will them to play their role in promoting efficient water use; be critical for effective decision making. Third, the and (6) enhancing resource sustainability and quality government should recognize the role of social trans- through improved watershed management. fers in building economic resilience among vulnera- Target public investment and improve service ble communities. Social transfers can include direct provision. In recent years, Yemen has under-spent on transfers, cash-for-work programs, community asset infrastructure, agriculture, and health. From a spa- building through public works, assistance in starting tial perspective, public spending across governorates microenterprises, and nutrition and health programs. does not seem to be aligned with poverty and food The government should use the political opportuni- security levels, indicating a lack of efficiency and tar- ties that arise from food-price crises and disasters to geting. A comprehensive public investment review incorporate risk management into the overall econom- should be conducted to better align public investment ic development planning framework. Strong collabo- with Yemen’s development objectives in general and its ration among governmental agencies, the private sec- poverty reduction strategy in particular across sectors tor, and Yemen’s international partners is absolutely and governorates. Once the right amount of money is essential for success. being directed to the places that need it most, the gov- Implement a national water sector strategy (see ernment must focus on how the money is being used. also Section 5.15 on water). Water tables are quickly Often, physical infrastructure exists but the services falling and water quality and accessibility are substan- provided are not satisfactory. Evaluation and mon- dard. Water-sector reform is crucial for achieving the itoring of service provision quality and investment country’s food security goals and sustaining accelerat- efficiency in all sectors will thus be needed for better ed development. Yemen’s future food security depends outcomes. Monitoring should chart issues of access heavily on reducing overall groundwater use and redis- associated with regional dwelling, gender, and so on tributing water used for agriculture to more promising ensure that services respond to, and can be accessed economic activities and human consumption. Impor- by, all Yemenis. However, additional investment is tant steps toward efficient and sustainable water man- also required, particularly to upgrade the rural drink- agement are (1) strengthening capacity for and imple- ing water supply and rural roads. Key services to tar- mentation of integrated water resources management, get include programs related to education, nutrition, including groundwater monitoring and control and and family planning. 28 Employment and Livelihoods 3 Rapidly increasing employment and sustainable liveli- source of potential new jobs for the growing population hoods are critical to address acute grievances and ineq- of youth in Yemen. The support available to such busi- uities, and avert a humanitarian emergency. Key issues nesses from the developing financial services indus- assessed in this regard include priorities for improving try in Yemen and how this industry was affected by food security, addressing vulnerable groups (in par- the crisis is presented. Mention is also made to the ticular the unemployed, youth, women, children, and expanding commercial poultry sector and the impact victims of state actions), as well as priorities for rapid of the crisis on large-scale companies. and equitable increase in jobs. Most Yemenis remain dependent on agriculture as their dominant livelihood strategy. Agricultural 3.1  Employment and Labor is diverse, but is now dominated by production and marketing of Qat. Although cultivated by most farm- 3.1.1  Introduction ers, vast quantities are produced by well-off farm- ers with unfettered access to ground water for irriga- This section looks at employment and labor from the tion and subsidized diesel. Alongside Qat other cash point of view of both the public and private sectors crops, such as coffee and high value fruits are being and both formal and informal working arrangements. supported. But as productivity in the agricultural sec- Informality characterizes the majority of employ- tor improves, it is unlikely to absorb a rapidly expand- ment opportunities, which leaves workers vulnera- ing population. There has been a small but progressive ble to unfair treatment and also deprives the state shift away from agriculture into industry and services, of potential tax revenue. During the 2011 crisis there as discussed subsequently. is anecdotal evidence that factory workers with for- Finally, this section considers the potential for mal contracts of employment suffered loss of income expansion of renewable energy sources, which can due to temporary lay-offs or reduced working hours; provide a real opportunity for new jobs in manufac- whereas informal sector workers, particularly those turing, construction and maintenance of the required in the construction industry, lost income on a longer- infrastructure, as well as providing long term, sustain- term basis as building projects were halted due to the able energy supplies for the growth of micro, small, unrest. This impact is still being experienced in 2012 medium, and large scale enterprises. due to rising costs of building materials, which is fur- ther depressing the construction sector. It is under- 3.1.2  Baseline Data stood that the on-going influx of migrants from Afri- ca lowers unskilled/informal wages by undercutting For the purposes of analysis, this assessment differ- locally established rates; this issue is covered in Sec- entiates between employment in the public and pri- tion 7 of this report. vate sectors. A commonality that should be stressed The growth of small and medium sized enterpris- here is that incomes were not indexed to the high es will also be considered since they represent a major levels of inflation experienced during the crisis. The 31 Joint Social and Economic Assessment Pre 2011 Context (Baseline) The last national labor market survey was carried out in 1999; therefore most of the baseline data on employment and labor comes from the HBS 2006 and the 2004 census. Key employment sectors are agriculture, poultry farms, construction, retail, and the public sector. Informal levels of employment are estimated to be the highest in the MENA region, with the entire region reported to have high rates. The civil service has formal contracts of employment including contributory health insurance and pension schemes, but this is rare in the private sector. Key Facts • Total labor force in 2004 = 4.2 million of which 3.7 million were male and 0.5 million were female (Census 2004) • Total labor force in 2010 = 5.6 million (estimate – 2010 Statistics Book) • Unemployment rate in 2009 = 14.6 percent (2010 Statistics Book) • 33.1 percent of the labor force employed in agriculture, 35.6 percent female (HBS 2005/2006) • 15.7 percent of the labor force employed in wholesale and retail, 3 percent female. (HBS 2005/2006) • 11.7 percent of the labor force employed in construction, 0.3 percent female. (HBS 2005/2006) • 10.9 percent of the labor force employed in public administration and defense, 5.2 percent female (HBS 2005/2006). percentage of unemployed, according to the 2010 CSO richest households work in the informal sector (World statistics book, dropped from 16.2 percent to 14.6 per- Bank informal labor markets 2011). Yemen’s private cent between 2004 and 2009. There are no statistics for sector is small and largely unwaged; at a glance, com- 2012, but anecdotally unemployment appears to have pared to others in the region, Yemen’s private formal increased significantly during 2011. sector is very weak. Youth and informality are strongly linked: 21.9 per- 3.1.3  Informality of Employment cent of employed people are between the ages of 15 and 24, and 97.2 percent of them work in the informal sector.33 Informality is a fundamental characteristic of under- Young people are exposed to higher levels of vulnera- development. Higher levels of informality are associat- bility than older workers. Despite this, it can be argued ed with lower levels of economic growth. Widespread that the informal sector may be an important transito- informality implies that a large number of workers and ry mechanism for youth, providing basic work experi- economic activities operate outside the legal-institu- ence, which may open up future opportunities. tional framework. Interestingly, informality rates in the MENA region At 91.4 percent in 2011, Yemen has the highest rate are higher among men than among women, apart from of informality in the MENA region. It is said that 90 per- in Yemen where female informality rates are higher. cent of the labor force does not contribute to, but has This is likely to be a result of the high proportion of access to, publically provided services such as health women who work in the agriculture sector, a sector and education. The level of informality in Yemen is so characterized for its propensity to informality. high that the standard assumption that informality is a phenomenon of the poor is not valid here. In Yemen 33  Striving for Better Jobs: The Challenge of Informality in the more than two-thirds of all workers who belong to the Middle East and North Africa, World Bank, June 2011. 32 Employment and Livelihoods Figure 6: Size of Private Salaried Formal Sector versus other Sectors (Percent of total employment) 100 90 80 70 60 50 40 30 20 10 0 Yemen Iraq Syria Egypt Morocco Jordan Lebanon Private formal Private informal Public Self-employed and employers Unpaid Source: World Bank. 3.1.4  Public Sector to be a large degree of consensus that civil servants are underpaid and that this needs to be addressed Unlike the private sector, no public sector jobs were as part of a comprehensive civil service reform pack- lost during the crisis. But public sector employees expe- age; which would aim at providing a more effec- rienced the following: tive public administration. Large donors (WB, UK, and EU in particular) have been involved in Public • Delayed payment of salaries; Administration Reforms for the last 10 years, with lit- • Physical displacement of staff from governor- tle impact to date. ates where acute conflict prevailed; and There were major disruptions to the operational • Decrease in real salaries due to very high capacity of public institutions working in areas heavi- inflation. ly affected by the conflict, such as Abyan. MoAI, along with other ministries, is now working remotely from In response to the crisis, the government has creat- Aden having been evacuated from Abyan. ed 50,000 additional civil service posts for fresh gradu- ates, as a measure to reduce unemployment and politi- 3.1.5  Private Sector cal tension (MoLA interview 2012), further reinforcing the already existing tendency of considering the civil Sources in the private sector estimated their losses from service as an alternative social safety net. December 2010 to August 2011 as ranging from US$8– Charitable foundations reported a steep rise in 17 billion. Domestic production fell by an estimated appeals for alms from this section of society in 2011, 14 percent (CoC 2012). Particularly severe impact was particularly during Ramadan. There appears now felt among those private sector companies that were 33 Joint Social and Economic Assessment • Salary reductions (around 20 percent on aver- Key findings on impact of crisis on age); and employment and labor – SFD rapid • Bonuses were cut. qualitative survey November 2011 It is too soon to assess how well the private sec- Significant increase in unemployment especially in urban areas. Due to closure/slow production tor has recovered in 2012, but an increased number in the private sector, majority of employees of all of active borrowers in micro-finance institutions have categories—skilled, semi-skilled, and unskilled— been reported for the first three months. have been made redundant. 3.1.6  Small and Medium Sized Enterprises Unskilled labor has been further hit by the (SMEs) stagnation of the construction industry. Stagnation of government development projects, local authorities sub-sector projects. Rural households SMEs provide crucial employment to millions of poor depending on remittances have been severely people in Yemen, while being very vulnerable to shocks. affected by lack of income. During the crisis a considerable number of SMEs were forced to close down due to a range of challenges Urban centers have been hit the hardest by the such as insecurity, lack of electricity, increased input crisis due to concentration of the disputes, fuel and electricity shortages, leading to closure of prices, transport challenges, and reduced access to large numbers of private sector enterprises, hence credit (mainly informal credit). Some SMEs suspend- increasing unemployment especially among semi- ed operations until the situation improved, though it skilled and unskilled labor. is unclear how many of those that suspended their operations have been able to restore their business. “Although accurate figures are currently not In urban areas the impact of the crisis on SMEs was available, unemployment levels could have at least severe, for example, in the two main demonstration doubled.â€? (SFD 2012 Response Document). areas in Sana’a City over 500 small businesses closed down. Rural areas faced different challenges, such as Abyan, where many SMEs closed due to the insurgency. contracted to implement government works, and it is Looting from small commercial stores was also report- said that companies are having difficulty in recovering ed during the crisis (CoC 2012). dues from government, leading to bankruptcy in some The Small and Medium Enterprise Promotion Agen- cases (Chamber of Commerce Document). cy (SMEPs), a subsidiary of SFD, carried out a study SMEs34 make up 97 percent of the private sector of 100 SMEs in the summer of 2011. The main objec- (Al Amal Bank 2012). In an interview with the Cham- tive for the study was to assess whether demand for ber of Commerce, the following were reported among business development services was present among private sector employees and workers during the cri- SMEs, and if so, what were the main reasons enter- sis, although these figures cannot be verified: prises were not accessing these services. The follow- ing findings relevant to this assessment emerged from • Large numbers of employees/informal work- this limited study: ers lost their jobs, estimates are 30–45 percent of factory workers and 15 percent of all pri- According to the Federation of Chamber of Commerce in 34  vate sector workers; Sana’a, the classification for large companies are those with • Employees were given unpaid leave for extend- over 500 employees, medium-size enterprises have over 100 ed periods of time (up to six months); employees, and small enterprises have less than 100 employees. 34 Employment and Livelihoods • Only three of the enterprises had been estab- manufacturing, and food processing. Regional cover- lished in 2011. age is patchy and some governorates and many dis- • 2010 was the best year for SME establishment tricts are not served by formal MFIs. According to the (between 2008 and 2010, 30 percent of the Social Fund for Development the 13 MFIs they support enterprises had been established). had the following results at the end of 2010 and 2011: • Although lack of electricity was a major con- The above figures indicate a reduction in lending straint during the crisis, all the enterprises com- during 2011 and a very significant increase in portfo- plained about structural issues such as unfair lios at risk. It was reported that as of March 2012, the taxation and weak governance. PAR is beginning to diminish. The number of individ- uals actively saving has increased significantly but the total amounts saved were not available. 3.1.7  Support to SME Growth through Micro- Finance Institutions 3.1.8  Large Enterprises Information of overall bank lending to small- and medi- As individual entities, large enterprises are more resil- um-sized enterprises (SMEs) is not available therefore ient to changes in the business environment than small this assessment looks at lending by micro-finance insti- and micro enterprises; they have greater access to col- tutions (MFIs) (most of these MFIs are donor support- lateral and therefore financial support, and have more ed and therefore have obligations to report results in a political status and clout, especially in the context of more transparent manner). Growth in this sector has Yemen. However, job security of employees and labor- been extremely rapid over recent years, and it is unlike- ers engaged with large companies is much less certain, ly that conventional bank lending to businesses will particularly during times of crisis. have grown to any degree at the same rate. There are As a case study for this assessment, the Resident 13 MFIs now registered in a micro-finance network, Director of the Thabet Group of Companies was inter- however it needs to be recognized that micro finance viewed. Thabet Group of Companies is the second is primarily targeted at micro/individual rather than largest group of companies in Yemen and employs small and medium enterprises, (with the exception of over 7,000 full-time employees, with thousands of the Small Enterprise Development Fund, which tar- part-time, informal, and sub-contracted workers. gets SMEs), loans are small, and are more likely to The Thabet Group of Companies operates in a wide assist individual income generation rather than pro- range of sectors from oil, shipping, cargo, and food moting employment. to packaging. Of its 7,000 full-time employees none The majority of MFI programs are present in urban lost their jobs as a result of the crisis, however many areas and this indicates that the target businesses are of them were given unpaid leave for a short period likely to be small or micro enterprises involved in retail, (around two months on average). But the impact of Table 12: Key Micro-Finance Institution Data Organizations interviewed December 2010 December 2011 Comments Number of Active Borrowers 66,419 63,618 More than 50 percent female Total Portfolio Outstanding YR 4,413,000,000 YR 4,030,000,000 Portfolios at Risk (PAR) 0.03 percent–5.1 percent 1.4 percent–28.6 percent Range between 13 MFIs (lowesthighest) Number of Active Savers 59,087 87,277 Source: Social Fund for Development. 35 Joint Social and Economic Assessment Box 2: Al Amal Microfinance Bank Statistics pre-2011 and 2012 • Growth in overall disbursements slowed significantly during crisis—growth from 2009–2010 was 17,565 loans, whereas from 2010–2011 it was only 12,506 loans. • Growth of loans disbursed to youth fell from around 6500 per year to 3700 during the crisis. • The number of savers between 2010 and 2011 increased by over 10,000 savers. • Repayment rates fell from 100 percent to 98.5 percent • Lost 35 percent of their operational coverage during the crisis due to insecurity. 2012 2009 2010 2011 (up to February) Number of loans disbursed, cumulative 5,858 23,423 35,929 39,549 Amount of disbursed loans, cumulative 1,384,322 5,522,201 8,492,627 9,338,178 Number of disbursed youth loans, cumulative 2,636 9,128 12,863 13,976 Number of savers 4,758 18,512 33,047 33,746 the crisis on informal workers was more difficult to sectors which show promising pro-poor job creation ascertain, for example, the Thabet Group hires many and growth prospects. unskilled workers for labor intensive operations such as loading and transport of goods. It can be assumed 3.2.1  Poultry Farming that during the crisis these informal workers received significantly less income due to the widely reported The commercial poultry sector in Yemen has seen a transport delays. huge expansion in production since its beginnings in the 1990s. It was reported by a representative of Mar- 3.2  Related Employment and Labor shall Breeders Pvt. Ltd., a company that imports day Markets Issues old breeder chicks from India, that the impact of the 2011 crisis on this sector was very marginal: normal This sub-section will explore several key employment delivery dates for chicks were delayed by a few weeks. markets in greater depth and any impacts the crisis has Broiler producers did however incur increased costs had on them. The justification for selecting the follow- due to delays in sending live chicken to market, along ing employment and labor markets is based on high with increased transport costs for eggs and meat. Min- numbers of people working in each sector, a high inci- istry of Agriculture and Irrigation estimated in 2008 that dence of poverty among workers in each sector, and 400,000 people (almost entirely men) were employed 36 Employment and Livelihoods in the poultry industry. This figure must be significant- (mainly shrimp farming). While artisanal fisheries dom- ly higher for 2012. A major strength of this industry inate the marine sub-sector, accounting for almost 98 is its very competitive nature, with many producers percent of total fish production, the development of based around Ta’iz and Sana’a. It is also reported that aquaculture is very much confined. The country’s long local investors are very well informed, innovative, and coastline of 2,250 km (552,669km2 Exclusive Econom- dynamic, with the result that new genetic breeds are ic Zone (EEZ) area), is endowed with diverse coast- being raised with exceptionally good results. This sec- al habitats that include some of the richest marine tor is said to be expanding faster in Yemen than other resources in the world.35 Therefore, Yemen has signif- countries in the region, but the market is still below sat- icant potential for expanding its marine fisheries. Dur- uration point. Yemen is a big meat eating country and ing the past decades, in line with the broad national chicken meat, being significantly cheaper than other development goals, policy has centered on institution- meats, is extremely popular. The industry is however al and infrastructure development, and efficient man- vulnerable to currency fluctuations and international agement and maintenance of fish landing sites. Poli- prices since almost all its inputs are imported. Along cies have also encouraged (particularly in the private with breeder chicks from India, it imports soya beans sector) the increase of fish production and the devel- from South America, feed concentrates from Europe, opment of the fishing industry and fish products to and specialized medicines from manufacturers with- meet increased domestic demand, as well as, to bol- in the region. ster fish exports. After oil, fisheries constitute a main source of 3.2.2  Fisheries export revenue and contribute up to three percent of the country’s GDP (Fisheries Report 2012). While The fisheries sector is a key livelihood source for many improvements can still be made, the export mar- many poor communities in Yemen, but also many ket demonstrates significant potential for further job people working in boat building/maintenance work- creation and growth, whereas from a food security shops, auctioneers, processers, transporters, whole- perspective, the domestic market provides a vital and salers and exporters. According to the household affordable source of protein. budget survey in 2005/2006, fisheries accounted for During the crisis, the supply and price of key inputs 0.8 percent of the employed labor force. Continuous required at different stages of value chain were extreme- growth has been experienced in fisheries, for example, ly unreliable in most areas. Operational costs for fish- in 2000 there were only 32,182 fishermen in Yemen, ermen increased by 15 to 25 percent, largely attributed but in 2010 it was reported that there were almost to the increased cost of fuel for fishing boats. In order 75,000 (Fisheries Report 2012). In total, the fisheries to cope, it is believed that fishermen spent longer at sector is said to provide financial support to around sea in an attempt to harvest more catch and get a bet- 750,000 people and 94,000 households. It is estimat- ter return on their fuel investments. At the same time, ed that the 2011 crises had significant effects on live- there was a clear absence of Monitoring Control and lihoods in the fisheries sector, besides the negative Surveillance (MCS) (regulation usually undertaken by effect on resources, and overall limited sector produc- tivity and performance. The main factors contribut- ing to this were (i) increased diesel/fuel/food prices; 35  A variety of important ecosystems such as coral reefs and man- (ii) limited access to resources and low utilization; groves, including around 185 offshore islands, support about 65 commercially important species including invertebrates (shrimp, and (iii) electricity supply. lobsters, cuttlefish, sea cucumbers), pelagic (Yellowfin and long- The country’s fisheries sector consists of two main tail tuna, kingfish, queenfish, Indian mackerel, Indian oil sar- sub-sectors, namely, marine fisheries and aquaculture dines) and demersal species (groupers, emperors, jacks, bream). 37 Joint Social and Economic Assessment government) so data on key indicators such as produc- support to fisher communities for livelihood develop- tion is patchy and should be interpreted with caution. ment and increased access to economic opportunities The poor supply of electricity meant that 40 process- such as fostering SMEs, including aquaculture devel- ing plants with cold storage and refrigeration facilities opment, and (ii) enhance domestic/export market sup- had to close during the crisis. Current reports from the ply and value chains. Ministry of Fish Wealth (MFW) indicate that now only three processing plants are functioning in Yemen, with 3.2.3  The Qat Market the consequent loss of over 1500 direct processing jobs, of which 45 percent are said to be held by females. In recent decades Qat production has become central Interestingly, according to MFW data, total fish to agricultural livelihoods in Yemen, and it is now esti- exports increased in 2011 by over 2,500 metric tons and mated to provide employment to millions of workers. US$18 million in revenue. It appears that the export of It accounts for six percent of overall GDP and 33 per- frozen crabs and lobster increased most dramatically cent of agricultural GDP. In 2009, research indicated during the crisis, 80 percent and 150 percent respec- that there were over 600,000 small-scale Qat farm- tively. Given the significant blockages associated with ers in Yemen, which accounts for more than half all fuel and electricity, this increase in fish exports may small-scale farmers. In total Qat provides employment seem out of context and therefore requires an under- to one in seven working Yemenis (World Bank Qat’ standing of the domestic fish market. During the crisis, report). There are numerous factors which incentivize the supply of fish to the domestic market is estimated the production, most notably the continuous growth to have decreased by up to 40 percent due to reduced in demand with the majority of value remaining with margins of the transporters and domestic traders and the farmer. It can be harvested almost year round and security issues associated with transport. This is said there is a quick return on investment, as sales can be to have increased the domestic price in urban centers made regularly with short payback periods for produc- by almost five times and as a result, some retail outlets ers. It is cultivated through either rainfed or irrigat- had to close down. Therefore, fishermen and auction- ed farming systems but high levels of irrigation using eers decided to sell more fish to regional export markets. subsidized fuel for pumping the water has proved Some areas were more severely affected due to con- highly profitable. Poorer farmers use a combination flict and displacement than others. For example, the of both techniques and the poorest small-scale farm- crisis saw nearly 3000 boats put out of action across ers depend on rainfed production. About 25 percent Yemen, of which 1,865 were in Abyan and 1,000 in of all rural households produce and sell Qat. While Shabwa (Fisheries Report 2012). The MFW believe that Qat is produced by households in all income catego- this decline in operations has left 9,500 people jobless. ries more households in the richest quintile sell Qat In areas where fishermen were operational during the (31 percent of the households in that quintile versus crisis, those in rural areas faced significant challenges 18 percent in the poorest quintile). Qat contributes with the maintenance of their equipment and supply of a much higher share of the richest household mon- gear. It is reported that many boat and gear workshops etary income than is the case for the poorer income were not functioning due to limited supply of materi- quintile (50 percent of the rich agricultural income al for repair services. Typically, it is believed that the comes from Qat, versus 36 percent for the poorest).36 poorer fishermen were most affected by this, as they Within the agricultural sector, food production and tended to have older and more unreliable equipment (Fisheries Report 2012). 36 World Bank, Republic of Yemen, Rural/Local Development In line with the National Transition Plan (2012– Strategy, Implementing the Poverty Reduction Strategy in Rural 2014), the key needs to be addressed are to (i) improve Areas, Updated June 30, 2004. 38 Employment and Livelihoods non-food cash crops (mainly Qat) compete over water production peak in 2008 with a record farm output, pro- and fruitful land. duction area, number of farmers, and yields. In sharp The percentage of household income spent on Qat contrast with production, exports have recently gone increased during the crisis: As part of the household bud- down, and more and more coffee does not even enter get survey in 2006, 72 percent of males and 33 percent formal market channels. Farmers get the highest share of females reported that they regularly chew Qat. Most of the retail value and there are considerable opportu- Yemenis are habitual users; more than half of those who nities for vertical integration, allowing farmers to main- chew did so each day of the week. In 2010, the share of tain even more value (such as peeling, washing, drying, expenditure on Qat by food-insecure households was roasting, and even packaging). Collectors, processors, and 7.1 percent, which was almost as high as expenditure exporters are highly specialized in coffee, while farmers on health (7.3 percent). In 2011, severely food inse- maintain more diversified incomes. Credit flows among cure households apparently spent eight percent of their chain actors are limited, as well as flows of information. income on Qat, and moderately food insecure households Unfortunately, detailed impact of the crisis on the cof- spent 10 percent. Their expenditure on health and edu- fee market is unknown; however it is clear that the sec- cation combined is 11 percent (five percent and six per- tor still demonstrates promising signs for job creation cent respectively). In Sana’a Governorate, expenditure and growth. IFAD has recently begun implementing a on Qat increased from 12.6 percent to 16 percent (WFP new agricultural program, which intends to strengthen 2010 and 2012). Qat is reported to suppress hunger and the entire coffee value chain. is therefore likely to have severe nutritional consequenc- There is an overly complicated system for quality es. In urban centers during the crisis, it is widely report- grading, largely depending on origin, and regulation is ed that political parties incentivized people to support inconsistent. Hence, the quality grading system does their party with offers of free Qat, food, and water. This not have the desired effect and is ineffective. Yemen indicates that demand increased during the crisis, there- could use examples from other countries to design a fore, controversially, the Qat market actually provided more effective quality grading system. For example, a reasonably secure source of income and employment Colombian coffee is renowned as high quality coffee for those engaged in the sector. and is competitive at a global scale. However, Colom- High consumption has social and health implica- bian coffee has a very simple nationwide quality sys- tions, which should be addressed at the national level. tem, essentially grading quality on the size of the bean, At the same time more effort is needed to diversify agri- rather than the type of tree. Along with this grading cultural production. High value, less water intensive method, farmers wishing to sell the highest level coffee cash crops such as coffee, or innovative crops such as and capture all the associated value turn to contract- Aloe Vera for medicinal and beauty treatments, need ing farming arrangements with globally known coffee to be more vigorously promoted. shops and supermarkets. Coffee farms in Yemen are small; depending on the region they have an average 3.2.4  The Coffee Market of 225 to 250 trees. Higher up the value chain, inter- ventions to improve market linkages between domes- In July 2009 the World Bank funded a value chain report tic and international actors and branding of Yemeni and this provides a detailed analysis of the Yemeni cof- coffee should be considered. fee market. In 2008, there were over 100,000 coffee farm- ers in Yemen, in addition to which, there are thousands 3.2.5  High Value Fruits of workers involved in collecting, processing, retailing, and exporting. Recovering from a decline in early 2000s, Fruit farms provide an important source of employ- the coffee sector now shows promise, as it reached a ment and labor in Yemen. For example, the governorate 39 Joint Social and Economic Assessment of Abyan has a long tradition of high value fruit pro- Foreign investors discontinued investment in con- duction such as mangos, bananas and pomegranates. struction works during the crisis. For example, an inves- Many commercial fruit farms just grow produce and tor from the Gulf had planned an US$800 million invest- outsource harvesting and transportation to traders, ment (with significant construction components) but meaning that seasonal labor opportunities were avail- this was halted due to the crisis. able pre-crisis, often for landless rural populations. Conflict was, and still is, present in Abyan, which has 3.2.7  Publicly Funded Construction Works resulted in large-scale internal displacement. Though clear evidence is not available, it is highly plausible Currently there are believed to be over 1,000 govern- that many commercial fruit farms were deserted dur- ment funded construction projects contracted-out by ing the crisis, and consequently production and farm- the Ministry of Public Works and Highways (MoPWH). er incomes decreased. During the crisis, it is reported that most of these proj- Despite the likely impact on fruit farms in Abyan ects were suspended, and to date many of them have during 2011, high value fruit markets in more secure still not been resumed. Contractors themselves suspend- areas of Yemen still present significant opportunities for ed the projects due to increases in prices. MoPWH had export-led growth. A recently constructed asphalt road a total of YR 85,659 million (US$390 million) allocated along the entire Yemeni coastline (where most fruit farms for disbursement in 2011. Actually disbursed was only are located) will remove previous transportation con- YR 37,907 million (US$172 million), for works that straints, opening up new markets to many fruit farms. had already been implemented. There is a further YR Efforts should be made to improve market informa- 25,000 million (US$114 million) committed to contrac- tion and linkages especially to more remote fruit farms, tors, out of which to date only YR 9000 million (US$41 perhaps through the establishment or strengthening of million) has been paid (MOPIC 2012). marketing associations. Availability of quality inputs is Disbursement from publicly funded works schemes another constraint that should be addressed, with partic- appear to be low. In an interview with the Director of ular focus on supporting the development of a competi- the Public Works Project (PWP), it emerged that out tive private sector. To tackle the issue of water shortage of a targeted disbursement of US$80 million for 2011, more support needs to be provided to ensure that the only US$42 million was disbursed. Out of all PWP dis- most effective and efficient irrigation systems are used. bursements 30 percent is budgeted for labor. Rough calculations would therefore indicate that during 2011, 3.2.6  The Construction Market PWP’s expenditure on labor decreased from US$24 mil- lion to US$12.6 million. At an average wage of US$7 According to the HBS in 2005/2006, 11.7 percent of per day, this decrease in expenditure translates into a the working population was employed in construc- loss of around 1.6 million working days. tion and building, amounting to 485,000 people. This represents one of the largest employment sectors in 3.2.8  Privately Funded Construction Works Yemen, particularly among the urban poor and rural migrants. Construction employs workers with varying Privately funded construction work was also impact- levels of skills, but for the purposes of this report the ed by the crisis. Private investment dried up abrupt- focus is on semi-skilled and un-skilled laborers, many ly and thousands of informal laborers lost their jobs. of whom are 15–24 years old. Real estate sales came to a virtual halt during the cri- Several key informants interviewed by the JSEA sis. Currently, there are many daily laborers waiting team indicated that huge losses were incurred in this from early morning at collection points in Sana’a City. sector during the crisis. It may also be the case that more semi-skilled and 40 Employment and Livelihoods ( ‫ )ïº?اï»?لﺡحﺭرïº?اïº?ج‬  Interviews with construction labourers from queues around Sana’a  ( ) Mohammad Ameen is from rural Ibb. He left his village, his wife, a daughter and his parents in search of work. He said “the daily labourer is in crisisâ€?; since 2009 the market has been stagnant but in 2011 it got worse, so there were very few opportunities, sometimes we used to get one or two days per week and sometimes not; but after the presidential election in February, the market started to move and actually I worked continuously for two weeks but then the cement prices increased, from YR1400 to YR2500 and the market went back to being slow. Now we hardly get an opportunityâ€?. Nabeel Kasim is from the Hubaish district in Ibb, he finished seventh grade and he came to Sana’a for an opportunity in construction jobs. He works as unskilled labourer in construction and has four children back in his home village; he also sends money to his parents. Just like others interviewed he thinks that the situation is hard and often works just a few days a week (if not a month). An elderly man, Shaiba Bagash who works as a wire knitter for reinforcing concrete was there with his son Mohammad who is in fifth grade, he said “there was no school today since teachers did not come because of the rain so they asked the children to go back home and I brought my son with me to start learning this skill, but there is no opportunity today and it looks like this most daysâ€?. unskilled construction laborers have recently migrat- than the international price. Production of domesti- ed from rural areas to Sana’a City. Laborers report- cally produced cement stopped during the crisis due ed that immediately after the transitional government to the cost of fuel and shortage of electricity. It is also came to power more work was available, but that the alleged that the monopolistic domestic cement market market has now slowed down again. The increased (three out of five domestic factories are owned by the cost of building materials is cited as a major reason Government) was being starved of supplies in order for this slowdown. to manipulate the price upwards. Despite the magnitude of impact on the construc- tion sector during the crisis, there are promising indi- 3.2.9  Supply and Service Markets Supporting cations of renewed activity as raw material supplies Construction increase. In response to several local cement fac- tories temporarily closing, cement is being import- Yemen imports most of its construction materials. ed in larger quantities from Saudi Arabia although Overall, imports of materials declined during the cri- imported cement prices are higher which represents sis, resulting in a shortage in supply and increases in a business risk for local building contractors. At YR prices. For example, during the crisis metal bars used 2,300 per 50kg sack, Saudi cement is almost dou- in reinforced concrete rose from YR 160,000 per ton ble the cost of Yemeni cement (Yemen Times April (US$750) to YR 200,000 (US$930), which was higher 2, 2012). For construction laborers like Mohammad 41 Joint Social and Economic Assessment Ameen (see his story previously), the increase in the and family-run; therefore employment records rarely price of cement means that he no longer has a reli- exist. Although quantification of impact is not possi- able source of income. ble, it is clear to see that retail was hit hard during the crisis. For example, in the two major demonstration 3.2.10  Retail and Wholesalers areas in Sana’a City (Tahrir/Al Dairi), over 500 small businesses closed down (CoC document). Retail and wholesale is the second biggest employer in Shops that did stay open faced significant chal- Yemen, after agriculture, employing over 650,000 peo- lenges. For example, thefts (some armed) from stores ple, which accounts for 15.7 percent of all employed increased during the crisis. Pressure from customers Yemenis. Most retail outlets in Yemen are small-scale for credit was another major challenge. In 2010, 18.6 percent of food was purchased on credit, whereas in 2011 this figure rose to 25 percent (WFP 2010 & 2012). Small Grocer in Al-Khafji (a poor, mainly This statistic is also backed up by the SFD labor inten- immigrant community in Sana’a City) sive baseline survey carried out in 2010, which found that 65 percent of households reported food shortag- Ali Al-Kholany has es. However, only 20 percent reported that this short- owned and run his age affected household food consumption, as nearly shop on 16th street in Al-Khafji for 40 90 percent of affected households said they purchased years. He also owns food on credit. It seems that as the crisis progressed, another shop in retailers and wholesalers became more averse to pro- “Taiz Streetâ€? which is viding credit. Retailers resorted to only giving credit managed by his son. He said: “2011 was a difficult to those that they knew well and trusted. year for everyone, I was careful and I stopped selling on credit except to home owners or people I have known for years and can trust. I stopped giving 3.2.11  Greening the Yemen Economy credit for two reasons; I am not able to get any more credit from my wholesaler, and people in the In 2008 it was estimated that only 39 percent of neighborhood particularly those who are working in the population had access to grid-supplied electric- the private sector lost their jobs and were unable ity. In a World Bank commissioned report, Yemen to repay. Those who do not own their homes can Renewable Energy Development Strategy it is stated relocate overnight and I would not be able trace that: “Yemen is not only endowed with crude oil and them for repayment.â€? natural gas resources but also with renewable energy He indicated that the grocery market had improved resources such as wind, solar, geothermal, hydropow- this year; food prices such as wheat flour came down er, and biomass energies. The development of renew- from YR 6000+ in 2011 to YR 5300, and the same able energies in Yemen could play an important role trend occurred with rice and vegetable oil. However, in achieving the government’s long term sustainable since 2011 not all types of food are available. For power sector development goals of meeting the rap- example, the price of a branded carton of dried milk (400 grams) increased in 2011 from YR 700 to idly growing electricity needs necessary for the coun- YR 1000 and it remains very expensive today. He try’s economic development.â€?37 described his customer’s use of credit by explaining The expansion of access to electricity in rural areas that most pay off their balance at the beginning of of the country is a necessary prerequisite for increased each month, when they get paid, and immediately start to borrow again. World Bank, Yemen Renewable Energy Development Strat- 37  egy, forthcoming. 42 Employment and Livelihoods 3.2.12  Recommendations JSEA NGO Workshop – Al-Br and Al-Takaful Association in Mareb Yemen needs to hasten the shift of employment away from a relatively high dependence on the agricul- Abdulhakeem, a participant from the JSEA NGO workshop, indicated that Mareb suffers from poverty tural sector towards creating more opportunities in while high quantities of oil and electricity are the industrial and service sectors. For this to happen generated in his governorate. He suggested that an agricultural productivity must be increased (as stat- initiative in one of the districts to find those who have ed also in other sections of this assessment, includ- destroyed oil pipes and other public services should ing the one on food security) so that more food can be implemented. He also said that an entrepreneur be produced with less labor thereby making food pro- from his area is now supplying his village with expensive electricity (from a diesel fuel generator) duction a more economically attractive undertaking. when the electricity is off. In response to this, his This also implies the need for an economic incen- organization has called for the use of solar energy. tive-driven shift away from the production and sale of Qat. This should be combined with anti-Qat con- sumption campaigns, similar to the anti-tobacco cam- agricultural productivity, job creation, income gener- paigns that have reaped some success in other coun- ation, and general economic development. Business- tries. Co-opting influential national and community es and residential consumers often rely on expensive leaders is a very first step toward establishing impact private diesel generators for electricity during typical in Qat reduction. “brownoutsâ€? or on low energy value/high cost tradi- Pilot interventions that seek to incentivize private tional energy sources, such as kerosene. Expanding sector enterprises involved in production and manufac- supply will result in significant cost savings. turing or service industries are required. (For example Opportunities for electricity extension to rural in the fish sector: support services such as maintenance, areas are waiting to be exploited. During 2004–2008, rehabilitation, and supply of modern and effective gear, a US$1 million Global Environment Fund project was motors, and tools need to be strengthened). Support- implemented by the World Bank, which conducted a ing new private sector players and thereby enhancing renewable energy resource assessment and then pro- competitiveness through improved access to finan- duced a renewable energy plan development, and cial services, including micro-credit, bank loans, and rural electrification plan through both grid extension insurance, as well as the provision of reliable and cost and off-grid renewable energy development. In 2009 effective energy sources for cold storage and food and the Bank approved a grant for a rural energy access fish processing are a must. project, mainly through grid extension, and a small Interventions to increase women’s engagement in component of off-grid solar photovoltaic for isolated employment and livelihoods are also required. The rural areas. However, there has been no progress on the women in Yemen have very low levels of involvement project due to delays, slow preparation, and then the in decision-making concerning their families (SFD Sur- political crisis. Meanwhile, MENA region countries vey 2011). However, in studies on coping strategies it such as Morocco, Algeria, and Egypt are all develop- has been shown that women-headed households tend ing ambitious wind and solar programs. The Yemeni to use a more diversified set of strategies that those parliament, in April 2012 approved a US$65 million headed by men. By increasing the number of its cop- loan from the Arab Fund to invest in a government- ing strategies, a household is attempting to reduce its owned wind farm, with the Kuwaiti Government exposure to risk. agreeing to a grant of US$6 million. The details have Work needs to become more productive and more yet to be clarified. formal. Levels of informal employment in Yemen are 43 Joint Social and Economic Assessment the highest in the MENA region. This has a tendency to advantages of different regions. This could involve distort or reduce the growth and operation of compa- a move towards off-grid energy generation in remote nies by keeping them outside the national legal frame- areas that are difficult to access via a national grid work. In addition, unregistered workers have little or (thereby creating opportunities for small and micro no protection, which makes them extremely vulnera- enterprise development) along with the construction ble to economic and social shocks, such as the polit- of localized energy grids close to areas identified for ical crisis of 2011. They also have no access to health industrial growth. insurance or pensions. Access to finance and com- Finally, the central state could consider relocating mercial loans for supporting MSMEs (Micro, Small government ministries and departments (for example and Medium Enterprises) investments and job-creat- those associated with fisheries or shipping) to locations ing efforts is a major constraint and remains extreme- away from the capital and closer to their target clien- ly limited, even through existing micro-finance net- tele. This would promote urbanization in areas where works. These issues need to be addressed in a gradual water may be more abundant and lessen the burden but systematic way whereby only larger firms (esti- of increasing urbanization in Sana’a. mated to employ more than 500 workers) are target- ed in the initial phase. 3.3  Employment Schemes and Social Structural changes, as set out above, tend to lead Welfare to increased urbanization as workers concentrate around industrial zones and/or areas of high popu- 3.3.1  Introduction lation density where service sector employment can be found. A framework of public policies is required Three main programs of Yemen’s Social Safety Net are: in order to energize this process, which demands the the Social Welfare Fund (SWF), the Social Fund for direct engagement of the state in stimulating econom- Development (SFD) and the Public Works Project (PWP). ic development and transformation. In parallel with An overview on these three programs is provided policies and programs, which seek to increase agri- in the table below: cultural productivity, there must be an equal empha- sis on promoting the off-farm sector. This includes Social Welfare Fund (SWF) the provision of technical and vocational training along with well-targeted apprenticeship schemes for Established in 1996, SWF is the largest social cash-assis- high skilled workers, including jobs in the so-called tance program in Yemen: YR 60 billion budget in 2011 ‘green economy.’ (about 0.65 percent of GDP). SWF currently has near- There is rapid growth opportunities in embracing ly 1.5 million beneficiary cases; 50 percent can engage renewable energy sources such as solar, wind (off- in economic activities. The cash transfer ranges from shore and on-shore), and geothermal. A quick reas- YR 2,000 to YR 4,000 per HH per month, and is trans- sessment of the potential for these technologies, in ferred on a quarterly basis. SWF offers other benefits light of technological advances since the World Bank to its recipients: fee waivers for health and education report of 2008, needs to be undertaken at the earliest services as well as emerging programs of conditional opportunity so that Yemen does not fall behind in the cash transfer for health and education. SWF has mul- race to harness these opportunities. There are many tiple programs for beneficiaries’ development BDP’s alternative strategies regarding the future deployment including microfinance and training. Also beneficia- of this technology. One possibility is to develop a more ries who meet specific criteria can get an advance pay- decentralized and regionally targeted energy and indus- ment equivalent to their annual entitlement, to pur- trial policy, which fully recognizes the comparative chase income-generating assets. 44 Employment and Livelihoods Box 3: Social Protection Programs in Yemen Mandate/Targeting/Challenges Potential Investments SWF Provides cash allowances to poor households: Increase the institutional support to implement CCTs. no conditions imposed except having a renewed Include new target areas of CCT in education and registration card, piloting CCTs and beneficiary health. development programs. Challenges include: Increase the level of stipend. A study to determine inadequate allowance, inclusion & exclusion errors. the poverty gap is required. SFD Provides community Development interventions Currently SFD-IV (2011–15) has a gap of US$600 in addition to Community based cash-for-work for million to meet its objectives. Increasing investments the chronic and transitory poor, increases poor through the labor-intensive works programs both communities’ access to basic services, and provides through the community-based cash-for-work or microfinance and capacity building. Challenges through other mechanisms is an option. More including inadequate financial resources and limited funding could be directed to more temporary outreach of microfinance to rural areas. employment generating activities such as rural roads. Other SFD operations supporting youth, the decentralization process, microfinance and social harmonization could be funded. See below elements of the strategy paper developed to respond to the crisis. PWP Creates job opportunities for skilled and unskilled Increasing investments in labor intensive works construction workers while promoting small scale program. More funding could be directed to the contractors. Driven by service needs. Does not target upgrading of rural roads. the transitory poor. SWF Beneficiary Development Programs developmental works. The SFD seeks to achieve these goals through four multi-sector programs: • The training program benefited about 27,000 beneficiaries (end of 2010) but few beneficia- • Community and Local Development; ries found a job due to limited labor market • Small and Micro Enterprises Development; uptake. Training quality may have been a con- • Capacity Building; tributing factor; • Productive Safety Net Labor-intensive Works • The microfinance (MF) program has an esti- Program (LIWP). mated 3,800 active clients with successful outcomes; In addition to the above programs, in 2006, SFD • To improve the MF program in terms of cov- started a Rainfed Agriculture and Livestock Develop- erage and performance, SWF is forging agree- ment Project (RALP) in 23 districts in five governor- ments with MFIs with good practices to target ates to increase productivity and income of rural pro- their beneficiaries. ducing groups. From 1997 to December 2011, SFD implemented Social Fund for Development (SFD) 12,047 projects in all sectors worth US$1.44 billion; more than 70 percent of this amount was disbursed. The SFD was established in 1997 and contributes to In 2012 SFD elaborated its fourth phase (2011–15) reducing poverty by increasing the access of poor Strategy Paper38 to respond to the crisis/post crisis sit- communities to basic social and economic services, uation; this states the following: building the capacities of local partners, and empow- ering communities and local authorities to implement 38  SFD’s response to the Aftermath of 2011, March 2012. 45 Joint Social and Economic Assessment • LIWPs will be diversified and have much wider opportunities with the budgeted labor content above geographic coverage. 30 percent. However, there are differences: • LIWPs implementation will be accelerated (US$45 million and US$70 million will be dis- • SFD implements a community-based cash-for- bursed in 2012 and 2013, respectively); work program (with two models: one rural • At least 5 million person/days will be added and another urban). The rural model targets to the temporary employment output of SFD. poor communities with simple interventions (The previous plan targeted the creation such as land clearance and terrace rehabilita- of 20 million person/days, which is now tion, etc. The labor content in this Program is increased to 25 million/day. This increase more than 60 percent; will be achieved by simplifying the type of • SFD has more diversified programs. For exam- works undertaken, therefore employing more ple: SFD supports financial and non-financial unskilled workers); services. Currently SFD supports 12 active MFIs • Nutrition and social harmonization themes and banks that provide services throughout the will be introduced, fostered, and mainstreamed country. SFD has a subsidiary agency that pro- through SFD’s relevant operations and train- motes business development: the Small and ing packages; Micro Enterprises Promotion Services with three • Employment generated will become a cross cut- branch offices (Sana’a, Aden and Al-Mukala); ting indicator for various sectors and programs. • The SFD budget is almost three times that of PWP. In 2011 SFD disbursed US$132 million, Public Works Project (PWP) while PWP disbursed US$42 million. The Public Works Project was established in 1996, 3.3.2  Recommendations under the auspices of the Ministry of Planning and International Cooperation (MOPIC) and implements Increase funding to community-based labor intensive basic infrastructure projects. Its aim is to mitigate the works to channel cash into the hands of the poor to adverse effects of Yemen’s structural reforms that start- help them to cope with the impact of the crises. Such ed in 1995. The PWP aims to create job opportunities a program could continue even after recovering from for skilled and unskilled laborers while providing infra- the crisis and serve as a productive, social safety net, structure service projects for the poor and deprived targeting chronically poor sub-districts and female- communities in remote areas. PWP also promotes the headed households. development of the local contracting and consulting Given the fragility of the government institutions, industry. By the end of 2010 PWP had implemented both SFD and PWP are effective instruments to assist 3631 projects, with an estimated cost of US$310 million the livelihoods of most vulnerable persons through- and creating temporary job opportunities of approxi- out Yemen. The current government has recognized mately 648,956 person/months.39 this in its national unity program delivered to the Parliament on December 24, 2011. It acknowledged Main Differences between the SFD and PWP both SFD and PWP programs to be important instru- ments to create labor intensive works opportunities Both SFD and PWP implement basic infrastructure and to deliver basic services to local communities. works: rural roads, street paving, and construction of Both programs are also good instruments to absorb schools and training centers, health facilities, and water storage schemes. These activities generate employment 39  PWP 2010 Annual Report. 46 Employment and Livelihoods donor funding. However, being heavily dependent on 3.4.2  Baseline Data donor funds means the sustainability of their servic- es could be affected. 3.4.3  Current Situation 3.4  Food Security The issue of food insecurity became even more critical during the 2011 crisis and now requires urgent action. 3.4.1  Introduction According to the preliminary findings of the WFP’s 2012 Comprehensive Food Security Survey (based on The World Food Summit of 1996 defined food security data collected at the end of 2011), there are over 10 mil- as existing “when all people at all times have access to lion food insecure people in Yemen (44 percent of the sufficient, safe, nutritious food to maintain a healthy population). Out of these, over five million are severe- and active life.â€? Commonly, the concept of food secu- ly food insecure (22 percent of the population), a fig- rity is defined as including both physical and econom- ure which has almost doubled since 2010. ic access to food. Spatial inequality remained high during the crisis. In rural areas 51 percent are now food insecure, with • Food security is built on three pillars: 27 percent severely food insecure. Urban populations • Food availability: sufficient quantities of food also became significantly more food insecure during available on a consistent basis; the crisis, jumping from 14.5 percent pre-crisis to 27 • Food access: having sufficient resources to percent. As the map below demonstrates, the complex- obtain appropriate foods for a nutritious diet; ity of inequality does not stop at the rural vs. urban • Food use: appropriate use based on knowl- divide. Higher levels of food insecurity are concentrat- edge of basic nutrition and care, as well as ed in the Western Highlands, while the eastern gover- adequate water and sanitation. norates of Hadramout and Al Mahra have less than 20 percent of their population suffering food insecurity. The first two pillars are addressed in this section, It is said that during the crisis 90 percent of house- whereas the third is addressed along with health and holds were adversely affected by high food prices. Phys- Water, Sanitation, and Hygiene (WASH) in Chapter 5. ical access to food markets was also affected by the Pre 2011 Baseline – Key WFP Facts In 2010 WFP found (based on data collected at the end of 2009) that 6.8 million (31.5 percent) of Yemenis were food insecure, including 2.5 million (11.8 percent) being severely food insecure. In 2010, Yemen had one of the highest malnutrition rates in world. Spatial inequality of food security was also large: rural areas having twice the number of food-insecure people than urban areas. Out of 21 governorates, five hosted 61 percent of all the food insecure and 66 percent of severely food insecure people. Alternative studies showed that: • One of three Yemenis have difficulty accessing sufficient nutritious food–IFPRI 2010. • 13.2 percent of children between 6 to 59 months were wasted and 55.7 percent stunted – HBS 2005/2006. Source: Government of Yemen and JSEA Staff 47 Joint Social and Economic Assessment and other related issues) office buildings, laboratories, Figure 7: Percentage of Food Insecure Households by Governorate irrigation networks, stores, workshops, and so on, were destroyed, burned and/or looted while in other places, vehicles, office furniture and machinery were stolen or destroyed. In some cases, because of of disbursement suspension by some development partners, contractors stopped work due to non-payment resulting in destruc- tion of incomplete works due to floods.40 Some PWP contracts have come to a complete stop. Total damages to agriculture infrastructure are estimated at about YR 202.64 billion (US$921.07 million equivalent).41 3.4.4  Coping Strategies With an already high incidence of poverty pre-crisis Source: WFP. (42.9 percent according to IFPRI 2010), poor and vulner- able people have long been undertaking a range of live- crisis and this fact is likely to have contributed to food lihood strategies. A household’s capability to devise an insecurity. The two most influential factors governing effective coping strategy essentially depends on access the rise in food insecurity were extortionate transpor- to a variety of different assets. Table 13 below illustrates tation costs and high levels of physical insecurity. In the types of assets that poor households might use. The Sana’a City more than half the population is said to more diverse the combination of assets a household has, have had reduced physical access to food as a result the more resilient their coping strategy is. of the protests (WFP 2012). Livelihood strategies based on the assets described Rural and urban area were affected in different above are very prevalent in populations within the two ways. The infrastructure of many public and private poorest wealth quintiles. WFP found that crop and institutions at both central and local levels that play a livestock production was practiced by 72.6 percent. major role in the provision of services for agricultural However 37 percent of rural households do not have development (food producing activities) in rural areas any access to land and 44 percent of households with were extensively damaged/destroyed during the crisis access have less than half a hectare (World Bank CS resulting in a loss of infrastructure and equipment. In some places (mainly Sana’a city, Sana’a governorate and 40 Groundwater and Soil Conservation Project. Abyan, which were affected by direct war, and others 41 Ministry of Agriculture and Irrigation/Agricultural Coopera- that were affected by violence, vandalism, lack of fuel, tive Union Report. Table 13: Livelihood Assets Used for Coping Strategies Financial capital Natural capital Physical capital Human capital Social capital Remittances Water Tools/Machinery Capacity to work Relationships and Trust Cash transfers Land Technology Skills development Social Networks Donations — Seeds Education Communication Credit — Electricity/Fuel — — Savings/pensions — Livestock — — Source: Government of Yemen data and JSEA staff. 48 Employment and Livelihoods in Rural Yemen 2010). Access to ground sourced irriga- International Remittances tion is expensive and often only available to better-off farmers. Access to technology, new tools, and machin- International remittances provide a direct lifeline to ery is almost non-existent among poor Yemenis (Agri- many households and are one of the most important cultural Strategy 2012). Access to other physical capital sources of income, enabling households to better cope such as fuel and electricity was a challenge for every- with their situation. The net inflow of international body during the crisis, and 39 percent (World Bank RN remittances was estimated at US$1.3 billion for 2011, energy) of Yemenis are estimated to live in areas not US$80 million more than in 2010 (IFC 2012 and Money serviced by the national grid. Human capital is also Transfer website). Initial findings from an SFD survey weak, particularly in rural Yemen. Support from fam- in 2011 indicate an increase from nine percent to 14 ily and friends were received from 66.8 percent and percent between 2010 and 2011 in households report- in-country remittances from 62.9 percent (WFP CFSS ing remittances as a source of income. Between 2009 2009/2010). The rural population has low levels of and 2012, the cost of sending international remittanc- education and skills; men on average have 5.9 years es between Saudi Arabia and Yemen became cheaper of schooling and women 1.3 years (World Bank CS in and is now the fourth cheapest corridor in the world Rural Yemen 2009). Also, 85 percent of rural women (IFC 2012). The 2011 increase will have provided addi- do not have access to income generating opportuni- tional purchasing power to recipient households. ties. It is estimated that two-thirds of rural households have very limited natural, physical, and human capi- Domestic Remittances tal (World Bank CS in Rural Yemen 2009). Therefore, most households base their coping strategy on the four Households relying on domestic remittances are poor- assets listed below: er and more vulnerable than those relying on interna- tional remittances. Of households relying on domes- • Remittances – migration of household mem- tic remittances, 62.9 percent fall into the two poorest bers either to urban areas or to a foreign coun- wealth quintiles (WFP CFSS 2009/2010). According to try (mainly unskilled labor), so that remittanc- an SFD survey, more households reported that they es can be sent home; were receiving domestic remittances in 2011. Con- • Consumption credit – for example, from shop- versely, it is believed that many poor and vulnerable keepers or borrowed from family or friends; households had to find non-remittance based alterna- • Livestock production – eggs, occasional meat tives to cope with the crisis. A reversal of the usual consumption and sale of animals, especially pattern of rural to urban migration occurred as many prior to Eid; urban workers chose to return to their village homes • Subsistence agriculture – for those that have due to unemployment and insecurity in major urban access to some land the growing of small centers (SFD 2011 Rapid Assessment). amounts of rainfed Qat, cereals, and vege- The financial services industry reported increased tables. Employing traditional water harvest- intra-national transfers. These may be due to one or ing and soil conservation techniques (such more of the following factors, which have been report- as terracing); ed anecdotally: • During the crisis many people relied more heav- ily on social networks and a sense of social • Higher levels of insecurity during the crisis cohesion within rural villages, in order to cope meant that migrant workers preferred to send with the lack of transport and non-availabili- money through formal financial service orga- ty of essential goods. nizations, such as: Al-Kuraimi and Western 49 Joint Social and Economic Assessment Union, rather than carry cash when travel- social capital between consumers and retailers. This ing home. would indicate that the urban poor using consump- • Workers avoided travelling during the crisis, tion credit as a coping mechanism were more impact- as transportation costs were too high. They ed than rural poor. therefore used formal cash transfer channels to support their families. Decrease in Food Consumption • Due to lack of confidence in domestic banking services during the crisis, it is said that nation- Inevitably, some families cope with food insecurity by al NGOs and political parties chose to trans- simply decreasing the amount and frequency of food fer money for their operations through these consumption. An SFD survey found that the num- same remittance channels. Transferring money ber of households in food deficit increased from 61.6 in this way is quicker and easier, but more percent to 67 percent during the crisis. Out of these expensive, than through a commercial bank. households, the percentage of households that report- ed missing meals rose from 27 percent in 2010 to 48.5 Consumption Credit percent in 2011. One of the most common coping strategies in Yemen Savings and Credit Groups is access to consumption credit. Credit of this nature is common and usually administered through small com- Community saving groups, predominantly involving mercial stores and larger retailers. At the time of the women, have been present across Yemen for many 2011 CFSS, over one third of households interviewed years and allow people to better cope with emergen- were in food related debt (CFSS 2009/2010). During cy situations. Each member of a group saves a set sum the crisis, there are conflicting accounts of availabili- on a weekly or monthly basis. Members can withdraw ty and access to credit to purchase food; such differ- their savings when it is either ‘their turn,’ or they con- ences simply demonstrate the complexity of impact. stitute as a ‘priority’ due to some emergency within On one hand, food retailers that were interviewed in their family. This informal method of saving is a coping Sana’a as part of the JSEA stated that as the crisis pro- strategy for the rural poor who motivate each other to gressed they stopped providing credit as they them- maintain the discipline of regular saving and who do selves were unable to access credit from their suppli- not have access to more formal savings accounts. An ers. This tightening of food credit is reinforced by an alternative on this practice is when the group, having SFD survey, which found that between 2010 and 2011 accumulated a sufficiently large sum of joint savings, households able to buy food on credit dropped from agrees to make loans to individual members for spec- 69 percent to 62.5 percent. ified purposes: either for income-generating invest- On the other hand, the CFSS found that food pur- ments or for consumption purposes. chased on credit actually went up slightly between The Post Office reported a change in saving pat- 2010 and 2011, from 22.4 percent to 25 percent (WFP terns during the crisis (ILO interview 2012). Instead CFSS 2009/2010 and 2012). It is assumed that, although of savings being withdrawn when school and health statistically insignificant, this slight increase may fees were due; a more sporadic pattern emerged where- reflect the differences between accesses to credit in by people simply withdrew savings as and when they rural vs. urban areas, as the CFSS had more national needed them. This indicates that during the crisis peo- coverage than the SFD survey. It is therefore believed ple coped by substituting investment in education and that consumption credit in rural areas was easier to healthcare for more immediate consumption needs, access than in urban areas, perhaps due to stronger such as food. 50 Employment and Livelihoods Empowerment of Women through correlation between women’s access to micro-finance Micro-Finance and their increased status within the household: wom- en’s role in the household becomes more valued by Yemen ranks last in the UNDP’s gender empower- other household members as they are recognized as ment index. For example, women have little control a source of income for the family. As a result of this over decisions relating to the household management, women gain more decision-making power. This has although women’s sole decision-making authority in also been demonstrated in SFD’s 2008 study on Gen- the household does grow somewhat with age, educa- der and Micro-Finance, in Yemen. The report pointed tion, and having paid work or residing in urban areas.42 out that traditions and customs pose significant barri- The majority of Yemeni women reside in rural areas. ers for women in accessing banks, which are consid- As illustrated in the table below,43 rural women in ered the realm of men and where women feel they will Yemen have very low levels of involvement in decision- not be taken seriously. Given such mobility restrictions, making concerning their families. However, in stud- micro-finance programs offer women the opportunity ies on coping strategies it has been shown that wom- to access financing to grow businesses for themselves en-headed households tend to use a more diversified or their family members to support their families and set of strategies that those headed by men (WB Cop- improve their status within the household. Still MFIs ing Strategies 2009). By increasing the number of its in Yemen remain small scale and predominantly in coping strategies, a household is attempting to reduce urban centers (78 percent) with only small penetra- its exposure to risk. tions to rural areas (22 percent). In countries, such as Bangladesh, where rural micro-finance programs have flourished over the 3.4.5  Local Food Production and Food Aid past 20 years, numerous studies have shown a strong Wheat Production and Subsistence Agriculture Figure 8: Share of Women Involved in Decision There are two wheat markets—domestically produced Making (10 percent of the total) and imported (90 percent)— 1 both of which are critical for food security. The fig- ure below compares the growth of these markets from Share of women involved 0.8 1990 to 2008 (WFP 2010 FS Survey). in Decision Making 0.6 The Domestic Wheat Market 0.4 Domestically cultivated wheat is mainly grown as a 0.2 subsistence crop by poor farmers in rainfed conditions 0 above 1900 meters. It is also grown using irrigation in governorates such as in Mareb and Hadramout. In total, Purchase big items Purchase everyday things Visiting friends 42  In a study conducted in 2010 by The Status of Women in the Type of food cooked Middle East and North Africa, 37 percent of women in urban Family planning areas reported making decisions by themselves or jointly with Take children to doctor their husbands regarding household purchasing (compared to 15 percent in rural areas). If female children attend school 43  Conditions in Rural Yemen: findings from the RALP baseline Source: Government of Yemen and JSEA Staff. survey, Daniel Egel et al. 2010. 51 Joint Social and Economic Assessment Figure 9: Wheat–Domestic Production vs. Imports 3,000,000 2,500,000 tons/year 2,000,000 1,500,000 1,000,000 500,000 0 1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Domestic production Import Source: Government of Yemen and JSEA Staff. the domestic wheat market has over 250,000 produc- to erosion and quickly lose their level contours. This ers, which is second only to Qat. Although promising is labor intensive work and burdensome at a time growth was experienced during the 2000s, there is a when many males are migrating away from their vil- clear lack of competitiveness in the domestic wheat lages in order to obtain paid work elsewhere. Some market and imported wheat is sold at a fraction of the families simply do not cultivate their terraces nowa- price. In addition, around 60 percent of wheat grown days as they feel that the rewards are too low to jus- is held back for household consumption. tify the effort and level of risk. SFD has interventions From a food security perspective the fact that to rehabilitate terraces under its food for work pro- many of the poorest farmers grow small quantities gram. To assist them to continue cultivation these of rainfed wheat for their household consumption farmers need advice on appropriate techniques for is significant. It also provides support agencies with stabilizing their terraces, for storing rainwater, and an opportunity to deliver effective advice services on how to maximize their yields, perhaps by growing to those farmers in order to raise the productivity of crops that are more drought resistant. It is possible their wheat crop. Typically, subsistence wheat farm- that, as a consequence of increased unemployment ers do not buy inputs such as seeds and fertilizers. during and since the crisis, more workers are avail- They select the best seeds from the previous harvest, able in these highland villages to work on their fam- which is an effective strategy for around three years. ily terraces, but this has not been verified. In that timeframe fresh genetic seed-wheat needs to be available but subsistence wheat farmers do not Other Subsistence Food Cultivation have easy access to supplies. They cultivate wheat on ancient terraces, which are designed to be flood- Subsistence farmers either have very small land hold- irrigated should sufficient rain fall. This form of irri- ings, typically less than half a hectare, or they have gation is very low cost and effective when good early small tenanted holdings. In mountain areas they are rains occur. But it is high risk in these times of cli- terraced, as mentioned previously, and on the coastal mate change as the seed can germinate and then die plains they tend to be interspersed between the hold- due to lack of water. The terraces themselves need to ings of much larger farmers. With a rapidly increas- be frequently repaired, as they are very susceptible ing population and growing indebtedness the further 52 Employment and Livelihoods fragmentation of these smallholdings seems inevita- The relative absence of animal healthcare and ble. Along with some coffee and fruit production these advisory services leaves poor livestock owners highly farmers are likely to grow small quantities of vegeta- vulnerable to losses due to poor husbandry practices bles primarily for their own consumption or perhaps and the spread of infectious diseases. for barter/sale in small local markets. The economic The main impact of the crisis on this sector appears viability of these holdings is very limited. Although to have been experienced by producers who were unable farmers have inherited knowledge of cultivation tech- to get their animals and birds to the market on time niques, there is a need to introduce new climate adap- due to insecurity and road blockades. This results in tion techniques and to empower these producers to take increased feed costs, which for intensively reared ani- advantage of new seed technology and other innova- mals is considerable. For sheep and goat herders, where tions, which can improve their yields. Currently, the their animals are not reared intensively, the main impact World Bank is supporting a Rainfed Agriculture Pro- would have been felt in terms of delayed income from gram (RALP) with the MoAI and IFAD are starting a sales. For small-scale producers this would be signif- new value chain orientated program to support small- icant at a time when they were experiencing many scale farmers and fisher people. other adverse economic shocks. No numeric date has Tenant farmers are discouraged from introducing been obtained regarding these impacts. innovations, or making improvements to their soil and water conservation techniques, as they must first Imported Wheat and Food Aid have permission from their landowner. There are few, if any, farmer associations and/or water users’ associ- In June 2011, it was observed that no locally cultivat- ations to represent the interests of small scale and ten- ed wheat was available in community markets visit- ant farmers. Such associations, if promoted effectively, ed by OCHA (OCHA, SDR 2012). Over 90 percent of could assist in the provision of extension services for domestic demand for wheat is met by imported wheat, improved production techniques, as well as support- which is a staple of food for millions of Yemenis. Dur- ing the provision of high quality inputs and appropri- ing the 2011 crisis, between January and November, ate marketing channels. the price of wheat in Sana’a increased by 90 percent ton average (OCHA, SDR 2012). Livestock The oligopolistic structure of cereal importers has led to the general perception that more competition is As reported below, Yemen’s poultry sector now meets needed in order to reduce local cereal prices. This per- 100 percent of local demand for eggs and 54 percent ception is supported by results from a simple compari- of demand for meat (Agriculture Sector Strategy 2012– son of local market prices in selected markets in Yemen 2016). Red meats such as mutton and beef are also very with international prices. Irrespective of the location popular although expensive and therefore only con- of local markets, wheat prices in Yemen are, on aver- sumed regularly in higher income households. Due to age, twice as high as the average international price.44 a preference for freshly slaughtered, halal meat, the Although part of the margin is explained by the usual value chain for meat products is rather short (producer trade margins there is wide suspicion that the oligop- > market/butcher > consumer). There is some limit- olistic structure of cereal imports extracts addition- ed milk production, but due to the cost of fodder and al rents. In fact, cereal imports are organized by only the complex husbandry demands of high milk-yield- five major private companies, which effectively form ing cattle breeds, these products are relatively expen- sive. Processed and packaged milk products are typi- 44 http://www.ifpri.org/sites/default/files/publications/ cally only available in urban areas. ifpridp01036.pdf. 53 Joint Social and Economic Assessment an oligopoly. These five companies cover about 90 the CSO (Central Statistical Organization) in Al Hodei- percent of all cereals imports, and the largest of those dah Governorate with EU funding (March 2011). Infor- five controls about 30–40 percent of the market. Most mation on food stocks, climatic change, regional and cereal imports come from Australia, the United States, global food prices and related markets, food consump- Pakistan, Turkey, and Uzbekistan. The 2007–2008 food tion, and nutrition indicators should be regularly col- price crisis highlighted the vulnerability of Yemen to lected and disseminated from government institutions sudden price spikes on the world market. Wheat pric- all the way to each household. Such information will es increased much more dramatically in domestic mar- provide early warning of further food insecurity and kets as compared with world markets. inform future humanitarian intervention. Sustainable intensification of agricultural pro- 3.4.6  Recommendations duction is required to mitigate, to some extent, the high dependency on imported foodstuffs, particular- Currently, Yemen is experiencing a very high level of ly in light of Yemen’s rapid population growth. This food insecurity and its agricultural sector is producing requires diversification away from Qat production and a fraction of the country’s needs. But improving access into high value fruits and staple foods, using variet- to food is a much more urgent priority than increas- ies that are drought resistant. The move away from ing local production as there will never be enough Qat has been official government policy for many production in Yemen to significantly reduce depen- years, but with little effect to date, perhaps due to a dency on imports. deficit of political will and strong incentives in the Due to its unstable economic and political envi- form of diesel subsidies, significantly reducing the ronment the country could become more susceptible cost of production. Production intensification-related to currency devaluations with consequent increases in programs will only start giving results after 10 to 20 the cost of imported foods. For the poorest, many of years under the best scenario, so this is a very long- who are already suffering from very severe food defi- term recommendation. cits, this will be catastrophic, as they do not have suf- The development of a policy focus on common ficient purchasing power at today’s prices. Therefore, livelihood assets that are used to device coping strat- improving their economic access to food, either through egies should be addressed under the transitional gov- increased income and job opportunities as described ernment plan. During times of crisis, the poorest and herein, or through improved cash transfers and safety most vulnerable Yemenis often turn to livestock pro- nets (as detailed in the social protection section of this duction to increase their monetary income, though the report) should be the first priorities for improving the quality and regional coverage of animal health servic- food security status of the most vulnerable. es is weak. Investment in the upgrading of public ani- Investing in women should be regarded as funda- mal health services is a prerequisite that will help poor mental cross-cutting issue for transitional development people to protect their most valuable assets. Progres- in Yemen, and crucially within the realm of food secu- sively, the policy should be informed by global success rity. Education and skills among rural women are keys stories where the private sector has been able to pro- to improving agricultural productivity, hygiene practic- vide good quality animal health services, often with es, and food security including nutrition, particularly wider coverage. At the same time, attention must also at a subsistence household level. be given to enhancing productivity of markets that sup- An effective nationwide food security information port livestock such as forage and fodder. Poor house- system, managed by the government, should be further holds turning to subsistence agriculture as a coping developed and gradually rolled out to other Governor- mechanism urgently need better access to information ates after the completion of the first baseline survey by and improved seed technology, while on a macro level, 54 Employment and Livelihoods issues surrounding land regulation, ground water gov- located in urban areas (mainly in Sana’a and Aden) ernance, and modernized irrigation techniques must rather than in camps (just 10 percent in Kharaz camp be addressed, especially as disputes in ownership and in the South). A total of 215,707 were registered by access to scarce natural resources are likely to increase December 2011. due to the displacement during conflict. In the northern Governorate of Sa’ada, there is a protracted displacement situation due to successive 3.5  Livelihoods for Refugees and rounds of conflict since 2004 between the Al-Houthi Internally Displaced People (IDPs) armed group and Government forces. While a Febru- ary 2010 ceasefire between the Government and Al- 3.5.1  Introduction Houthi continues to hold, armed clashes between the Al-Houthi and opposing tribal groups continue, with IDPs and refugees have been selected for further explo- the result that new displacement is on-going, particu- ration due to their particularly high levels of vulner- larly in Hajjah Governorate. The number of registered ability. During the crisis, the number of refugees that IDPs in the North at the end of 2011 was 312,887 com- entered Yemen reached the highest level ever record- pared to 220,994 at the end of 2010. ed, while at the same time, the total number of IDPs In the south of Yemen, internal displacement is a increased in both Sa’ada and Aden. more recent phenomenon, which began once an insur- Yemen faces three simultaneous and on-going gency came to prominence in May 2011. This has cre- scenarios: ated conflict with Government forces and resulted in There is an influx of refugees from the Horn of families fleeing the Governorate of Abyan, the major- Africa escaping drought, conflict, and human rights ity of whom settled in Aden and its surrounds. The abuses. In 2011, over 103,000 people arrived in Yemen; number of registered IDPs in the South at end of 2011 the highest annual rate since UNHCR started gath- is 150,565, of which 23,726 are in Abyan. ering statistics in 2006. Many are attracted to Yemen Refugees arriving in Yemen are permitted to work as an access point to entering other Gulf States for in the informal economy and therefore they compete work. In some cases, they hope to receive passage directly for jobs with the local population. Displace- to countries outside the region. Refugees are mostly ment also disrupts the usual livelihoods of IDPs, who also therefore need to look for work. In both cases, the influx of new workers has the potential to undercut JSEA Livelhood NGO Workshop – Society some of the small earnings paid to the host community. for Community Development in Amran 3.5.2  Livelihood Issues Affecting Refugees Hannan from The Society for Community Devel- opment in Amran that also serves Sada’a and Haj- Camp-based refugees in Yemen depend on human- jah indicated that in 2011 Sada’a enjoyed relative peace compared to the situation 2010. This is unlike itarian assistance, while those in urban settlements Amran in 2011 where the armed conflict was intense are more self-reliant. However, in both situations their in several districts and the turmoil and tension was resources are insufficient. In addition, the high unem- at the highest level. In her view women and children ployment rate in Yemen along with very high infla- suffered most; child physical disabilities, trauma tion during 2011 worsened their situation. Microfi- cases and child orphans increased. Women IDPs nance schemes and business development training suffered from violence and harassments particularly since there is no women-designated toilets in the are insufficient to respond to the increasing demand IDPs camps. from refugees. Other difficulties faced by refugees in 2011 include: 55 Joint Social and Economic Assessment • Women lost regular work as cleaners/domes- • Settle and integrate in another part of the tic workers and other ad hoc employment. country. • Lack of job opportunities for refugee men. Ethiopians lost their work in construction Under the first option, it is essential that IDPs and complained of a lack of income gener- can return in safety and that the underlying reasons ation opportunities. They also reported mis- for their displacement have been addressed. These treatment at work. reasons often involve issues related to inter-commu- • Lack of income forces families to have only nal conflict, lack of development, corruption, and the one or two meals per day, which leads to mal- absence of the rule of law. On returning home, IDPs nutrition among children. Refugees are also may find that the assets they left behind, including unable to pay housing rent. land, may have been badly damaged, stolen, or that • Children are engaged in the labor market in their homes and land are occupied, which is a source order to support their families. of new conflict. If returning home is not possible, or if IDPs do not wish to return, there is a need to identi- 3.5.3  Livelihood Issues Affecting IDPs fy long-term solutions that do not create conflict with host communities. In some cases, such solutions may Displacement typically results in the loss of housing, involve previously rural communities having to adapt land, property, jobs, physical assets, social networks to urban lifestyles. and resources. This in turn often leads to food insecu- Under all three options, access to employment and rity, increased health problems and social marginaliza- re-establishment of livelihoods, along with safety, an tion. In many cases, IDPs lack such documents even adequate standard of living, and mechanisms for res- prior to displacement; whereas the majority of IDPs in titution of housing, land, and property, is an essential the South possess personal documentation, as many criteria for IDPs to achieve a durable solution. There as 80 percent of IDPs in the North are undocument- is likely to be a need for new occupations to be iden- ed. Due to the lack of livelihood assets, few IDPs can tified and this requires training in new skills. It may afford the fees to obtain or replace this documentation. also require the provision of credit to buy productive Children may lose access to education, due to these assets and the identification of viable markets. Access documentation issues or because school fees cannot to services such as education, health, housing, and to be paid, thereby undermining their future livelihood potable water and sanitation are essential but often opportunities. In 2011, these problems were exacerbat- requires the presentation of identity cards, which as ed by the rapid and dramatic rise in basic living costs. noted above may not be possible. Having access to livelihood opportunities during dis- In an effort to reduce the burden on services with- placement is a right of IDPs and is critical for them to in host communities, several donors led by UNHCR meet the basic needs of their families. In the absence supported a number of Quick Impact Projects (QIP) of such opportunities, IDP (and refugee) women and in 2011. For example: through these, UNHCR rehabil- children find themselves at heightened risk of sexual itated six health centers, four schools, and four water exploitation, trafficking, and the use and recruitment projects. UNHCR also supported the establishment of children by armed forces or groups. Regarding dura- of a new market in Hajjah, providing better access to ble solutions to displacement, IDPs have three options: food and economic opportunity for vulnerable IDPs, as well as for members of the host-community. In all, • Return and reintegrate in their place of origin; these projects benefited some 200,000 people. • Settle and integrate in the area to which they However, short-term displacement often converts have fled; and into protracted displacement and the needs then change 56 Employment and Livelihoods Table 14: IDP Profiling Conducted by Danish Refugee Council in 2011 Livelihood issue North Yemen–Haradh North Yemen–Amran Current Livelihoods: percent percent Involved in daily labor 47 8 Support from family — 28 Involved in livestock 17 4 Casual work, e.g., Qat smuggling 5 — Small trade 4 2 Agriculture 2 22 Potential future livelihoods: Agriculture — 40 Livestock 84 — Small business/trade 39 12 Vocational training 9 — Preferred solution: Return home 77 90 Relocation 1 — Sources: Government of Yemen and JSEA Staff. from humanitarian issues to predominantly develop- beauticians, seamstresses, nurses and midwives. IDPs mental, requiring a focus on hosting communities more who applied for small business grants in Sana’a were broadly in order to address the needs of the IDPs and required to participate in small business training to of the hosting communities. The key development chal- strengthen their capacities and improve their chanc- lenges to achieve sustainable solutions for displaced es of success. Furthermore, 1,199 families benefited people include: (i) restoring access to land, housing, from small business support and/or skills and voca- and property belonging to the displaced; (ii)  rees- tional trainings in Amran and Sana’a in order to sus- tablishment of livelihoods; (iii) delivery of services tain their livelihoods during the civil unrest of 2011. comprising security, health care, education, drinking Some of the livelihoods activities with nation- water and sanitation, and other infrastructure; and (iv) al authorities were disrupted for a couple of months accountable and responsive governance, particularly due to the civil unrest of 2011, but had resumed by the at the local level, that gives voice to those in displace- end of the year. Many training institutes closed during ment or returning from displacement. the civil unrest and those enrolled could not complete their training. Also income from the skills acquired 3.5.4  Technical and Vocational Education and contracted; some IDPs sold their tool kits in order to Training (TVET) gain immediate cash. Training, both formal and informal, small business start- 3.5.5  Recommendations up, and self-employment initiatives were supported by UNHCR through SMEPS and other local NGOs through- In 2012, the Government of Yemen, in line with its out 2011. Trainings took place in Haradh, Amran, and current commitment to UNHCR should develop and Sana’a and provided over 1,000 persons with the skills operationalize a national policy on internal displace- necessary to gain employment, including as: mobile tele- ment. The policy needs to set out the rights of IDPs, phone repair service providers, mechanics, electricians, in accordance with international standards (namely 57 Joint Social and Economic Assessment the Guiding Principles on Internal Displacement) and essential criterion of a durable solution to displace- the responsibilities of the authorities towards IDPs. It ment it is important that livelihood considerations, should articulate key strategic priorities of the Gov- which should include the developmental needs of ernment towards addressing the current challenges of the hosting communities, be fully integrated into this internal displacement in Yemen. A strong focus of the national policy framework. Supporting the Govern- policy should be on creating conditions enabling IDPs ment and building policy capacity, in particular the to secure a durable solution to displacement. With Executive Unit on IDPs, to implement the policy will access to livelihood assets being, as noted above, an also will be essential. 58 Expanding Social Service Delivery 4 4.1  Social Protection This assessment will focus on the major social wel- fare mechanisms existing in Yemen, mainly the Social 4.1.1  Introduction Welfare Fund and the SFD. It will review effectiveness in terms of adequacy of the assistance to cover con- This section reviews the impact of the 2011 crisis on sumption gap, its operational efficiency, including tar- social welfare and focuses on the poorest and most geting, and its role in contributing to the reduction of vulnerable section of the Yemeni population. It exam- chronic poverty through investment in human capital. ines the existing social protection instruments and their It will also address issues of child welfare and the role during 2011. Even prior to the 2011 crisis, Yemeni’s welfare of people with disabilities. It will describe the welfare and the level of resilience, particularly among the poor, had been deteriorating. There has been a 45 Based on simulation analysis carried out by the International clear upward trend in poverty from 2005/6 to 2010.45 Food Policy Research as part of the preparation of Yemen Food Yemenis have experienced various shocks since 2008, Security Strategy found that the poverty rate had increased from such as food price increases and volatility, cycles of 34.8 percent in 2005 to 42 percent by the end of 2009, and to drought and flood, and political instability. 54.5 percent by the end of 2011. Pre 2011 Context (Baseline) Yemen’s existing public social safety and social protection instruments consist of programs that provide income assistance, training, small and micro credit, public works and community driven operations. It also includes contributory social security and pensions for public and private employees. There is no health insurance scheme, although in November 2011 Parliament passed the Health Insurance Law, which will cover those employed in the public and private sectors, while excluding those working in the informal sector, and those who are self-employed. Yemen as a tribal and traditional society still maintains a community-based social welfare protection tradition that complements public provision to some degree. Key Facts • 42.8 percent of Yemenis live in poverty (47.7 percent rural – 29.9 percent urban) • Population of Yemen: 23,153,982 (2010 Yemen Statistics Book) • Recipients of SWF social assistance: 1 million beneficiary cases (about 5 million beneficiaries) • Population of children under age of 18: 12,060,000 (UNICEF) • 22 percent of the population are child laborers under age 18 • 2 percent-6.5 percent of the population are living with disabilities (Yemen 2004 Census, 2005/6 HBS) Source: Government of Yemen and JSEA Staff. 61 Joint Social and Economic Assessment existing social welfare protection instruments, includ- the number of families in poverty has increased as a ing; labor market social protection instruments partic- result of the crisis and it is believed that a high num- ularly those providing cash-for-work schemes, social ber of these new applications are eligible for support. security and pensions and the role of community-based In 2008, due to the increase in food prices, the gov- social welfare networks. ernment doubled the amount received by SWF recipi- ents. Since then the cash transfer has ranged from YR 4.1.2  Social Safety Net Mandated to Provide 2,000 to YR 4,000 per HH per month, and is transferred Immediate Assistance on a quarterly basis, mainly through Post Offices. In remote rural areas, beneficiaries receive their payments Social Welfare Fund through SWF’s district cashiers. There are no condi- tions imposed, except having a renewed SWF registra- The Social Welfare Fund (SWF) is the Government’s tion card based on the 2008 verification survey. Bene- primary social assistance mechanism. The SWF’s main ficiaries who meet specific criteria can get an advance objectives are to ensure financial assistance for poor payment equivalent to their annual entitlement to pur- disabled or unemployed persons and help those who chase income-generating assets. can work to reintegrate into the labor market. It also Although cash assistance in 2008 was increased, aims to promote the human capital of Yemeni children it is insufficient to cope with the effects of the crisis. to break the intergenerational cycle of poverty.46 In Removals of fuel subsidies and inflated prices have 2010, the SWF had 1.046 million47 beneficiary cases. eroded the relative value of the transfer, which caused In 2011, the SWF expanded to reach 1.5 beneficiary cases, representing 6.9 million individuals in all 21 gov- 46  Social Welfare Fund Operation Manual, 2009, page 21 as cor- ernorates. As of 2012, there are 400,000 applications responded to the Law no. 38 in 2008. in the pipeline that have not been dealt with, most 47  Fourth Development Five Year Socio-Economic Plan For Pov- of which were submitted in 2011. According to SWF, erty Re-education, 2011–15. Box 4: SWF Cases as of March, 2012 • 54 percent of cases (HHs with at least 6 members) receive the maximum benefits of YR 4000; in 33 percent of these cases the main beneficiaries are women • 15 percent of cases (single person HHs) receive the minimum benefits of YR 2000; in 73 percent of these cases the recipients are women No. of Number of cases recipients in Estimated transfer Estimate the HH Total Women Women percent (YR) beneficiaries 1 223,082 162,700 73 446,164,000 223,082 2 102,908 50,789 49 246,979,200 205,816 3 87,755 51,684 59 245,714,000 263,265 4 117,261 61,826 53 375,235,200 469,044 5 160,323 79,939 50 577,162,800.00 801,615 6 819,082 273,454 33 3,276,328,000.00 4,914,492 Total 1,510,411.00 680,392 45 5,167,583,200.00 6,877,314 Source: Government of Yemen and JSEA Staff. 62 Expanding Social Service Delivery Box 5: SWF Assistance is too small to meet some families’ basic consumption needs Fatima Mohammad Hassan lives in Harat Al-Mutla’a , one of the alleys in Al-Khafji in Sana’a City. Her family consists of her three grandchildren: two grandsons and a granddaughter. Her grandchildren do not receive any education. One grandson, who is 16 years old, is paralyzed and the other, a 17 year old, is working in a variety of menial jobs, such as a construction worker, cleaning cars, or whatever jobs he finds. He is the family’s only breadwinner. Her granddaughter is 19 years old and a divorcee with an infant who also is cared for by Fatima. The family receives YR 8400 ($40) each quarter, collected from the postal office in Shumaila, and it pays YR 2000 ($9.30) a month for rent on their corrugated tin shed home. During the rainy season the roof leaks very badly. Families interviewed for this assessment, like Fatima’s, indicated that in 2011 they incurred additional expenses for electricity, water, and cooking fuel. In the opinion of an Al-Khafji community leader (Al-Akel), who is himself a SWF recipient, the SWF stipend, even though small, makes a difference to the lives of the poor, particularly as it is received every three months; “it is like a feast when the money arrives, poor families can buy wheat flour, cooking oil, and other foodstuff.â€? Source: Government of Yemen and JSEA Staff. livelihoods to deteriorate. Furthermore, since payments the 2011 crisis led to a decrease in institution building, must be collected at the Post Office, many beneficia- technical assistance, and funding to SWF. ries must either rent high-cost transport or pay a mid- Despite its national coverage there are still eligible dleman to collect their entitlements. poor who do not receive assistance (see Annex Chap- The 2011 crisis triggered additional price hikes. ter 4). To address this, removing barriers that might Public water supplies, electricity, and cooking fuel discourage applications, such as the need for certifi- became scarce due to interrupted supplies. Water charg- cation by community leaders, could be considered. es, lighting, and cooking fuel costs increased sharply. Alternatively, SWF must hold community leaders to In urban areas and neighborhoods where armed con- account if they misuse their power. On the other hand, flict occurred, such as in Sana’a and Ta’iz, families had SWF’s accountability should also be strengthened, to bear the costs of moving from their homes to safer and as a first step, an effective and transparent Mon- locations, either in other neighborhoods or to move itoring and Evaluation function, as well as an appro- back to their home villages and towns. priate complaints and grievances mechanism, should The SWF reaches all governorates in Yemen and dur- be put in place. ing the peak of the 2011 crisis SWF transfers continued SWF has improved its targeting approach and its with the exception of two governorates that were inac- selection of beneficiaries. The 2005/6 HBS showed cessible due to military and political conflicts, name- that SWF had poor targeting: 45 percent of beneficia- ly Abyan and Sa’ada, along with several districts in ries were deemed to be non-poor. In 2008, SWF adopt- Amran and Sana’a. However, some recipients managed ed a proxy means-tested targeting system. This divides to receive their entitlements through the nearest SWF potential recipients into 6 categories from A to F, where district cashier or Post Office. It should be noted that categories A and B are very poor, category C is poor, 63 Joint Social and Economic Assessment Box 6: Potential for Indexing the SWF Stipend In 2008 SWF stipends were doubled as a response to food price increases. The overall CPI for the years 2008, 2009, 2010 and 2011 was 19 percent, 5.4 percent; 11.8 percent and 19.5 percent respectively (IMF 2012). There are no recent poverty updates that estimate the poverty gap and how much a poor person should receive to be lifted out of poverty. Descriptions Current situation Indexed per CPI overall Transfer per individual per month (minimum benefits) 2000 2,853 Transfer per household per month (maximum benefits) 4,000 5,604 Current average transfer per month at end of 2011 3,421 5,023 Number of SWF cases as end of 2011 1,510,411 1,510,411 GDP (000 YR) 4th DPPR 2011 (estimated) 7,696,396,000 7,696,396,000 National budget (000 YR) 4th DPPR 2011 (estimated) 2,372,595,420 2,372,595,420 SWF budget Transfer in YR (excluding administrative costs) 5,167,116,031 7,586,610,654 Social transfers as percent of GDP 0.67 0.99 Social transfer as percent of national budget 2.18 3.2 Source: Government of Yemen and JSEA Staff. category E is transitory poor and F is non-poor. In the Conditional Cash Transfers (CCTs) same year, they undertook a comprehensive re-certi- fication process of all actual beneficiaries, as well as Education. In 2010, due to increasing food prices, the those in the pipeline. This revealed that categories E&F European Union agreed to support SWF to raise the (ineligible) made up 25 percent of their beneficiaries. purchasing power of its poorest beneficiaries, main- The distribution of these categories (E&F) varies from ly those in categories A and B who have school-aged one Governorate to another with high concentrations children. The additional cash is tied to the sustained in Al-Mahrah, Sana’a City (Al-Amanah), Dhamar and enrollment of their children in school. SWF monitors Aden (see Annex 2). attendance records of the participating schools. Ten SWF’s challenge now is to remove these ineligible districts in Ta’iz were selected jointly by the EU, SWF, recipients, but this has so far proved to be too politi- and MOE to target 10,000 families including around cally sensitive in some areas, and therefore little prog- 50,000 children. ress has been made. The 2011 crisis delayed action in The major shortcoming of the CCT is that it is this regard. It is very important to address this issue, dependent on short-term donor funding, with a com- because the presence of ineligible persons on the roles mitment period of just two academic years, as it is prevents those in need from accessing the system and a pilot project. The management capacities of the burdens the institutional capacity of SWF. The adop- SWF, already overstretched, would also not be able tion of the Social Welfare By-Law in 2010 offers options to handle the additional procedural and administra- to address the issue over time. tive requirements of a CCT program on a national scale at this point in time. A future challenge will be 64 Expanding Social Service Delivery Box 7: A Snapshot of CCT Program in Taiz City Ahmed A. A., a food vendor, has three girls and three boys, all of school age, and lives in Taiz City. The girls attend school thanks to the CCT program, but the boys do not. He said that he couldn’t enroll the three boys in school because there is no participating boys school in his neighborhood and he has high living expenses, including monthly house rent of YR 18,000. He was able to buy a small cart, from which he sells cooked potatoes, with an advance payment of one year’s non-conditional cash transfer from the SWF. He said that it has been four months since he was able to buy a gas cylinder, and is using wood and charcoal to boil the potatoes and to cook for the family. He uses the CCT cash to cover school related expenses, to pay rent, to buy basic food items, and to give a daily allowance to the girls when they go to school. Ahmed’s experience is typical of families participating in the CCT pilot. During an on-site visit in late January 2012, UNICEF questioned social workers about their role in the CCT program, and whether they conduct outreach visits to homes. They explained that they call parents to the school, as most students, especially adolescent girls, are embarrassed by their poor living conditions. The social workers provide help to all school students, and they have not received additional training as part of the CCT program. Location: Al-Durrah School for girls, Wadi Al-Madame, Taiz City. Source: UNICEF 2012 to extend the outreach of the program to rural areas Institutional Capacities while maintaining robust monitoring an oversight capacity. Selected schools are required to employ In 1998, the Social Fund for Development started its social workers to monitor children’s attendance and first phase of organizational support to the SWF with each child’s performance. This demands institution- the development of a management information system al capacity, as well as coordination between the SWF (MIS). At that time, SWF had 35,000 beneficiary cases and the Ministry of Education. Also, children with and payments were often delayed for several months. learning difficulties may be unable to achieve their With the establishment of an MIS, SWF’s efficiency in performance targets. issuing payments increased. The MIS now contains the Health and Nutrition. The World Bank is initiating records of 1.5 million beneficiaries including recipient’s a pilot program focused on conditional cash transfers pictures, fingerprints, and other information. tied to health and nutrition indicators. The project is In 2002, the EC launched its first project to sup- to be jointly implemented by SWF, the Social Fund for port the institutional capacity of the SWF focusing Development and the Ministry of Health, with techni- on policy reform and institutional capacity-build- cal support from UNICEF. ing to improve SWF’s effectiveness and efficiency. These education and health targeted cash trans- In 2008, the World Bank also launched a capacity fers top-up the small transfers available under the building project and introduced proxy means-testing. non-conditional program (as previously described), As such, SWF has been able to benefit from donor while also promoting improved education and child support despite the difficult environment it has been health. As the institutional capacity of the SWF is working in. Several donors now support SWF, as it enhanced the conditionality of cash transfers offers is the only national social safety net program that is to sustain the assistance while aiming for results that mandated to provide immediate cash assistance. In can be monitored. addition, this legal operating framework has been 65 Joint Social and Economic Assessment greatly strengthened with the 2010 adoption of the identity. Birth registration is a fundamental means of social welfare By-Law. securing these rights for children and is closely linked A source of concern is that the cost of identifying to the realization of other children’s rights: protection and monitoring beneficiaries in rural areas is high in from early recruitment into the armed forces, protection relation to the level of transfer. A recent assessment from early marriage and protection from judicial mis- commissioned by the EC provided a detailed plan with judgment. In Yemen, low birth registration is an impor- costing to strengthen this aspect of monitoring. This tant factor that limits access of children and families to assessment estimated the cost of monitoring at 0.6 social services, hinders effective planning for poverty percent of SWF’s budget. While the assessment con- alleviation and social services programs, and directly cluded that cash transfers do reach the beneficiaries affects protection of children, as only 22.3 percent of chil- in Yemen, up to 30 percent of SWF assistance is made dren under five in Yemen have their births registered.50 through their cashiers, which could induce practices such as small payment deductions. In terms of effi- 4.2.2  Child Labor ciency, the assessment found that SWF has room to increase its efficiency and to improve its monitoring Child labor—both a cause and a consequence of pover- and evaluation by: ty—damages a child’s health, threatens education and leads to further exploitation and abuse. Importantly, it • Involving civil society organizations in identi- violates Yemen’s commitments under the MDGs, CRC, fying and monitoring cash transfers. and International Labor Organization Conventions 138 • Establishing a system to properly receive and and 182, as well as the World Fit for Children docu- handle complaints and grievances. ment. Taking children out of school and using them as • Raising awareness, including within SWF’s laborers is one of the coping mechanisms that impov- staff, of the beneficiaries’ right to present sub- erished families and families whose men are other- stantiated complaints. wise engaged in conflict have adopted in Yemen, and in particular in response to the 2011 crisis. Common- 4.2  Child Welfare ly, such children find themselves working in Qat pro- duction where, in addition to violations of their rights Poverty and the cycle of conflicts exposed children in to education, they are exposed to harmful pesticides. Yemen to heightened risks and vulnerabilities through- In the conflict-affected northern governorates, 29 per- out the crisis. Prior to 2011, one-third of Yemen’s 12 cent of interviewed children had worked for pay within million children were considered vulnerable.48 The the previous three months, 14 percent of whom were 2011 crisis Yemen has made the situation of the most between 8–14 years of age.51 Although limited in size, vulnerable children even more precarious, exposing the percentage is slightly higher than the national aver- them to various forms of violence, abuse, and exploi- age of 22.7 percent,52 while in Al-Jawf, an estimated tation, including grave child rights violations, child labor, child marriage, child trafficking, irregular cross 48  Yemen Social Protection Strategy, 2008, page 45. border movements, and smuggling.49 49  Secondary data review for Yemen. OCHA, page 35, 1st September–15th. 4.2.1  Low Birth Registration 50  Yemen Multiple Indicator Cluster Survey (MICS), 2006. 51  “Interagency Comprehensive Child Protection Assessment in conflict affected governorates of North Yemen (Sa’ada, Hajja, The Convention on the Rights of the Child states that Al Jawf, Amran & Sana’a Governorates) â€? Yemen Child Protec- every child has the right to a name and a nationality and tion Sub-cluster, August 2010. the right to protection from being deprived of his or her 52  Yemen Multiple Indicator Cluster Survey (MICS), 2006. 66 Expanding Social Service Delivery 35.6 percent of families are engaging their children in this center responded that overcoming economic hard- income generating activities or sending them out in ships of families was one of the main reasons for their search of work.53 trek into Saudi Arabia.61 4.2.3  Grave Child Rights Violations, Including 4.2.5  Child Marriage Use and Recruitment of Children by Armed Forces and Groups Negative household coping mechanisms to offset the shocks of 2011 also affected girls, through early mar- It is reported that children constitute twenty percent of riage. While a deepening sense of poverty as a result Al-Houthi and 15 percent of the pro-government mili- of rising food, fuel, and water prices drove increas- tia. Over 844 children were directly harmed during the ing numbers of families to engage in this practice, 2011 conflicts, including 159 children killed (138 boys conflict and the displacement it caused further exac- and 21 girls) and 363 children maimed (312 boys and 51 erbated this trend. When asked, approximately one girls) through live bullets or ammunition and hundreds third of IDP caregivers revealed their willingness to of other children who were affected by teargas suffo- marry their under-age girls. There are a variety of cation in the main cities of Sana’a, Aden, and Ta’iz.54 reasons for this response, ranging from strong incen- In 2011, reports indicated that the recruitment of thou- tives to reduce the financial burden of one addi- sands of children was becoming a livelihood option tional household member, to feelings of obligation for many children under the age of 18. For example, toward host families who are rewarded by marriage in Amran, it is reported that school children dropped to (IDP) girls.62 out to join the army or rival armed groups.55 Concern over the widespread use and recruitment of children within the armed ranks of Government and anti-Gov- 53  “Draft Vulnerability Assessment in Al-Jawf,â€? October 2011, ernment forces, such as the National Security Forces IOM. 54  20 percent of Al-Houthi and 15 percent of the tribal militia and the Republican Guards and also with the opposi- affiliated with the Government, Al-Jaysh Al-Sha’bi, are children. tion‘s breakaway armed group of General Ali Mohsen‘s “Children and Armed Conflict,â€? Report of the Secretary General First Armored Division and extremist groups such as (A/65/820 – S/2011/250), 23 April, 2011 page 46. 55  A rapid assessment conducted by Social Fund for Develop- Ansar-Al-Sharia,56 continued during 2012, as reported ment on the impact of 2011 crisis, November, 2011. by the Human Rights Council.57 56  2012 Yemen Humanitarian Response Plan, United Nations. 57  Report of Human Rights Council (A/HRC/19/51), issued on 4.2.4  Child Trafficking/Smuggling 13 February 2012. 58  A rapid assessment conducted by Social Fund for Develop- ment on the impact of 2011 crisis, November 2011. The study Channeling children into illegal migration is a coping was conducted in 20 governorates. strategy of families faced with increased living expens- 59  “Interagency Comprehensive Child Protection Assessment in es.58 This is not a new practice but reports indicate that conflict affected governorates of North Yemen (Sa’ada, Hajja, it has intensified in 2011. In a study released in 2010, Al Jawf, Amran & Sana’a Governorates)â€?, Yemen Child Protec- tion Sub-cluster, August 2010. in three northern conflict-affected governorates fami- 60  Yemen is one of the major “sourceâ€? countries of trafficked lies were using coping mechanisms, including remov- children to Saudi Arabia (UNICEF 2011). ing children from school, engaging them in labor, and 61  UNICEF field monitoring assessment for the center of Haradh sending them illegally into neighboring countries.59 In for the period from first of January to end of July 2011. 62  “Interagency Comprehensive Child Protection Assessment in the north, the protection center in Haradh for victims conflict affected governorates of North Yemen (Sa’ada, Hajja, of child trafficking has documented over 400 child vic- Al Jawf, Amran & Sana’a Governorates)â€?, Yemen Child Protec- tims.60 A total of 40 percent of the Yemeni children in tion Sub-cluster, August 2010. 67 Joint Social and Economic Assessment 4.2.6  Decreased Sense of Security and address essential case management activities and fol- Children’s Psychosocial Wellbeing low up on the most vulnerable children. The traditional system focuses responsibility on In every needs assessment or monitoring effort con- government and NGOs to run social care centers in ducted among children in 2011, it is clear that chil- the governorates’ capital cities. There are donor ini- dren across the country have experienced high lev- tiatives to establish community-based, child protec- els of distress or were otherwise emotionally affected tion and safeguarding groups in some areas, includ- by the 2011 conflicts. At the peak of the conflict in ing IDP camps, to report child abuse and violence, but September 2011, 54.8 percent of children queried in these are limited. Exacerbating this difficult situation, a regular household monitoring project in Sana’a funding that was available to the sector in charge at reported a fear of playing outside their homes, com- the Ministry of Social Affairs and Labor (MoSAL) was pared to 15.8 percent in Al-Hodeidah. While the fig- diverted to respond the needs of the IDPs from Sa’ada ure obtained from Al-Hodeidah is lower than the one and Abyan. in Sana’a, it is important to note that children across In spite of government’s investment in high edu- the country were affected by conflict, regardless of cation to ensure available social work capacity (under whether they were directly in the line of fire, or liv- the jurisdiction of the Ministry of Education), oppor- ing in relative safety. Parallel to this, the percentage tunities for social work graduates to find employment of children suffering from nightmares was reported within the Ministry of Social Affairs and Labor is at 13.6 percent in Sana’a and at 9.4 percent in Al- extremely limited. However, social workers are available Hodeidah. In the conflict-affected northern governor- in schools with a mandate to deal with vulnerability ates, one in three children reported feeling unsafe, issues of children (see the sub-section on Conditional sad or frustrated, suffered from diminished hope, fear, Cash Transfers in Section 4.1.2), but with limitations anger, and hatred as well as experiencing difficulty on capacity, because there is no referral system to deal sleeping.63 Among the IDPs of Aden, over 90 percent with cases beyond the school setting for those outside of families interviewed indicated that their children the school system. Moreover, there is no outreach to have experienced a wide range of psychosocial prob- vulnerable children in rural areas, where most live, or lems including disobedience, problems with peers, to urban children not enrolled in school. problems in sleeping, and others, and the majority of children are suffering from lack of adaptation to 4.3  Welfare of People with the new situation, causing many problems and trou- Disabilities ble for them and their parents.64 The disabled are among the most vulnerable segments 4.2.7  Under Funded Child Welfare Sector of society and their livelihoods may have further dete- riorated as a result of the 2011 crisis. It is estimated Major gaps exist in Yemen’s child- and gender-rele- that the 2011 armed conflicts in affected regions have vant social policies, regulations, and recourse mech- increased the number of the disabled as a result of anisms. Historically, there has been insufficient fund- ing for the social welfare sector in order to expand its 63  “Interagency Comprehensive Child Protection Assessment in presence beyond the capital cities of the governorates, conflict affected governorates of North Yemen (Sa’ada, Hajja, as well as to effectively deliver services and reach vul- Al Jawf, Amran & Sana’a Governorates)â€?, Yemen Child Protec- tion Sub-cluster, August 2010. nerable children in remote rural areas. Almost all the 64  Initial rapid assessment conducted by UNICEF and Child social defense and social welfare expenditure is towards Protection Sub-Cluster members with 220 IDPs in Aden on the human resource costs with very limited funds left to impact of the Abyan displacement, June 2011. 68 Expanding Social Service Delivery increased laying of landmines and improvised explo- where they are exempt from paying tuition fees. It sive devices; however, there are no statistics that illus- also requires that schools be made accessible to per- trate the magnitude of such incidents. Armed conflicts sons with disabilities. It is not clear to what extent also produce psychosocial trauma resulting in disabling this law is implemented. behavior, if left untreated. The Disability Fund (DF), established in 2002, is a The statistics from the 2004 Census and 2005/6 Government-funded instrument, which provides assis- HBS, show that the disabled in Yemen range from tance for health care, education, recreational activities, 2–6.5 percent, though it is believed that families may and assistive devices (e.g., hearing aid, artificial limbs, shy away from reporting disabled members. There are and medications). Students can apply for a scholar- many causes of impairment in Yemen ranging from acci- ship to cover accommodation, food, and transport. The dents, conflict, low immunization rates, consanguine- financial resources of the DF fluctuate as they arise ous marriages, and poor maternal care.65 In reference from hypothecated taxes raised on the sale of cigarettes to children, it was reported that a quarter (24.5 per- and air tickets. The Disability Fund provides generous cent) of children two to 9 years of age had at least one support regardless of the type of disability, age, or eco- disability. The disability most commonly reported was nomic situation of the applicants. It has five regional delay in sitting, standing or walking (9.3 percent) fol- offices covering Ibb, Ta’iz, Aden, Hadhramout, and Al- lowed by being unable to understand instructions (six Hodeidah. It has attempted to reach rural areas, but percent) and unable to be understood (six percent). currently their service is biased toward the urban pop- There were no major differences found between chil- ulation, particularly in Sana’a City (accounting of 48 dren living in urban or rural households. Mother’s or percent of the Fund’s resources).69 The DF carries out caretakers in poorer households reported higher lev- need assessments and is available for disabled men, els of child disability. In the poorest households it was women, and children. However, men take the largest estimated that 29.4 percent of children had at least portion of the benefits. one disability compared to less than 20 percent in the The number of beneficiary cases from the DF ser- two richest wealth quintiles. Among children three to vice reached 185,000 in March 2012. Along with the nine years of age it was reported that 7.4 percent did Red Cross, it extended its services to camps that serve not have normal speech with little variation among the IDPs from Sa’ada.70 The DF has no data on persons background variables. A quarter of mother or caretak- disabled as a result of conflict in 2011 or prior to that ers with a two-year-old reported that their child can- date, as it is politically sensitive to record such infor- not name at least one object.66 In Sa’ada, 1,783 chil- mation. However, according to the Director, most dis- dren with physical disabilities were registered by the abilities are a result of car accidents, accidents at work, Handicapped Association: 50 percent of the disabili- and firearm incidents. ties were attributed to the conflict.67 The MoSAL is responsible for protecting the rights of persons with disabilities. The Government’s Social 65  Fund for the Care and Rehabilitation of the Disabled Institu- Fund for Development and the Fund for the Care and tional Assessment, OMP, 2010, page 4. 66  UNICEF. Multiple Indicator Cluster Surveys (MICS), 2006. Rehabilitation of the Disabled or the Disability Fund 67  “Interagency Comprehensive Child Protection Assessment in (DF), administered by the MoSAL, provide services conflict affected governorates of North Yemen (Sa’ada, Hajja, and support more than 120 NGOs and care centers68 Al Jawf, Amran & Sana’a Governorates)â€?, Yemen Child Protec- to assist persons with disability. By law, five percent tion Sub-cluster, August 2010. 68  According to the director of the DF in a meeting on 28 March of government jobs should be reserved for persons 2012. with a disability, and the law mandates the accep- 69  Yemen Social Protection Strategy, 2008. tance of persons with disabilities in universities, 70  According to the director of the DF. 69 Joint Social and Economic Assessment 4.4  Cash for Work Safety Net situations by initiating operations for a shorter dura- tion through labor-intensive works that are technical- The Social Fund for Development and the Public Works ly simpler and have a shorter implementation cycle. Project are two important social safety net instruments In this way, the LIW can operate as a core productive in Yemen. Both provide pro-poor, medium to long-term safety net program that could be scaled up (and down) development opportunities that assist poor households in response to shocks of various kinds (such as a food to manage economic shocks. price crisis or localized crop failure).71 4.4.1  Community Based Labor Intensive 4.4.2  Targeting Effectiveness Works The community-based cash-for-work modality is In 2008, The Social Fund for Development implement- designed to work directly with poor local households ed a community-based cash-for-work (CfW) program rather than contracting private contractors who are targeting the poorest areas. The program was designed not prepared for such implementation approaches to respond to the 2008 food price increase and has con- and usually free to select non-local laborers. It tar- tinued since then. gets the transitory and chronically poor. The target In 2010, community-based labor intensive works workers are in rural areas, as well as unskilled and (LIW) became one of the main programs of SFD to semiskilled laborers in urban areas who queue at serve as a productive safety net. The design aimed certain locations waiting for a day job. Wages are at inducing a longer-term impact by targeting most set at about 10–20 percent lower than the prevail- impoverished sub-districts in the country for a period ing market rate of laborers in the sector of construc- of three to five years, to build more sustainable live- tion, so as to attract most needy laborers and not to lihoods. This includes assisting communities during impact on commercial employment. This program dry seasons to provide income, and at the same time has been implemented in 15 out of Yemen’s 21 gov- to build community assets, for example: constructing ernorates so far. and maintaining agricultural land and terraces; pro- viding water harvesting facilities; and developing irri- Social Fund for Development Phase IV Project Document, 71  gation schemes. SFD is also responsive to emerging 2009, page 45. Box 8: Multiplier Effects The cash-for-work program aims to provide immediate assistance through payment of wages. It is expected that while the income received assists families to by food and pay off debts, savings would be used to buy productive assets such as livestock, sewing machines, etc. The works undertaken construct local community-owned assets, such as roads and water storage facilities. Description 2009–2010 2011 Total No. of projects/communities benefited (more than one village) 98 181 279 Average transfer per HH (excluding operating costs) in US$ $700 $600 No. of households benefitted 16,841 27,318 44,159 No. of work days created 898,711 1,377,629 2,276,340 Source: Government of Yemen and JSEA Staff. 70 Expanding Social Service Delivery 4.4.3  Feasibility at the Time of Crises program for empowerment of local governance. The intention is to engage 80 out of Yemen’s 333 districts The CfW modality had proved to be an effective from 2011–2015, to build their capacity. The target is approach during the 2011 crisis. While 23 percent of for 40 districts to be able to implement development overall SFD projects were suspended, only three per- interventions in their areas. cent of the CfW projects were stopped during the cri- sis. These projects use predominantly locally sourced 4.4.5  Infrastructure for Service Delivery materials and labor so communities have a strong incentive to ensure their continuation. Both SFD and PWP are creating jobs opportunities Adequacy: The cash for work program transfers through implementing infrastructure for basic servic- an average of US$600 per household per interven- es delivery. These works include health and educa- tion. This program is targeting the most vulnerable tion facilities, water, and rural roads and other target- and this amount is deemed to be sufficient to com- ed infrastructure schemes. pensate households for a certain time during a down- The events of 2011 decreased confidence among turn of the jobs market, and to, sometimes, induce some donors, and led to decreased or suspended fund- multiplier effects. ing to both SFD and PWP. For example, in 2011 PWP disbursed US$42 million, which is 53 percent of the 4.4.4  Instruments in Place original budget and SFD disbursed US$132 million, which is 80 percent of their disbursement plan. Other This community-based LIW program has been in place reasons for low performance include: scarcity of fuel, since 2008 and proved to be effective in assisting house- increasing building material prices and deterioration holds to cope with the effect of the crisis by increas- of security. It is important to note that both SFD and ing their resilience. The findings from evaluations indi- PWP continued to implement projects and to disburse cate that this program is highly targeted. The transfers funding throughout Yemen during the crisis, with the are used to smooth basic consumptions and to repay exception of areas of armed conflict. debts. Provided that funding is available, SFD is plan- ning to increase CfW’s beneficiaries close to a cumu- lative total of 100,000 households or approximately 670,000 persons by the end of 2015. Box 9: Overview Currently, this program is heavily dependent on donor funding, which affects its sustainability. Since In 2011, 72,773 work/months were created by 2006, the government of Yemen has allocated US$20 the Public Work Program (PWP) activities. PWP million annually to implement labor intensive works created more employment opportunities with fewer investments than in 2010. This results from activities; however, it is not clear if such allocation implementing projects with high labor content, would continue given the Government’s budgetary con- including street pavement. Similarly, SFD also gave straints. The other challenge is to increase the cover- priority in 2011 for projects with high labor content. age of this program countrywide so that it becomes— eventually—an integral part of a national social safety Description PWP SFD umbrella. Yemen is going through cycles of shocks and No. of communities 298 700 benefiting such interventions are becoming increasingly impor- No. of work/months created 72,773 210000 tant. In the long term, local governments could be in Source: Government of Yemen and JSEA Staff. charge of implementing the cash-for-work labor inten- sive interventions. Currently, SFD is implementing a 71 Joint Social and Economic Assessment 4.5  Social Security and Pension one percent for accident insurance. The benefits pro- vided under this scheme are: Four formal pension funds provide old age income pro- tection and insurance against work injury, disability, • A minimum (or safety net) pension for con- and death to fulltime workers from the civil service, tributors of 15 years, currently at YR 20,000 military, police, and policyholders in the private sec- per month; tor. This limited range of pensioners does not include • A benefit calculated on the basis of final sal- the poorest segments of society.72 ary and number of years of service; All four pensions are pay-as-you-go defined con- • Disability insurance for employees or their sur- tribution plans and provide a safety net component by vivors who have completed at least one month setting a minimum pension. While it is considered a of employment; and generous pension, because it provides 100 percent of • The replacement rate of the pension varies salary at retirement, inflation and limited indexation in from 43 percent for the minimum eligible peri- the civil servants’ scheme—or no indexation whatso- od of 15 years service up to 100 percent after ever in the private sector scheme—can quickly erode 35 years of service, which is reflected in the the purchasing power of such a pension.73 It is believed following formula: final month’s salary mul- that the livelihoods of both lower-income and middle- tiplied by the number of months of contribu- income groups have been affected.74 tion divided by 420 months. It is suggested that the 2011 crisis has impact- ed the beneficiary groups of these funds. The recipi- 4.5.2  The General Corporation for Social ents generally consist of widows, elderly people, and Insurance (GCSI) orphans who may have limited other sources of liveli- hood to compensate for their losses. Also, funds were The number of people enrolled as of end 2011 is 170,000 impacted by the 2011 events, particularly private sec- and the number of pensioners and survivors is around tor funds, which experienced high turnover as many 8,000. The disability/insurance component of the business and self-employed people stopped their con- employer’s contribution is often not paid and there- tributions. The time and scope of this study does not fore some private sector employees are not covered in allow for an assessment of the depth of this impact. the event of disability/death. The basic parameters of However, Section 4.5.1 and 4.5.2 describe two pension the public sector scheme described above also apply to funds and the challenges they are facing. this private sector fund with the following differences: 4.5.1  The General Authority for Social • The employees’ contribution amounts to six Security and Pensions percent of their wage and the employers’ con- tribution amounts to nine percent of the wage. All civil servants, public enterprise employees, and • Replacement is calculated based on the aver- their administrative units are required to contribute age salary of the last five years or the final sal- to General Authority for Social Security and Pensions ary, which is lower. (GASSP). It currently has around 560,000 registered members and 108,000 pensioners and pensioners’ sur- 72  Food Comprehensive Survey 2010, WFP pages 53–54. vivors. The contribution is based on the salary of the 73  Yemen Social Protection strategy 2008, page 34. employee. The employee contributes six percent of their 74  Introductory statement by Mr. Al-Shatter, Deputy Minister of wages and the employer an additional six percent plus Planning, March.19, 2012. 72 Expanding Social Service Delivery • No benefit adjustment—in the public pension information system in place. Contributors the benefits are adjusted by 50 percent of the should be registered with the Ministry of Civil value of any salary increases granted to active Service. civil servants. • A recent actuarial study suggested that to keep the public insurance out of deficit by 2028, the 4.5.3  Challenges: Public Sector Pension contribution has to increase from the current 12 Scheme percent to 24 percent, everything being equal. The public sector pension scheme is costly, not well 4.5.4  Challenges for the General Corporation balanced, and financially threatened: for Social Insurance • The benefit structure, which bases the pen- The private sector retirement suffers especially from sion benefits on the last year of earnings, pro- a low coverage: vides incentives for employers to promote an employee prior to retirement; • Dealing with large informal sector with high • Survivor benefits to future generations are turnover; extremely costly; • Contribution could be affected by economic • Investment strategies yield relatively low rates shocks and crisis. For example, in 2011 many of return; businesses and the self-employed stopped • Inability of the pension authority to identi- contributing; fy individual contributors since there is no • Low subscription rate for eligible private sector employees, and this excludes the self-employed who are the largest single component of the private sector workforce; Box 10: Pensions paid by General Authority • Need to improve its management informa- for Social Security and Pensions tion system. • Fifty-eight percent of pensioners fall in the minimum wage category between 20–30 Both funds have to work in an environment where thousands riyal, which is approximately birth and death registrations are limited and identifica- US$100–150; tion cards can be manipulated. It is difficult to verify • Only two percent receive more than 100,000 the legal documents issued and the pensions’ transfers riyals which is about US$500. may continue to be disbursed even after the death. To No. of eliminate subscribers taking an early retirement, it is Monthly entitlement in pensioners/ that age be the only determining factor for retirement: Yemen Riyal survivors Percent rather than the current practice, which is years of ser- 20,000–30,000 62077 58 vice or target age (whichever is first). 31,000–50,000 28212 27 51,000–70,000 9197 9 71,000–100,000 4692 4 4.6  Community-Based Social More than 100,000 2262 2 Transfers Total 106,440 100 Source: Government of Yemen and JSEA Staff. In a low-income country like Yemen, informal and pri- vate transfers are important. It is believed that private 73 Joint Social and Economic Assessment Box 11: Pension paid by General Corporation for Social Insurance • Sixty-seven percent of pensioners/survivors fall in the category of the minimum wage between 20,000 Riyal which is less than US$100 • Women are about four percent of all pensioners Pensions categories in YR Males Females Total Percent Up to 20,000 4176 178 4254 67 20,001 to 50,000 1255 44 1299 21 50,001 to 100,000 389 16 405 6‑ 100,001 to 200,000 167 11 178 More than 200,001 87 4 91 3 Total 6074 253 6327 100 Source: Government of Yemen and JSEA Staff. transfers, social networks, and CSOs were important as storing and marketing their products, helping farm- instruments of support to the poor during the 2011 cri- ers getting agricultural inputs (seeds, fertilizer, etc.) at sis. Consumption credit was still available; however, reasonable prices, following up with authorities to pro- it became less accessible. Remittances and consump- vide diesel fuel (for farmers), getting loans to fisher- tion credit are assessed in Chapter 3.4 Food Security. men (as in Hadhramout) for fuel/emergencies (to be repaid after the products are sold). 4.6.1  The Role of Civil Society Organizations (CSOs) 4.6.3  Provision of Food and Services to Poor People The role of private and civil society organizations is important, especially with the scarcity of public resourc- Focus group discussions indicate that large charities es. Around 17 percent of the 477 households inter- distributed food and clothing to the poor and provid- viewed as part of a study75 conducted in 2011, indicat- ed health services. One of Yemen’s largest charity foun- ed that they received transfers from charities and CSOs. dations indicated that the monthly allowance it trans- In a rapid study on the impact of 2011,76 CSOs ferred to the poor tripled in 2011. “Alms giving during played a role in varying degrees. The study reveals the Ramadan were even extended to the families of public positive role of CSOs in providing livelihood support, employees that are supposed to be middle class, but including provision of financial assistance, food, and the hardships of 2011 reduced them to poverty.â€?77 It is health services. International agencies have extended believed that charitable works of the largest NGOs in the their support to IDPs through local NGOs particularly country assisted in mitigating the impact of the crisis. during intensified conflicts. 4.6.2  Cooperatives Assisted their Members 75  A survey in 15 Governorates as part of the assessment of to Access Fuel and Needed Inputs Social Fund for Development cash-for-work programs. 76  A rapid assessment conducted by Social Fund for Develop- ment on the impact of 2011 crisis, November, 2011. Agricultural and fisheries cooperatives provided vari- 77  Meeting with Abdulwasa Hayel Saeed, a member in the board ous kinds of support for farmers and fishermen, such of trustees of Al-Saeed Foundation, on April 5, 2012. 74 Expanding Social Service Delivery In Hadhramout Governorate, charities were active social harmony, emphasize positive norms, and pro- to provide poor families with services to mitigate the mote social cohesion. The political polarization led to crisis. These charities benefit from well-to-do migrants decrease security, increasing with various degrees of who raise funds for poverty alleviation and to provide intensity. health and education workers. Some NGOs were active in providing financial support to needy families, sup- 4.7.1  Deterioration of Security port to IDPs, care for orphans, and in appealing for social cohesion. The deterioration of security correlated to the appear- In Al-Dalea, political leaders established “peo- ance of checkpoints along roads between governor- ple committeesâ€? to follow-up receipt of the rationed ates. Sabotage of oil pipelines increased exponential- diesel fuel and then supplied it at pre-crisis prices to ly (40 incidents) by late 2011 compared to just one in ensure that the cost of water trucks and taxis did not the two years prior to the crisis, according to authori- increase. They also assisted in securing communi- ties. In governorates such as Al-Mahawit, Amran, and ties and reducing excessive rents for displaced fami- Raima political partisanship was so deep that it divid- lies. People’s Committees were established in urban ed the authorities at all levels, from the highest down areas, though their role was limited and sometimes to local authorities. Security deteriorated to varying politically driven. degrees, manifested by road gangs extorting and rob- bing travelers and levying illegal tolls on oil tankers 4.6.4  Supporting Humanitarian Actions and cars carrying Qat. Illegal drug smuggling increased in an unprecedented way. In Aden, Lahj, Amaran, Hajja and Sa’ada, the num- ber of civil societies increased to provide services to 4.7.2  Increase in Domestic Violence IDPs. International humanitarian agencies and inter- national NGOs have relied on local NGOs to provide In urban centers, there has been an increase in the services to IDPs. divorce rate and in domestic violence (Dhamar/Ibb) as a result of decreasing income and political disputes 4.7  Social Fabric within families and among co-workers. Programs sup- porting organizations providing legal protection to The 2011 crisis has without doubt divided the country. abused women were very active during the period of The tension has varied according to geographical loca- conflict. In other urban centers like Al-Hodeidah City, tion, social norms, urban vs. rural, and distance from there was increased tension between people due to the centers of tension. The Yemen Country Social Analysis economic crisis, loss of jobs, fuel shortages, and price underlined that the gap between rich and poor is wid- increases. In most towns there has been increased evi- ening, along with the concentration of economic and dence of small weapons being carried. political power, and the weakening of the traditional systems of social cohesion, governance and account- 4.7.3  Increased Tensions between Residents ability, without them being replaced by yet function- and IDPs ing “modernâ€? mechanisms. A rapid assessment study conducted by SFD at the end of 2011 found general In Aden/Lahj, tensions increased between IDPs and consensus around the negative impact of social and residents. In addition, increased drug use among youth political tension on all areas such as agriculture, invest- has been attributed to unemployment and social exclu- ment, and other means of livelihood. There is a need sion. Interviewees mentioned that thefts are now occur- for intervention especially in activities that restore ring weekly (as opposed to rarely before) committed 75 Joint Social and Economic Assessment by residents (as opposed to outsiders). An increase in Moving the SWF from being a means of surviv- vandalism and destruction of property belonging to al to investing in human development capacities owners from northern governorates was reported at should be considered (conditional transfers to health/ the JSEA NGO workshop. nutrition and education programs). Conditional cash transfers could additionally contribute to child wel- 4.7.4  Governorates that Maintained Social fare and help address other issues such as: child sol- Norms Were Less Affected diers, child trafficking, and child labor. SWF stipends should also be more inclusive regarding disabilities In governorates such as Shabwa, there has been an and youth. While education and health targeted pro- increase of social solidarity with IDPs coming from grams address the development of 0 to 18 year olds, the Abyan Governorate. Social solidarity has also the social assistance through SWF should give con- been enhanced in response to price increases in the sideration to special needs, including the disabled eastern region, including Hadramout and Al-Mahara. poor and youth. In certain rural areas, such as in Al-Hodeidah, exist- The Disability Fund is the main provider of sup- ing social norms (the “sea codeâ€?) acted as a refer- port to people living with disabilities. There is a need ence for resolving arguments over scarce resources to provide this fund with technical assistance capac- such as fuel. ities in order to develop its targeting and outreach to rural areas. Also, its information system must be devel- 4.7.5  Recommendations oped, along with other procedures, to better serve vul- nerable groups. The level of cash assistance from the Social Welfare Strengthening the process of birth and death reg- Fund (SWF) is insufficient for a family to meet its basic istrations, as well as forming a unique social security/ consumption needs. The incidence of poverty in both identification system led by the Civil Registry Authority urban and rural areas has increased significantly as of the Ministry of Interior, is critically important, espe- had food insecurity as well. To make social assistance cially to child protection initiatives. As a result, social through the SWF an effective tool for poverty reduc- safety net instruments can provide better services. tion, the amount of cash transfers must be increased Assistance needs to be provided to strengthen and coverage expanded to include more poor people. the social welfare system, including the development The savings from excluding ineligible SWF recipients, and implementation of standard child welfare frame- as well as some of the savings from reduced fuel sub- works. Institutional structures, and capacities need to sidies, could cover the financing of such an increase. be strengthened and recommended changes should be Barriers that discourage poor people from apply- piloted in selected governorates or districts and eventu- ing for SWF stipends, such as the need for certifica- ally scaled up nationwide. Mapping of available servic- tion by community leaders, which may also be used es and introducing case management is another com- as a political tool, should be addressed,. Alternative- ponent to ensure that the most vulnerable children are ly, SWF must hold community leaders to account if reached, followed up with, and protected. The need for they misuse their power. Civil society organizations building and strengthening safety, protective, and vio- could be involved in identifying eligible households lence-free components in other systems such as edu- who are not receiving assistance. On the other hand, cation and health cannot be overstated. SWF management systems should also be made more The role of CSOs in providing social protection transparent and effective (particularly Financial Man- services is important. They can also play a role in agement and Reporting, Monitoring and Evaluation, enhancing positive traditional norms, social harmoni- Complaints and Grievances, etc.). zation and peace building. CSOs should be nourished 76 Expanding Social Service Delivery and encourage to play such roles. Close monitoring of scheme needs to be considered. It is important to start these organizations is required. piloting how to cover poor people who are mostly Health expenditure consumes a substantial amount employed in the informal sector and are highly unlike- of poor peoples’ income. A social health insurance ly to be covered at present. 77 Expanding Basic Service Delivery 5 5.1  Nutrition the Government of Yemen’s policy and institutional response has been insufficient to offer meaningful safe- 5.1.1  Baseline ty nets and offset the critical nutritional situation (for more on social welfare and safety nets, see Chapter 4). The precarious condition of the nutritional status of Rural women and children are particularly exposed Yemeni children was evident even before the 2011 cri- to acute malnutrition.82 Children less than 24 months sis, and stems from longstanding structural inequalities are vulnerable compared to older age groups due to the and inadequate infrastructure. Data from 2003 showed high prevalence of GAM, indicating that this particular Yemen to be the second worst country after Afghani- vulnerability is related to suboptimal infant and young stan for stunting, with levels exceeding 58 percent, and child feeding, which begins at birth with high level of third after India and Bangladesh for underweight chil- Low Birth Weight and poor breastfeeding and comple- dren (41 percent).78 Global acute malnutrition (GAM) mentary feeding practices. Moreover, stark gender effects has been a chronic problem showing a negative trend mark malnutrition in Yemen, with boys suffering high- even before 2011, with GAM rates of 12.4 percent in er rates of wasting (34 percent versus 28.9 percent) and 2003 worsening to 15 percent in 2006, while severe stunting (60.2 percent versus 58.9 percent) than girls. acute malnutrition (SAM) hovered around three per- While mortality rates among children under cent.79 In 2010, 600,000 children under age five suffered the age of five decreased from 122 cases per 1,000 from moderate acute malnutrition (MAM) and 129,000 live births in 1992 to 78.2 in 2006 (and infant mor- were affected by SAM.80 Meanwhile, acute child mal- tality rates decreased from 83 cases per 1,000 live nutrition increased from 12.9 percent in 1997 to 15.7 births in 1992 to 69 cases in 2006) the rate of reduc- percent in 2010, while chronic child malnutrition has tion slowed considerably from 2006 onwards so that increased from 51.7 percent in 1997 to 57.9 percent in Yemen is not currently on track to achieve its MDG 2010. Additionally, 25 percent of Yemeni females aged targets by 2015.83 The infant mortality rate in 2009 16 to 59 years old were found to be acutely malnour- stood at 69 per 1,000 live births, or 65 for females ished.81 Maternal malnutrition and maternal mortali- and 72 for males.84 ty are both high, with corresponding negative conse- quences for child nutrition and mortality. The underlying causes of Yemen’s dismal track 78  Family Health Survey (2003, the most recent country-wide conducted in Yemen). record on nutrition are a product of the combined 79  Yemen Multiple Indicator Cluster Survey–2006 MICS. effects of entrenched structural problems such as food 80  Correspondence from UNICEF, 12 September 2010. insecurity, insufficient access to clean water and ade- 81  WFP 2010. Yemen: Comprehensive Food Security Survey. 82  WFP, 2010. Yemen: Comprehensive Food Security Survey. quate sanitation, and poverty, coupled with the need 83  UNDP with the Republic of Yemen, 2010. Yemen Report 2010: for behavior change in areas such as infant and young Millennium Development Goals. child feeding and caring practices. Despite clear links 84  UNICEF, 2009. Mid Term Review Report: 2007–2011 Program between household-level deprivations and malnutrition, of Cooperation, 12. 79 Joint Social and Economic Assessment Figure 10: Malnutrition and Death Causes Malnutrition and death Manifestation Inadequate Disease dietary intake Immediate causes Insufï¬?cient Inadequate Insufï¬?cient health household food services & unhealthy Underlying causes maternal & child care security environment Inadequate education Resources & control Human, economic & organizational Basic causes Political & ideological superstructure Economic structure Potential resources Source: Government of Yemen and JSEA Staff. Box 12: Poor Infant Feeding Practices Box 13: High Disease Burden • Less than one-third (30 percent) of all newborns • Sixteen percent of child deaths are due to receive breast milk within one hour of birth. diarrhea. Undernourished children have an • Fewer than one in eight infants under six month increased risk of falling sick and greater severity are exclusively breastfed. of disease. • During the important transition period to a mix • Undernourished children who fall sick are of breast milk and solid foods between six and much more likely to die from illness than well- nine months of age, one-quarter of infants are nourished children. not fed appropriately with both breast milk and • Parasitic infestation diverts nutrients from the other foods. body and can cause blood loss and anemia. 80 Expanding Basic Service Delivery 5.1.2  Crisis Impact lack of access to food, reduced diversity in diets, chang- es in breastfeeding practices as a result of the crisis, All sectors of life in Yemen were affected during 2011, and reduced access to clean water because of fuel pric- and as might be expected the nutrition situation deteri- es, which led to catastrophic results. Compounding the orated during that time. Given the weak starting point above, the overall breakdown of social services as a result outlined above, most vulnerable Yemeni families began of the unrest created conditions whereby addressing the 2011 ill prepared to absorb the shocks induced by the intensifying problem of children’s health and nutrition crisis. As a result, conflict, general insecurity, and ris- became even more challenging. For example, while the ing prices for essential commodities aggravated hunger number of malnourished children seeking treatment at and malnutrition. Vulnerable populations experienced a health centers increased during the first half of the year, Table 15: Prevalence of Malnutrition Compared to the Previous Surveys and 2010 WHO Projections Wasting Underweight Stunting Survey Year Severe a Moderate b GAM c Severe a Moderate b Total Severe a Moderateb Total 1. Demographic 1997 2.6 10.3 12.9 14.5 31.6 46.1 26.7 25.0 51.7 Health Survey (GoY, CSO) 2. Family Health 2003 3.0 9.4 12.4 15.2 30.4 45.6 22.2 30.9 53.1 Survey (GoY) 3. Household 2005/06 4.4 11.3 15.7 15.0 27.9 42.9 35.4 22.5 57.9 Budget Survey (HBS) 4. WH0 2010 3.9 11.1 15.0 19.0 24.0 43.0 37.1 20.9 58.0 Projections 2010 based on WFP (CFSS 2009) 5. Comprehensive 2011 3.6 9.4 13.0 12.6 12.9 35.5 21.7 14.9 46.6 Food Security Survey (CFSS) Survey, 2012d (WFP) 6. Hajjah 2011 9.1 22.3 31.4 20.3 28.0 48.3 22.8 20.8 43.6 Nutritional Survey (UNICEF) 7 Hodeidah 2011 9.9 21.8 31.7 26.7 32.9 59.6 26.6 27.9 54.5 Survey (UNICEF) 8. Ta’iz Nutrition 2012 1.0 8.4 9.4 9.1 25.9 35.0 17.1 34.4 51.5 Survey Mountains (UNICEF/WHO) 9. Ta’iz Nutrition 2012 3.1 12 15.1 13.4 30.9 44.3 19.1 30.0 49.1 Survey Coastal (UNICEF/WHO) Sources: GoY, UN. Notes: a Severe acute malnutrition (SAM). b Moderate acute malnutrition (MAM). c Global acute malnutrition (GAM); GAM = MAM + SAM. d The CFSS excludes Sa’ada and al-Jawf governorates, which have been affected by long-lasting conflict. Given that the prevalence of child malnutrition in these two governorates has been significantly above the national average (see e.g., MOPIC & IFPRI 2010), the reported prevalence rates are likely to be understated. 81 Joint Social and Economic Assessment by June 2011, approximately 70 percent of Outpatient during the six-month reporting period, while only 8.8 Therapeutic Programs (OTPs) were non-reporting, an percent of urban households enjoyed protein intake. indication that they likely were not functioning. In addition, 60 percent of rural households reported Malnutrition in Yemen, moreover, is not equal- decreased meals among children less than five years of ly distributed throughout the country—certain pock- age compared to those in urban areas at 40.8 percent. ets post exceedingly high rates well above emergency Similarly, a recent survey in the coastal and moun- thresholds. Nutritional surveys conducted in response tainous areas in Ta’iz showed how levels of malnu- to the 2011 crisis revealed that in Hajja, Hodeidah, and trition are not equally distributed across geographical the coastal areas of Ta’iz, for example, acute malnutri- regions, even within the same governorate: the GAM tion has exceeded an alarming 30 percent,85 while an rate in Ta’iz’s Mountainous Zone is 9.4 percent, which additional 58 percent of Yemeni children suffer stunt- is classified as poor by a WHO classification scheme of ed growth, approximately 35 percent of whom are GAM severity, while in the Coastal Plains the GAM rate severely stunted.86 As of February 2012, the emergen- is deemed at a critical stage, at 15.1 percent, (MOPHP cy threshold for severe acute malnutrition of five per- /UNICEF/WHO 2012). cent has been exceeded in five governorates: Hajjah, Conflict presents an additional burden that exac- Sa’ada, Hodeidah, Aden and Lahj, and the emergen- erbates vulnerabilities, as evidenced by surveys con- cy threshold for global acute malnutrition of 15 per- ducted among displaced populations from Abyan cent is exceeded in the three governorates of Hajjah, which indicate alarming rates of GAM and SAM for Al Hodeidah and Abyan. children under age five living in conflict-affected areas: A nutrition survey in Hajjah Governorate conduct- 18.6 percent for GAM and a SAM rate of 3.9 percent.87 ed by UNICEF, the MoPHP and WFP among both girls Reasons for these high rates of GAM and SAM can and boys under age five in IDPs and host communi- be traced to the direct and negative impact on access ties provide indication of increased vulnerabilities in to food, access to fuel, the collapse of health servic- conflict-affected areas. The findings show alarming- es, and the lack of access by humanitarian partners ly high GAM rates of 31.4 percent and with a SAM to affected populations. In addition, less than 70 per- rate of 9.1 percent, both above emergency thresholds. cent of mothers sustained breast-feeding for children GAM prevalence is significantly higher among chil- between 12 and 24 months of age, though rates of dren under two years of age—43.9 percent compared breastfeeding of boys (69.9 percent) is slightly higher to the national average of 28.9 percent—and is high- than for girls (65.1 percent). Meanwhile, bottle-feed- est among males. The overall prevalence of SAM of ing for those between 12 months and 24 months are 9.1 percent, an underweight prevalence of 48.3 per- higher for girls than for boys at 66.7 percent and 58.9 cent that is marginally higher than the national aver- percent respectively. age of 43 percent, reported stunting of 43.6. Micronutrient deficiencies are also pervasive, and The UNICEF Social Protection Monitoring Report more than one-third (38 percent) of women are ane- covering the period July 2011–March 2012 indicates mic according to a 2012 WFP report.88 Malnutrition that whether children under five receive decreased or was higher among pregnant women with poor access increased numbers of meals is extremely sensitive to even small disruptions or interventions in household 85  Hajja and Hodeidah nutrition status surveys July and Novem- budgets and charitable support. Despite these fluctu- ber 2011 (MOPHP and UNICEF). 86  OXFAM 9/2011. ations, some constant trends were evident throughout 87  UNICEF Nutrition assessment of 6-59 month old girls and 2011. Most notably, almost none of the rural house- boys among IDPs in Abyan, Sept. 2011–GHO in Abyan, page 3. holds reported any protein intake (red meat, fish, or 88  Emergency Food and Nutritional Support to Conflict Affect- chicken) among children less than five years of age ed Populations in Yemen, 2012. WFP, page 4. 82 Expanding Basic Service Delivery Table 16: Prevalence of Morbidities in the Two Weeks Preceding the UNICEF Hodeidah Survey Compared to the Previous Surveys Survey Year Diarrhoea ARI Fever Family Health Survey a 2003 29.60 percent 42 percent 40 MICSb 2006 33.5 NA NA Hajjah Nutritional Surveyc 2011 47.40 percent 43.10 percent 54.6 This survey 2011 45.40 percent 64.10 percent 57.70 percent TENDENCY   ↑ ↑ ↑ Source: Government of Yemen and JSEA Staff. Note: a Ministry of Public Health and Population. Central Statistical Organization, and League of Arab Sector. Yemen Family Health Survey, Principal Report; 2005. b UNICEF. Multiple Indicator Cluster Surveys (MICS), 2006. c UNICEF (2011). Nutrition Survey among U5 Children and Women of Childbearing Age in Three Districts in Hajjah Governorate, Yemen. to food. Anemia remains a particular concern, with for malnutrition, from 15,000 children treated for SAM increased rates being observed in children between in 2010 to 65,000 children in 2011. While the increase 2008 and 2009 in all sites. The 2009 anemia survey in children being treated can in part reflect a positive included all refugee sites, and total anemia and severe trend of expanded Outpatient Therapeutic Program anemia were found to be 77.9 percent and 8.8 percent, (OTP) and Therapeutic Feeding Center (TFC) cover- respectively, among refugee children under age five age throughout the country, the dramatic increase is in Kharaz refugee camp, 73.9 percent among Yemeni largely driven by the worsening nutrition situation children under age five around Kharaz camp, and 47.5 among children. percent and 3.7 percent among refuge children under age five in Sana’a respectively. 5.1.3  Food Security and Malnutrition In Hodeidah, the nutrition survey among chil- dren under age five found an overall GAM prevalence WFP conducted data collection for Comprehensive Food of 31.7 percent and SAM of 9.9 percent, both much Security Surveys (CFSS) in 2009 and 2011 in response higher than the respective emergency thresholds. The to the dire nutrition situation in Yemen. Results from underweight prevalence of 59.6 percent is alarmingly the earlier survey provide a national baseline for GAM high, among the highest in the world, and far above of 12.4 percent prior to the outbreak of the 2011 crisis, the 2015 MDG target. The stunting prevalence found though many experts perceive this rate as underesti- through the same survey is 54.5 percent.89 The under- mating likely GAM due to methodological constraints. lying causes of the problem appear to be related to: The follow up survey, which was conducted from lack of food diversity including lack of fortified food; November to December 2011, included approximately limited livelihoods opportunities; frequent disease out- 7,750 households throughout Yemen’s 21 governorates breaks; poor infant and young child feeding practic- (with the exception of Sa’ada and Al Jawf, which were es; inadequate water and sanitation facilitie; limited inaccessible). Included in the survey was an exami- nutritional program coverage; high tea consumption nation of the nutritional and food consumption sta- and wheat based diet (high phytate and polyphenol/ tus of more than 11,000 children and around 10,000 tannin content of the diet); poor child care practices mothers between the ages of 15 and 49.The prelimi- at the home level, inadequate health service; and Qat nary findings from this survey indicate that food inse- consumption. curity in Yemen has dramatically worsened, reaching As noted above, the crisis of 2011 prompted an increase in the numbers of children seeking treatment 89  MoPHP/UNICEF 12/2011. 83 Joint Social and Economic Assessment alarming levels, with 44.5 percent of the population— over 10 million people—labeled food insecure. Over Box 14: Limited Access to Nutritious Food five million, or roughly 22 percent of the population, are severely food insecure and unable to produce or One in three households are food insecure; large amounts of land and water are devoted to growing buy the food they need. This represents a shocking Qat, a mild narcotic that has no nutritional value and 87 percent increase from the earlier CFSS, and is well competes with food production. above the threshold at which external food assistance is required. An additional five million people were Achieving food security means ensuring quality and found to be moderately food insecure and at risk of continuity of food access, in addition to quantity, for becoming severely food insecure in the face of rising all household members. Dietary diversity is essential food and fuel prices and conflict. As with health indi- for food security. cators, food security presents wide disparities between Solution: Involve multiple sectors including urban and rural populations: in rural areas, more than agriculture, education, transport, gender, the food one in two Yemenis were found to be food insecure, industry, health, and other sectors to ensure that while in urban areas nine percent of the population diverse, nutritious diets are available and accessible is severely food insecure and 18 percent moderately to all household members. food insecure. With respect to the exogenous shock of rapid- ly rising food and fuel prices throughout 2011, the survey found that nearly all Yemenis—90 percent of have caused households to buy more food on credit, households—reported difficulty in accessing food due resulting in as much as one-third of households sur- to higher food prices. In addition, rising food prices veyed reporting debt related to food. Over all, survey Figure 11: Prevalence of Malnutrition in Yemen Prevalence of acute malnutrition Prevalence of chronic malnutrition Total Total Al Bayda Aden Mareb Al Mahrah Sana’a Hadhramout Al Mahrah Abyan Shabwah Shabwah Raymah Sana’a City Sana’a City Taiz Dhamar Lahej Hadhramout Al Bayda Ibb Mareb Abyan Ad Daleh Amran Ibb Mahweet Al Hudeidah Ad Daleh Haija Taiz Dhamar Haija Sana’a Aden Amran Lahej Mahweet Al Hudeidah Raymah 0% 5% 10% 15% 20% 25% 30% 0% 10% 20% 30% 40% 50% 60% 70% 80% Source: Government of Yemen and JSEA Staff. 84 Expanding Basic Service Delivery results revealed a very high prevalence—more than 40 Roll out SMART Surveys: The priority would be to percent—of severe food insecurity in the governorates roll out Standardized Monitoring and Relief Transition Al Bayda, Mareb, and Sana’a (excluding the capital). (SMART) nutrition surveys to all governorates, iden- The greatest concentration of severe food insecurity is tifying and targeting the most vulnerable populations found in the Highlands region. within each governorate in order to address inequali- ties throughout the country. The response plan must 5.1.4  Recommendations be designed in an integrated comprehensive fashion to address both the immediate and underlying causes The nature of malnutrition is complex and multi-sec- of malnutrition, and provide for scaling up these inter- toral. As a result, durable solutions proposed to tackle ventions to reach all the affected populations. this problem also must be multi-sectoral. As it stands, Community Management: To ensure sustainable placing malnutrition as an issue related only to the change, special focus must be paid to community-based health sector addresses only part of the problem while structures, including capacity strengthening of nutri- ignoring many of the deep root causes previously men- tion volunteers. Among functions that must be under- tioned. In addition, the present health system is ill- taken: screening for malnutrition; follow up to prevent equipped to manage the estimated 966,000+ casel- relapse and to deliver appropriate care practices; IYCF oad. The Government of Yemen and partners working /Breastfeeding counseling services and WASH advoca- on Agriculture, Health, Water, Sanitation, Education, cy messages; livelihood interventions and directly link- Local Government, and other sectors must synergize ing these to a targeted social protection mechanism. their respective strategies and interventions to com- School Nutrition: Increase awareness of children prehensively address the multiple dimensions of fac- and parents about importance of dietary intake for the tors contributing to Yemen’s malnutrition crisis. Such development of children; develop education materials an approach will require stronger coordination and targeting health, nutrition, and hygiene. As described leadership from the highest levels of Government than in Section 4.1 on Social Protection, initiate targeted what was provided in the past. school feeding programs linked to social safety nets While this is the most appropriate strategy in operational and management schemes. addressing chronic malnutrition, the immediate risk Control of Child and Maternal Undernutrition: Pro- of death faced by the over 260,000 children under the mote early initiation, exclusive breastfeeding for the age of five with Severe Acute Malnutrition must be first six months and breastfeeding for at least two years addressed. Community based management of Acute with timely introduction of appropriate complimenta- Malnutrition using Ready-to-Use Therapeutic Food is ry foods. Promote breastfeeding at birth places (home recommended as the best approach to treat children based and health facilities). Enhance collaboration with who are severely malnourished. This approach needs agriculture and other relevant sectors to promote and to be rolled out in all governorates90 and districts with improve most vulnerable households’ food security. Severe Acute Malnutrition rates of over five percent. Chronic malnutrition and the immediate risk of The multi-sectoral approach to the nutrition crisis sug- death for over 260,000 children with Severe Acute Mal- gested here will also reinforce the response to Severe nutrition remain to be addressed. Community Based Acute Malnutrition. Management of Acute Malnutrition using Ready-to-Use The National Nutrition Strategy91 provides for set Therapeutic Food is recommended as the best approach actions, among which Nutrition for Emergency Situa- tions, School Nutrition, Control of Child and Maternal 90 Currently only three governorates are covered. Undernutrition, Control of Low Birth Weight are some of National Nutrition Strategy for Yemen (draft); Family Health 91  the priorities already highlighted prior to the 2011 crisis. Directorate, Primary Health Care Sector, MOPHP. 85 Joint Social and Economic Assessment to treat children who are severely malnourished. This including proper care practices, extending health ser- approach needs to be rolled out in all governorates vices to remote and hard to reach areas through insti- and districts with Severe Acute Malnutrition rates of tutionalizing outreach services to deliver a comprehen- over five percent. The multi-sectoral approach to the sive minimum package of PHC and nutrition services, nutrition crisis encouraged herein will also reinforce and improving water supply and sanitation, among the response to Severe Acute Malnutrition. other initiatives. Funding: In order to address the needs of severe- ly wasted/acute malnutrition (SAM) children, the gov- 5.2  HEALTH ernment will need on average an estimated US$100 per SAM case. Reducing the prevalence of Severe Acute 5.2.1  Health Services Malnutrition (Wasting/SAM) can be accomplished through improving maternal malnutrition, adopting Crisis Context appropriate Infant Young Child Feeding (IYCF) practices In 2011, essential Government services such as health care, social welfare, education, power, and water were Figure 12:  Number of MAM and SAM Affected reduced or eliminated as a result of civil unrest and Children under Five (Distributed by conflict compounded by rising commodity prices. This Governorate) has exacerbated severe and widespread chronic vulner- 9046 abilities in Yemen, particularly with regards to nutri- Abyan 4253 24132 tion, food security, and access to water, social welfare, Aden 8185 2053 education, and healthcare. Government wages were Al Mahra 714 Al Mahweet 13803 either late or unpaid for months, including those for 4710 Al-Baida 9243 medical workers, resulting in persistent service dis- 2634 Al-Dhale 11929 ruptions. The effect of these disruptions was ampli- 8399 Al-Jawf 74583 163657 fied by the timing of the crisis, occurring on the heels Al-Hodeida 31934 of a years-long recession that negatively impacted 14514 19696 Amran 8203 society’s most vulnerable, i.e., women, children, and Damar 36516 8211 young people. Hadramout 28099 7101 The increased political violence in the central/west Hajjah 62710 22186 part of the country also took its toll on deteriorating IBB 51951 19918 health care services in a number of governorates. Any Lahj 26655 9602 further escalation and spread of violence could result Mareb 3990 1110 8256 in a further dramatic deterioration of the country’s Raymah 3788 55495 weak health system, which receives only 3.6 percent Sa'ada 25222 Sana'a 14964 of the national budget. Presently there are 842 Public 6744 Sanaa City 43574 Health Centers (PHCs), ostensibly staffed with physi- 21450 Shabwa 8987 cians and paramedicals who cater to the needs of the 3714 Taiz 11841 73076 entire country, but which effectively reach a mere esti- mated 68 percent of the population.92 These centers, 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 which are often understaffed and under-resourced, especially in rural and remote areas, consistently rely MAM Affected SAM Affected Source: Government of Yemen and JSEA Staff. 92  CSO 2010. 86 Expanding Basic Service Delivery on humanitarian agencies and charitable organizations provide evidence of the destruction of facilities, their for the continued provision of services.93 Many factors occupation by armed forces, the looting of properties, contributed to the substantial increase in the number, the insecurity and blockage of transports, the inabili- magnitude and impact of communicable and vaccine- ty of staff to report to work as normal, and the addi- preventable disease outbreaks, including: the disrup- tional burden placed on facilities in neighboring gover- tion of social services including water and sanitation; norates as IDPs flee fighting in conflict-affected areas. limited vaccination coverage due to lack of access as All of these reflect the impact the crisis had on peo- well as disruptions to the cold chain; and high food ple’s rights to access basic social services in general, and fuel prices. and access to health in particular. In addition to PHCs, Yemen possesses a number The conflict also took a high toll in the numbers of Health Facilities, though assessments are needed to of dead and injured among civilians, amounting to determine how many of these meet basic service capac- about 6,500 victims in all governorates, though sec- ity standards. Even before the crisis, the 2010 baseline tor experts suspect the actual numbers to be much of utilization of these centers reflected a stark inequality higher than the official count. Regardless, even at of per capita outpatient rates, ranging from 0.58 to 2.7 6,500, the number of wounded requiring emergency contacts per year depending on the geographic area in care overwhelmed the health care facilities. The lack the country. While 0.58 is quite low, the rate of 2.7 is of adequate trained staff across the country, insuffi- quite high compared to other crisis countries.94 Exact cient funding, high turnover of human resources, and data for service utilization specifically for hospital ser- lack of medicine, electricity, fuel, compounded with vice utilization is either absent or unreliable, though the outbreak of epidemics such as measles, malaria, estimates put the range at less than 15 and less than and water-borne diseases/cholera and general lack of seven clients a day respectively.95 coordination and guidance pushed the already weak There are limited reports that show utilization health system beyond its limit. of services was even further affected during the cri- In addition to these challenges, the doubling of sis. The reports from Abyan, Sa’ada, and elsewhere costs of commodities negatively impacted the sec- tor’s ability to provide adequate services and cover- age to a population that increasingly could not afford even that which was available. Throughout 2011, both Box 15: Impact on Health Service Delivery petrol and diesel became scarce and saw a 130 per- Due to conflict in Abyan Governorate, foreign cent price increase when it was available. Such diffi- doctors withdrew from their duties; affecting six culty affected all administrative, curative, preventive, hospitals in Lawder, Moudyah, Al Mehfed, Shokran, emergency response initiatives including the vaccina- Al Wadee and Ahwar; and leaving vacant important tion cold chain, medical supplies, and drug delivery functions such Gynecology & Obstetrics, Pediatrics, to the governorates and districts. In addition, constant General Surgery, and Anesthesia. Those functions and frequent interruption of electricity affected the are crucial to providing the much-needed services to people living in those districts as well as IDPs overall system, and in particular water pumps, com- around those areas. Medical supplies are facing puters, refrigerators, operations for the injured, blood critical shortages making the emergency situation even direr, given that even before the crisis Abyan 93  Civil society and community groups are a major contributor would receive only five percent of the supplies on social service delivery and are increasingly reaching out the provided to the Regional Store in Aden. most vulnerable where government structures are absent. This was clearly demonstrated throughout 2011 crisis. Source: Government of Yemen and JSEA Staff. 94  World Bank Discussion Paper, 1998. 95  Salad Health system profile, WHO 2011. 87 Joint Social and Economic Assessment banks, emergency units and so forth. Even generators, as the population’s needs were increasing in terms of designed to buffer the system against such problems, higher rates of malnutrition, water-borne diseases, were negatively affected, as they quickly burned out communicable diseases, and conflict-related injuries, from overuse. the system became increasingly unable to respond. In addition to the overall weak state of emergency Governance preparedness, the Ministry itself absorbed direct threats to its premises in Sana’a. Starting as early as March Decentralization of health care kicked off in the mid- 2011, Ministry staff was increasingly unable to report 1990s, as the MoPHP, which has overall responsibili- to work due to roadblocks/checkpoints throughout the ty for the health sector, initiated a sector reform plan. city, and shelling and gun battles in the neighborhood A key feature of decentralization was the creation of where Ministry buildings are located. The lack of pro- local health councils, comprised of an Executive Organ visions for alternative workspace resulted in a near Director and appointed community figures. The decen- halting of administrative work, including the imple- tralization effort was further elaborated by the devel- mentation of much-needed development programs. opment of a “National Model of a District Health Sys- The Ministry was further constrained by delays temâ€? in 2003. or suspension of the health budget. For example, the The decentralization process has been hamstrung Department of Child and Adolescent Health responsi- by weak capacity to plan and implement at the local ble for Integrated Management of Child Illness (IMCI) level, and by a centrally-managed budget system. Local did not obtain the department’s budget for the sec- District Councils (LDCs), for example, plan according to ond half of 2011 and for the first half of 2012, causing strategic objectives given to them by the central level. significant delays in planned activities and contribut- While 90 percent of Yemen’s districts manage to draft ing to poor performance and worsening conditions of annual plans according to agreed templates, the weak child health. Against this backdrop, the donor coor- capacity of staff in terms of planning—only 25 per- dination system was also interrupted during the cri- cent of overall Ministry staff have training in the area sis due to closure of MoPHP and evacuation of the of planning and management—translates into limited technical staff belonging to multilateral and bilater- ability on the part of LDCs to guide their own develop- al agencies and donors. In response, many observ- ment. Thus, while decentralization may be well articu- ers note the increased role of the private sector and lated in the policy sphere, its implementation has not NGOs during the crisis, and in particular their efforts achieved the desired results. to reach the most difficult-to-reach in remote areas. Analysis of the impact of the crisis on their capac- Impact ities and resources however is outside the scope of this assessment.96 The national health care system, along with other sectors, experienced dramatic disruption during 2011. Organization & Health Workforce Price shocks combined with the weak state of health care prior to the escalation of conflict translated into Currently there are 229 hospitals, 791 health centers, a sector unable to ensure continued service deliv- 2,849 health units, and 2,566 reproductive health cen- ery to a population in crisis. Notably, the sector as a ters in Yemen. The total number of beds is 15,691.97 whole—from the level of the central Ministry down When functional, these facilities provide access to to local councils—failed to identify contingency plans that could have buffered vulnerable populations from 96  15 April Workshop findings. the worst effects of the emergencies. As a result, just 97  Reference the figures. 88 Expanding Basic Service Delivery approximately 68 percent of the population. In addi- representatives in the HFC and through defined work- tion, there are 168 private hospitals, 324 dispensaries, ing relations of the DHMT with the Local Council in 541 health centers, and 657 private clinics concentrated the district. The GHO and the DHS were launched to mostly in urban areas.98 Private for-profit health care address the well-known failures of the formerly high- is essentially curative and is available mainly in and ly centralized national health system. around urban areas. There are also a number of pri- The overseeing bodies for the MoPHP are the Health vate clinics, which are well equipped and have up to Department within the Central Organization for Mon- 50 beds. Private health services are strictly commer- itoring and Accountability and the Health Commit- cial and charge substantial fees to their patients. While tee in the parliament. The MoPHP has recently estab- private, for-profit and non-profit health services offer lished a department for monitoring and accountability some alternatives to public services and could poten- aiming at monitoring the whole range of activities of tially be tapped for innovative solutions to barriers to the Ministry. access, overall they are poorly coordinated as a sector. There are about 50,000 people working in the health Public health services are organized in three lev- sector in Yemen, with four out of every five workers els starting with Primary Health Care (PHC) support- employed by the public sector. It is common that tech- ed by secondary and tertiary referral care. The health nical staff (doctors, nurses, midwives, lab technicians) services start at the village level where PHC units are work in the public health sector in the morning and in run by paramedical staff and are backed up by PHC the private sector in the afternoon. There is no over- centers, most of which are managed by one physi- sight control on the human resources, hospitals, and cian and have laboratory and X-ray facilities. Patients clinics of the private sector despite Executive Bylaw of who cannot be properly cared for at the PHC level Law No. 60 for the year 1999, which mandates over- are referred to rural, district, or governorate hospitals sight of private medical and health establishments.99 (secondary care) for further diagnostic and curative Service delivery and utilization in Yemen is con- treatment. Some of these hospitals also provide sup- strained by the unequal distribution of qualified health port for national or regional immunization and dis- professionals in urban areas and in district centers, ease control programs. Finally, tertiary hospitals pro- leaving remote rural areas without coverage. vide specialized care and serve as teaching hospitals The baseline of the health workforce is quite low: for the medical faculties of the country’s two univer- medical doctors 3/10,000; nurses 5/10,000; and mid- sities. The District Health System (DHS) is based on wives 2/10,000.100 The WHO benchmark for adequate three levels of health facilities, which are the Health comprehensive coverage is 2.5 health workers per 1,000 Unit, Health Center and the District Hospital. Two high- persons. Compounding the problem of accessibility for er levels of health care provision such as Governorate female patients, for every female staff there are two Hospital and Central Hospital function as referral lev- male colleagues, despite that in first-line health ser- els for the DHS. Each health facility in the DHS is sup- vices the majority of patients are women. posed to be managed by a Health Facility Committee In order to address emergency medical needs dur- (HFC). Community-based health services and services ing the crisis, mobile teams were mobilized to facilitate provided through mobile clinics are usually linked to a health facility. A District Health Management Team 98  Prime Minister’s decision No. 132 for the year 2004 about (DHMT) manages the DHS as a whole and is locat- the Executive Bylaw of Law no. 6 for the year 1999 about Pri- ed at the District Health Office (DHO). The DHMT vate Medical and Health Establishments. 99  Prime Minister’s decision No. 132 for the year 2004 About receives support and supervision from the Governor- the Executive Bylaw of Law no. 60 for the year 1999 about Pri- ate Health Office (GHO). Mandatory community par- vate Medical and Health Establishments. ticipation in the DHS is exercised through community 100  Central Statistical Office 2010. 89 Joint Social and Economic Assessment access to basic health services for vulnerable population Kuwait hospital, Sabeen hospital (Sana’a); groups, especially IDPs. During 2011, the total number Rowdha, Safwa hospitals, Operation Room of medical consultations provided by medical teams in and Field hospital (Ta’iz); Naqeeb hospital, all emergency operating sites was 243,819101 including: Jumhuria and Wehda hospitals, establishment of Rehydration Centers and Nutrition Centre (Aden); Bin Khaldoon hospital Rehydration • Eight mobile health teams providing life-saving Centre (Lahj). health services to Abyan IDPs in Lahj and Aden; • Ten fixed medical teams providing PHC and Information Management life-saving services to IDPs and host popula- tion in Sa’ada; one psychiatrist and one gener- In general, assessment of the quality, provisioning and al surgeon providing services to population as accessibility of services is constrained by the lack of needed based in Al-Jumhuri Hospital in Sa’ada; reliable data generated by the system and available • Two fixed medical teams providing PHC and to the Ministry. The Health Management Information life-saving services to IDPs and host commu- System (HMIS) is not properly functioning within the nity based in Khaiwan and Al-Houthi hospi- MoPHP, leaving data collected from different sources, tals in Amran; including humanitarian partners, scattered through- • One Comprehensive Health Center and three out the system in the absence of a central repository. mobile teams providing PHC and life-saving Moreover, there is scant data collected, and what little services to IDPs in Haradh and Khyran dis- exists is of questionable quality. While all governor- tricts of Hajjah; ates use standard reporting formats, with the excep- • One mobile health team providing PHS and tion of a handful of governorates, reporting is incon- life-saving services to IDPs and host commu- sistent and weak. The absence of policy and financial nity in Al-Jawf. commitments from the MoPHP to strengthen a cen- tral system has contributed to duplication of efforts, Medicine and Technology as well, as different health programs attempt to over- come the problem by establishing small-scale paral- Even before the crisis, few health facilities possessed lel systems with no provision for sustainability and/ adequate essential drugs, and health centers—includ- or increase in outreach. The lack of a unified, reliable ing in the main cities—received very small drug stocks, system has direct impact in policy formulation, plan- typically only two or three times per year. ning, performance monitoring, and resource allocation During 2010–2012, international organizations pro- under each of the components of the health system. vided support to a number of health centers and hos- pitals in key locations throughout the country through Funding delivery of the following to fill long-standing gaps: Many of the pre-crisis weaknesses in the health care • Medical Products: 26 Trauma A and B kits, sector can be linked to the chronically low financing 13 Diarrheal kits, 19 Interagency Emergen- of the system: despite clear unmet needs, the health cy Health kits and 65 Basic Boxes in addition sector receives only 3.6 percent of the national bud- to 40 metric tons of locally-procured life-sav- get. Annual per capita total expenditure on health rests ing supplies; • Equipment supplied to Al-Malaheet hospital In 2009, the number of diagnoses of various illnesses were 101  (Sa’ada); AMP in Sana’a University Square, 4.8 million; the 4th 5-year DPPR, MoPHP, page 22. 90 Expanding Basic Service Delivery at US$64 (YR 15,375), while government expenditure MoPHP, the General Directorate of ERS is the central on health is merely US$70 per capita, resulting in a institutional department responsible for management 71 percent (or US$81) out of pocket expenditure of total and technical issues related to preparedness, planning, health expenditure.102 Other funding sources for health coordinating, and supervising the process of ERS pro- care such as emergency or development support have vision in all governorates. The department coordinates not been factored into the coverage rates. with the main hospitals; Governorate Health Offices Compounding the problem of unevenly distribut- (GHOs) are based in the governorates and supervises ed health facilities, patients are not charged standard the emergency operation room located in the MoPHP. fees, which may vary greatly for service delivered in Despite this structure, the coordination mechanism is different levels of Health Facility. The lack of regula- not clearly established within the MoPHP. tion of user fees poses a threat to equity of care espe- Main hospitals are the main points of provision for cially for the poor, the majority of whom are female- ERS, though their capacity to respond at present does headed households.103 The lack of regulation also not match needs. Moreover, the weakness of ERS net- prohibits estimates of unit costs for standard proce- work is clearly reflected by the lack of resources (finan- dures, and thus limits monitoring. In addition to the cial, technological, and human) in the governorates,105 lack of fee price regulation, the system further deep- where the need increasingly exists. MoPHP has pre- ens the inequality effect through its lack of user fee pared a national plan that addresses the need of Emer- protection for those unable to pay health services.104 gency Service and Rescue interventions such as pro- Only a few ad hoc community initiatives support the viding ambulances, human resource capacity building, poor at the local level, while special funds that provide and medicine provision, and is seeking support for the financial aid to certain categories of vulnerable people establishment of 10 centers at the governorate level. such as the SWF, SFD, Disability Fund etc., are under- utilized. Thus, as prices for food, fuel, transportation, 5.2.3  Reproductive Health and water increased throughout 2011, vulnerable peo- ple’s access to healthcare suffered even further, as user Baseline fees put medical treatment beyond the reach of most. Reproductive health (RH) and population growth indica- 5.2.2  Health Emergency Services tors paint an alarming picture. Yemen has one of the high- est maternal mortality rate in the world at 366/100,000 In the health sector there are three main committees live births in 2010, making this more than just a techni- overseeing the health sector emergency and disaster cal problem but a political problem. Add to this the high planning. These include the Higher Health Council for fertility rate at 6.1 children per woman in reproductive health emergencies and disaster preparedness, the pre- age (rural: 6.7, urban 4.8); total fertility rate (TFR) of paratory committee for health emergencies and disas- 6.7 for illiterate women; 4.3 for those with preparatory ter preparedness planning, and the executive commit- education; and 2.8 for women who completed secondary tee for health emergencies and disaster preparedness plans. Each of these committees has representation at 102  Source: MoPHP. the national, governorate, and hospital levels. All three 103  At PHC level in Sana’a, the doctor focused specialized ser- committees are headed by the Minister of Health but vice to generate fees rather provide essential primary health ser- differ with technical membership. vices; the funds generated are shared among health workers. 104  This despite a legal obligation on the part of private facil- Emergency and Rescue Services (ERS) are of crucial ities to provide free emergency care to individuals unable to importance in protecting population under crisis con- pay for services. ditions both in disaster and conflict times. Within the 105  Reports of the governorate on the situation of ERS. 91 Joint Social and Economic Assessment education;106 infant mortality rate (IMR) of 68.5/1,000; to clean drinking water, particularly in more isolated crude birth rate of 37.9/1,000 (CSO 2010); and contra- rural areas, leads to the spread of associated diseas- ceptive prevalence of only 19 percent corresponding to es and infections, which has serious implications for levels of population growth rate at three percent per hygiene, including during delivery. Meanwhile, hun- year, and it is clear that the need is not matched by an ger often impacts expectant mothers more severe- appropriate number of dedicated staff and health facili- ly than others, weakening women and placing them ties. Despite the fact that authorities recognize the huge at increased risk for other avoidable illnesses. All of unmet needs for RH in Yemen population, the financial these issues have a compounding impact on women’s backing of the subsector, necessary for the full roll out health—especially reproductive health. of appropriate strategies, is inadequate. Various assessments report unmet needs for repro- Impact ductive health services, with deliveries conducted under unhygienic conditions, inadequate health care services, Though no comprehensive baseline data and reports and virtually no referral systems for Basic Emergency on RH exist, and it is impossible to evaluate the impact Obstetrics Centre (BmONC). For example, all gover- of the crisis as a whole, it can be stated that the avail- norate hospitals provide a Basic Emergency Obstetrics able data speak for dire conditions already before the Center per 500,000 population. (Consider the number events of 2011.107 Prior to the crisis, 77.2 percent of of women of reproductive age at 3,421,805 (CSO 2010) deliveries were reported to be unassisted by skilled and if there are 56 government hospitals that provide staff, placing both mother and child at serious risk.108 BmONC, then on average, 1 hospitals provide BmONC In rural areas, only four out of every 10 women receive for 61,104 women of reproductive age.) ante natal care (ANC), and only three receive care The 3rd five-year National Health Plan identified during delivery,109 disproportionately increasing mor- one of its key six objectives as the reduction of mater- tality rates among women. During 2011, the maternal nal mortality rate by extending “safe motherhood ser- mortality rate is expected to have remained high as a vices in the context of reproductive health services in direct result of the severe deficiency in ANC provid- all health facilities and among all community groups.â€? ed to women, as well as the lack of access to medi- The same priorities were carried over to the 4th five- cal services designed specifically for women, includ- year National Health Plan. From the 3rd Plan to the ing reproductive health services. 4th, only 56 percent of the targeted objective was met, Yemeni women had been already suffering risk with the lowest achievements in the categories of: and vulnerability in their daily lives (as detailed in i) support female staff involvement in the health sec- the baseline data), and the crisis has made them even tor (at 34 percent); and ii) extend and promote quali- more vulnerable in terms of their reproductive health ty pregnancy care (at 37 percent). The situation is fur- and rights. Demonstrating the impact on reproductive ther compounded by prevailing cultural norms, under health, however, is difficult, especially in the Yemeni which women may not leave their homes without being context. While this section seeks to assess the impact accompanied by a male adult family member, even to of the crisis given the available data, there are several seek medical care for themselves or their children. For the same cultural reasons, instances of sex- or gender- 106  YFHS 2003. based violence (SGBV) and female genital mutilation 107  The rise in fuel prices, lack of electricity, as well as high (FGM) are rarely reported. transportation costs compound by lack of safety and security and traditional and cultural norms are all indicators that lead Women’s health and maternal health are affect- to the belief that the situation has worsened. ed by any number of broader social challenges, such 108  Yemen Report 2010: Millennium Development Goals. as malnutrition and extreme poverty. Lack of access 109  CCA 2011. 92 Expanding Basic Service Delivery important caveats which need to be recognized when center capital of Sana’a. For example, UNFPA recent- considering the analysis: ly communicated with the Zubeiri Health Office of Al Thawra Hospital in the Old Sana’a and confirmed • The overall data in this category is already a that it has not been able to provide much maternal challenge to acquire, given the various cultur- health care due to fleeing of foreign health care work- al and traditional barriers that exist to survey ers, especially related to maternal health issues. And such information; this part of the Al-Thawra hospital has been especial- • The institutional capacity to obtain such data ly equipped well for maternal and child health care, has historically been weak, and the disrup- to provide safe delivery, emergency obstetric care ser- tion of security in 2011 only made it more dif- vices, and even treatment for obstetric fistula cases. ficult to carry out important surveys such as While the infrastructure exists in good condition, with- DHS and the Household Budget Survey. This out enough health care providers, the institution can- means that the opportunity to survey some of not meet the needs of many women. the key issues surrounding reproductive health Outside of Sana’a, while some other health offices has been missed; in nine districts within Abyan are technically “open,â€? • Also, the kind of impact that occurs in repro- health workers are operating with minimal supplies. ductive health is not always as immediately More specifically they receive only around five per- visible as death, but one that lingers and is cent of the total drugs allocated for five governorates often cascaded behind other competing pri- instead of the 20 percent needed to function properly, orities. In fact, such level of prioritization in including reproductive health commodities. Again, the itself is indicative where women’s status is in lack of security coupled with the inaccessibility of the such situation. health workers has left health offices without steady delivery of drugs for the past four months.110 Cases of Destruction of Health Facilities Reproductive in Abyan and Sana’a depict more than the infrastruc- Services tural debilitation of reproductive health services deliv- ery. The connotations of this destruction speak to the From ground reports it is clear that many health institu- depletion of women’s sexual and reproductive rights. tions providing services to women have been destroyed, especially in areas such as Abyan that continue to expe- Lack of Funding for Reproductive Health rience violence. Coupled with this reality, Ministry of Interventions Health’s capacity has been heavily affected, whereby anecdotal accounts collected by UNFPA describe how Moreover, many Yemeni women of reproductive age ministry and other government health officials could have further experienced setbacks due to the lack of not access health offices and clinics due to the insecu- well-funded international assistance available against rity of these areas. For example, the Director General of their needs. This is because international assistance Abyan health office still cannot access his office due to has been largely catered towards more “immediateâ€? the volatile security situation. Also, all health staff in needs such as food, water, and shelter. For example, Zinjbar and Jaar districts has fled from the health offic- as of March 2012, project proposals for reproductive es, leaving health offices dysfunctional. This includes health identified in the Consolidated Appeals Proj- all the foreign health workers who were providing tech- ect (CAP) for the United Nations have been funded at nical assistance to the district health offices. In fact, the vacuum of foreign health workers not UNFPA interview with Director General of Abyian Health 110  only occurred in areas such as Abyan but also in the Office. 93 Joint Social and Economic Assessment 0 percent. Also, several development partners evacu- Gender-based Violence and Women’s Health ated and halted their interventions on the ground due to security instability, especially at the height of vol- Gender-based Violence (GBV) is particularly an area atility in 2011. This means that there was an overall that merits attention during crisis and post-crisis period, increase in the needs of reproductive health services as recognized by Security Council Resolution 1820, and by Yemeni women which could not be met by inter- the various Secretary Generals’ Reports in response to national interventions due to lack of funding and/or the resolution. Gender-based Violence includes sexual evacuation of development partners. violence, and has been noted in the Yemeni context as As a result of the above, the risk and vulnerability elsewhere. Moreover, GBV, and in particular Violence of women to access safe delivery, family planning, and Against Women (VAW), often has significant impact emergency obstetric care have been greatly compromised. on women’s reproductive health. Especially in a country like Yemen where the adolescent Preliminary figures from 2011 indicate high levels fertility rate111 is 73.7 births per 1,000 women who are of gender-based violence as a result of the civil unrest. between the ages of 15 and 19, there is a greater chance In April 2011, for example, there were 7,240 cases of of these women being exposed to suffering from various violence against women reported, 6,099 in May, 480 delivery-related complications. This means that the over- in June and 693 in July. The incidences of violence per all reproduction rate of Yemeni women under 20 is cur- geographical location are: 13,265 in Sana’a; 2,910 in rently at 52 percent, which is lower compared to 1994 Ta’iz; 1,688 in Hodeidah; and 633 in Aden. In the first rate of 66 percent,112 however the figure remains high quarter of 2012 alone, five rape cases were reported compared to the global average. In general, the mortal- in Ta’iz. Also Médecine Sans Frontières (MSF) record ity rate among mothers less than 20 years of age rep- showed cases of early/formed marriages by IDP fami- resents one-third of total maternal deaths, indicating a lies. Anecdotal accounts collected by UNFPA reveal that serious risk associated with early pregnancy. IDP families who are especially poor are prone to opt In the case of IDPs, there is an estimate of 115,875 for marrying their daughters at younger ages in order women113 who are of reproductive age.114 For exam- to mitigate the overall household economic burden. In ple, in the North,115 the estimated number of IDP some cases, IDP families have “offeredâ€? their young women of reproductive age is 55,600, of which 11,117 daughters for marriage to better assimilate themselves women are pregnant. In the South,116 17,162 are of to the host communities. Monitoring data on the civil reproductive age of which 3,500 are pregnant. In a uprising in different key cities across the country indi- UNICEF survey, of the 1,592 women of childbearing cates that sexual violence occurred during the crisis, age sampled, 23 percent were pregnant, about half of but due to stigma and cultural norms it is often under- whom were at severe to moderate risk of intra-uter- reported and remains a largely hidden form of abuse. ine growth retardation, and 37.8 percent had mod- erate to severe anemia (UNICEF/MOPHP July 2011). 111  The adolescent birth rate measures the annual number of Applying similar rate to the Northern and Southern births to women 15 to 19 years of age per 1,000 women in that IDP pregnant women, approximately 5,500 preg- age group. It represents the risk of childbearing among adoles- cent women 15 to 19 years of age. It is also referred to as the nant women could be suffering from anemia and age-specific fertility rate for women aged 15–19. http://mdgs. are at great risk of experiencing complications dur- un.org/unsd/mdg/Metadara.aspxâ€??IndicatorId=0&SeriesId=761. ing delivery as well as losing their babies. There is 112  Yemen Report 2010: Millennium Development Goals. 113  At 25 percent of the total population of 463,500 IDPs. also a record of 194 miscarriages among 2,800 preg- 114  15–49 years of age. nant women IDPs in the Hajja (Harad is part of Hajja 115  Sa’ada, Hajjah, Amran, Al Jawf. governorate), which represents a miscarriage rate of 116  Abyan, Lahj, Aden. approximately seven percent.117 117  Part of Hajja governorate with 102,346 IDPs. 94 Expanding Basic Service Delivery According to the data collected by the Sisters Arab Data collected by humanitarian organizations Forum for Human Rights (SAF) on behalf of UNFPA, in Haradh shows that sexual violence is a major an estimated number of 17,803 cases of violence protection issue among displaced populations. From were reported in different governorates across the January to April 2011, MSF Spain registered 17 cases country; the majority involving male perpetrators, of sexual violence within the family (related to early/ accounting for 85 percent of cases, two percent forced marriage), of which six are male and 11 are women, four percent boys, less than one percent female; and 10 cases of sexual violence outside the girls and another nine percent are not accounted family (six female and four male). The IDP profiling for. The statistics from SAF indicate that two cases report (2010)a revealed that girls face serious risks of of rape against women were recorded, 12 women sexual violence in going out to herd animals and in were kidnapped, probably exposing them to sexual collecting firewood beyond the camps in Haradh. violence and abuse. Another two boys and one girl were abducted. The key perpetrators of the violence a Danish Refugee Council & UNHCR (Sept 2010): Profiling for IDPs and returnees in Northern Yemen. are security forces, accounting for 88 percent of all recorded cases, while other armed opposing groups accounted for 11 percent of all recorded cases. the governorates of Hodeidah, Hadromout, Al Mahra and Aden, which range between 82.2 to 96.6 percent The consequences of coerced and early marriage of women, are extremely high. Moreover, many IDPs are, including but not limited to, non-consensual sex- originate from these areas, further underscoring the ual intercourse (equivalent to rape) that causes phys- heightened vulnerability of these women. ical and psychological damage as well as obstetric fis- The Interagency Comprehensive Child Protection tula from complications during delivery.118 The effects Assessment in conflict-affected governorates in North of obstetric fistula are that the affected woman can- Yemen119 reveals that rates of sexual violence, exploi- not control her urine and sometimes her bowel, leav- tation, and abuse had increased during the displace- ing her unable to stay dry. Further, the smell of urine/ ment period during and after the 6th war in February feces often makes her ostracized from her own com- 2010. Up to nine percent of interviewed girls and four munity. Given that there are currently no comprehen- percent of boys report having experienced sexual abuse sive emergency obstetric care services available in IDP and exploitation. Of these cases, 30 percent of the per- camps—procedures such as Caesarean section—the petrators were from the family, 25 percent from the risk of maternal death and other complications such community and 25 percent from security officials. It as fistula are elevated for the several thousand young is a problem that victims and survivors of sexual vio- women who are pregnant. lence have fairly limited access to appropriate care and Girls who have undergone female genital mutila- support in the conflict-affected areas. tion/cutting (FGM/C) are under similar risk in relation to childbirth. Practices of genital mutilation or cutting 118  Obstetric fistula is “a condition that often develops during can result in significant complications during child birth, obstructed labor, when a woman cannot get a Caesarean sec- tion (C-Section). Obstruction can occur due to malnutrition and including death from bleeding, and sometimes in the pregnancy at a young age (which leads to small pelvis width death of the baby (raising the likelihood of death to and thus pronounced cephalic-pelvic disproportion).â€? Taken 15–55 percent, depending on the level of mutilation), from the Obstetric Fistula Needs Assessment Report Findings and obstetric fistula. In Yemen the national average of from Nine African Countries. 119  See also http://www.humanitarianinfo.org/iasc/; the report FGM/C is recorded at 21 percent. Geographical dispar- was issued in June 2010. The Interagency Standing Committee ities, however, reveal extremely high concentrations of is a consortium of UN agencies and Non-UN agencies engaged affected women that the national average obscures: of in humanitarian affairs. 95 Joint Social and Economic Assessment 5.2.4  Child Health In addition to lower rates of access to health care and poorer nutrition, children from poor families seek Baseline employment outside the home, placing them at great- er risk of social harm and social violence, while the While the Government of Yemen was beginning to show high stress of chronic unemployment and hunger with- modest improvement in some key child health indica- in families makes children more vulnerable to neglect tors before the crisis, the situation of children’s health and domestic violence or abuse at home. The analysis was precarious even before 2011. Mortality rates among done within the United Nation’s 2011 Common Coun- children under the age of five, for example, decreased try Assessment describing the root causes of child mor- from 122 cases per 1,000 live births in 1992 to 77 in tality is still relevant and should be addressed by the 2010, while infant mortality rates decreased from 83 longer-term development programs. cases per 1,000 live births in 1992 to 57 cases in 2010.120 Malnutrition is the leading cause of childhood Data from 2006, however, show that the rate of reduc- death, severe hunger often starting in the womb, tion slowed considerably between 2006 and 2010; as a whereby maternal hunger often results in children result, at the end of 2010, Yemen was not on track to being born underweight and with an increased risk of achieve its MDG targets by 2015.121 The root causes of dying before the age of five. Adequate food consump- these high mortality figures largely reflect high rates tion dropped from 76 percent in 2006 to 40 percent in of poverty in the country. 2008, with inadequate food consumption increasing Within the 3rd five-year DPPR objectives, reduc- from nine to 24 percent, and nearly 22 percent of the tion of child mortality was one of the key objectives population severely food insecure which represents evaluated against four policies and 10 indicators with 87 percent increase from the last CFSS conducted in an average implementation rate of 55 percent. The low- 2009. At the same time an additional five million peo- est indicators were “enhance coverage of the extended ple were found to be moderately food insecure. Early immunization program to eliminate Polio and Measles age of motherhood is also a factor, as children born to by 2010â€? with an implementation rate of 42 percent, very young mothers are more vulnerable to diseases and “extend the integrated child health strategy for and hunger in the early stages of life. Compounding the management and control of common childhood complications around early motherhood, a majority of diseases such as malnutrition, acute respiratory infec- babies are delivered at home, without the presence of tions, measles, and diarrhea.â€? Prior to the crisis cov- a skilled health worker, which increases the risks for erage of well-proven interventions that are known to both mothers and newborns. Furthermore, some gov- reduce child mortality were already quite low: Only ernorates receive a much lower level of funding for 47 percent of children with suspected pneumonia were health services than others. taken to a health facility and out of these only 38 per- cent received antibiotics; over 50 percent of children Impact under the age of five have diarrhea and only 48 percent receive oral rehydration solution and continued feed- While the real impact on child morbidity and mortal- ing. Coverage of children under age five with twice- ity rates may not be known, a number of indicators yearly supplementation with Vitamin A, which has been shown to reduce all-cause child mortality by up to 24 percent,122 is less than 45 percent.123 120  Yemen Fact Sheet: UNICEF, WHO, UN Population Division and the World Bank, 2011. Child mortality in poorer families remains signif- 121  Yemen Report 2010: Millennium Development Goals. icantly higher than the national average, highlight- 122  Mayo- Wilson et al British Medical Journal 2011 Aug 25, 343. ing the strong link between poverty and mortality. 123  UNICEF, SOWC 2012. 96 Expanding Basic Service Delivery point to continuing challenges as a result of the 2011 teams for years due to ongoing conflict, 132,000 chil- crisis. In 2012, the Government officially reported a dren (80 percent of target) were vaccinated in 2011. Sub- measles outbreak with a total of 4,250 cases and 177 sequent vaccination campaigns were needed in 2012 to deaths Over 75 percent of the deaths were registered contain polio and measles outbreaks and boost popula- in the last two months of 2011 and early 2012. Chil- tion immunity that had declined due to the crisis. This dren under five years of age bore the greatest brunt has been at a cost to both the government and part- of the outbreak with 70 percent of the reported cases ners, diverting the scarce resources from other com- and the majority of the reported deaths. The first peting priorities such as the routine immunization pro- cases of measles outbreak were reported in Maaber gram and overwhelming an already weakened health area of Jahran district in Dhamar governorate in June system. The measles outbreak response campaign, for 2011, due to the low immunity profile as a result of example, that had to target a wider age group of chil- the lack of access by immunization teams. The out- dren aged six months to 10 years to contain the out- break spread out to the other governorates affected by break, cost US$7 million. More campaigns within other recent crisis such as Shabwa, Abyan, Aden, Lahj, Al- programs will need to be launched in order to cover Dhale and Al-Biedha, demonstrating the link between missed cases and to compensate for unavailable ser- chronic underdevelopment and heightened vulnera- vices in locations where facilities are not functioning. bility in a crisis. The overall limited access to health services due The crisis caused a disruption of routine vaccina- to high transportation costs, lack of capacity, safety tion services and much lower vaccination coverage and security (including the very low number of oper- during 2011—with only 27 percent of districts achiev- ational OTP centers in the Northern, Central and West- ing coverage of 80 percent of the targeted children— ern governorates), increased risks associated with compared to 75 percent of districts achieving the same child health. It is estimated that as much as 20 per- coverage in 2010. The four rounds of outreach servic- cent of facilities were shut down at some point during es that contribute to 30 percent of the overall cover- 2011 as a result of frequent power cuts and gas short- age were not undertaken due to the crisis until the last ages, while other locations, such as Aden where the quarter of 2011. cold vaccination room was overrun by militia in 2012, Analysis by WHO of the acute watery diarrhea were more directly impacted by civil unrest and con- (AWD) outbreak in 2011, shows a total of 31,789 cases flict. The table below additionally illustrates the neg- with 124 deaths. The cases were from Abyan (34 per- ative impact of 2011 on one of the key child survival cent), Aden (46 percent), with other cases reported in Ibb, Lahj, and Al-Dhale governorates. Of the total cases reported, an overwhelming 56 percent was among Table 17: Trend of IMCI Selected Activities children under five years of age, while 66 percent was Description 2009 2010 2011 among children aged less than 15 years. Considering Number of training 39 41 7 that 46 percent of Yemen population is below 15 years courses of age, this figure represents an excess in morbidity Number of new 26 30 9 districts for this age group. Number of new 360 324 37 Despite Yemen being declared Polio free in 2009, a health facilities polio outbreak was recorded in 2011, which prompted Number of newly 907 937 195 an immediate outbreak response vaccination campaign trained staff Number of 1,238,419 536,091 29,807 that reached approximately 4.4 million children (97 per- new children (Outreach +) (No Outreach) cent of target) under the age of five. In Sa’ada gover- beneficiaries norate, which has not been accessible to vaccination Source: Government of Yemen and JSEA Staff. 97 Joint Social and Economic Assessment initiatives, the Integrated Management of Child Illness- es (IMCI) program. Box 16: Impact on the EPI Nationwide 5.2.5  Communicable Diseases EPI coverage was seriously affected during 2011. The vulnerability of immunization activities can be seen by studying the trend of coverage and measles Baseline outbreak cases starting from 2008 till early 2012. The low routine coverage in fixed posts was 60 percent in Yemen, like other developing countries, has a high 2010 and 56 percent in 2011. Immunization activities burden of communicable diseases. The 2009 MoPHP were suspended in Al Jawf, and in Abyan (Zingibar, Annual Statistical Report show that infectious diseas- Khanfer) due the security situation. The outreach es contribute to 20 percent of outpatient attendance activities planned for May to July 2011 were delayed resulting in a further decrease of three percent of and are the commonest cause of hospitalization.124 the outreach activities. This, in conjunction with the Among the communicable diseases commonly seen at displacement of people, crowded living conditions the health facilities are (in order of magnitude) non- and the decrease of the overall immunity has led bloody diarrhea, malaria, typhoid, bloody diarrhea, and to increase of communicable diseases, especially bilharzia. Other commonly reported diseases include measles. meningitis, dengue, chikungunya, and viral hepatitis. The figures show that measles cases per million In 2009, non-bloody diarrhea was in the top five dis- increased about six times in 2011 compared to 2010 eases in 22 governorates and Socotra Island and the (2011: 135.9/1,000,000; 2010: 21.2/1,000,000). number one cause of outpatient attendance and inpa- tient admission in 19 governorates and second in four Source: Government of Yemen and JSEA Staff. others. Bloody diarrhea, indicating very poor sanita- tion and inadequate supply of water, was reported in the top five diseases in 19 governorates. Diarrhea is endemic in Yemen and is the second leading cause of In addition to AWD/cholera and measles, several death especially among young children. other communicable diseases, including chikungunya and HIV/AIDS remain of concern. In October 2011, for Impact example, Yemen witnessed an outbreak of chikungun- ya in October 2011, which affected about 13,500 peo- With disruption of the health services and prevailing ple, out of which 199 cases were hospitalized, with risk factors conducive to spread of infectious diseas- 72 reported deaths (a case fatality rate of 53 percent). es, the year 2011 witnessed increase of communicable HIV-AIDS prevalence is estimated at 0.2 percent.125 No diseases in comparison to 2010. Overall figures for 2011 data are available for increased spread of the disease are thought to be much higher even when compared during 2011 though patients on specific therapy may with what is being reported, given the real incidenc- have suffered of gaps in follow up and stock outs of es and prevalence of the diseases due to interrupted medicines. working environment and communications. For fur- ther reference, please see Table 12, Annex Chapter 5. Most devastating was the outbreak of acute watery diarrhea (AWD)/cholera This outbreak stemmed from 124  The Fourth 5-Year Health Development and Poverty Allevi- ation Plan 2011–2015-MoPHP. the reduced per capita household water availability 125  While the overall prevalence rate is low, it is rising among spe- due to increased costs of water and/or destruction of cial groups (homosexual inclination) with a rising risk of trans- the water systems. The data are as shown in Table 18. mission (see also UNGASS Country Progress Report 2012-Yemen). 98 Expanding Basic Service Delivery Table 18: Cholera and Diarrhea Outbreak Table 19: Crisis Related Injuries Cholera or Cholera Geographic Location Deaths Injured AWD/Cholera Outbreak AWD Affected Sana’a 244 4443 Abyan 30 10,842 + 431 Ta’iz 46 1016 Aden 16 13,850 + 551 Hadramouth 2 42 Lahj 4 2,730 Aden 36 191 Al Dhale 42 3,172 Ibb: The AWD 12 deaths 42 1,044 Abyan (explosion gun 35 97 reported last two months factory) (not calculated but trend declining. in the total) Hajjia — 87 Abyan 6 83 Source: Government of Yemen and JSEA Staff. Other governorates 37 316 TOTAL 369 6049 Source: Government of Yemen and JSEA Staff. 5.2.6  Injuries Treatment There is no baseline available for violence and inju- operated these AMPs and support was provided to ries in Yemen; however the use of live ammunition in over 4,000 injured individuals that were transported order to control demonstrations during 2011 may have by ambulances to referral hospitals during the politi- increased the total number of cases. Again, there are cal crisis. Another eight referral hospitals, both pub- no data on the number of population who are disable lic and private, in Sana’a, Aden, Ta’iz and Hodeidah or face severe or extreme difficulties in functioning as provided support in the form of medical supplies and a result of 2011 events, however, the government is equipment for emergency life saving health care ser- taking measures in granting free treatment in country vices including surgical wards. User fees were removed and/or abroad, e.g., Turkey, depending on the case. as a compassionate measure during the crisis. In addi- So far, there are about 369 deaths and 6,500 injuries tion, 33 ambulances, stocked with with medicines and confirmed. Many episodes presented as “mass casu- supplies, were supported (including the operational altyâ€? increased further the demand on health servic- cost—fuel, maintenance, etc.) to provide round-the- es and on the health workforce that, despite efforts, clock services to transport injured people during the were unable to triage and manage the logistics of mass political crisis. casualties. Table 19 below comes from the analysis of different reports, and though it may not be complete 5.2.7  Mental Health because injured patients did not always go to health facilities in fear of being arrested, it gives an idea of Although mental health/psychiatric care is an essen- strain put on governorates main hospitals. tial part of any emergency health response, resources Caught by the surge in demand and lack of capac- for this area are not always forthcoming in complex ities much attention was given to establish field hos- emergencies. In Yemen, the dearth of trained men- pitals and organize other related activities. Training of tal health professionals in general, and female men- Trainers was conducted for 230 medical personnel in tal health professionals in particular, coupled with Triangle and Mass Casualty Management in Sana’a, limited resources, stigma, and traditional behavior, Aden, Ta’iz and Hodeidah. Eight Advanced Medical severely limited the provision of mental health care Posts (AMPs) and Field Hospitals were established services throughout the crisis. There is no existing and operationally maintained in those four cities as data on percent of population with severe or extreme well as in other demonstration sites. Youth volunteers difficulties in functioning, but it is well known that 99 Joint Social and Economic Assessment there is only one rehabilitation hospital in the entire of the national health services in an equitable, effec- country. Further, the psychiatrists providing psycho- tive, efficient, and sustainable way. Such institution- social services to IDPs in camps or in hospitals, for al development will allow the MOPHP to perform its example in Al Jumhuria Hospital in Sa’ada, are very role to steer the national health system and to act as limited in number. It is estimated that two to three the custodian for the health of all people in Yemen. percent of the population suffers some form of severe Institutional development will strengthen policy and disorder, e.g., psychosis, severe depression, or severe- planning capabilities in order to efficiently implement ly disabling form of anxiety disorder. Statistics show the suggested priorities. that during conflict, the prevalence of severe mental Organization and Management. Ensure the appro- disorder generally increases by one percent on aver- priate organizational structure is in place to a) re-estab- age, while mild or moderate mental disorders (i.e., lish the presently disrupted rapport between all levels mild and moderate forms of depression and anxiety of MOPHP, b) implement the strategic direction and disorders, including mild and moderate Post Trau- ensure clarity of roles and functions of different levels matic Stress Disorder (PTSD) is at 10  percent dur- of health care to achieve high access, equity, quality, ing conflict. effectiveness, efficiency, and sustainability. During conflict it is expected that a population, Medicines, Medical Technology, and Supply of Essen- whether directly or indirectly affected, may suffer from tial Medicines. Develop pharmaceutical and medical symptoms such as anxiety and depression. This was technology systems to ensure the implementation of borne out by results of a household vulnerability sur- new technology underpins the strategic direction and vey conducted by UNICEF in three governorates from that necessary organizational change accompanies June 2011 to March 2012. While the survey recorded investment in technology. Ensure increased availabil- heightened levels of fear and distress among children ity of essential medicines and supplies through the in households living in conflict areas, it also showed establishment of a revolving fund that may or may notable upticks among children from areas that did not include a cost recovery system. not directly experience violence. While there are no Improving Access to Health Services. Reduce the bur- available data on prevalence of psychiatric disorders or den of disease by addressing the priority health areas symptoms to inform on the impact of the conflict on through the most cost effective interventions and the population at large, reports from a mission in Harad development and enforcement of national policies and may prove instructive for determining needs among norms to steer the national health system in Yemen other conflict-affected populations. From October 2011 and achieve MDGs targets. to February 2012, a psychiatric doctor was deployed Human Resources for Appropriate Health Care Deliv- to support the population of the Harad area, where ery. Strengthen human resources management, work- he treated 812 cases, including five patients under force planning, production, and utilization—and value the age of 15. The majority of cases were diagnosed staff in their provision of health services. The purpose as mood disorders, including mild depression; other of this area is to correct the unfair dictum: “unskilled, cases included schizophrenia, delirium and seizures, untrained, un…â€? This dictum should change to make as well as anxiety disorders. staff confident, credible, and accountable. Performance Management, Quality/Safety, and Clin- 5.2.8  Recommendations ical Effectiveness: Improve quality and responsiveness of services and strengthen the role of the Ministry of Institutional Development of Ministry of Health & Pop- Public Health and Population in the promotion of clin- ulation. Strengthen capacity of MOPHP at all levels to ical excellence and the performance management of impart strategic and operational thinking and organizing service improvements. 100 Expanding Basic Service Delivery Investment into Capacitating Health Offices (espe- at the national level is lacking. One of the major gaps cially in the rural areas): there is a great need for health is the lack of laws that protect and empower women offices (hospitals, clinics, and centers) to have larger (i.e., combating early marriage, female genital cut- quantity and better quality of health providers. There ting/mutilation, etc.). Also, the transcription of inter- needs to be further effort to produce more “qualifiedâ€? national treaties andconventions should be pursued in health workers in tandem with the reconstruction/reha- a culturally sensitive way so that various stakehold- bilitation of the current health offices. Often hardware ers, including religious leaders, support the “nation- reconstruction projects are pursued during the transi- alization process.â€? tional years. However, they should be simultaneously Health Care Financing Management. Design a backed by software support. health-financing framework to ensure equity and social Innovative ways of increasing the health work- protection through rigorous examination of financing force to the recommended ratio must be implemented. alternatives while also developing transparent, effective Identify, train, and deploy a cadre of staff that can be and efficient budgeting, accounting, and audit systems. retained in remote rural areas; commencing with paid Government should aim at allocating at least seven community `volunteers’ with training in undertaking percent of its GDP to health as a minimum. A target simple curative and preventive health care including of five years to achieve this can be set with clear out- deliveries. Phasing in of paramedical personnel who puts/results.126 For example, an increase in government specialize in pediatrics, surgery, and other fields that allocation to health by one point of GDP will reduce can be deployed to the same areas. infant/under-five mortality by 10 percent. Careful atten- Special effort to increase female health care work- tion needs to be put in increasing Government’s bud- ers in gender-sensitive areas such as obstetrics and get on health and gender-based budgeting. In doing so, gynocology, and midwives should be seriously consid- it is important to ensure that the increase in the bud- ered. This effort should be further augmented by sig- get would be for programmatic activities rather than nificant revision of the Medical School curriculum to for operational cost. There needs to also be a policy build on the effort to nurture “qualifiedâ€? health work- that enforces gender-based budgeting to be practiced ers. In particular the curriculum should be revised to in the Health Ministry. put more emphasis on on-the-ground practical training. Community Involvement: Encourage individuals, Also for women’s health issues, medical school cur- families and communities to take more responsibili- riculum should expose medical school students to the ty for their own health and to contribute to determin- taboo issues that often affect women’s health (obstetri- ing the shape and patterns of delivery of health ser- cal fistula and early marriage, women’s sexual rights, vices in the future. and family planning, among others). Enhancing Women’s Health: increased availabili- Combating Gender Based Violence. There is a need ty and awareness of Family Planning services, includ- to transcribe/translate the various international trea- ing emergency obstetric care. The interventions sur- ties and conventions that Yemen has signed off into rounding family planning would help decrease rapid national laws. Particular focus should be put to the population increase and contribute towards overall Committee on the Elimination of Discrimination against population control. Women (CEDAW) process (for development efforts) as Health Information and Communications Sys- well as the implementation of Security Council Resolu- tems & Technology: Develop a health information sys- tion 1325 (for humanitarian efforts) in Yemen. Yemen tem that ensures the implementation of new ways of has committed itself at the international level on the various women and human rights’ treaties and con- Government, WB, UNICEF can work to calculate the exact 126  ventions, but implementation of these commitments budget. 101 Joint Social and Economic Assessment working and communication to underpin the effective uncertain, but is expected to be, on balance, nega- implementation of the suggested priorities as well as tive. In some areas, rainfall may increase but in oth- long-term plans; and develop the necessary organiza- ers decrease. Most likely there will be steady warm- tional changes to accompany investment in HIS and ing, increased unpredictability of rainfall, and more its technology. droughts and floods. Lack of adequate water resources, combined with 5.3  Water Sector under-investment and weak institutions, results in poor water supply and sanitation services, creating 5.3.1  Water, Sanitation and Hygiene notable differences for urban and rural residents. In 2007, only 56 percent of the urban population was Background connected to a public network (Middle East and North Africa (MENA) average is 96 percent). In many cit- Yemen is one of the most water-deficient Arab coun- ies, water cannot be provided on a daily basis, and tries, with declining freshwater resources due to in Ta’iz the interval sometimes reaches 40 days. The over-pumping of aquifers, and the increasing level of capital Sana’a has similar water supply problems, with aridity that is the result of low rainfall and high tem- water provided once every two or three weeks. Much peratures. In recent decades, the rapid growth of the of the infrastructure is in poor condition and physi- population and of commerce and industry, togeth- cal losses are high. The active private sector supplies er with the development of commercial agriculture, the needs of unconnected households through tank- have led to a surge in demand for water, estimated ers, local networks and water shops, and also meets in 2010 at 3.9 billion cubic meters (bcm) (90 percent the shortfalls in supply to households connected to for agriculture, eight percent for municipal uses, and the network. Costs, however, are high—water from two percent for industry) against a renewable supply a private tanker can cost up to ten times as much as of 2.5 bcm. The shortfall (1.4 bcm) has been met by network water. It is predominantly the poor who are depleting Yemen’s stock of non-renewable groundwa- not connected to networks, and who have therefore ter, which became accessible in the 1970s because of to pay these high prices. Network sanitation cover- modern tubewell technology. age is about 31 percent, with most households con- Neither traditional nor newly established water gov- nected to cesspits. ernance institutions have been capable of effectively In rural areas, communities have invested for mil- moderating the depletion of water reserves, and gov- lennia in elaborate water supply schemes, although the ernment has not been able to put in place or enforce springs that were the source for many of these schemes a modern regulatory framework. Water sector gover- have now largely dried up. As a result, access to safe nance is thus extremely weak, with traditional collec- water in rural areas was estimated to be 44 percent tive institutions largely overtaken by the individual in 2007 (MENA average 81 percent). In recent years, appropriation of the groundwater resource, and mod- access and services have been improved through pub- ern laws and regulations proving highly ineffective in lic and community cooperation to develop and man- the Yemeni context, which is characterized by weak age tubewell-based schemes. However, groundwater- enforcement of legislation (see also context review). based schemes are more and more vulnerable as water As a result, after thirty years of apparent abundance, tables drop, and as the water resource has dwindled, water availability is declining rapidly and non-renew- able resources are expected to run out within one to two decades in the densely populated highlands.127 The For example, Sana’a water utility has to drill about six new 127  possible impact of climate change in Yemen is highly deep wells every year to replace drying wells. 102 Expanding Basic Service Delivery it has become a challenge to sustain rural water sup- Water resource management: Beginning with the ply schemes in many locations. Adding stress to the creation of the National Water Resources Authori- rural household, access to safe sanitation stands at less ty (NWRA) in 1996, Yemen has struggled to put in than 30 percent of the population according to recent place a modern water-governance framework. In surveys, and poor hygiene practices further undermine 2004, the newly established Ministry of Water and health conditions. Environment (MWE) piloted the National Water The effect of these barriers to access on the pop- Sector Strategy and Investment Program (NWSSIP), ulation has been dramatic, and has hit the poor the which set out the implementation plan for a gover- hardest. Surveys estimate that around 4.5 million chil- nance framework of basin planning, basin commit- dren lived in households that have no access to an tees and local level community-based water associ- improved water source and that over 5.5 million chil- ations. The NWSSIP was updated in 2008. In 2009, dren have no access to adequate sanitation.128 These a ‘sector-wide approach’ (SWAP) based on NWSSIP types of low rates of access to safe water and sanitation was agreed upon by government and donors to ensure are major contributing factors driving the high preva- that all water sector investments were harmonized lence of diarrheal diseases, malnutrition, and mortal- and aligned within NWSSIP. ity in those under five years of age. However, implementation of this governance Since the beginning of the civil unrest, the secu- framework has fallen short of expectations. The rity situation has significantly deteriorated and access main reason for this is that water resources are in to basic services, including water, sanitation, and the hands of hundreds of thousands of fiercely inde- hygiene (WASH) has worsened. The General Author- pendent local households, and top-down regulato- ity for Rural Water Projects (GARWP) has reported a ry approaches to water resources management have sharp decline in the implementation of water projects gained little traction in Yemen’s chronically centrifu- in 2011, and estimates that over 239,000 rural inhab- gal governance environment. Little impact on water itants who were expected to benefit from a planned use or resource sustainability has so far resulted from 105 projects to improve their access will not see those the government’s initiatives. By contrast, however, much-needed resources. In addition, it is estimated there are striking examples of communities coming that more than 5.7 million people have been affected together to try to manage their own water resourc- by the lack of fuel, the absence of resources to per- es more sustainably, sometimes with public sup- form basic maintenance on existing systems, and inad- port, but often without it. In recognition of the real- equate funding for 3,628 rural water projects. In addi- ity of local control over water resources, a national tion to the heavy impact on rural communities, urban conference in January 2011130 validated NWSSIP and areas also were affected, such as the Aden neighbor- endorsed the Sana’a Declaration on Water with both hood of Shoula, where sewage is flooding the streets documents having a particular emphasis on decen- while solid waste is accumulating—a sign of the dete- tralized approaches to water management, the prima- rioration in public services.129 cy of community-based management, and the need Reforms Implemented Prior to 2011 128  WHO/UNICEF Joint Monitoring Program for Water Supply Yemen has long recognized that water shortages are and Sanitation, 2010 update. 129  Humphrey, J.H. (2009) “Child undernutrition, tropical enter- a critical constraint to economic and human develop- opathy, toilets, and hand-washing.â€? The Lancet; vol. 374, no. ment, and has worked hard over the last two decades 9694; p. 1032–1035. doi:10.1016/S0140-6736(09)60950-8. to develop investment and institutional responses to 130  The National Conference for the Management and Develop- the emerging crisis. ment of Water Resources in Yemen. 103 Joint Social and Economic Assessment for public agencies to work in support of communi- Rural water supply and sanitation: In rural water ty-based ‘bottom-up’ approaches. supply, following the bleak assessment of previous Agricultural water management: In agriculture, pub- ‘top down’ approaches, the last decade has seen the lic agencies have long worked with farmers to support introduction of global best practices in the ‘demand- improved agricultural water management, co-investing responsive approach’ (DRA), which gives communi- in water use efficiency and conservation in both ground- ty associations choices but also responsibility in the water and spate irrigation, and in watershed manage- investment and operation of locally-run water supply ment and water harvesting. Research and extension schemes. This approach was incorporated in NWS- programs have also focused on water use efficiency. SIP, and resources were allocated to move Yemen rap- Public programs have scaled-up these approaches and idly toward much higher rates of coverage. Over the begun to link improved agricultural water management last decade, progress has been made, with an extra to broader, integrated community-based water resourc- 3.3 million rural people reported to be accessing safe es management approaches. Both NWSSIP and the water, though as noted above, overall the percent- National Agricultural Sector Strategy and Implementa- age of rural access still hovers at a low 44 percent tion Plan (NASS), approved by the Council of Minis- (2007). Government’s rural water agency, the General ters in March 2012, confirm this approach. However, Authority for Rural Water Supply Projects (GARWSP) coverage of these programs is so far limited, and unless has been overhauled. The Social Fund for Develop- improvements in water use efficiency are linked to col- ment (SFD) has successfully innovated low-cost and lective water resources management, there is no assur- sustainable supply from water harvesting. The Rural ance that the consumption of water actually will reduce. Water Supply and Sanitation Project (RWSSP) has Urban water supply and sanitation: In urban water, piloted DRA. Community-based organizations have a far-sighted reform program was adopted in 1996 to shown how grassroots initiatives can create strong decentralize service provision to autonomous utilities, sustainable institutions, and non-governmental orga- local corporations (LCs), which were established to nizations have introduced alternative technologies run along commercial lines. At the same time, invest- and supported community mobilization and health ments were programmed to finance the rapid expan- education. The main challenges are expanding cov- sion of networks and supply. This approach was con- erage to the poorer, remotest communities at afford- firmed by NWSSIP. However, although there has been able prices, offering a broader range of appropriate, considerable investment in expanding coverage, water low-cost technologies, and ensuring sustainability of consumption in towns is expanding even faster, and water sources. the percentage of the urban population covered has scarcely risen. In some highland towns, bulk water Long-Standing Structural Challenges of the shortages have meant that expanded networks have Water Sector resulted in reduced per capita supply, with pre-crisis average per capita supply in some large towns as lit- Clearly, as Yemen entered 2011 the nation faced mul- tle as 30 liters per capita per day. Evidently, these util- tiple structural challenges in its water sector, and ities are running in order to stand still. They are also these challenges remain valid today after the politi- conflicted between three, at times, incompatible man- cal events of 2011: dates: affordable service expansion and provision, a business approach, and protection of the poor, all of • Mechanisms for more sustainable water which are to be served by a scarce water resource. In resource management need to be strength- all cities, tariffs remain below operation and mainte- ened, based on the reality that only local water nance cost-recovery levels. users can change water use patterns; 104 Expanding Basic Service Delivery • Agriculture has to adjust to greater water use on the black market. Farmers were not able to bene- efficiency and less water-intensive production fit from public programs for irrigation improvement or systems while maintaining agricultural income from extension, as public services were disrupted on as far as possible (“more income per dropâ€?); a major scale. There was also widespread breakdown • The economy has to prepare for an orderly in markets, due in part to civil turmoil, but also due to shift from a predominantly rural, agriculture- constrained transport from farm to market and onwards, based economy, to non-farm activities and a due to shortage of fuel and spare parts. The activities gradual rebalancing of the population towards of public agencies, including Ministry of Agriculture urban centers; headquarters and branches, the regional development • Settlements have to negotiate increased water agencies, and the Agricultural Research and Extension sources from their rural hinterlands as well as Authority, were impeded, and a number of agencies improve water use efficiency; suffered damage and looting, some on a large scale. • Towns have to ensure expansion of network Urban water supply and sanitation: With large and coverage in an affordable and sustainable way, visible installations in the heart of population centers, offering options for the poor; urban water utilities proved exceptionally vulnerable • Rural water supply has to be increasingly to the unrest. In addition, water services are depen- assured from sustainable sources, including dent on energy, materials, and spare parts, supplies from water harvesting; of which suffered widespread disruption. In all urban • Future urban commercial and industrial growth centers, utilities suffered from lack of electricity and has to be located where adequate sustainable diesel, which caused reduced production from wells, and affordable water sources are available. as well as persistent problems in distribution. Reduced supply performance and overall chaotic conditions also 5.3.2  The Impact of 2011 on the Water Sector reduced both billing and customer payments, resulting in a cash flow crisis, which in turn impacted on service The impacts of the political crisis of 2011 were perva- delivery performance. Non-revenue water increased as sive throughout the country, not the least in the water the number of illegal connections rose. Sana’a LC, for sector. The principal impacts are summarized below: example, suffered a 20 percent drop in water supplied Public agencies: Public programs and services suf- and billed, and a 47 percent drop in collections dur- fered widespread disruption throughout the country ing 2011. By December 2011, the LC lacked resources and across all parts of the water sector. Public invest- to purchase fuel, resulting in a further vicious circle of ment essentially ground to a halt, and donors suspend- reduced supply, reduced billings, and reduced collec- ed disbursements. Ministries and other public agencies tions. When fuel is available on the black market, it is were highly visible targets during outbreaks of civil sold at YR 130–150/liter, against the official price of YR unrest. MWE and GARWSP headquarters were exten- 59/liter. Diesel shortages also affected private pump- sively damaged and looted and require complete reha- ing and water sales, and retail water shops faced steep bilitation and re-equipment. Project facilities and stores increases in the cost of both raw water and packaging. also suffered extensive damage and looting. The retail cost of a cubic meter of water rose from YR Irrigated agriculture: In agriculture, the impact was 2,000 ($10) to YR 14,000 ($70), and many shops had felt in both production and markets. Public agencies and to cease trading altogether. projects suffered significant disruption and damage. In Several LCs have suffered extensive damage to production, groundwater irrigation was disrupted by installations and equipment. In Abyan, the LC has a lack of diesel fuel and spare parts, and by the high been essentially taken over by Non-State Actors and costs of these items when they were available, often resources have been looted or destroyed. In Ta’iz, the 105 Joint Social and Economic Assessment already poor services were dramatically impaired by As per UNICEF  and  WHO’s joint monitoring sabotage and looting of equipment and machinery. program for water supply and sanitation, the use Disarray of public agencies and the suspension of of improved sanitation facilities in rural Yemen has disbursements by donors have led to the interruption of increased from as low as 12 percent in 1990 to 34 per- investment programs. This has had a secondary effect cent by the end of 2010. According to a breakdown of on contractors, who have not been paid, and hence on safe versus unsafe sanitation, however, the percent- the survival of their businesses and on the economy age drops to merely 26.7 percent of the population more generally. There have also been negative phys- with safe access. ical impacts, as works left half-completed have been Predictably, the 2011 crisis has further impinged damaged through pillage or flooding. on rural communities’ access to safe sanitation and Rural water supply: Rural water supply schemes hygiene. According to UNICEF’s Social Protection sur- were little affected by damage, as violence occurred vey, a substantial proportion of households do not principally in large cities. However, shortage of die- have enough water for hand washing, compared to sel affected supply from pumped schemes. GARWSP urban households. Likewise, not one rural household offices and stores were extensively damaged and loot- throughout nine months of monitoring indicated that ed in several locations. SFD’s program of investment it had enough water for house cleaning, a difference in rural water was partially disrupted but the large- when compared to urban areas. ly gravity-fed schemes operated as normal during the Beyond infrastructure or access-related constraints, year, as they were not dependent on outside inputs. Yemen’s rural population engages in hygiene practic- Costing the damage: According to MoWE and the es that create additional health risks. A January 2012 utilities, the total cost of damage and losses caused WASH cluster assessment of five governorates, for exam- by the 2011 events are about US$265 million. Of this, ple, reported that as much as 68.8 percent of the rural US$40 million would be for emergency works and re- population partly or entirely defecates in unmanaged equipment and the remainder for: priority operations open spaces, against 34.77 percent of the same gov- and maintenance, rebuilding of working capital, stud- ernorates without sanitation facility in the previous- ies etc. Of the US$40 million for the immediate pro- ly noted 2010 survey.131 Other important results from gram, about US$26 million has already been mobilized WASH cluster survey include: (about US$13 million from the Government-donor sec- tor wide approach instrument, the Water Sector Sup- • In 35.7 percent of sites in rural areas, 50 per- port Program (WSSP), and about US$13 million from cent of the population does not have soap. the Kreditanstalt für Wiederbau (KfW). • In 56 percent of sites in rural areas, 50 per- cent of the women do not have sanitary goods. 5.3.3  Rural Sanitation & Hygiene • In 88.5 percent of sites garbage is seen close to the houses in rural areas. Historically, rural sanitation has received little attention • In 96.3 percent of the sites in rural areas there from GARWSP, a point made as early as 2005 within are no garbage disposal facilities. the National Water Sector Strategy and Investment Plan (NWSSIP). Despite clear goals related to gender-sen- Results such as this indicate the potential for rel- sitive sanitation and hygiene programs, GARWSP still atively low-cost, high-impact interventions related to lacks the capacity to adopt an integrated water supply, behavior change, which would have immediate and sanitation and hygiene promotion approach, although discussion between GARWSP and other agencies about GARWP National Survey which has started in 2010 and 131  low-cost sanitation approaches has continued. stopped in 2011 and resumed early 2012. 106 Expanding Basic Service Delivery dramatic positive effect, regardless of infrastructure WUAs members confirmed that diesel continues to be investments that may take years to implement. a major problem facing rural water schemes. At the same time the price of alternative water trucking qua- 5.3.4  Effect on the Population of the 2011 drupled from December 2010 to December 2011. People crisis in rural areas are now looking for affordable drinking and domestic water anywhere they can find it, with The past year of unrest has caused a breakdown of pub- dire consequences on public health and the wellbeing lic services. The water supply chain has been severely of the population, especially vulnerable groups such as affected. As a consequence, the general lack of water children, the elderly, pregnant women, disabled per- results in most Yemenis relying on either unprotected sons, and others. traditional water sources or water truck distributors. The main public health concern is the outbreak A small sample phone interview survey of 30 water of diseases associated with poor access to water and user associations in three governorates (Ibb, Hajah and sanitation. Even without widespread unrest and crisis, Lahj) showed the following results: Yemen has struggled with such diseases in the past. In 2009, non-bloody diarrhea was among the top five dis- • Eighty-three percent of the water systems had eases in all of Yemen’s 21 governorates, and the num- completely stopped delivering service for at ber one cause of outpatient attendance and inpatient least three months during 2011, due to short- admission in 19 governorates. age of fuel for pumping stations. Diarrhea is the second leading cause of death • Eighty-five percent of the respondents confirm among children under the age of five. The current crisis that alternative water sources in their areas has brought an increase in the prevalence and severi- are not protected (open borehole, open shal- ty of disease. Outbreaks of cholera and acute watery low wells and unprotected springs). diarrhea have been reported with increasing frequen- • Ninety percent of water systems were affect- cy since February 2011. In May 2011 an outbreak was ed by the shortage of fuel supply in some way reported in Abyan with 294 cases and four deaths. or another (effects ranges from complete stop While predominantly in the above-15 age group, 40 to intermittent interrupted supply of water. were children aged five and younger, an indication of • Seventy-three percent of WUAs continue to inappropriate hygiene practices and lack of clean water. face difficulty in operating their systems due In June the outbreak spread to Aden and Lahj among to increased operational costs and inability of the IDPs from Abyan, and in August Dhale governor- beneficiaries to pay their water bills. ate reported 721 cases including more than 30 deaths. • One hundred percent of the WUAs reported A fifth of the cases and a third of the deaths were chil- that water consumption decreased during last dren under the age of five. To date the outbreak has year’s crisis. been reported in five governorates and is not show- ing signs of abating. A 2010 survey conducted by GARWSP, showed The origin of these outbreaks has been traced to average water consumption in rural Amran, Sana’a and contaminated water sources, especially wells that have Hodeidah at 35.5 liters per capita per day (l/c/d).132 not been disinfected, mainly due to insecurity and inac- In 2011, the average as per UNICEF’s Social Protec- cessibility. The rapid spread of disease has also been tion Survey for the same governorates is 19.5 l/c/d. blamed on the declining amounts of water available This shows a decrease in water use due to increase in the price of water and the shortage of fuel (die- sel). Information provided by most of the interviewed 132  GARWP National Survey 2010 and stopped in 2011. 107 Joint Social and Economic Assessment to households, caused by prohibitive prices and power • 38 percent of the population depends fully or cuts that prevent water pumping. partly on water trucking in the rural areas. A UNICEF social protection monitoring system that • Only 35.2 percent of the population in rural has tracked water availability in sampled households areas is fully or partially dependent on pro- in the governorates of Sana’a, Amran and Hodeidah tected boreholes. showed 63 percent of households reporting a decline • 15.7 percent of populations in rural areas in water consumption in June, and 32.5 percent in Sep- fully depend on unprotected well and springs tember (improvement coincided with a return of elec- although there are other unprotected wells and tricity during the Holy month of Ramadan). The decline springs in 32.4 percent of sites. in water consumption corresponded with a reported 46 percent diarrhea prevalence among those under age Conflict in various pockets throughout the coun- five in June, declining to 21.8 percent in September. try, moreover, has created additional barriers to pop- WASH and the link with malnutrition: A recent ulations’ access to safe water, sanitation and hygiene. nutrition survey among IDPs and host communities in In the southern governorates of Yemen such as Abyan, Haradh found that half the children surveyed had diar- confrontation between government troops and armed rhea. There was a significant association between diar- groups has forced around 100,000 civilians, of which rhea and malnutrition, with those reporting diarrhea more than half are children, to flee to other districts 1.5 times more likely to be malnourished compared to inside the governorate and to neighboring Aden and those without diarrhea. Sanitation and hygiene inter- Lahj. In Aden alone, around 80 schools are hosting ventions have been known to reduce the prevalence persons displaced from Abyan. Water, sanitation, and of stunting between four and 46 percent with greater hygiene facilities for these populations are below stan- improvements among urban children. dard, with a high risk of serious health repercussions. In response to the nutrition crisis, in January 2012, Moreover, the damage to WASH facilities in schools the WASH cluster in Yemen conducted an assessment due to over-burdening of the system means that once covering around 1 million inhabitants in Ibb, Ta’iz, alternative accommodation is located for IDP families, Abyan, Lahje and Al Dhalea governorates. Preliminary heavy investments will still be needed in order to ren- results show the following: der the schools fit for children’s education. In and around the capital Sana’a, severe fight- • 65.7 percent of the rural population reported ing in the neighborhood of Hasabah, as well as the that water is not sufficient and 52.6 percent of area around Arhab in Sana’a governorate, led to the the population survives at or below the emer- displacement of hundreds of families in mid-2011. gency threshold of less than 15 l/c/d. Signif- While some families were able to afford a move to icantly, the 2010 Survey reported coverage in safer areas, the most vulnerable have fled to slums, the same five governorates at 41 percent. caves, and other deprived areas, where public servic- • 52.8 percent of the water systems in rural areas es are all but non-existent, thus exposing an already are not functioning and need repair (2010 Sur- vulnerable population to even higher risk of water- vey reported inoperative systems in the five borne diseases. governorates as 34.4 percent). In addition to the impact on WASH in schools in • 54.9 percent of the water systems reported that the south, many schools in conflict-affected areas of the water supply is not reliable. the North also have been damaged or destroyed by • 61.6 percent of sites in rural areas have long fighting, including damage to WASH facilities. Beyond queues and in 36.5 percent sites people spent the impact of conflict, WASH in schools throughout more than 30 minutes to fetch water. the country is inadequate, with the vast majority of 108 Expanding Basic Service Delivery Yemeni schools lacking sufficient water and sanitation 5.3.6  The Future Agenda and facilities even before the crisis. Recommendations 5.3.5  Water and Sanitation and Hygiene Provided security is restored, the installation of a new (WASH) within Social Protection Schemes government gives the opportunity, not only to repair the ravages of the previous year but also to refocus the Recognizing the dire impact of limited access of poor- strategy in the water sector and to prioritize the reform er Yemenis to safe water sources and sanitation and and investment program. This new start also allows hygiene facilities, the Government of Yemen has devel- a refocusing of programs on specific areas, particular- oped a number of social protection initiatives designed ly poor or remote areas that have been left behind in to address the WASH needs of vulnerable households. previous public programs. This section looks in turn These schemes are mainly implemented through the at priorities in water resource management, the water Social Fund for Development (SFD) and the Public and agriculture nexus, sourcing water for towns; rural Works Project (PWP) and typically support local or water supply and sanitation; and, urban water supply community-based approaches. and sanitation. The section ends with a discussion on Operating nationwide from its own eight branch priorities for the role of donors. offices, SFD works through community contracting by training village committees to manage construc- Water Resource Management tion work related to WASH investments. Within this mandate, SFD is notable for its focus on water harvest- 1. Confirm the Sana’a Declaration and the NWS- ing. It capitalizes on Yemen’s long tradition of water SIP Update, and revise/prioritize the NWSSIP harvesting, especially in mountainous areas. SFD is investment program (in line with the recom- now piloting the “community-led total sanitationâ€? mendations in this chapter). approach, which is expected to involve strong partic- 2. Mainstream the community-based water ipation of women. While widely assessed as a com- resource management approach and the sup- petent development partner, the SFD suffered as most porting partnership role of government and agencies in 2011. Specifically, in response to reduced public agencies. In parallel, reorient NWRA or frozen funding from Government and donors, the to become a supportive partner of local com- Social Fund reduced its operations and was compelled munities, rather than a top-down regulator. to cancel 124 water and sanitation sub-projects (with 3. Continue decentralization to basin level,133 SFD’s share of costs estimated at US$17,334,570) that empowering basin committees and NWRA were ready for implementation in 2011 in a number branches to complete preparation, validation, of governorates. ownership and implementation of basin plans The PWP focuses on labor-intensive public works and the related investment and service deliv- projects and compliments SFD’s community-based ery programs. approach. PWP’s public works employ local contrac- 4. Use sector-wide approaches such as WSSP as tors and community labor. Working through local mechanisms for integrating water programs consultants, PWP seeks to build the capacity of com- at the basin level. munities and their local contractors, and emphasiz- 5. Support by all means possible community es community ownership of water schemes. As with management of water resources and water SFD, deep cuts in PWP’s budget resulted in a reduc- tion of about 50 percent in terms of completed proj- See above–Water Resources Management–for the basin plan- 133  ects for 2011. ning approach adopted in Yemen. 109 Joint Social and Economic Assessment use efficiency, ensuring that all programs sup- agricultural water management interventions need to porting agricultural water management and be integrated in community-based water resource man- rural water supply are part of a community- agement approaches, as described above. The chal- managed plan for sustainable water resourc- lenge is to do more and better in supporting farmers in es management. nationwide implementation of five main approaches: 6. In the context of high population growth rates in economic centers such as Sana’a and Ta’iz, 1. More efficient groundwater irrigation and more management of available resources may not be use of groundwater solely for supplementary an adequate solution. It may be necessary to irrigation, supported by (a) scaling up of the bring in additional water resources from out- Government’s programs for support to irriga- side the basin to sustain growth of those areas. tion improvement similar to the Groundwater and Soil Conservation Project (GSCP) and the Immediate actions to implement this agenda could National Irrigation Program (NIP), and restruc- include: turing of the Government’s fund for support- ing agriculture (such as the Agriculture and 1. Obtain approval of the NWSSIP Update and Fisheries Production Promotion Fund—AFPPF, reconfirm the Sana’a Declaration by the Coun- including under possible Global Agriculture cil of Ministers, as well as establish a commit- and Food Security Program—GAFSP—and Pilot tee to closely follow up implementation of rec- Project for Climate Resilience—PPCR—financ- ommendations under NWSSIP and the Sana’a ing); (b) greater involvement of the private sec- Declaration. tor in manufacture, design, and implementa- 2. Conduct a detailed resource availability study tion; and (c) integration of support programs for priority basins such as Sana’a to confirm into community-based water management. water availability in deep aquifers and/or neigh- All of these entry points should be developed boring basins. Similarly, conduct a feasibility with a clear pro-poor focus. study on importing desalinated water for Ta’iz 2. Investment in infrastructure and improved and Ibb as well as rally support from public water use efficiency of surface irrigation, espe- and private sectors to implement the project. cially large and small-scale spate, with atten- 3. Rally support from donors for NWSSIP and tion to equity of water allocation, supported align donor support along priority areas iden- by: (a) scaling up of the Irrigation Improve- tified by NWSSIP and within the sector-wide ment Project (IIP) to further large-scale spate approach, particularly for decentralized, basin- schemes; and (b) extending NIP/GSCP sup- level, planning and programming and sup- port to small scale spate schemes nation-wide, port to bottom-up, community-based, water possibly under GAFSP and PPCR financing. resource management institutions. These entry points should be developed with more attention to equity and financial viability. Water and Agriculture 3. More intensive use of traditional agricultural and water harvesting techniques, and a more Yemen has been pursuing an agenda to improve the productive livestock economy, with a partic- efficiency and sustainability of water management in ular focus on poor or remote areas (support- agriculture. These efforts, however, need to be scaled ed by continuation of RALP possibly under up, with increased emphasis on the poor and produc- GAFSP and PPCR financing, and a restruc- tion systems. Most importantly, all irrigation and other tured AFPPF). 110 Expanding Basic Service Delivery 4. Adapting farming practices: changing crop- 4. Innovating demand-driven research and exten- ping patterns, growing shorter cycle, drought- sion, as a step towards redynamization of agri- tolerant or later maturing varieties, changing cultural services envisaged by the Ministry of the cropping calendar etc. Possibly supported Agriculture’s Aden Agenda. by the proposed GAFSP as well as PPCR and 5. Selective expansion of RALP or similar pro- through a partial implementation of the Aden grams to support rainfed and livestock farmers. Agenda, it will be important to revive research 6. Development of flexible support mechanisms and extension in the Agriculture Research for poorer rainfed and livestock areas, e.g., a and Extension Authority (AREA), the Region- Payments for environmental services (PES) al Development Authorities (RDAs) and the model which could support terrace rehabil- Agricultural Directorates in the governorates. itation, watershed management, rangeland 5. Adoption of integrated management of the management etc., perhaps working through water resource at all levels from the bottom AFPPF and/or with PWP/NIP/SFD on a labor- up (mainstreamed in all agricultural pro- intensive public works (LIPW) basis with- grams in partnership with basin commit- in basin plans and programs and linked with tees, the National Water Resources Authority other water resources development projects (NWRA) branches, water user associations, to strengthen the synergy. NGOs/CBOs). 6. Development of flexible support mechanisms Water Sources for Urban Areas for poorer rainfed and livestock areas, e.g., a “Payments for environmental servicesâ€? (PES) The problems of highland cities and towns in sourc- model which could support terrace rehabil- ing water are growing fast. The government needs to itation, watershed management, rangeland confirm a clear set of approaches to ensure solutions management, etc., perhaps working through that are fair to all citizens, both in source areas and AFPPF and/or with PWP/NIP/SFD on a labor- in urban areas: intensive public works (LIPW) basis with- in basin plans and programs and linked with 1. Work with communities to establish water other water resources development projects rights, and work from existing community insti- to strengthen the synergy. tutions (for example traditional water manage- ment institutions at local level, or more recent Immediate actions to implement this agenda could “modernâ€? water user associations), strengthen- include: ing where needed, to transfer water from agri- culture to municipal and industrial use (M&I) 1. Scaling up NIP/GSCP, accompanied by devel- following principles of equity, sustainability opment of market-based water technology and no uncompensated harm. The proposals transfer (e.g., pipes distributed by the private for the Sana’a basin, for example, could be a sector on an OBA basis). good place to start: zone the basin for agri- 2. Restructuring of the AFPPF, perhaps on the culture, water sourcing, urban development model of SFD, to support local community and, reserve the deep sandstone aquifer for investments. M&I etc. (see also Annex Chapter 5). 3. Continued support for NIP to follow through 2. Work on supply management to increase sup- with other half-completed programs such as ply. This could include: (i) contracting with IIP for other large spate schemes. community-based associations for bulk water 111 Joint Social and Economic Assessment transfer; (ii) rooftop or other traditional rain- Ensure that successes of the ‘demand respon- water harvesting techniques; (iii) partner- sive approach’ and efficient project delivery ship with private water suppliers; (iv)study are sustained. of options for desalination and water resource 2. Improve efficiency through decentralization transfers/distribution. and joint planning (GARWSP, SFD, PWP, NGOs 3. Prioritize solutions for the greatest problem /CBOs) at the local level, as well as, coordi- areas: Sana’a, Ta’iz and Ibb. For Sana’a, the nation among water users from other sectors Government should revive the integrated water such as irrigation to ensure sustainability of resource management framework (IWRM) investments. established under the Sana’a Basin Project 3. Ensure that sustainable, affordable technologies and establish the feasibility of arranging with are available, particularly low-cost technolo- local rural communities to transfer water from gies not dependent on pumped groundwater. rural to urban areas. The Government should 4. Put in place transparent monitoring and eval- also follow up on the recent study by Sana’a uation to track increases in effective access, University’s Water and Environment Center scheme sustainability, and socio-economic (WEC) on the scope for public-private part- impacts (e.g., on peri-natal mortality, diar- nerships for Sana’a water supply. Moreover, rhea incidence, and girl’s school attendance). the Government should review and update the 5. Implement a comprehensive behavior change detailed resources assessment study for deep program designed to improve knowledge, aquifers in Sana’a basin (Tawilah aquifer) and attitudes and practices related to improved review the resources and feasibility of out-of- hygiene. basin resource transfers (including update of the nine options identified in the study Sourc- Urban Water Supply and Sanitation es of Water for Sana’a (SAWAS) of 1996). For Ta’iz, given the scarcity of alternative options, Yemen has been pursuing a reform program in urban the basin plan for Upper Wadi Rasyan should water for almost fifteen years, which has led to pal- be reviewed, and the feasibility of pumping pable improvements. However, LCs are far from being up desalinated water from Al-Mocha should financially viable. Coverage and service quality are be further studied. lagging behind the rapid growth in urban population. 4. Work on demand management to contain Meanwhile, the poorest pay the highest charges. The demand. This could include water saving agenda would include: devices, cost recovery tariffs etc. 1. Press on with the sector reform agenda, pur- Rural Water Supply and Sanitation suing the goals of affordable service provision and a business approach, with each LC pre- Innovations have been successfully introduced and paring a Business Plan showing how it will expansion of coverage seems to have yielded results, achieve these goals. albeit modestly. Attention is needed to ensure efficiency, 2. Keep the pro-poor imperative constantly in quality, and sustainability. The agenda would include: view and ensure that any implicit or explic- it subsidy goes to help the poor and not the 1. Continue the previous rapid expansion of cov- better-off. erage, focusing on affordable and sustainable 3. Be flexible and responsive to local conditions, supply, particularly in areas hitherto neglected. especially encouraging innovative, low-cost 112 Expanding Basic Service Delivery technologies (such as decentralized sanitation • Introduce more flexibility and innovation in with small bore outlets to the network) and the urban water sector to work with the local new business models and partnerships (pri- private sector and, to adopt low cost technol- vate sector, output-based aid, etc.) that can ogy and prioritize pro-poor services. expand access and improve service delivery sustainably and affordably. 5.4  Education Sector 5.3.7  Recommendations 5.4.1  Pre-Crisis Sector Status Based on the above agenda, the following are summa- General Sector Background ry recommendations: Over the past 40 years, Yemen has performed rela- • Provide priority support to rehabilitation of tively well in expanding formal education opportuni- key infrastructure. ties but important challenges remain. Enrollments at • Align all internal and external stakeholders all levels have improved substantially. Illiteracy was on NWSSIP, the Sana’a Declaration, and—to halved in 30 years, from 90 percent in 1973 to 45 per- the extent possible—the sector-wide approach cent in 2004. Rapid population growth continues to be (e.g., through WSSP). a challenge; nonetheless gains in coverage at all lev- • Focus water management reforms and support els were made, especially for girls. However, there are on the bottom up participatory community- still about two million children out of school, many based water resource management approach, of whom live in rural areas and are part of marginal- combined with strengthening water governance ized communities. Gender parity is still far from being and agencies at the basin/decentralized level. achieved; retention throughout the grades is a serious • Prepare water sourcing plans for key vulner- problem due to both social factors and administrative able cities (Sana’a–Ta’iz–Ibb). constraints; and improving the overall quality of edu- • Strengthen support to irrigation improvement cation remains a challenge. for both groundwater and spate, but only Development of education and skills is a key devel- where communities are effectively managing opment priority in Yemen. The country’s Development their water resources. plans have continuously stated that human develop- • Focus support to rainfed areas on poverty-reduc- ment, and in particular educational development of the ing investments in watershed management, labor force, is a priority. Since 2002, the government terrace rehabilitation, productivity improve- has endorsed five major strategies to address educa- ments, and rangeland/livestock improvement, tion issues at the various levels of education: including through the use of PES mechanisms. The National Basic Education Development Strat- • Continue rapid investment in rural water supply egy (NBEDS, 2003–15) aims to increase enrollments in and sanitation, prioritizing poor and neglect- basic education, particularly for girls and in rural areas, ed areas, and ensuring inter-agency joint plan- to reach 95 percent of the 6–14 year-olds in Yemen by ning and ensuring appropriate technology and 2015. The strategy received a strong and coordinated the sustainability of water sources. support from the donor community, and the government • Design proper hygiene training, education, has made significant progress in strengthening the policy and awareness-raising programs to be imple- environment since the articulation of the NBEDS in 2003. mented in selected rural areas where hygiene The National General Secondary Education Strate- awareness is low. gy (NGSES, 2007–2015) aims to provide equitable and 113 Joint Social and Economic Assessment cost-effective quality secondary education for transition across the human development sectors that are most to tertiary education and the labor market. To imple- likely to impact the achievement of the MDGs, and to ment policy reforms planned under the NGES, the propose action plans to be integrated and implement- Ministry of Education (MOE) has entered into formal ed by concerned line ministries as part of their respec- agreements with the governorates and relevant minis- tive sector programs. tries to ensure their commitment to comply with pol- In addition, to these five strategies, Yemen has an icy reforms related to recruitment, deployment, and ongoing National Strategy for Literacy and Adult Edu- monitoring of teachers. The strong support received cation, which aims to eradicate illiteracy in the popu- from donors to the NGSES was lately reduced due to, lation 10–40 years of age, and has prepared a Nation- among other factors, delays in implementation. al Strategy for Early Childhood Development. The National Strategy for the Development of Voca- Despite the many strategies, Yemen is missing tional and Technical Education (NSDVTE, 2004–2014) one coordinated vision for education. Each subsec- aims to achieve an “adequateâ€? balance between gen- toral strategy is intended to increase access and equity, eral education and Technical Education and Train- and improve quality and efficiency of education deliv- ing (TVET). The target of this strategy was to attract ery quite independently of what is happening in other 15 percent of basic and secondary education gradu- education subsectors. As a result, there are major dis- ates to post-basic and post-secondary TVET, respec- connects among the strategies and investments of the tively, by 2014. Among the policy reforms implement- various subsectors. A national vision that articulates ed under the NSDVTE were the amendment of the law the education and skills needs of the economy and for the Skill Development Fund (SDF) in 2009 to grant the society, and the choices that must be made to pro- the SDF greater autonomy in its dealings with employ- vide these skills, is greatly needed. The work for the ers. To implement the strategy, the GoY received sup- development of such vision has started based on the port from a number of donors including Saudi Arabia, results of the comprehensive sector assessment made DfID, GIZ, and IDA. through the Yemen Education Country Sector Report The National Strategy for the Development of (CSR) published in 2009. Higher Education in Yemen (NSDHEY, 2006) focuses The priority set for education was also reflected in on four areas of reform: governance, finance, quality, the government spending on education. The funding and diversification. Regarding enrollment growth, the increased 125 percent between 1997 and 2007, however strategy aims to expand access to universities and other the share of education spending declined from over 19 higher education institutions (including TVET), partic- percent between 1998 and 2004 to 16 percent in 2007 ularly for the 19–23 year-old age group, from 13 per- (equivalent to 5.8 percent of the GDP). This figure is cent to 16 percent by 2010, and to 35 percent by 2025. lower than the 20 percent reference point set in the One of the key policy reforms implemented under the EFA Fast Track Initiative (FTI) Indicative Framework. NSDHEY was the establishment of the Higher Council Sources from the Ministry of Education (MoE) indicate for Quality Assurance and Accreditation. The imple- that in 2010, the government expenditure on education mentation of the NSDHEY received support from The declined to 12 percent or four percent of the GDP with Netherlands and IDA. a distribution among education sectors as follows: Gen- The National Children and Youth Strategy (NCYS) eral Education, 75 percent; Technical Education, seven was prepared as a response to the challenges in address- percent; and Higher Education, 18 percent.134 The sys- ing the risks (particularly those related to health, edu- tem may be spending too much on administrative and cation, and employment) that Yemeni children and support staff; it needs to reallocate or identify funding youth face over their lifecycles. It used an integrated, cross-sectoral framework to identify the issues and gaps 134  Ministry of Education. 114 Expanding Basic Service Delivery to invest in improving the operation of schools and the In grades 11 and 12, enrollment is diversified into the overall education services. science track and humanities track, although in prac- Yemen has a comprehensive legislative and regula- tice many rural schools are not able to provide both tory framework that lays the foundations of the current options. Students can enter secondary school, if they education system. The 1964 Education Act regulates have a Basic Education Certificate (BEC), which requires the levels of education, and a set of decrees defines the passing the ninth-grade examination. Vocational schools institutional structure of the sector. Education is man- and community colleges offer two- and three-year post- aged by three ministries. Pre-basic, basic, and gener- basic and post-secondary programs, respectively. After al secondary education is managed by the Ministry of a one-year waiting period, secondary school graduates Education (MOE). Post-basic TVET and post-secondary can enter universities. The government also provides TVET are managed by the Ministry of Technical and adult literacy programs. Kindergartens are mainly run Vocational Education and Training (MTVET). Univer- by the private sector, which also plays a growing role sity education is under the mandate of the Ministry of in other levels of education (two percent of basic and Higher Education and Scientific Research (MOHESR). secondary enrollments, and 15 percent of higher edu- Literacy is the mandate of the Literacy and Adult Edu- cation enrollments).135 cation Organization (LAEO), as supervised by the Min- The following table provides enrollment data, and ister of Education. The Supreme Council for Mother- the number of teachers at each level of education for hood and Childhood (SCMC), established in 1991, has the academic year 2010/11 or earliest available: the mandate to develop country strategies and promote policies aiming to improve the situation of mother- 5.4.2  Preschool Education hood and childhood in Yemen. The Supreme Council for Education Planning (SCEP), chaired by the Prime According to the MoE, enrollment in Kindergarten Minister and including eight ministers with leverage increased by about 140 percent over the past ten years over education policies, has a coordination and over- to a total of 30,100 in 2010/2011. The number of kinder- sight role, and has been instrumental in consolidating garten schools also increased from 181 in 2001/2002 to education data over the past years. 549 in 2010/2011, and the number of teachers increased Yemen’s current education structure is dominated from 886 to 1997. It is noted that kindergartens are pri- by general streams with a very low level of profession- marily in the main cities of Yemen and rare in rural alization undermining the quality of education services. areas. The enrollment in kindergartens is low in cities Yemen’s current formal public education system com- and almost absent in the rural areas. prises nine years of compulsory basic education fol- lowed by three years of general secondary education. 135  World Bank Education Sector Note, 2010. Table 20: Overview of Education Services Number of students Number of teachers Number of institutions Early Childhood Education 30,100 1997 549 Basic education 4.7 million 120,339 12,376 Secondary education 615,600 6891 331 Post-basic TVET 7,653 3,525 85 Post-secondary TVET 19,376 University 331,738 8,897 30 Sources: MOE, MTVET, Supreme Council of Education Planning. 115 Joint Social and Economic Assessment • Most of those institutions are private (66.21 of education within communities, especially those liv- percent) which makes them less accessible to ing in remote areas and within marginalized groups. most children, given the limited low financial Equity in education has made progress, but girls abilities of many families to pay for this kind are still at a disadvantage, especially in rural areas. of education, and the low priority given by Despite the substantial increase in girls’ enrollment in families to this level of education in general. basic education (from 42 percent in 1997/98, to 66 per- • The quality of education in private institutions cent in 2010/11) and in secondary education (from 16 is also questionable. There is no standard cur- percent to 23 percent), gender gaps are still large and riculum and no monitoring and evaluation of vary from one governorate to the other. While boys’ the quality of services provided in these insti- enrollment rates are relatively similar across Yemen’s tutions. Often, private preschool institutions governorates, the difference in girls’ enrollment reach- are located in private houses and thus do not es 52 percentage points between Sana’a (84 percent) offer a suitable environment. There is no cer- and Sa’ada (32 percent). Administrative data show tification for teachers; most of them are either that gaps in enrollment rate within some governor- former basic education teachers or women who ates are also large. There is also a growing communi- are jobless and available for such a market. ty of marginalized children who tend to be at a higher risk of exclusion from the traditional education sys- 5.4.3  Basic and Secondary Education tem, including the African-descended Akhdams and rural migrants to urban areas as well as migrants who Access has improved but the completion rate is still returned to Yemen after the Gulf War. poor. Yemen has made impressive gains in gross enroll- Quality remains the area where progress has been ment ratios (GERs) for all levels of education, especial- most limited. Education quality faces major challeng- ly for girls. However, despite the remarkable expan- es. Only 40 percent or teachers hold a bachelor degree, sion of its education system, GER for basic education and most students and teachers do not receive text- remains low at approximately 76 percent in 2010/11. books or learning materials until close to the end of the According to the 2005 Household Budget Survey, there school year. Yemeni Grade 4 students ranked the low- were 1.8 million out-of-school children in the 6–14 year est among 36 countries participating in the Trends in age bracket. School survival rates are low: only half Mathematics and Science Study (TIMSS), 2007, primar- of those who enter Grade 1 reach the end of the basic ily because they could not read the narrative-based test education. The Grade 6 Completion Rate in 2009/10 questionnaire. There is a risk that the planned expan- was 61 percent (51 percent for girls, and 71 percent for sion in enrollment could further reduce quality if not boys). Given that many children never enter school, adequately planned and resourced for. The health and many others drop out of school early, and that pop- nutritional status of Yemeni children and adults poses ulation of school-age is expected to rapidly increase, serious threats to achieving access to quality education Yemen is unlikely to achieve the goal of Education for given that almost 50 percent of the children under age All, one of the Millennium Development Goals—to five are malnourished. ensure that all boys and girls complete a full course of primary schooling by 2015. Some of the structural chal- 5.4.4  Technical and Vocational Education lenges that the sector faces include lack of school build- ings, lack of teachers in remote areas where commu- Access to Technical and Vocational Education Training nities live in scattered settlements, poorly trained and (TVET) remains limited due to small and geographi- uncommitted teachers, absence of female teachers in cally imbalanced numbers of seats offered by training rural areas, as well as low awareness of the importance centers. While TVET enrollment has been progressively 116 Expanding Basic Service Delivery increasing during the last decade, the current program operational procedures—are determined by the MTVET, framework is responsive only to a limited number of allowing little means or incentive at the institute level citizens and for limited employment opportunities. for innovation to improve quality or efficiency. Total number of students enrolled in TVET programs is about 24,000 with enrollment rates for relevant age 5.4.5  Higher Education groups below one percent for both post-basic and post- secondary programs. There is an evident need for the Increased access to higher education over the last decade TVET system to increase public and private training was, to a large extent driven by the private sector and capacities and to be more responsive to the needs of “parallel programs.â€? Higher education enrollments other target groups. The ability to be more responsive have increased rapidly in recent years; from 190,200 is currently constrained by: (i) the small number of students 2002/03 to about 300,000 in 2010/11. The pri- TVET institutions; (ii) institutional constraints regu- vate sector accounted for a large part in the increase in lating student flows between general and vocational enrollments and makes up about 20 percent for total and technical education; (iii) an imbalance in terms of enrollment. The GERs increased as the system expand- geographic distribution of training opportunities; and ed, with an overall GER for higher education estimat- (iv) low utilization levels of existing TVET institutions. ed at 13 percent in 2006/07. Despite modest increas- Quality, relevance, and linkage with employers are es in their participation over the last 10 years, girls weak. The predominant characteristic of the Yemeni remain vastly underrepresented in higher education TVET sector is its strongly supply-driven approach. with a GER of eight percent compared with 18 percent Linkages between the TVET system, labor markets, for males. In 2004–05, given the growing demand for and private sector enterprises continue to be weak. higher education, public universities began to accept There is a lack of cooperative training and low use of students into parallel programs. These fee-paying pro- potential training opportunities (internships) in enter- grams’ are offered in the afternoons to students who prises. Despite initiatives to upgrade curricula, many do not qualify to enter the regular programs. The lim- weaknesses persist. The training capacity and quali- its have been set by the Supreme Council of Universi- ty of programs is constrained by the lack of tools and ties on the proportion of students in parallel programs. equipment required to develop graduates’ competen- However, these limits have not been adhered to, and cies that are mandatory for employment in the respec- across all public universities in 2007–08, 14 percent tive occupational areas. Staffing is a major problem: of enrollments were in parallel programs. Students in instructor qualifications are poor and wages are too parallel programs have fewer teaching and learning low to attract trainers with enterprise-based work expe- materials available to them because most facilities on rience. Dropout rates in all TVET programs are high, campus are closed in the afternoons. particularly among female students. According to latest Quality and relevance have deteriorated. The rapid available data (2006–07), only 57 percent of the stu- increase of enrollment in public universities has ham- dents graduated who had entered two-year post-sec- pered the already poor quality and relevance of the ondary TVET institutes competed the full two years. higher education sector. In particular, the expansion The institutional capacity needs to be developed. of parallel programs has caused a severe deterioration The Ministry for TVET (MTVET) was established in in the quality of higher education. Also, limited and 2001but the capacity in the new ministry to manage its unbalanced program offerings in public universities task is still weak. The current structure of the MTVET is creating an excess supply of graduates in social sci- shows weak linkages between the different departments. ence, and a shortage of science and technology grad- The organizational and regulatory structure for insti- uates, which makes it difficult to meet the human tutes—budgets, programming, enrollments, staffing, resource needs of the economy and the society. Poor 117 Joint Social and Economic Assessment quality and relevance in the higher education sector Sana’a, due to either occupation or inaccessibility with are indicated by: (i) low internal efficiency (as evi- 100,000 children affected. The MTVET also reported a denced by high repetition rates); (ii) a lack of com- rise in students drop-out because of the insecurity and petitiveness among Yemeni university graduates and overall instability in the country. employers’ dissatisfaction with them; (iii) insufficient Teacher and administrative staff absenteeism quality assurance mechanism in universities; (iv) a increased in 2010/11 due to strikes and weak institu- dearth of teaching and learning resources in univer- tional monitoring at both centralized and decentral- sities; (v) high academic staff-student ratios and low ized levels. The MOE estimates that about 10 percent qualification levels of academic staff; and (vi) a poor of the total number of teachers have been temporari- work environment, non merit-based career ladder, ly absent from schools and that about 3,200 teachers and limited professional opportunities for academic from Sa’ada and Abyan have sought refuge in neigh- staff in universities. boring governorates. The curricula in 2010/11 were not completed. The 5.4.6  Impact of the Crisis second semester of the school year for basic and sec- ondary education was shortened by about two months Impact on the Provision of Education Services in order that schools could close early in anticipa- tion of escalation of the conflict, and in an effort to Part of the educational infrastructure was damaged limit any impact from the same for the school year. by the fights or occupied by armed forces and Inter- Although the school year was completed and nation- nally Displaced Persons (IDPs). According to the MOE al examinations took place, study content received by about 810 schools have been more or less severely students was likely reduced by about 25 percent, in damaged by the armed conflict, with buildings com- average. There were delays in the completion of aca- pletely destroyed in some cases. During its Back-to- demic programs in universities and technical institutes School campaign in September 2011, UNICEF found in the affected areas. that more than 150 schools were occupied by either There were also delays in the delivery of school armed forces (34 schools in Sana’a) or IDPs (76 buildings, equipment, and material due to the slow- schools in Aden and 43 in Abyan).136 Displacement down in project implementation as a result of the inse- was mainly due to the conflict in Abyan which led curity situation and the precautionary measures taken thousands of families to move to a safer area within by most Development Partners (DPs). the governorate or to Aden. Also, the MTVET report- ed that eight institutes in Zinjibar and Abyan have Impact on Stakeholders stopped operating; for six of them this was due to partial or total destruction of their buildings and loot- According to a summer 2011 account,137 about 390,000 ing of their facilities’ equipment, while the two oth- newly displaced added to the stock of about 214,000 ers were occupied by IDPs. IDPs resulting from previous conflicts. About 30 per- Some schools remained inaccessible due to the inse- cent of the IDPs are estimated to be within the school- curity generated by the conflict. In the affected areas age range (6–18). Despite MOE efforts to accommo- (mostly in Sana’a, Aden and Ta’iz), some schools were date some of the displaced children within existing closed while in others, attendance decreased signifi- cantly due to parents keeping their children at home 136 The Back-2-School Campaign report, UNICEF, October 2011. for safety. In Sana’a, about 46 schools were closed in 137 Conflict, Displacement and Development: A Political Econ- September 2011 due to insecurity, according to UNICEF omy Perspective on the Current Crisis in Yemen, World Bank B2S report. In total, 80 schools were not operating, in brief, August 2011. 118 Expanding Basic Service Delivery schools in host communities and assistance provid- disruption in communications, line ministries lost ed by UNICEF and other DPs through the provision part of their capacity to monitor the provision of edu- of temporary learning spaces and teachers, it is like- cation services during 2010/11. However, because of ly that a large number of IDPs do not have access to an emerging more decentralized approach due to the educational services. prevailing circumstances in 2011, and as a result a Students and their families gave less importance to stronger community involvement in the functioning education during the crisis due to insecurity and hard- of schools, the completion of the school year in 2011 ship generated by the crisis. Price increases for basic became feasible nonetheless, albeit it was cut short commodities such as food and energy left little or no by two months. room, particularly for poor families, for education relat- Capacity to deliver was further weakened by bud- ed expenditures. Also, electricity shortages and over- get constraints due to the crisis situation and the result- all distraction by the events taking place in the coun- ing overall tight fiscal situation, which led to reduced try prevented students from spending time and effort operational budgets. This particularly had an impact on study, and parents from monitoring and support- on the implementation of tests and examinations and ing their children. This adds to considerable amounts on supervision, given the associated costs (photocopy, of distress in children caused by the tensions, making incentives for staff, overtime etc.). The MTVET report- them less receptive for learning. ed delays in completing tests and delivering certificates The impact of the crisis on psychology and atti- to students in most institutes. In addition, universities tudes of students, teachers and staff was alarming. were also financially affected by the general suspen- In addition to the psychological trauma observed in sion of tuition fees, a decision that was made based similar conflict situations, the crisis has resulted in on instruction by the former President. This decision changes of attitudes from key players in the educa- deprived universities from the income gained from tion field. Feedback from the MOE indicates that they “parallel programs,â€? which represented an important feel weakened as the authority of the ministry is now source of revenue for most universities. This policy continuously challenged by teachers who are often on has not yet been repealed. strike, participating in demonstrations or just taking Growing demand for better governance. The crisis opportunity of the fluid situation to not fulfill their created a new situation where stakeholders (students, duties. The same applies to non-teaching MOE staff. families, local communities, and staff) are less hesitant There is also a trend for students to lose the sense to contest the authority of local and central administra- of discipline and to not abide by the rules governing tions, request more transparency and denounce corrup- the school. Overall, the MOE reported an increased tion and patronage. This trend has materialized at the use of verbal and physical violence to deal with dif- university level where the MOHESR, under pressure ferences in views and opinions instead of dialogue. from stakeholders, has started changing universities’ A recent assessment has shown that the rate that chil- leadership through establishing university boards and dren actively participate in violence is on the rise. 138 organizing elections for university presidents, which This is in addition to their exposure to extreme vio- use to be appointed. lence due to the conflict, political instability, and their consequences. 138 Initial findings of the Interagency Child Protection Rapid Institutional Impact Assessment conducted in 6 conflict affected governorates (Aden, Abyan, Lahj, Shabwa, Al Dhale and Taiz), April 2012. See also http://www.humanitarianinfo.org/iasc/; the Interagency Stand- Because of the recurrent strikes and demonstra- ing Committee is a consortium of UN agencies and Non-UN tions since 2011, overall demobilization of staff and agencies engaged in humanitarian affairs. 119 Joint Social and Economic Assessment 5.4.7  Recommendations from poor, disadvantaged communities and particularly girls in rural areas. Strengthening of demand-side inter- Short-Term Actions ventions such as Conditional Cash Transfer and school kits distributions should be considered. The increase of School Infrastructure. Destruction of buildings and loot- children malnutrition also calls for improving and devel- ing have primarily affected MOE and MTVET institutions. oping school feeding programs, at least temporarily. The initial estimate for the cost of constructing, rehabil- Better Use of Available Resources. Despite the current itating, and equipping the affected buildings is US$32 difficult fiscal situation, there is some room to improve million for the MOE and US$24 million for the MTVET. the use of existing resources to better respond to the Dealing with Displacement. Given the still-fluid sit- social demand for education and the needs of the econ- uation in Abyan and the overall fragile transition peri- omy. One example: about one third of higher educa- od, it is expected that there will continue to be a rela- tion budget is being used for granting of scholarships tively high number of IDPs requiring the provision of for studies abroad (benefiting about 6,000 students), basic services including education. The MOE should while only half of this amount is going to the operation- be requested and supported to facilitate the registra- al budget of public universities (hosting about 250,000 tion of displaced children in existing schools in host students). Maintaining this policy is highly question- communities. Whenever such schools are unavailable able, particularly at a time when Yemeni public uni- or already saturated, temporary schooling facilities and versities are subject to a reduction in their budgets and resources would be needed. have serious quality issues. The current country con- Strengthening Capacity to deal with the Crisis. Line text offers a unique opportunity to start phasing out ministries (particularly MOE) central and decentralized this costly and inequitable program. Another example staffs need to be trained on crisis management. Teachers is the Skills Development Fund (SDF), which is sitting and school administrators should also be trained and on substantial resources but lacks a clear strategy and supported to deal with conflict post-traumatic stress the implementation capacity. An appropriate techni- issues, including psychosocial and protection activities cal support could help the SDF to better respond to to respond to the specific needs of children, increase the much needed skills development of young unem- their resilience, and encourage them to go to school. ployed Yemenis and partially compensate for the cur- Developing Advocacy Programs. Yemen is at risk rent inefficiency of the TVET system. of losing part the impressive achievements capitalized over the past 20 years in terms of access to basic edu- Opportunities for Longer Term Policy Change cation. The case of Iraq, which is now among the low- est performing countries in the region despite the fact The wind of change brought by the Arab Spring opens that it had achieved universal access in the 70’s, is a a window of opportunities to engage in key reforms warning. Communities and families are under unprec- that have been resisted over the past years. Among the edented stress due the current economic situation and key issues to be addressed: governance and reform of are tempted to put less priority on children’s educa- academic programs and curricula. tion in light of competing demands. Therefore, there Governance. Key governance reforms recommended is a need to strengthen and generalize awareness cam- by the various subsector strategies have been delayed paigns for psychosocial support, protection, and com- or simply not implemented due to resistance from the munity work, such as what is done through the Back- line ministries and lack of political will. This applies, to-School program. in particular to: (i) the restructuring and decentraliza- Support to Fragile/Poor communities. The risk of los- tion of the MOE to improve efficiency in the delivery of ing ground on education gains is even higher for children education services; (ii) the involvement of employers 120 Expanding Basic Service Delivery in the management of the TVET sector; and (iii) the last year’s uprising and secondly, a brief description autonomy and financing of universities. In addition to of the underlying causes of the limited success of the such sector reforms, there is clearly a need for more GoY to provide sufficient urban services to the Yeme- substantial reforms at the broader public sector level ni population. (particularly public service and finance) for more trans- parency and accountability in the allocation and man- 5.5.1  Assessment of Damages agement of human and financial resources. Strengthening the Role of Local Communities. Schools Infrastructure Services with stronger community involvement (e.g., with active parents councils) showed more resilience to sustain Private and Public Assets. There is no doubt that the normal operation during the 2011 crisis. This was well impact on private and public assets during the polit- understood by the MOE which is planning to develop ical crises that swept the country in 2011 varied from and strengthen the councils of fathers and mothers. one city to another. Based on assessments made by the Given the high return on early childhood education, concerned municipalities it is clear that the cities that the increase of funding to expand this sector should be were most affected are Sana’a, Ta’iz, Hodeidah, Aden considered. However, effort should be made to devel- and Mukalla. The total cost of the unrest in these five op low cost, community based models and focused on cities is YR 18,861 million (US$88.10 million). Other disadvantaged areas and communities. There is also a cities such as Ibb, AlBaidha, Seiyun, and others were need to develop a regulatory and institutional frame- less or least affected by the crisis and hence, this assess- work to facilitate the development of early childhood ment covers only the five most affected cities, indicat- education and introduce quality standards. ed previously cities. Detail breakdown of the YR 18,861 million is given in Table 21. Develop Second Chance Programs for Background on the five cities: Despite a reduction Out-of-School Children and Adults in urban poverty in Yemen over the past decade, 21 percent of urban households still fall below the poverty Address the Quality and Employability Issues with Per- line. Close to 75 percent of all urban poor are concen- sistence. Key reforms would include: (i) greater focus trated in the cities of Sana’a and Aden (1,800,000 and on learning outcomes particularly reading, math and 600,000 inhabitants respectively) and the Governorates sciences skills at the general education level, through of Hodeidah, Ta’iz and Hadramout, where they are pri- revision of curricula and improving teacher training; marily concentrated in Hodeidah, Ta’iz and Mukalla and (ii) improving the quality and relevance of TVET cities (respectively with 450,000, 540,000 and 200,000 and university programs. inhabitants). Ta’iz, Mukalla and Hodeidah cities suffer Develop a holistic vision for the education sec- from extreme urban poverty, reflected by high urban tor aiming at better responding to the economic and poverty gap index levels. Nearly 42 percent of popu- social needs of the country through increased profes- lation in all these cities lives below the poverty line. sionalization and improved regulation of students flows Assessment:139 Immediately upon receiving letters between general education, on one hand, and TVET from the Ministry of Planning and International Coop- and higher education on the other hand. eration dated February 6, 2012 and following Cabinet Decree No. 42 for the year 2011, municipalities which 5.5  Urban Infrastructure 139  This assessment is based on reports prepared by the Office This assessment covers—in a summary form—two key of Public Works and Highways, Sana’a Secretariat and the Office issues. First, an assessment of the damages caused by of Public Works and Highways in the city of Ta’iz. 121 Joint Social and Economic Assessment had been affected by the unrest deployed their teams permits,140 Street Posters/Advertisements, and Clean- of engineers and technicians in addition to other sup- ing Fees141 is estimated at YR 1,106142 million. port staff in assessing the damages, loses, and needs Needs: In addition, the affected municipalities need inflicted by the unrest. an estimate of YR 9,094 million (US$42.5 million equiv- Damages: Damages inflicted to private and public alent) to rehabilitate the damages to private and pub- assets, particularly in Sana’a and Ta’iz were primari- lic assets to its original condition or better and for car- ly caused by artillery shells fired from heavy and light rying out emergency works to damaged streets; street weapons, which resulted in most of the cases in par- lights and traffic signs; sidewalks, restoration of pub- tial destruction of external walls, windows, etc. Some lic recreational facilities, etc. buildings were set ablaze as a result of the shelling. Other types of public assets damaged include street 5.5.2  Institutional Services lighting and fixtures, recreational facilities, traffic signs, street posters and advertisements, and pavements and Labor Force and Staffing. The capacity of the affected sidewalks. Based on the assessments the total cost of municipalities to provide services was negatively impact- damages is close to YR 4,661 million (US$21.80 mil- ed during the unrest for a number of reasons, primari- lion equivalent). ly security concerns and lack of mobility caused by the Losses: Losses sustained to private properties were absence of fuel from the local market. This was exac- mostly attributed to the loss of rental income and rev- erbated by the declined in the resources, mainly oper- enues due to closure of business. It is estimated that ating expenditures, and hence minimizing staff mobil- the total loss by private properties is YR 4,000 mil- ity and presence in the field and or where they were lion (US$18.7 million equivalent) divided between YR needed. The Ministry of Public Works and Highways 1,600 million losses in rental income and YR 2,400 mil- lion as a result of temporary closures of businesses. 140  People took advantage of the crises and built without obtain- Another loss category was borne by the five cities and ing building permits. this includes losses in revenues. The total loss in reve- 141  Includes in water and electricity bills. nues including but not limited to issuance of building 142  Average from the years 2008, 2009, and 2010. Table 21: Detail Breakdown of the Costs of the Unrest Damages Private Public Other Losses Needs Total City (in million Yemeni Riyal) (in million Yemeni Riyal) US$ Million Sana’a 3,445 207 313a 2,561 6,526 30.45 Secretariat Ta’iz 471 32 38* 640b 4,085 5,266 24.61 Hodeidah 0 0 156 51 816 1,023 4.78 Adenb — — 156 51 816 1,023 4.78 Mukalla b — — 156 51 816 1,023 4.78 Total 3,916 239 506 1,106 9,094 14,861 69.40 Other Lossesc — — — 4,000 — 4,000 18.7 — — — — — 18,861 88.1 Source: Government of Yemen and JSEA Staff. a Stolen and damaged vehicles. b Losses as a result of reduced revenues from building permits, street advertisements, rents of public buildings, etc. plus Cleaning Fund. c Estimated losses in rental income and stoppage of businesses to private sector. 122 Expanding Basic Service Delivery and its branch offices, including its department in the released, and in many cases this release required spe- Sana’a Municipality, have lost between 150–200 pro- cial clearance from a central body. fessional staff to private sectors and to the neighbor- In addition to fragmentation and absence of coor- ing countries because of these events. dination at higher levels, branch offices of the line min- Apart from municipalities, the impact of the unrest istries and central agencies implement most local deci- on economic activities, especially in the manufac- sions. An absence of transparency and accountability turing and construction sectors, has had a negative to local citizens coupled with limited capacity to mon- impact on both private and public institutions. The itor local and central revenues are added constraints to main problems encountered during 2011 were deterio- city management. These administrative challenges are ration of security, continuous power blackouts, short- major constraints to the implementation of Decentral- age of water supply, absence of fuel (diesel, petrol) ization Law No. 4 of 2000 and need to be addressed street blockages, armed car robberies, reduced pur- to allow for direct involvement of local governments chasing power of the citizen, and so forth. In the first in the management of their governorates in an effec- four months these problems resulted in an approximate tive and responsible manner. Readiness and having 30 percent reduction in economic activities resulting the right tools and systems in place are additional con- in 15–20 percent redundancies in labor and profes- straints to implementation of the law at the local level. sional staff. In the second four months period, activi- ties were reduced further to up to 50 percent bringing 5.5.3  Broader Context on Urban Service the number of redundancies to 30–40 percent of the Delivery labor force. In the last four months of the unrest, eco- nomical activities were brought to a standstill bring- Since unification in 1990, the Yemeni state has been ing redundancies to an unprecedented high level. As grappling with establishing viable central authority a result, job opportunities were limited and the num- and creating a pluralistic political system within the ber of unemployed—skilled and unskilled labor— framework of a unified nation-state. Overlaying a mod- increased to about 80 percent. Organized crimes and ern state upon Yemen’s traditional governance system vandalism to private and public properties increased has proved challenging and both state formation and to unprecedented levels. All of these factors plus oth- nation building remain works in progress. Meanwhile, ers encouraged the departure of specialized labor forc- to ensure its survival, the government had created es, in particular young graduates, to the neighboring informal political alliances with a number of power- countries, taking advantage of the available communi- ful interest groups through extensive patronage net- cation technologies to communicate with the job mar- works outside the formal state structures—which had kets in those countries. given rise to somewhat of a parallel state. As a result, City Administration: Except for Sana’a, which the even before the current crisis, urban service delivery law had accorded a special status, fragmentation and and economic development were seriously affected in absence of coordination in planning, service delivery, many parts of the country. One of the key underlying and other municipal matters was clearly demonstrat- causes is the lack of accountability (coupled with lim- ed during this assessment. Due to fragmentation of ited capacity) for service delivery by the government responsibilities at the city level, gathering information (at the local and national level) vis-à-vis the Yemeni for the assessment in the affected cities was tedious population. and time consuming despite the fact that this informa- In this context, strengthening local governance, tion was readily available at the various entities. An including decentralization of responsibilities of ser- enormous amount of time and effort and sometimes vice delivery to local governments, could help improve pressure were exerted in order to get the information local urban service provision—and will need to be 123 Joint Social and Economic Assessment addressed over the medium term after the current cri- data. Having such a system accessible to the public will sis. Improved local governance could improve service help improve transparency in revenue collection, hiring delivery by making sure local preferences, endowments, of staff (civil and non-civil servant), planned invest- and capacities are taken into account. Furthermore, ments, expenditures, greater autonomy for local gov- cities will need to be equipped with a fuller range of ernment in introducing changes to local taxes and fees, responsibilities, including in the areas of local fiscal and so forth. Revenue collection methods also should policies (i.e., local taxes/fees etc.), local government be revisited. The current methods of tax collection, staffing, including remuneration levels, as well as inde- for example, whereby a tax authority will send some- pendent decision-making authority.143 one to bargain how much a citizen is to pay provides Decentralization is actually not new to Yemen. opportunity for bargaining and wrongdoing. Greater Decentralization became a priority policy for the gov- transparency also could help reinforce accountability ernment after the civil war in 1994. The Ministry of at the local level. Local Administration was created in 1995 and the first Law on Local Administration was enacted in February 5.5.4  Recommendations 2000, following about six years of public debate. It pro- vides Yemen’s basic legal framework for decentraliza- To respond to the damages caused by the current crisis, tion and contains important provisions for local elec- there is a need to mobilize resources to address all the tions—which took place in 2001 and 2006. The Law urban service damages caused by the crisis. The ini- was a major step in imparting Yemen’s lowest level of tial estimate of required incremental financial invest- government, the Local Councils, with significant con- ments is US$43 million. However, it is important that, trol over budgetary allocations and over local branch- beyond simply responding to the need to address the es of key ministries. This law provided the legal foun- physical damages, some of the underlying causes of dations for the functioning of the local authorities poor urban service delivery—even before the crisis— based on four pillars: broadening popular participation be addressed. Some of the key recommendations are through elected local councils; financial decentraliza- as follows: tion; administrative decentralization; and decentral- ization of service delivery functions. However, actual progress with decentralization has been slow so far. 143 These would be extensive changes and as a result would need to be implemented in a gradual way. One possibility is to The credibility and effectiveness of Local Councils have pilot a reformed approach in one city, such as Ta’iz that has rel- been undermined due to capture by either the central atively strong local capacity and reform willingness. The Bank government or tribal elites, or by highly constrained also is deeply engaged through the ongoing Ta’iz Integrated fiscal autonomy, severe shortage in capacity and lack Urban Development Project (and many other projects over the past 20 years). With regard to procurement, for example, the of institutionalized avenues for accountability to cit- city can adopt the model of the Public Works Project-PMU struc- izens. The decentralization process in Yemen, while ture to implement all projects, including procurement related delivering some improvements in terms of capacity activities financed by the different line and central agencies in building for local government and delivery of servic- the city and governorate as a whole. Staff of this unit should be lean and recruited competitively and be paid remuneration es to some districts, has been largely stalled. compatible to the private sector. This would help in sustain- In addition to creating conditions for greater local ing the quality of operations and at the same time replace the accountability, there is a major need for improved current practice of each represented office of a line ministry or transparency. It is important for the citizen to have central agencies having its own technical unit to carry out and implement projects, which has proven to be not cost effective access to information concerning their city, for example and to deliver sub-standard quality works/assets. Under one through the installation of computerized data manage- implementation agency, the standard could be maintained and ment system and corresponding access to government improved over time. 124 Expanding Basic Service Delivery • Greater Empowerment and Accountability. As would be conducted on regular basis to mea- mentioned, local governments are currently sure improvements in the performance of the not fully empowered to respond to the local governorate/city. population needs because of the highly cen- • Fragmentation. There is a need to establish tralized nature of the Yemen state and corre- a single responsible agency to manage and sponding centralized decision-making process- implement basic infrastructure services in the es. In addition to the limited empowerment governorate, thus moving away from the cur- of government at the local level is an inher- rent fragmented practice whereby each branch ent lack of accountability for delivering local office of a line ministry or central agency does urban services to the Yemeni citizen. Therefore its own procurement, contracting, construction empowering local governments to improved supervision, and so forth. Apart from not being accountability and service delivery is a high practical and cost effective, effective respon- priority post-crisis reform agenda. sibility for delivery of quality products across • Improve Transparency. Improving local gover- the board could not be secured for a number nance through promoting transparency in rev- of reasons including: lack of accountability enue collection, budgeting, staff appointments, to the local government, conflict of interest and other related matters is also required. As (same unit manages and supervises contracts), a minimum first step, improved computerized absence of cost and quality control, breed- management information systems would need ing ground for collusions, and others. Anoth- to be installed and the resulting data gradual- er weakness in the current approach is that it ly made open to the public. Absence of trans- provides opportunity for corruption, accepting parency to local citizens coupled with limited sub-standard quality works, lower productiv- capacity to monitor local and central revenues ity but with higher operating costs, and other are added constraints to city management. related concerns. These administrative challenges are major constraints in the Decentralization Law No. 5.6  Electricity Sector 4 of 2000 and need to be addressed to allow for direct involvement of local governments in 5.6.1  The Impact of the 2011 Crisis the management of their governorates in an effective and responsible manner. The political and social event in 2011 had a major • Improved Coordination. Fragmentation and adverse impact on the electricity sector. Physically, absence of coordination in decisions making at frequent and sustained damages were made to the 400 the city and governorate level are added con- kV transmission lines that transmit electricity gener- straints to city management. Some local gov- ated by the 340 MW gas-fired Mareb I power plant to ernment officials would like it to stay that way the load center in Sana’a area. The transmission lines so that accountability is diluted. By having a were damaged over 100 times in 2011, most through management information system in place, city shooting or metal crossing to cause short circuiting. officials and citizens can monitor performance On three occasions, one or two of the transmission of the different entities in their city. Non-per- towers sustained damages that took weeks or even forming entities or individuals could be sin- several months to repair. The damage resulted in the gled out and supported to improve their per- failed operation of the transmission lines for most of formance or removed if performance remained the year. There were some damages to other trans- unsatisfactory. Citizen satisfaction surveys mission lines and the distribution system in major 125 Joint Social and Economic Assessment cities like Sana’a. Although most of the HFO and die- 2010. The reduction in the total available capacity is sel fired power plants were not physically damaged, the reduction in the signed rental diesel capacity. As the lack of fuel due to the damage to the oil pipe- the cost of the rental diesel power is so high, it is the line from Mareb oil field to the refinery in Aden seri- correct decision by the government to significantly ously disrupted the operation of most power plants. reduce the rental contracts for diesel power. The next As Sana’a was mostly supplied by Mareb I power major power plant to be commissioned is likely to be plant, the disruption in electricity supply for Sana’a the Mareb II, which will be operational in about three area was the most significant. The supply disruption years. Except the Mocha wind power project, which in other major cities like Aden was less serious com- has yet to secure financing, there is no other major pared with that in Sana’a. power plant under development that could be com- As a result, the monthly electricity supply by the pleted before Mareb II at this stage. The power sup- Public Electricity Corporation (PEC) to non-govern- ply situation is likely to get worse before it gets bet- ment consumers declined steadily between May 2011 ter in once Mareb II comes on line. and December 2011, from the peak 322,629 MWh in May to 177,231 MWh in December. This resulted in 5.6.3  The Physical Damage the decline of sales revenue from YR 48.4 billion in May to YR 33.2 billion in December. The conflict also 5.6.4  The Impact caused a significant decline in the bill collection rate from 96 percent in January to the lowest of 57 percent The impact of the conflict on the power sector is signif- in June. The collection rate hovered between 60 per- icant, but very difficult to quantify. Construction and cent and 70 percent during the July-November period. implementation of all ongoing and planned genera- The sales revenue to the government, which pre-crisis tion, transmission and distribution projects are on hold accounted for about 10 percent of the total, declined because all such work is being done by international sharply as the electricity sold decreased by 25 percent contractors—and there is no sign yet when internation- for most of the year and the collection rate declined al contractors will resume normal work in Yemen. The to just over 10 percent for several months. PEC man- impact on these projects is a delay in completion of aged to collect enough revenue to pay for the staff sal- at least one year. The most significant is the 400 MW ary and part of the fuel cost. Mareb II gas-fired power plants, which is urgently need- ed to replace some of the expensive diesel units and 5.6.2  The Recovery in 2012 fill part of the demand gap. The EPC (EPC: engineer, procure, construct) contract was awarded and signed The damaged 400 kV transmission line was repaired in early 2011. The plant was expected to be put into in February 2012. The fuel supply was largely restored. commission before end of 2013. Now the earliest pos- As of early March 2012, a total of about 835 MW gen- sible date for commission is end of 2014, if the con- eration capacity was operational, including about 360 tractor is ready to resume normal work soon. In addi- MW gas-fired capacity (for Mareb I which de-rates to tion, the proposed power generation plants involving 340 MW for operation in summer), 242 MW HFO- the private sector will be significantly delayed or may fired capacity, 168 MW diesel-fired capacity, and 65 never materialize—at least for the foreseeable future. MW rental diesel-fired capacity. This is the current Two 60 MW HFO-fired power plants and a 220 MW available capacity in the integrated power system of rental gas-fired power plant were bid to select pri- PEC before new power plant construction or exist- vate developers prior to the crisis. The selection pro- ing power plant rehabilitation. It is still less than the cess was put on hold. Even if the process resumes, about 1000 MW capacity operational at the peak in it is unknown whether the original firms would be 126 Expanding Basic Service Delivery interested and whether they would be in a position to state-owned integrated power company, the Public mobilize commercial financing for projects in Yemen Electricity Corporation. Well-intentioned Government in the near future. There were other power genera- policies to protect the poorest members of society and tion projects, including wind power, being discussed promote more equitable income distribution, in part with private firms prior to the crisis. None are likely through subsidized power tariffs, has contributed to to materialize now. the severe financial deterioration of the power sector. In sum, the major impact of the 2011 crisis on the The across-the-board low tariff actually benefits more power sector is in the medium/long term rather than in of the rich than the poor as they consume the over- short term. The delay in the implementation of ongoing whelming amount of the electricity supplied. and planned power generation, transmission and dis- The PEC is not charged with the autonomy and tribution projects will further worsen the already acute responsibility for managing power development and power supply situation in the coming years. Already operations according to commercial business princi- connected consumers will continue to suffer from fre- ples. Instead, capital investment and operating deci- quent and long hour of power shedding. New connec- sions have often been made on political, not commer- tions to areas and consumers which have no electricity cial or economic grounds. The planning, investment, access will have to be postponed. The delayed com- tariff, and procurement decisions are made by a num- mission of gas-fired and HFO power plants is likely to ber of government bodies, including the Ministry of further boost the use of diesel units by the consum- Planning and International Cooperation, the Ministry ers and revitalize the rental diesel units by the gov- of Finance and the Ministry of Electricity and Ener- ernment. Such actions would further increase energy gy. In fact, many of the key decisions are subject to subsidy by the government and limit its fiscal space. approval by the prime minister, the president or even the parliament. 5.6.5  The Institutional Challenge PEC is a large vertically integrated monopoly responsible for the generation, transmission as well as Although the conflict created a serious power crisis in distribution of electricity in the country. It has 15,500 2011, the poor performance of the electric power sec- staff and hundreds of branches and units all over the tor is not a product of the conflict and crisis in 2011. country. However, PEC is poorly organized and all Over the last decade, the electric power sector in Yemen the managerial power concentrated in the hands of has been characterized by little progress in expand- the top management in Sana’a. As a whole, PEC is ing electricity access to the more than half of the total not fully accountable for operation and business and population without access, inadequate capacity addi- has no incentives or pressures to improve its tech- tion to meet the growing demand by new industrial nical and financial performance. There is no clearly and commercial establishments in the grid-connected defined authority and responsibility among the var- areas, and the frequent power shedding and extreme- ious parts and units. There is no accountability and ly poor quality of services experienced by already con- incentive for each of the business lines or units or nected consumers. In addition, the Government’s sub- branches to perform to a set standard. PEC has not sidy to the electricity sector has continued to be a big been a commercially viable business enterprise for a drain on the country’s limited fiscal capacity and has long period time. Its technical performance has been required diverting significant budgetary resources from poor by any standards, to the point where power out- other critical growth and poverty alleviation needs. ages, load shedding, and substantial voltage irregular- Such a situation is a result of the chronic set- ities are common and widespread. Transmission and ting of low electricity prices by the government and distribution losses (commercial and technical) are as the monopoly of the sector by the poorly performing high as 29 percent. 127 Joint Social and Economic Assessment 5.6.6  The Development Challenge MW, at an annual growth rate of 10 percent over the next decade (Figure 14). New capacity of 3,538 MW Low Access Rate: Despite the rapid increase in total by 2020 will need to be added to the grid to replace the electricity consumption over the past decade (Fig- retiring units and accommodate this growing demand ure 13), the per capita electricity consumption was at with sufficient capacity margin. The total investment 256 kwh in 2010, compared with the world average of required for building the needed generation capaci- about 2,800 kwh. Yemenis have the lowest access to ty and the associated transmission and distribution electricity in the Middle East and North Africa region facilities is estimated to be over US$5 billion. Demand with about 50 percent of the total population having projections are based on an average GDP growth rate access, compared to a regional average of 90 percent. of 6.5 percent up to 2020, the minimum required for Rural areas are particularly disadvantaged, with only Yemen to maintain current employment. 20 percent of the population having access to electrici- Dominance of Liquid Fuel: In 2010, electricity in ty. Yemen’s economy and citizens will need more mod- Yemen was generated by the combustion of heavy fuel ern energy to run their homes, offices, and factories, oil (45 percent), diesel (28 percent) and natural gas and their appliances and transportation needs. These (28 percent). As a result of the dominance of liquid developments will reduce poverty levels and improve fuel in power generation and the relative low efficien- the quality of life, a legitimate aspiration that would cy of many power plants, the economic and financial need to be accommodated. Yemen’s electricity con- costs of electricity generation and supply are extremely sumption is set to continue growing rapidly in tan- high. In contrast, the average level of consumer tariff dem with economic and population growth once the is very low. The electricity sector is heavily subsidized country stabilizes. through direct government subsidy for fuel and indi- Massive new investment in the power sector will rect subsidy through investment. It is estimated that be needed to satisfy continued rapid growth in the total fuel subsidy alone to PEC in 2010 was as high as next two decades. The latest Power Development Plan US$330 million, and total subsidy to the power sec- (2009–2020) forecasts a total capacity demand of 3,102 tor was about US$550 million, about 14 percent of the Figure 13: Yemen’s Electricity Output Growth 8 Total Electricity Output (Twh) 7 6 5 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Source: Public Electricity Corporation, Yemen. 128 Expanding Basic Service Delivery Figure 14: Forecast Power Demand in Yemen 3500 3000 2500 Total Demand (MW) 2000 1500 1000 500 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year Source: Public Electricity Corporation, Yemen. total government budgetary expenditures. This put a gas, and introduction of new generation technolo- major burden on the government’s fiscal balance and gies is vital to the long-term sustainable develop- crowded out social expenditures. ment of the energy sector. Yemen is endowed with The Government planned to move towards a gas- significant renewable energy resources such as solar, fired power generation system and put the first gas-fired geothermal energies, and particularly wind (Figure power in operation in 2009. However, as of 2010, cer- 15). These resources are capable of sustaining large- tified gas reserves is reported to be 10.2 tcf, of which scale commercial power development as well as about 9.2 tcf has been committed for exports as Lique- small-scale decentralized systems to meet the ener- fied Natural Gas (LNG). The government has allocat- gy needs of rural and remote communities. Support- ed 1 tcf of certified gas reserve for power generation. ed by a Global Environmental Facility grant imple- The amount is only sufficient to support the operations mented by the World Bank, a detailed assessment of the Mareb I power plant at 80 percent capacity fac- was made of renewable energy resources potential tor for 25 years. There are other proven reserves which in Yemen that could be exploited for grid and off- are not yet certified. But the total current uncommit- grid electrification. The resources assessed include ted proven reserves are reported to be only sufficient to wind, solar, geothermal, small hydropower, and bio- support Marb I and II, which are either in operation or mass energy resources. The estimated theoretical and under construction, with a total capacity of about 1000 technical potential of renewable energy resources are MW for 20 years. They are far from sufficient to meet shown in Table 22. the required fuel demand for power generation expan- The competitiveness of generating electricity using sion. There are other reserves which are yet to be proven renewable resources was examined against other before a firm power generation plan could be developed. options available in Yemen. The preliminary estima- Renewable Energy: Clearly the diversification tion is that the gas-based Combined Cycle Gas Tur- of energy supply away from petroleum products and bine (CCGT) using locally produced natural gas is the 129 Joint Social and Economic Assessment most cost effective option. Except concentrated solar program. It is generally considered that electricity sup- power (CSP), all other renewable technologies have ply is an essential service, which should be extended lower dynamic unit cost than diesel power genera- to all citizen of a country. However, there are a issues tion. However, wind power could only provide inter- concerning this goal that must be taken into consid- mittent electricity; its real value to the power system eration. Electrification of a country with universal decreases when the wind capacity in a system reach- access is a gradual process that typically takes sever- es a certain percentage of the total system capacity. al decades to complete. The speed at which univer- A detailed economic analysis will be needed that takes sal access is achieved needs to be compatible with the into account all factors, including the characteristics speed of industrialization and the growth rate of the of the demand carve in the power system, transmis- economy in a country. Therefore, in any country at sion system, and the expected supply curve of wind the developing stage, only a portion of the population power and the locations of the wind farms. will have access to electric service. Yemen should be Rural Electrification: In its Power Sector Develop- with no exception that the progress in rural electrifica- ment Strategy Note of 1997, updated in 2006, the Gov- tion should be compatible with the size and strength ernment committed to a nationwide rural electrification of the country’s economy. The inequality in electricity access is significant- ly increased if electricity service is heavily subsidized Figure 15: Wind Resources of Yemen at 50 m above Ground Level According to and priced at only a portion of the supply cost. The Mesoscale Model (2006) effect of this policy is that the portion of the popula- tion with access to electricity receives a subsidy from government budget that is not available to the portion of the population without access. Heavily subsidized prices also deprive the sector of generating revenue for investment and impact the government budget. Both of these outcomes ultimately slow down the electrifi- cation process. The poorest group in the most remote areas would be most affected. If electricity service is, rather, treated as a commodity to be provided at full cost to those who can afford it, the extent of inequal- ity would be significantly reduced. Physically, rural electrification can be achieved through a combination of extension of the main grids Source: Government of Yemen and JSEA Staff. Table 22: Grid-based Renewable Energy Potential Resource Theoretical (MW) Gross Technical (MW) Practical Technical (MW) Wind 308,722 123,429 34,286 Geothermal 304,000 29,000 2,900 Solar Electric (CSP) 2,446,000 1,426,000 18,600 Biomass 10 8 6 Hydropower 12–31 11–30 — Solar Thermal (SWH) 3,014 MW thermal 278 MW thermal 278 MW thermal Source: Renewable Energy Development Strategy, prepared by Lahmeyer International for MoEE, Yemen. 130 Expanding Basic Service Delivery and development of isolated grids in remote areas as willing to pay. Otherwise, the rule of subsidy needs is currently the case in Yemen. The factors that affect to be very clear and transparent to encourage invest- the decision include the size of the main grid, available ment and private sector participation. generation options, geography, and detailed study of the country. Ultimately, however, the decision depends 5.6.7  Proposed Sector Reform by on the economics of available power supply and deliv- Government ery options. In a country where power is primarily gen- erated by large power plants with economy efficiency The GOY has fully realized that it could not afford of scale, with ample resources such as coal, nuclear, to continue the subsidy policies as it has followed in natural gas, then extension of the grid to most regions, the past and it needs a financially sustainable and except the isolated remote areas, is normally the more technically sound power sector to support the GOY’s economic choice. In a country where power is primar- twin objectives of high economic growth and pover- ily generated by HFO and diesel with little economy ty reduction. For a decade prior to the political crisis, and efficiency of scale in power plant operation, local the Government, assisted by donors and internation- and isolated grids to serve many regions may be more al consultants, had been developing a power sector economical, particularly when the terrain is very dif- development strategy and preparing a plan to restruc- ficult and population is sparely located. For isolated ture the power sector that would provide the princi- grids, there is also the issue of whether home-based ples to be followed and key actions to gradually put renewable energy systems are more economical than the sector on sustainable footing. The key elements diesel or HFO generated power. Currently in Yemen, it considered include: is not very clear how the decision is made when a cer- tain area is electrified. Renewable energy is difficult to • Fully separate the policy making functions of promote as petroleum products are heavily subsidized. the government from the business operations Institutionally there are the choices of the main of the power entities so that the government power companies, such as PEC, to be fully responsible ministry is no longer involved in the opera- for a country’s rural electrification program, or many tion of the power companies—publicly owned entities, including dedicated government agency, the or privately owned. private sector, local communities and cooperatives, to • Create an independent regulatory body to pro- participate in rural electrification program. Until 2009 vide sector regulation and promote competition. PEC was the principle entity to implement rural electri- • Unbundle the vertically integrated PEC into fication program in Yemen. Then the General Authori- legally and financially independent power gen- ty of Rural Electrification was created to be responsible eration, transmission, and distribution busi- for rural electrification. The intention was to mobilize ness entities. additional financial resources and create financial via- • Corporatize the power generation, transmis- ble rural electricity service providers in newly electrified sion and distribution entities and operate them areas. But it is questionable whether new consumers according to commercial principles. in these areas are willing to pay cost-reflective tariffs • Significantly improve the technical performance when the existing consumers are paying heavily sub- of the sector through reduction of technical sidized tariffs. Without cost-reflective tariff, it is diffi- and non-technical losses, increased invest- cult to mobilize additional financial resources. If elec- ment efficiency, and increased system avail- tricity prices fully would reflect the cost of supply, the ability and reliability. private sector or any investor could develop and pro- • Develop separate generation tariffs, transmis- vide electricity service anywhere the consumers are sion tariffs and distribution tariffs and price 131 Joint Social and Economic Assessment each one to ensure recovery of prudent costs More importantly, unbundling the sector and cre- and earn a reasonable rate of return so as to ating more companies does not automatically lead to improve the financial viability of the sector. increased competition and improved sector perfor- • Promote diversification of financing sourc- mance. Actually it is unlikely to have genuine com- es and encourage entry of new participants, petition in such a small power system for decades to including private players and financing. come. But it would create the conditions for entry by • Promote competition in the generation seg- equity and debt participants other than incumbents. ment and power supply business. For this to happen, the assets have to be clearly sep- arated and defined. Even if all the companies are still A first, but very important step was taken by GOY owned by the government, there need to be separate to implement the proposed power sector reform strategy boards and management teams for each company. and plan. A new Electricity Law, which embodies most There must be clearly defined contractual relationships of the above principles and elements, was approved among the participants in the different segments. Hav- by the parliament in February 2009. The plan was to ing a large number of companies would not bring any implement the reform as articulated in the Law with- benefits if all the companies are under the same man- in three years of its approval. But so far, no steps have agement—there is no autonomy and accountability, been taken and nothing has happened. and there is no clear contractual relationship among them. International experience that it is corporatiza- 5.6.8  Structural Change: A Means not an End tion and full commercialization of the power sector, rather than simply unbundling, that brings efficiency It is a common practice for countries pursuing power improvement and increases sector financing. sector reform to start by unbundling vertically integrat- ed power entity into generation, transmission, distri- 5.6.9  Reforms are Critical – Recommendations bution, and even supply business entities. In the gen- eration segment, a number of generation companies The government’s involvement in the power sector is are created to own and operate the generation capaci- pervasive. Without fundamentally changing the roles ty previously owned by incumbents. The distribution played by the government and the manner in which activity is also divided into several franchise areas run these roles are played, any reform of the power entities by different companies. Although the unbundling and will likely only yield marginal benefits. At the best, the breakdown create the conditions for better cost account- unbundling of the sector and improvement in manage- ing according to business activities and are essential to ment practices would reduce electricity loss, improve introduce competition, directly or indirectly, they them- collection rates, and reduce fuel consumption and selves do not generate efficiency improvement. In actu- other operating costs to some extent. But key issues ality, they could contribute to increased transaction and such as financial viability, adequate financing, time- administrative costs as more management teams are ly investment decisions, and adequate power supply created and the command and orders between busi- capacity would hinge on changed behavior and actions ness activities are replaced by contracts. Particularly, by government. the Yemen’s power system is very small with a total installed capacity of less than 1000 MW and Yemen has The Short-Term Actions a very limited number of high caliber managerial staff and technical experts. Therefore, care should be taken Consensus on Direction and Strong Leadership for to avoid fragmenting the sector too much and further Change: The Electricity Law provides a clear direction stretch the limited human resources during unbundling. and guiding principles on how the sector should be 132 Expanding Basic Service Delivery restructured, but whether the restructuring will deliver Reducing Power System Losses: Some 30 percent the expected outcomes will depend on what and how of Yemen’s power generation is lost in the transmis- the law will be implemented. Therefore, it is critical sion and distribution system, compared to losses of for the Yemen government to have strong leadership less than 10 percent in developed countries and of during the entire reform process. Strong leadership less than 15 percent in most developing countries. The will ensure critical issues are resolved and required main cause of high losses is the prevalence of old, out decisions are made in a timely fashion. The high-lev- of date equipment and increases in system load well el government leading group should be supported by over the carrying capacity that they were original- a working group consisting of a diverse group of high ly designed for. In the distribution system, high loss caliber experts covering all major aspects of power sec- transformer models still dominate in most areas. An tor reform. The communication channels between the international consultant carried out a loss reduction leading group and working group should be smooth. study recently and a number of ways for loss reduc- As the restructuring is likely to redistribute the power tion were identified. The study also showed that the and interests of existing stakeholders, it is important unit investment cost for reduction of losses (per kwh that the decision makers are independent and have reduced) is much lower than the unit cost for electric- no vested interests in the sector. Currently the gov- ity generation. It should not be a huge challenge for ernment leaves the implementation of the reform in PEC to reduce distribution losses in cities like Sana’a the hands of MOEE. This is not likely to work as the to below 20 percent. power sector involves many other government bodies Increasing the Efficiency and Availability of and MOEE itself should be in the center of the restruc- Existing Generation Capacity: More than 20 percent turing and reform. of PEC’s existing power generation capacity is not Focusing on Institutions. In order to put the power available due to the lack of spare parts and inade- sector on a sustainable development path, there needs quate maintenance. The fuel efficiency of both HFO to put in place an accountable institutional frame- fired power units and diesel powered units are very work. It is very important that the institutions are low by international standards. PEC fuel efficiency equipped with capable technical and managerial staff ranges from 0.426 liter/kwh to 0.323 liter/kwh for to carry out their duties and responsibilities. But it is HFO units, and from 0.298 liter/kwh to 0.231 liter/ much more important that each institution, manager, kwh for diesel units. There appears to be quite a bit and staff is given clear rights and responsibilities and room to improve the generation efficiency of exist- is made accountable for their performance. Broadly, ing power plants. there are two categories of institutions: the govern- Increase Bill Collection Rate : PEC continues to ment bodies which make sector policy, provide sector suffer from a low rate of bill collection. Although the regulation and excise the ownership rights; and the overall bill collection rate reached 94 percent in 2009, public power entities which mange the investment it declined to 86 percent in 2010. An 86 percent bill and operate and maintain the assets. The key issue for collection rate effectively reduces PEC’s average con- the government bodies is to clearly define each actor’s sumer tariff from 17.34 YR/kwh to about 13 YR/kwh. rights and authorities, make each act only within its PEC’s average age of receivables for non-government own power sphere and improve the effectiveness and consumers and government consumers stand at about efficiency of their decision making. The key issue for four months and nine months respectively in 2010. PEC the public power entities is to make them run as effi- should aim to achieve a bill collection rate of 95 per- cient commercially oriented business, have autono- cent and an average age of receivables of three months mous management. and clear procedures to ensure in the next couple of years. accountability. 133 Joint Social and Economic Assessment Box 17: Distribution Improvement and Loss Reduction The total amount of electricity in the transmission, distribution and consumer chain which was not metered and billed is reported to be 29 percent of the total electricity delivered from the power plants countrywide in 2010. The 29 percent consists of both technical loss and non-technical (commercial) losses. At a collection rate of 86 percent in the same year, the percentage of electricity that was not billed and paid is 33.7 percent. This represented the loss of just more than one-third of PEC’s total revenue. The electricity loss was the highest in Sana’a area, at 37 percent as compared to the national average of 29 percent. This illustrates the factor of high commercial loss because technical losses are normally much higher in sparely populated rural area than in populated urban area. However there are no specific data on the portion of technical loss and commercial loss. Among the total 29 percent losses, PEC’s estimated technical losses are around 19 percent and commercial losses around 10 percent. An international consultant estimated technical loss in Sana’a area at only 12 percent and commercial losses at about 25 percent. The main causes for high technical loss include: inadequate size of conductors, lengthy overhead HV/LV lines, low power factor, overloading of lines and substations, poor standards of construction, voltage drop in LV networks, and inadequate feed arrangement. The primary reason for the high commercial loss is the lack of management in the power utility. The other reason is the lack of IT support and quality meters to measure and bill consumers’ consumption. The technical loss can only be reduced by making investment in rehabilitation of the network. PEC’s preliminary study of the entire distribution network would require a total investment of about US$130 million over a three-year period. The investment would cover the rehabilitation of low voltage network, medium voltage network, and 33/11 kV substations in 24 governorates. Upon completion of the investment program, the average technical losses could be reduced by four percent. This would be about 250 Gwh per year, equivalent to the annual output of a 60 MW power plant operating at 50 percent capacity factor. The construction of a 60 MW HFO/diesel power plant would cost about US$30 million. In addition, the reduced amount of electricity loss would help decrease the operating and fuel costs, at about US$70 million annually, of the plant to generate the same amount of electricity. The preliminary study by the international consultant {Mercados) in a pilot area of Sana’a indicates that a total investment of US$13.6 million over a five year period would reduce technical losses by 5.43 percent, the equivalent of about 101 Gwh of electricity annually. Commercial loss reduction is much different from technical loss reduction, which mainly relies on extra investment. Commercial loss reduction relies primarily on improvement of the company’s management. Areas for management improvement include: meter reading and billing process for all customers, revenue collection and recovery, the creation of dedicated energy accounting and audit cells, and organization restructuring to address its current weakness. Above all, the success of commercial loss reduction initiatives is contingent on the commitment and dedication of the entire organization. These organizational improvements will require a small amount of investment. But such improvements must be accompanied by replacement of all outdated meters and installation of meters for un-metered customers, which require more investment. Mercados’s preliminary study in a pilot area of Sana’a indicates that a total investment of US$7.6 million for management and metering improvement over a five year period would reduce commercial loss by 20 percent, equivalent to about 373 Gwh of electricity per year. Such an amount of electricity would be equivalent to the annual output of a 90 MW power plant operating at 50 percent capacity factor. The annual fuel and operating cost to generate the electricity would be over US$100 million at current oil price (US$100/bbl). Source: Feasibility Study for Distribution System Improvement and Loss reduction project by PEC, Consulting Services for Loss Reduction and Energy Audit, Mercados/NDPL/SyT, and PEC Annual Report 2010. 134 Expanding Basic Service Delivery The Mid-Term Recommendations the energy supply constraints and meet increasing demand. There is an urgent need for Yemen to devel- Least Cost Generation Expansion: The current genera- op an updated master generation plan which should tion capacity consists of costly diesel-fired and heavy determine the least cost generation mix to meet the oil-fired units, and the 340 MW Mareb I gas-fired power country’s power needs in the coming decades. Since plant consists of open cycle units instead of the more both oil products and natural gas are internationally efficient combined cycle units. The ongoing Mareb II tradable goods, even for locally produced oil products is planned to be constructed as 440 MW with open and gas, their full economic prices, rather than the cost cycle units first and then be increased to 660 MW thor- of production in Yemen, should be used in determin- ough converting to combined cycle units. The Master ing the least cost generation mix of meeting Yemen’s Generation Plan prepared five years ago envisaged electricity demand. that the generation mix would consist of more than Update Rural Electrification Strategy: Although a 95 percent gas-fired capacity by 2025. It was recent- rural electrification program was developed in 1997 ly discovered that Yemen is unlikely to be have with and updated in 2006 as part of the Power Sector Devel- the natural gas resource to support such a large gen- opment Strategy, it needs to be updated to take into eration capacity. Actually, it is yet to be determined consideration of the changes in the sector and imple- whether Yemen has additional gas resources to support mentation experiences in the last few years. The rural new gas-fired power plants beyond Mareb I and Mareb electrification strategy needs to make careful trade-offs II. With a gradual decline in oil production, it is also between the extension of the main grid and the devel- unlikely that Yemen could afford to further expand its opment of local grids by taking all possible factors HFO and diesel fired generation fleet. The other tech- into consideration. The strategy also needs to exam- nical available options to meet Yemen’s increasing ine and review the development of renewable-ener- electricity demand include the development of nucle- gy-based electricity against liquid-fuel-based electric- ar power plants, coal-fired power plants with import- ity by accounting for the full economic costs of power ed coal, gas-fired power plants with imported natural generation and delivery. Institutionally, the proposed gas or buy-back LNG, as well as renewable-energy- arrangement and framework needs to fully consider based power generation. the overall sector-restructuring objective, the social Several preliminary estimates were made in recent and political context of the local communities, and years on the relative cost ranking of the various power the lessons learned in recent years. The implementa- generation options available to Yemen (Table 23). Gas- tion schedule needs to be compatible with the afford- based Combined Cycle Gas Turbine (CCGT) appears ability and willingness-to-pay of the consumers if tar- to be the most cost effective option. Therefore, both iffs reflect supply cost, and the status of the economy CCGT based generation capacity and their hours of and fiscal constraints if price continues to be heavi- operation should be maximized, up to the limit that ly subsidized. sufficient gas is available and could be economically Steps toward Financial Viability: Financial viabili- extracted. Coal-fired power generation is international- ty of the power sector means that the operating power ly quite competitive, particularly in regions where coal entities are able to generate adequate revenue to meet is produced locally. Yemen may take proactive steps to all operation expenses and to finance capital invest- investigate and explore the option of meeting part of ment needed for rehabilitation and expansion from the future electricity demand through coal-based power their own resources or to attract sufficient external generation plants. Renewable-energy-based genera- capital for this purpose. This would require the aver- tion, particularly wind-based power, may be competi- age consumer electricity tariff to adequately cover the tive and could play a significant role in helping resolve full cost of power supply. 135 Joint Social and Economic Assessment Table 23: Indicative Costs of Electricity Production by Technology Types Levelized cost Levelized cost ($ cents/kwh at ($ cents/kwh at Technology 15 percent WACCa) Technology 2 percent WACC) CCGT conv. 3.1 b CCGT conv. 1.2 Coal 7.7–8.9 Wind 4.3 Gas CCGT 10.5 c Coal 5.2–5.5 Wind 10.8 Solar PV 2015 7.6 Gas CCGT (LNG buyback) 12.9 d Geothermal 3.9–8.6 Gas OCGT 13.9 Gas CCGT 7.4 Geothermal 9.4–20.4 Solar PV 10.0 HFO 16.1e Gas CCGT (LNG buyback) 11.2 Gas OCGT (LNG buyback) 17.4 Gas OCGT 12.3 Diesel 19.3 e HFO 13.7 Solar PV 2015 21.6 Solar CSP 14.6 Solar PV 29.6 Gas OCGT (LNG buyback) 15.8 Solar CSP 34 Diesel 17.8 Source: Mackenzie: Creating an Executable Roadmap for the Power Sector in Yemen, provided by Ministry of Electricity and Energy, Yemen a WACC= Weighted Average Cost of Capital b Gas accounting cost of US$2/mmbtu c Gas export opportunity cost of US$10.5/mmbtu d YLNG buyback price of US$13/mmmbtu e Average crude oil price of US$10 0/bbl. In view of the current financial position of PEC and Once the distribution business is separated the planned power sector restructuring, it is likely to from the transmission activity, it is also important take quite a few years to bring the financial position to ensure that the distribution companies are finan- of PEC to a sound footing through tariff increase and cially viable. If the consumer prices continue to be performance improvement because this would mean subsidized, they should be subsidized through low a significant tariff increase for the residential consum- prices from the transmission company. The distribu- ers. Therefore, the following approach is proposed to tion margins charged by the distribution companies gradually achieve sector financial viability. Once gener- should be adequate to cover the costs of distribution ation is separated from transmission and distribution, services. But adequate incentive mechanisms should it is suggested that all power plants be corporatized be built into the pricing system to promote the grad- and commercialized. Each of them will sell their out- ual reduction of distribution losses and increase dis- puts to the transmission company at pre-determined tribution efficiency. tariffs that are adequate to cover the cost of generation. Once the vertically integrated PEC is separated into For all new power plants, the wholesale tariff should generation, transmission, and distribution businesses, be adequate to cover the capital costs of constructing initially it is probably better to put all the financial loss the plants as well as the operating costs. For existing of the sector in the transmission company, rather than power plants, the tariff should be adequate to cover have all the companies share the losses. This would the cost of serving remaining debt, if any, and the cost facilitate the discipline of the generation and distribu- of operation. But an incentive system should be built tion companies from the beginning, and make them into the tariff formula to encourage least-cost invest- operate on fully commercial principles. The transmis- ment and efficient plant operation. sion company could have a separate account for the 136 Expanding Basic Service Delivery loss so that it could show clearly to the government equity funds are the commercialization and corpora- what amount of subsidy it would require. tization of the sector and the implementation of cost If PEC is not going to be unbundled very soon, recovery tariff system. it should financially ring-fence its different business In view of the current status of the power sector, it activities, so that PEC’s management is very clear how would take some time to fully commercialize and cor- its different businesses are operating and where the poratize the entire power sector and put PEC onto a inefficiencies are. Then it should develop detailed per- financially viable footing. A gradual and more practi- formance indicators for its business units to gradual- cal approach is to structure new investments as finan- ly improve performance within a limited timeframe. cially independent entities and to allow them to charge Once the various business activities are vertically and cost recovery tariff on prudently incurred costs and horizontally ring-fenced, PEC management can bench- to earn a reasonable rate of return on equity. Based mark the performance of the various business units. on international experiences, new generation power Financing the Expansion: Currently all PEC’s power plants are usually easier than other segments to open generation, transmission and distribution projects are to and attract new equity investment and debt finance. financed through allocations by the government, which Initially, the equity investors could be large indus- either borrows from multilateral/bilateral institutions tries that are looking for reliable electricity supply, local or uses its own fiscal revenue. PEC’s internal reve- infrastructure developers, and overseas Yemen entrepre- nue from the sales of electricity is barely adequate to neurs that are willing to take local currency revenues. finance the maintenance and operation of its existing The lenders could be local pension funds and banks, assets. Because PEC’s financial position is so poor and which do not look for high, but rather stable earnings. the domestic banking and capital markets are under- Currently, the large industry consumers often build developed, they are unable to intermediate domestic their own small, but costly diesel generators to meet and foreign savings into the power sector. Under the their electricity needs. One way to encourage them to current industrial structure and electricity tariff regime, contribute to new big gas-fired power plants is to allow no other domestic or foreign investors are willing and them to have an equity share in these power plants. able to channel equity funds into PEC’s generation, Through equity participation, they could be guaran- transmission, and distribution business. teed the supply of electricity proportional to their share The power sector in Yemen is faced with a huge even in power-shedding situations. investment requirement in the coming 15 years. The tra- ditional approach—to rely solely on government fund- Encourage Foreign Financing ing—is unlikely to meet the sector expansion needs. Various options to mobilize domestic and foreign capi- To encourage investment by independent power pro- tal to meet these important needs must be considered. ducers (IPPs), the government need to formulate a Mobilize Domestic Finances: As the power sec- basic policy framework that would provide for compe- tor does not generate foreign currency directly, it is tition at entry on the price of power supplied, mitigate always more difficult to attract direct foreign invest- investor concerns on country and policy-based risks, ments into the sector since they require a creditable and adequately assign commercial risks to prospective guarantee of both the convertibility and availability of investors. The success of the LNG project shows that foreign exchange. However, the power sector is con- international investors and lenders are willing to take sidered one of the most reliable sectors for domestic the political and country risk of Yemen. But the differ- long-term investment under the right policy and reg- ence for power plant is that it does not generate prod- ulatory environment, particularly tariff policy. The ucts which could be sold directly in the international prerequisite for the forthcoming of domestic debt and market to earn hard currencies. The critical additional 137 Joint Social and Economic Assessment risks that the investors and lenders will face are the the full privatization of the sector and/or the imple- electricity off-take and revenue payment by PEC, the mentation of full cost-recovery electricity pricing. foreign exchange fluctuation, the convertibility of local It does not necessarily disadvantage rural electrifica- currency, and availability of hard currencies risks. In tion programs or electricity supply to remote areas. view of the very poor financial position of PEC, all But the government subsidy policy needs to be clear- these risks need to be borne by the Yemen Govern- ly defined and made transparent. Yemen is unlikely ment. It is yet to be tested whether and what risk mit- to have a competitive power market for many years igation measures and arrangement could be made to to come, so there will be no real competition in the attract the interests of international investors and lend- market. But a transparent competitive process can be ers to a Yemen power project. The best way to do it is developed for entry into the market (competition for put a real project into the market. market), either in developing distribution and gener- ation projects or in operating and maintaining distri- Benefits of Private Financing bution and generation assets. There are a number of benefits associated with the intro- Increased Self-Financing by PEC duction of private sector financing for power projects: (i) it will bring a large of amount of financial resource to Adequate sector self-financing of new investments is the sector in addition to the funds provided by multilat- vital for the sustained development of the industry. This eral and bilateral donors to fill the funding gap to meet means that power companies require a market-deter- the sector’s huge financing needs; (ii) it will bring the mined rate of return on assets. Increased power sec- most advanced technologies, skills, and technical and tor financing requires pricing reforms based full recov- managerial know-how for power project construction ery of supply costs. These measures will be essential and operation to drive change in the sector; (iii) it is if power companies are to become financially viable likely to significantly improve efficiency in construc- entities, able to access funds from capital markets on tion and operation and thus reduce the cost of capital commercial terms based on their own financial per- construction and power system operation; and (iv) it formance and the strength of their balance sheets. To will shift most of the commercial risk—such as cost avoid one-time price hikes, pricing reforms can be overrun, construction delay, and operation failure— implemented in stages. First, the price level should from the government to the private sector. There are ensure adequate revenue to fully cover the mainte- also some costs associated with private sector financ- nance and operation costs of existing assets. Second, ing. The most obvious is that the cost of private cap- the price level for new investments should be adequate ital is likely to be much higher than the cost of donor to cover both the capital costs and the operation costs. funding as both loans and equity funds will charge market rates plus risks premiums. But the addition- New Pricing Regime Critical al cost is likely to be offset by efficiency gains in con- struction and operation activities. It should be noted As PEC is a vertically integrated utility which owns all that the private sector will not take risks beyond its the grid connected power plants as well as the trans- control such as the political risk, the power demand mission and distribution facilities, and there is no finan- risk, or the currency risk. These need to continue to cial separation or ring-fencing of the different business be shouldered by the government through govern- activities, Yemen does not have a complex electricity ment guarantee. tariff system made up of wholesale price, transmission It should also be noted that the introduction of pri- price and retail tariff as in many countries. Instead, vate investment does not need to be associated with Yemen has only one type of price, which is the retail 138 Expanding Basic Service Delivery tariff charged by PEC to its final consumers and includes for residential consumers, but probably price reduc- six rate classifications defined by customer class. The tion for the large industrial consumers. The adoption current pricing system is far from adequate to serve of “lifelineâ€? tariffs for residential consumers is com- the needs of the sector. The average retail tariff level mon in many countries. These tariffs are intended for is well below the cost of supply and could not recov- low-income households. Under such a scheme, house- er adequate revenue to maintain the financial viability holds would pay full cost for electricity consumption of the sector. Both the tariff level and structure do not over a basic lifeline level, which could be about 50 kwh encourage sector investment and efficient use of the per month. This type of tariff would avoid subsidizing limited electricity resource. Major efforts are required high-income households, which usually account for to rationalize the power pricing system so that it can the largest share of household electricity consumption. meet the financial needs of the expanding sector as well In view of the planned sector reform, future elec- as promote investment, allocation, and consumption tricity prices in Yemen are likely to consist of three types efficiency. Any attempt and efforts to restructure the of tariff: generation tariff at which the power plants sell power sector will fail without getting the price regime their outputs to the transmission company; transmis- right. In a commercialized power sector, pricing should sion tariff at which the transmission company charg- help achieve the following goals: es for transmitting the electricity from the generators to the distributors; and the consumer retail tariff. It is • Mobilization of adequate funds to ensure that important that the tariff level at each stage is adequate investments are financed by revenues gener- to fully recover the costs of the services and the tar- ated by the sector and commercial loans rath- iff structure is designed to encourage efficient invest- er than government allocations. ment in generation, transmission, and distribution. • Rationing of the available supply among poten- tial users to ensure that electricity is assigned Areas for Donor Support to consumers that will generate the highest economic benefits. Donors’ continued strong support to Yemen’s power • Optimal use of the electricity sector’s capital, sector is critical during the coming three to five years fuel, and labor to maximize output at low- if the sector is going to experience the key transition est cost. and changes required. Building upon the strong rela- tionships developed over the past decade, carefully tar- Depending on the structure of the electricity indus- geted donors’ financial assistance and advice on sector try, the electricity pricing system could be very complex investment, institutional, regulatory, policy, pricing, and and consist of many types of prices. But retail consum- financial issues can play a key role in assisting Yemen er price exists in all electricity systems. In a regulated to implement a much needed restructuring program, power industry, retail tariff should be based on mar- alleviate electricity shortage, and expand access—the ginal-cost principles to ensure adequate allocation of lack of which hinders economic growth and pover- supply among end users and efficient use of electrici- ty alleviation. The donors can help speed the restruc- ty. The application of marginal-cost principles implies turing program and reduce sector inefficiencies, help- that tariffs distinguish between customers with differ- ing Yemen to avoid the mistakes experienced in some ent demand characteristics and cost of service. The countries during the transition from a vertically inte- current tariff for the different categories of consumers grated sector run by government command as a politi- in Yemen is determined according to perceived afford- cal and control as a political tool to an unbundled sec- ability rather than the cost of supply. A rationalization tor structure operating on commercial principles with of the tariff system would imply major price increase participation of private sector. 139 Joint Social and Economic Assessment Yemen will depend on donors for financing in the • Develop and implement sound accounting foreseeable future for all its investment in major power policies and practices for different business generation, transmission, and distribution projects as activities, and strengthen financial manage- well as rural electrification programs. It will take sev- ment systems. eral years or even longer for the power sector to meet a significant part of the financing needs from either its Mid-Term own revenue or the private sector. In the medium–to long-term horizon, donors are expected to continue • Clarify and delineate policy-making, regula- to focus on major power generation and transmission, tion and ownership functions of the govern- and rural electrification projects. In the short term, ment, and clearly separate the policy-making donor financing in the following areas may yield bet- functions of the ministry from regulatory func- ter economic and financial returns for the country: tions of the regulator, the oversight functions of the owner, and the management functions • Repair and rehabilitation of electricity distri- of the power companies. bution infrastructures damaged during the • Corporatize and commercialize state-owned conflict, including spare parts for Mareb I power entities, so that the companies will have power plant. the autonomy to make investment and operation • Rehabilitation and renovation of existing gen- decisions, but will be fully accountable to the eration plants to increase capacity and avail- shareholders for the performance and results. ability, and improve generation efficiency; • Rationalize electricity pricing, which would • Rehabilitation and strengthening of the distri- promote sector development to meet growing bution network in major load centers such as demand but also encourage efficiency and pro- Sana’a city (accounting for 40 percent of the tect consumers from monopoly abuse. Devel- total distribution system loss) to reduce dis- op and implement efficient generation, trans- tribution losses. mission, and distribution prices if the sector is going to be unbundled. Technical assistance by the donors in the power • Promote of new sources of financing and sector could be focused on the following major areas. increase involvement of domestic and for- The specific work at a given time would depend on the eign equity investors and debt lenders in the pace of the reform and the issues that arise: power sector. • Improve investment planning and technical Short-Term capacity of state-owned power entities, and reduce losses and improve overall efficiency • Develop and establish clear contractual rela- in the power system. tionships based on commercial principles • Build capacity for the policy ministry to improve between different generation, transmission, sector planning and sector policy development and distribution business units entities, even and implementation. still owned by the government. • Develop and implement the new regulatory • Develop and apply sound management prac- system and build capacity so that the regula- tices to make each business unit fully account- tor can provide light-handed supervision of able for performance, including clear perfor- autonomous commercially oriented power mance indicators and incentives to improve. entities. 140 Going Forward: Supporting the Transition Phase in Yemen – Emergency Response and Setting the Stage for Economic Development 6 6.1  Introduction of Planning & International Cooperation (MoPIC). The TPSD describes the challenging security environment, Against the backdrop of an overall difficult political the precarious social and humanitarian situation pre- and social context as well as the long standing devel- vailing in Yemen, the fragile financial position the Gov- opment challenges Yemen faces, the JSEA sought to ernment faces, and it calls for an emergency response identify key enablers for restoring economic growth, and support by the international donor community. The measures and mechanisms to improve livelihoods, TPSD proposes parallel implementation of an Emergen- create jobs, strengthen food security, expand social cy Response (Pillar 1: short term priorities), and the ini- service delivery, and propose ways to restore and tiation of a medium-term Economic Recovery Program broaden vital public infrastructure. There is a short-, (Pillar 2: medium term priorities, see also Table 24). medium-, and longer-term dimension to all these A major goal of this Chapter is to show how the ana- considerations. lytics and insights of the JSEA can underpin the imple- The political events of 2011, which allow for an mentation of the TPSD’s four priorities under the Emer- opportunity to change and improve Yemen’s develop- gency Response (Pillar 1) and the six priorities under the ment path, challenged the fragile socio-economic bal- Medium-term Economic Recovery Program (Pillar 2). ance and conditions in Yemen, especially for the short term. In response to such challenges, the preceding 6.2  Design Principles for Supporting chapters analyzed the following four major themes: the Implementation of the (i) how the political events of 2011 impacted the recent Transitional Program for socio-economic outcomes and shaped the potential Stabilization and Development to overcome the crisis moment; (ii) looking ahead, (TPSD), 2012–2014 what are the policies, policy changes, and resources required, as well as the time for different growth and The analytics and insights presented in the 2011 World development options to help restore the economy and Development Report (WDR) on Conflict, Security and to deliver the services Yemenis expect; (iii) the need for Development offer valuable lessons for designing and capacity building to deliver such services and improve implementing post-conflict transitional program in governance, aside from reviewing policies and attract Yemen. These are: resources; and (iv) suggestions for the very short term Multiple transitions. Countries that have success- to restore services and economic activities, including fully moved away from fragility and conflict have done targeted emergency repairs of infrastructure (see also so not through one decisive “make or breakâ€? transition the Executive Summary). moment, but through a succession of transition points— In late June 2012, the Government of National Unity consultative conferences, peace negotiations, pre-election of the Republic of Yemen launched the ‘Transitional campaigns, post-election settlements, new governmental Program for Stabilization and Development (TPSD) reform plans. Each of these plans is an opportunity to for 2012–2014,â€? which was prepared by the Ministry consolidate change and overcome temporary setbacks. 143 Joint Social and Economic Assessment Table 24: TPSD Priorities and Estimated Financing Requirements Short-Term Priorities (US$ 4.26 billion) 1 Peaceful Power Transfer (inclusive national dialogue, constitutional reforms, elections). 2 Security Stabilization and Rule of Law (emergency security measures, counterterrorism and counter-piracy, restructuring of the Army and security sector, enhancing the judiciary and rule of law). 3 Emergency and Humanitarian (basic food supplies and services, human damage compensation, service restoration and reconstruction). 4 Macroeconomic Stabilization (Financing SWF’s households, financing ongoing foreign-funded projects). Medium-Term Priorities (US$ 6.9 billion) 1 Economic Growth Sectors (agriculture, fisheries, manufacturing, oil, gas, minerals, tourism). 2 Improvement of Basic Infrastructure (environment, water, electricity, transport, ICT, public works and roads, housing and urban development). 3 Expansion of Social Protection (social safety net). 4 Youth Aspirations and Human Resources Development (education, health, job creation, women’s empowerment). 5 Private Sector and Business Enabling Environment (legislative and institutional framework, business simplification, national investment promotion strategy).. 6 Good Governance and State-Building (civil service reforms, judiciary, transparency, accountability and anticorruption, legal affairs, rights and liberties, local governance). “Inclusive enoughâ€? pacts. National leadership reforms take time, with WDR research demonstrating have typically created momentum through “inclusive- that the fastest reformers have taken around 20 years enoughâ€? pacts that build coalitions, offer a narrative to move from the institutional governance of the aver- of change and create trust that promises will be kept, age fragile state to the level achieved by more stable often by drawing on third parties to monitor and sup- countries such as Vietnam or Ghana. port key signals of change in security operations, polit- Pursuing feasible reform approaches. Reforms of ical inclusion and justice, or financial probity. institutions in fragile contexts are adapted to political Delivering rapid results. Efforts to build coalitions context rather than being “technically perfectâ€? solutions. to restore confidence have worked only when they can They may involve non-electoral consultative (participa- follow through on promises by delivering some short- tory) mechanisms while the conditions for elections are term, tangible results in security, justice and econom- being established; solutions for service provision than ic prospects. Successful country cases show that only have higher than average unit costs but can operate a few visible results are needed in the short term, and in insecurity; or rapid action on large scale corruption that these often draw on non-governmental support while gaining time to address lower-level corruption. for delivery. Recommendations for international actors: Paying early attention to the reform of security Invest in the prevention of political and criminal and justice institutions, and pacing other institution- violence, including bridging crucial gaps in the inter- al reform efforts. To consolidate successful violence national architecture in the areas of criminal justice, prevention and make it resilient to changes in leader- employment, legal and technical assistance for inter- ship and new external stresses, countries prioritize and national resource extraction agreements, and cross- sequence efforts to transform institutions. Early efforts border assistance. to reform security and justice institutions, including Move away from simply “tweakingâ€? the reg- budget and expenditure reform and controlling illegal ular way of doing business toward a specialized financing of violence from natural resources and traf- set of instruments for violence-affected situations ficking, can help to dismantle violent networks. Other that integrate humanitarian and development aid, 144 Going Forward: Supporting the Transition Phase in Yemen peace keeping, and mediation assistance. These can iv. “Transitional compactâ€? which is understood be designed to provide faster and more flexible assis- by all internal and external parties, to mutually tance that supports national institution building con- bind the government and donors in a web of sistently over a twenty-year period, while also man- mutual responsibilities and obligations (a con- aging domestic risk concerns for donors. tract), to (i) deliver on mutual commitments Generate renewed consensus among low, mid- in a transparent way; (ii) provide for predict- dle, and high income countries on norms and incen- ability on both sides; and (iii) ease implemen- tives for responsible national leadership, including tation obstacles upfront. Form and mode of discarding the idea that there is a single “best prac- such a compact consider the absorptive and ticeâ€? technical solution to corruption, human rights, or institutional capacity of both the public and political representation challenges; supporting region- private sectors in Yemen. al recognition and sanctions processes; and increas- ing reward and recognition initiatives for responsible These design principles are reflected in the two leadership in fragile situations. pillars supported by the TPSD: (i) the four priorities Strengthen instruments to diminish external under the Emergency Response; and (ii) the six pri- stresses. This includes investing accepting co-respon- orities under the Medium-term Economic Recovery sibility for trafficking issues between producing and Program. 145 consuming countries; undertaking joint investigations By linking the TPSD priorities with the JSEA and prosecutions on corruption and money launder- insights, the aim is to help both the Yemeni authori- ing; and taking integrated action to reduce the violence ties and the donor community to productively engage risk arising from resource shocks and food insecurity. and to develop a common understanding of TPSD or In the context of post-conflict transition scenar- JSEA around critical needs during the transition period. io in Yemen, both the TPSD and the JSEA stress on the following design principles:144 6.3  Supporting Implementation of TPSD Pillar 1: the Emergency i. “Prioritizationâ€? of critical conflict resolu- Response Phase tion themes (such as peace and state building efforts) and linking them to alleviating binding The TPSD Pillar 1 (Emergency Response Phase) con- constraints to economic growth, livelihoods, sists of the following four priorities: (1) finalizing peace- expanding social services, and restoring infra- ful transfer of power and restoring political stability; structure. It also means that, within reason- (2) achieving security and enhancing the rule of law; able bounds, supporting these programs or (3) meeting urgent humanitarian and material needs; projects in specific regions in Yemen to sup- and (4) restoring macroeconomic stability. A successful port peace building; implementation of priorities 1 and 2 will set the foun- ii. “Sequencingâ€? of key activities in the TPSD and dations for Yemen to move towards conflict stabiliza- linking them with progress on security stabili- tion, peace, and state building. Major steps are required zation and insights from the JSEA assessment; to restore confidence, revive economic activities, and iii. “Realismâ€? which avoids pursuing an onerous institutional and policy reforms agenda from the perspectives of both the Yemeni author- 144 See also Annex Chapter 1. 145 See Annex Chapter 6, Table 1 for illustration of a possible ities and the donor community, but focuses matrix linking priorities, or prioritized programs , expected out- on essential peace and confidence support- comes, compact arrangements and deliverables of commitments ing issues; and for the government and donors. 145 Joint Social and Economic Assessment support internally displaced persons (IDPs), restore elec- building confidence. For example, holding a national tricity, water and sanitation services, provision of care dialogue—as foreseen in the transition agreement—is and compensation for victims of the 2011 events, pro- obviously a step toward national reconciliation. Low- vision of urgently needed food relief to alleviate wide- ering the conflict level in the country and facilitating spread hunger and malnutrition of children, urgent restoration of transport networks and access to mar- income support for poorest households, and the mobi- kets will further economic activity. In this regard, the lization of financial resources for restoring damaged ability to repair the Safer-Al Hodeidah and Mareb-Ras public infrastructure and private properties in many Eissa oil pipelines are seen as an early and important governorates as well as restarting delayed or stalled Gov- indicator of successful progress towards political and ernment investment projects. A successful implemen- economic stabilization. According to IMF, current fis- tation of priorities 3 and 4 will assist in the social and cal losses in foregone fiscal revenues from these sab- economic and social recovery, focus on improving live- otaged oil pipelines are estimated at US$250 million lihood conditions, and ensure macroeconomic stability. per month. Pillar 1 of the TPSD identifies an overall funding need of US$4,260 million146 for the period 2012–14, which is Priority 3: Addressing Urgent Humanitarian, requested to be financed by the donor community. With- Reconstruction, and Rehabilitation Needs in Pillar 1, priority 3, which is concerned with undertak- ing urgent humanitarian, reconstruction and rehabilita- Conflict and food security are highly correlated. UNI- tion activities, the Government plans to provide funds CEF has carried out high-frequency Social Protection amounting to US$327 million against expected donor funds Monitoring panel surveys to investigate the dynamics amounting to US$3,215 million. For priority 4, donors are between conflict and food security in 2011. As expect- expected to provide funds amounting to US$470 million ed, conflict and food security are highly correlated for to support economic stabilization measures. Given the the total sample as well as for each governorate sub- challenging security and macroeconomic situation, both sample. The food security situation appears to have the Government and the donors need to prioritize mea- also drastically deteriorated in areas that are not direct- sures, programs and operations that provide relief during ly subjected to violent clashes. Indirect transmission the period 2012–14 to budgetary pressures. Donors should mechanisms are the influx of internally displaced peo- review their programs to focus on quickly disbursing aid ple (IDPs), conflict generated price surges, and severe to meet the social fiscal challenges, and assist quickly in fuel shortages. improving of Livelihood conditions. Mobilizing resources for delivering urgent Following the suggestions made in the JSEA, pro- nutrition assistance. OCHA, WFP, UNICEF, GCC and grams and activities to support priorities 1–4 are brief- OIC based Red Crescents societies should immediate- ly discussed below. ly launch the “YEMEN APPEAL,â€? separately from or as part of the upcoming CG meeting. The identified Priorities 1 and 2: Linking Conflict Abatement needs go beyond the regular supply of food stuffs, and & Political Stability to Economic Revival should include other priorities like nutrition for women and children, clean water, and health services access, The evolving and difficult security situation in Yemen catering for the mounting and alarming food insecuri- is likely to limit the ability of the authorities to com- ty, and the resulting of severe malnutrition that wors- mit to a full-fledged macroeconomic stabilization pro- ened during 2011. Ensuring access of the poor to food gram. Therefore, during this first phase, addressing political and economic challenges are mutually sup- portive in positively affecting conflict stabilization and 146  This includes the Abyan Rehabilitation Plan. 146 Going Forward: Supporting the Transition Phase in Yemen in sufficient quantities is paramount to avoid a poten- Resettlement and/or integration of internally dis- tial humanitarian crisis. placed persons (IDPs). IDP programs include quick Restoration of livelihood opportunities. Almost impact projects that deliver basic services to the reset- half of the Yemeni population lives below the poverty tled or to the yet-to-be-integrated displaced persons as line. Creating employment and sustainable livelihoods well as to their host communities. Support activities is critical to address acute grievances, and to avert a should take effect immediately with the involvement humanitarian emergency. With significant public and of the civil society in order to assure rapid implemen- private facilities damaged by the recent unrest (espe- tation. The first year of the TPSD should lay the foun- cially in San’a, Ta’iz, Hudaida, Aden, and Mukella), the dation for supporting activities, e.g., the expansion of priority of reconstruction activities should be given to basic vocational skill development programs on site, the facilities servicing health and education, in addi- and best augmenting these programs with microfinance tion to the roads, power, and water networks. Such service offers. The initiation of any resettlement pro- an approach will give relief to existing social security grams should not proceed before the de-mining activ- arrangements, while at the same time providing earnings ities in the affected governorates (e.g., Sa’ada, Amran, opportunities to the unskilled labor force. With US$70 Ibb, and Abyan) are concluded. million estimated reconstruction costs, these facilities should be prioritized within the current year, based on Priority 4: Laying Foundations for Economic the most pressing service needs, making sure that the Stabilization priority projects and programs agreed upon (e.g., revival of the 124 water and sanitation projects that are imple- Building conditions for growth momentum. The mented by the Social Fund for Development and Pub- IMF projects GDP contraction of –1.9 percent in 2012, lic Works Program) are delivered up by the end of 2014. which is a considerable improvement from a real con- Social protection enhancement. Key issues to traction of –10.5 percent in 2011, however, continu- address in this regard is addressing the immediate ous economic contraction cannot satisfy. Consumer needs of vulnerable groups (women, children, the inflation is expected to rapidly decelerate from 23 per- elderly, the disabled), including enhancing food secu- cent in 2011 to 14 percent in 2012. Even these modest rity, as well as urgent actions for a rapid and equita- improvements expected in 2012 are critically depen- ble increase in jobs. Investing in women’s employ- dent on conflict abatement and stabilization, and on ment and capacities is a fundamental cross-cutting the overall investment rate doubling from 5.4 percent issue for transitional development in Yemen, and is of GDP in 2011 to about 11 percent in 2012. Within crucial to address issues of food security and nutri- the overall fiscal deficit target of 5.8 percent in 2012, tion. Promoting education and building skills among the Public Investment Program (PIP) is projected to rural women are key to improving agricultural and increase from 1.9 percent of GDP in 2011 to 4.4 per- non-farm productivity, hygiene practices, and food cent in 2012. A gradual shifting of budget allocations security including nutrition, particularly at a subsis- from current expenditure to investment expenditure is tence household level. The Social Fund for Develop- urgently needed in combination with a focus on effi- ment (SFD) and Public Works Programs (PWP), along cient implementation of the Public Investment Pro- with the Social Welfare Fund (SWF) are effective tools gram (PIP). Such will also help to energize private in the short term to deliver basic services and create sector investment activity—and ultimately leading to jobs and income. These institutions assist the liveli- building an economic growth momentum of an envi- hoods of the most vulnerable throughout Yemen, in sioned annual eight percent growth rate under the particular female-headed households, and should be ‘accelerated transition scenario’ (see Chapter 2) over supported and further scaled up. the period 2014–20. 147 Joint Social and Economic Assessment Restoration of vital energy services to ignite while funds mobilized from donors are to be utilized early growth. Restoring electricity supplies is a fun- for implementing priorities 3 and 4. In this context, damental step to reviving economic activities in the priority 4, which aims at achieving economic stability, short-run. The current operating 835MW electrici- seeks to mobilize donors’ funds amounting to US$470 ty generation capacity is hampered by sabotaged oil million. These funds will be utilized to provide income and LNG pipelines, damaged transmission lines, and support and social security (including public employ- sharply lower bill collection from consumers. Overall, ment schemes) to poorest households and finance the the net effect of these supply-side constraints is that Government share of counterpart funds to help restart Yemen is experiencing electricity outages of 20 hours stalled PIP projects after the 2011 events. per day. The TPSD estimates a financing requirement of US$308 million to improve the electricity genera- 6.4  Supporting Implementation of tion and transmission system; however, a breakdown TPSD Pillar 2: the Medium-Term of major repair and rehabilitation works will be nec- Recovery Program essary for mobilizing donor support. Repairs and ser- vice improvements require, however, success in the The TPSD Pillar 2, which delineates a Medium-term on-going political reconciliation efforts and avoidance Economic Recovery Program, comprises the following of renewed attacks on supply lines. In the interim, a six priorities (see also Table 24 above): rationing plan should be developed to supply electrici- ty in alignment with established priorities, like support • Revive economic growth; for SMEs. Even limited, announced electricity supplies • Improve basic infrastructure; to the SME sector will help to regenerate private sec- • Expand social protection; tor activity which positively impact employment cre- • Build human resources and meeting youth ation and improves livelihood prospects for poor and aspirations, including education, health, job low-skilled workers. creation, and women empowerment; Reviving stalled Public Investment Programs • Enhance the role of the private sector and (PIP) and projects. There are various options to help improve the business climate; and restart stalled PIP programs and projects such as pri- • Support good governance and state building. oritization of those projects where the implementa- tion rate is, say, more than 50 percent, downsizing the Implementing these six TPSD priorities, the total scope of remaining stalled projects, and cancellation investment costs for the period 2012–14 are estimated to of projects where warranted, e.g., due to security con- amount to US$8.8 billion, and for which about 78 per- cerns. Overall, this engaging mix of donor support will cent is expected to be funded from external sources. help to build confidence in the transition authorities Preparatory work for the implementation of Pil- and the TPSD implementation. As a result, the Yeme- lar 2 priorities needs to be carried out in parallel dur- ni authorities will be able to bring to fruition devel- ing the transition period 2012–14. In this regard, there opment assets that were only partially completed so are three major types of activities: i) completing fea- far, thereby reviving economic activities and generat- sibility studies; ii) lining up funding arrangements; ing livelihood opportunities, and giving relief to bud- and iii) completing formalities related to projects’ get pressures, and supporting a low inflation policy effectiveness. Based on the insights of JSEA, the var- stance, especially helping the poor. ious programs and activities to support the six prior- Judicious use of financial resources. The TPSD ities are presented in Annex Chapter 6, Matrix Table funding strategy for Pillar 1 is to utilize own bud- 2 “The Medium-Term Recovery Programâ€?, and are getary revenues for implementing priorities 1 and 2, briefly discussed below. It may be noted that Table 2 148 Going Forward: Supporting the Transition Phase in Yemen combines the six TPSD priorities and the JSEA growth financing and accompanying economic and social pol- strategies to ease cross-comparison of implementa- icies that help to unlock this potential. tion activities. Supporting agriculture sector and the rural econ- omy. The strategy for an agriculture led growth should Priority 1: Revive Economic Growth focus on the development of poultry farming and fish- eries sectors, and supporting the growth of coffee and Yemen needs to overcome its sluggish growth record high-value fruits produce. Increasing productivity of of four percent during the last decade to meet the subsistence wheat farming through land (terraces) demand for gainful employment that played a major improvement and targeted government price support role in the uprisings, especially among the youth, mechanism is a necessity for food security. By 2014, the but also to address exclusion, inequalities, and high fisheries sector modernization and value chain devel- levels of poverty. The JSEA employed a ‘dynamic com- opment should cover all nine maritime governorates, putable general equilibrium’ (DCGE) approach to rank namely Hajjah, Hodeida, Taiz, Lahej on the Red Sea and investment and policy led growth strategies based on Aden, Abyan, Shabwa, Hadramout and Al Mahara on agriculture-led, industry-led, services-led, and an accel- the Gulf of Aden and Socotra, with relevant Ministries erated transition scenario, which combines all three having established branches near to the activities to sector-led scenarios. Combining the growth accelera- supervise, coordinate and assist implementation. Addi- tion in agriculture, industry and service sectors would tional efforts should be made for strengthening coffee, bring Yemen quickly back to pre-crisis levels and put and the high value fruits value chain, in Abyan, Amran, it on an accelerated growth path. Under this scenario, Dhamar, Hodeidah, Ibb, Lahej, Taiz, and Sana’a gover- non-oil annual growth rates reach 7.6 percent on aver- norates, building export competitiveness’, and develop- age in the first phase (2013–2016) and then 8.9 percent ing off-farm MSMEs dealing with honey & horticulture. in the second phase of the recovery. The simultaneous Within the decade ending 2020, growth in poultry farm- investment (and policy) push in all non-hydrocarbon ing, marine fisheries and aquaculture should become a economic sectors would generate synergy effects that noticeable part of the non-hydrocarbon GDP. translate into a higher growth trajectory. Improving the conditions for food security. Forty- The JSEA approach also provides investment four percent of Yemen’s population (10 million) is food costing of growth strategies in terms of achieving insecure and 22 percent of the population (5 million) targeted impact on poverty reduction, alleviating are severely food insecure. In spatial terms, 51 percent child nutrition, improving prospects of jobs and in rural areas are food insecure with 27 percent severe- livelihood, expanding social service delivery, and ly food insecure while, in urban areas, food insecuri- investing in vital public infrastructure. For the peri- ty jumped from 14.5 percent in 2009 to 27 percent in od 2013–16 (4 years), the JSEA approach estimates that 2011. WFP survey data suggests that, as a result of high about US$3 billion are needed in form of foreign aid for food prices during 2011, about 90 percent of house- the baseline case which was the prevailing case prior to holds became temporarily food insecure. At a macro- 2011, while additional investment to implement the three level, Yemen is heavily food import dependent coun- DCGE growth strategies is estimated at about US$4.8 try—57 percent of all imports are food, which arises billion (accelerated scenario). Given differing techni- because Yemenis spent 50 percent of total private con- cal approaches and time period covered, it is a happy sumption on food. Part of the reason for high food prices coincidence that the ballpark investment requirements in Yemen is due to an oligopolistic cereals import struc- to implement Pillar 2 of TPSD and the JSEA growth ture. In the medium-term, there is a need for strategic strategies are quite close to each other. However, real- action that can help to narrow the food price differen- izing this growth potential requires augmented external tials between the domestic and international prices. 149 Joint Social and Economic Assessment Apart of such regulatory reforms, future programs need Improving water security and expanding sanita- to target productivity improvements (agriculture led tion services. As part of economic recovery, and with growth strategy) for farmers, e.g., subsistence wheat population coverage of 26 percent, the improvement farming through land (terraces) improvement. Taxing and expansion of water and sanitation services should Qat production to compensate for the diesel subsidy score high on the priority list. The government should (used for water pumps and irrigation systems) would embark on the development of priority projects based be a step to address production distortion, and encour- on NWSSIP and Sana’a Declaration on Water of Janu- age shifting farming land to food production. However, ary 2011. Given the prevailing living style in small con- even improved food production in Yemen is unlikely glomeration of families and smaller towns, especial- to yield enough food, neither in quantity nor in vari- ly villages in rural areas, a viable institutional offer to ety, to address this policy issue. Importing and storing facilitate decentralized water and wastewater manage- food in an efficient way will therefore also be indis- ment should be high-priority matter for research and pensable. Donors could support Yemen to establish investigation. Moreover, support should be mobilized strategic grain reserves, help building storage capaci- to conduct a feasibility study for water desalination ty (grain silos), and support participation of Yemen in initiatives in the governorates of Ta’iz and Ibb, which GCC food imports arrangements to gain from compet- could also involve the private sector in building and itive arrangements and scales. operating these systems. Achieving water security needs to be under- Priority 2: Improve Infrastructure pinned by implementing major reforms in irriga- tion and water sourcing regulations. Operational Sourcing electricity generation from renewable sourc- arrangements should be adopted to scale up donor es. Yemen is faced with dwindling oil reserves and limit- support for the National Irrigation Plan (NIP), which ed gas reserves. The Government is also heavily depen- also includes twinning arrangements between the Inter- dent on hydrocarbon exports for fiscal revenues and national Centre for Biosaline Agriculture (Dubai) and financing balance of payments deficits. In addition, the Agriculture Research & Extension Authority of Yemen. antiquated transmission and other distribution losses The goal of supporting such twinning arrangements amount to 29 percent. In the medium term, electrici- will be to promote best practices in arid farming and ty generation capacity could be increased by resuming drip irrigation system. With the water resources man- work on the construction of 400MW Mareb-II, provided agement plan adopted, it should be possible to have viable security arrangements could support construc- some first investments under the NIP completed by tion. However, given the resource endowments, the 2014. Moreover, the restructuring of the National Water case for long-term investment in the development of Resources Authority (NWRA) should be accompa- affordable wind- and solar-based electricity generation nied with regulations formulated that govern access is compelling. For instance, feasible wind-based elec- to groundwater and possibly offer targeted subsidies tricity generation potential has been estimated at about for farmers to install efficient groundwater irrigation 34,000MW. Based on existing energy-related studies techniques. from the World Bank and other donors a blueprint for the medium term energy sector development needs to Priority 3: Expand Social Protection be produced, which combines a focus on institutional reform, improving the bill collection system, with new Despite the fragility of the government institu- investments like (1) modernization of distribution and tions, the Social Welfare Fund, the Social Fund for transmission system, and (2) new generation capaci- Development and the Pubic Work Project appear ty through gas and/or renewable sources like wind. as effective instruments to assist the livelihoods 150 Going Forward: Supporting the Transition Phase in Yemen and improve access to basic services for the most Leveraging cross-border remittances as poverty vulnerable throughout Yemen. Yemen’s social pro- alleviation tool: In 2011, Yemen received US$1.3 bil- tection network is, for most Yemenis, defined by the lion from cross-border remittances. Given these signifi- Social Welfare Fund (SWF), the Social Fund for Devel- cant household transfers, there are tremendous oppor- opment (SFD) and the Public Works Project (PWP). tunities to leverage remittances for the development of Increased donor funding to community-based labor- MSMEs and sustainable poverty reduction across many intensive works will channel cash into the hands of governorates. In this regard, donors could support the the poor to help them to cope with the impact of Central Bank of Yemen to link microfinance institutions the crisis. Such programs could continue even after with the payments system, while also transferring best recovering from the crisis and serve as a productive, practices from the Latin American experience and the social safety net, targeting chronically poor sub-dis- one made in Asia with appropriate savings schemes, tricts and female-headed households. In addition, the investment products, and home town associations. limited access of poorer Yemenis to safe water sourc- es and sanitation and hygiene facilities is well recog- Priority 4: Develop Human Resources and nized. A number of social protection initiatives have Enhance the Role of Youth and Women been designed to address the Water and Sanitation and Hygiene (WASH) needs of vulnerable households. Delivering education-for-all. Yemen has made remark- These schemes are mainly implemented through the able progress in providing education at all levels and the Social Fund for Development (SFD) and the Public halving of illiteracy from 90 percent in 1973 to 45 percent Works Project (PWP) and typically support local or in 2004 while the net enrollment rate increased fur- community-based approaches. The current Govern- ther from 62.5 percent in 2004 to 75.3 percent in 2008. ment acknowledged both SFD and PWP programs Despite these considerable achievements, the education to be important instruments to create labor-inten- sector is beset by a number of challenges: lack of qual- sive work opportunities and to deliver basic services ity education due to unskilled education professionals; to local communities. Both programs are also good extreme poverty, leading parents to remove students to instruments to absorb donor funding. However, a high engage in child labor; social norms that lead to higher dependence on donor funding could affect the sus- drop-out rates for girls, especially in rural areas; inad- tainability of their services. equacies in teaching, of textbooks and other learn- Making social protection offers more accessible. ing materials; and the 2011 events, which led IDPs to A key barrier that discouraged poor people from apply- take shelter in schools in Abyan, Aden, Lahj, Haradh, ing for SWF stipends was the need for certification by Sa’ada, Sana’a and Ta’iz governorates, caused phys- community leaders, which may also be used as a polit- ical damages to education infrastructure, and para- ical tool. In this regard, developing a civil registry sys- lyzed investment from the government and donors in tem and the provision of “smart cardsâ€? for Yemenis, the education sector. Given these multi-faceted chal- which also identifies poor households and IDPs, can lenges, investments need to focus on rehabilitating the provide multiple benefits including improved target- damaged infrastructure in the short-term, and for the ing of pro-poor programs. In addition, the role of Civil medium term the focus would need to be on improv- Society Organizations (CSOs) in providing social pro- ing the quality in education and the requirements to tection services is important. They can also play a role achieve quality. Such is likely only to be achievable in enhancing positive traditional norms, social harmo- if a special education compact can be struck between nization and peace building; however, close monitor- central and local levels, government and donors and ing of these organizations is required to ensure good their respective implementation teams, parents/par- governance and transparency. ent associations, and government entities. Developing 151 Joint Social and Economic Assessment a national curriculum, and improving teachers’ train- poor information management system leading to inad- ing, testing, and certification standards would then equate provision of essential services and medicine. In become visible outcomes of such concerted efforts. the medium-term, reforms and resources are needed Improving the delivery and quality of education- to (i) target institutional development of the Ministry for-employment. The number of vocational training of Health and Population; (ii) clarify and improve the institutions (TVET) reached 80 in 2009 with a total regulatory environment for private health providers number of enrolled students of 25,875. In 2010, the to improve quality and services; (iii) capacitate rural number of students admitted to TVETs was 13,084 out health units and thereby widen access to health servic- of 21,706 applicants, which reflected high demand for es, and (iv) foster innovative programs to expand the skills acquisitions. However, there is a high drop-out delivery of basic health services to the poor through rate of students in TVETs, which is mainly due to (i) a philanthropic organizations. curriculum emphasizing teaching theoretical subjects Launching specialized programs to reduce mater- rather practical skills, (ii) low budget delivery and its nal mortality rate and improve child nutrition: Health utilization, and (iii) the limited actual relevance of skills quality improvement programs are essential in an effort acquired by TVETs graduates judged by the needs of the to eradicate the high number for maternal mortali- private sector. Improving the quality of TVET institu- ty and child stunting (with the first estimated at 366 tions and upgrading the quality of their skill programs deaths per 100 thousand and the latter at 59 percent of would be imperative. Specifically, a focus should be children). This may include in the medium term, the made on bridging gaps between students and indus- launching/expansion of fully trained “woman health tries through a skills qualification framework in sec- workersâ€? program at the community/rural level, build- tors such as construction, renewable energy, health- ing on the experiences of other countries with simi- care services, fisheries, livestock, and poultry, which lar demographic, geographic, and cultural conditions. are estimated to offer high growth within the coming The program can be part of the already existing com- decade. In this context, donors could support private- munity based initiatives supported by the WHO (Inte- sector-operated TVETs, which would support deliv- grated Social Development Activities for achieving bet- ery of targeted skills development programs that are ter Quality of Life in Yemen), or expanding it to reach aligned with private sector needs. In addition, GCC all governorates of the Republic of Yemen. The culmi- countries could consider increasing the skilled labor nation of all these efforts should lead to fully capac- quota allocation for Yemen. The employment pros- itated existing health offices in rural areas, with the pects of TVET graduates can be further strengthened Government assuring reconstruction/rehabilitation of by imparting skills that are needed in implementing current health offices with larger quantity and better community based labor-intensive works through the quality of health providers. multi-sector livelihood programs of PWP and SFD. Supporting efficient and effective delivery of Priority 5: Enhance the Role of Private Sector health services. Currently, about 68 percent of the pop- and Improve Business Climate ulation in Yemen has access to public or private sector health providers. The ratio of the servicing health work- Enhancing the quality of private sector delivery in force is extremely low: medical doctors are 3/10,000; projects’ implementation. Addressing the challenge nurses are 5/10,000; and midwives are only 2/10,000. of improving the business climate in Yemen requires Some of the major challenges in the health sectors are also building capacity in the private sector (such as extremely inadequate public sector funding, lack of a consultants, contractors, suppliers, trainers etc.) to gender balance in key health services, extremely low deliver high quality services during the various phas- quality of child and reproductive health services, and es of investment planning and project implementation. 152 Going Forward: Supporting the Transition Phase in Yemen Given the experience of some donors, it is critical to highlighting specific investment areas, possibly spe- set performance and accountability standards for pri- cific projects (infrastructure), and to building investor vate sector service delivery. In this context, the Gov- confidence. Although, the Islamic Development Bank ernment can assist in enhancing the role of private (IsDB) Investment Promotional Technical Assistance sector delivery by considering the following: (i) sup- Program (ITAP) will work with GIA to develop such porting foreign and local consultants to bid jointly with a capacity program and will request government sup- contractors for various phases of project implementa- port in the process, other donors are invited to join as tion and for capacity development components. Such deemed appropriate. This should help, among other a measure will foster transfer of technology and skills initiatives, to establish Yemen’s own Export Credit through partnership arrangements with local private Agency by (projected) 2020. sector consultants, contractors, and suppliers, with a Making the public investment processes more view to strengthening their technical skills and improv- efficient. Major regulatory changes should be pursued ing their respective service delivery; (ii) reforming of that expedite the administrative process for imple- the relevant legal framework for private sector service menting projects funded under the Public Investment providers with a view to fostering transparent gover- Program (PIP) and address fragmentation of PIP proj- nance standards in public procurement systems and ects. Government and donors should work together to a mechanism for penalizing delinquent delivery; and re-engineer implementation mechanism and process- (iii) allowing the Central Procurement Committee in es—with specific measures to be identified—to speed Yemen to determine those components within a proj- up project implementation. In a recent IsDB study it ect-cycle where joint bidding could be made the pre- was shown that projects in Yemen took on average ferred mode. 1.2 years more compared to other IsDB serviced Low Improving the investment climate and ease cost Income Countries. The Government of Yemen should of doing business: As a result of the recent events in considerably improve and streamline national sys- Yemen, including terrorist activities, the perception tems (on the central and governorate level) to ease of risk in Yemen has increased. However, the Islam- project implementation, and facilitate supervision and ic Corporation for the Insurance of Investment and monitoring. In addition, donors should help through Export Credit (ICIEC) and other public risk insurance improved coordination, harmonization, and simplifi- agencies continue to receive inquiries for political cation of donor delivery systems. It is recommended and commercial cover for private sector transaction maximum use be made of country systems, and com- in Yemen. It is important that existing arrangements mon results frameworks. While line ministries should for providing political and export credit risks guaran- serve as central development agencies and supervi- teed by bilateral, regional and multilateral export cred- sory entities coordinating all implementation efforts it agencies (ECAs) continue to be exploited. Moreover, with regards to the TSPD and related strategies, donors the General Investment Authority (GIA) has under- are well advised to help to build or improve such a gone a major restructuring in 2010 focusing it as an capacity, as well as support capacity-building of exe- investment promotion agency. Donors should sup- cuting agencies. port its ongoing capacity building activities to enable it to make best use of investment demand (includ- Priority 6: Support for Good Governance and ing from abroad), assist and advice in improving State Building the investment climate (regulatory and administra- tive obstacles), help to identify investment opportu- Improving Governance and implementing effective nities, and work on an investment promotion strate- transparency and accountability mechanisms (e.g., gy, taking TPSD priorities into account, that cater to the recently adopted access to information legislation) 153 Joint Social and Economic Assessment is also critical. Governance and public sector weak- In moving ahead, a common understanding of nesses are a key constraint for Yemen to realize its suitable aid modalities that support and accelerate development and growth goals, as underlined by the implementation of different types of prioritized pro- 2011 protests. A significant overhaul of the governance grams and suggested investments will be critical. In system is needed to enable the Yemen civil service to this regard, the TPSD supports adoption of the OECD effectively perform core functions and deliver servic- recommendations147 for fostering a “Country Com- es. In addition, efforts need to be undertaken to gen- pactâ€? which stresses national ownership, flexible and erate greater diversity in governance structures. This predictable financing, transparency in financial flows, includes targeted policies and measures to increase the results-based aid delivery as an accountability tool, number of women in decision-making and governance and higher donor tolerance for risks in a context like positions. Governance related reforms will require a the one prevailing in Yemen. participatory approach to the strengthening of selected When supporting TPSD implementation, it is vital to major public sector institutions, policies, procedures reduce the risk of strategic failure arising from improper and capacity starting from the district, governorate, up sequencing of aid and aid flows, and from the disper- to the central level. sion of donors in multiple activities, either singularly or jointly. Needless to say, institutional mandates and 6.5  Supporting the Transition types of resource mobilization as well as the particu- lar TPSD priority will dictate the choice of a financing Given the challenging condition for success, both Gov- modality. In post-conflict and transition situations as ernment and donors need to prioritize measures, pro- in Yemen, strong donor coordination, making proac- grams, and operations which help toward conflict abate- tive use of the choice of available aid modalities to sup- ment, work to improve economic conditions, provide port, focus, and anchor coordination, is indispensable. rapid relief to the Yemeni people, and assist in allevi- ating budgetary pressures during the period 2012–14. Donors should review their programs to also allow for quickly disbursing aid to support political, humanitar- ian, and economic recovery, and contribute quickly to 147  OECD International Network on Conflict and Fragility INCAF. improving livelihood conditions. Discussion Note. 2011. 154 Annexes Annex 1. Context Review Lessons from the 2011 World 3. The WDR also underscored the importance of Development Report on Conflict, capable institutions in managing the inter- Security and Development nal and external stresses that increase vul- nerability to violence, and laid bare the often 1. The 2011 World Development Report on Con- unacknowledged reality that successful insti- flict, Security, and Development (WDR) called tution building is a long-term commitment, for development interventions that restore typically no less than a generation. It identi- confidence and transform institutions to cre- fied the danger of too many reforms too soon, ate a virtuous cycle that moves a country “premature load bearing,â€? leading to a break- out of repeated cycles of violence and fra- down in the system due to lack of capacity and gility to security and prosperity. The WDR the creation of new incentives for corruption. found that institutions that contribute to cit- It concluded that the institutions that contrib- izen security, justice, and jobs need to be ute to citizen security, justice and jobs need to prioritized due to the nature of the stress- be prioritized in situations of conflict and vio- es that pose a risk of conflict and violence. lence and proposes that “best-fitâ€? institution- The WDR found that different types of vio- al approaches that can be implemented with lence are interlinked and are recurrent over limited capacity in fragile contexts. time, blurring the lines between political con- 4. Finally, the WDR concluded that internation- flict, criminality, and other forms of violence, al actors need to adopt long-term sustained requiring development interventions that rec- engagements rather than the present short- ognize these linkages. term stop-go aid; institutional transforma- 2. The WDR recognized that successful preven- tion requires time and patience. The risk tion of and transition from conflict and vio- aversion and “procedural conformismâ€? of lence have involved early confidence-building international agencies is not suited to the measures in the form of “signalsâ€? and com- challenges of institutional transformation in mitment mechanisms that demonstrate that conflict settings; better solutions are needed intentions are backed-up by concrete actions. that satisfy accountability to domestic constit- It highlighted the importance of “inclusive uencies and manage the risk of action, and enoughâ€? coalitions to galvanize support for but that also recognize the risk of inaction. change and the need to achieve early repeat- Finally, it calls on the international commu- ed results to maintain momentum, and that nity to work together across diplomatic, creative inclusive approaches to achieving development, and security capacities with early results can be compatible with, rather country partners to better address the inter- than undermine, long-term institution build- linked humanitarian, security, and develop- ing and government legitimacy. ment agendas. 157 Joint Social and Economic Assessment 5. These findings have strong implications for the and (6) determining the best mix of in-coun- international community’s engagement in frag- try staff and supporting resources to deliver ile and conflict situations (FCS). Accordingly, the work program. the World Bank has committed to shifting the paradigm of its engagement in FCS and devel- The findings of the WDR on evolving forms of vio- oped a framework for operationalization WDR lence and conflict resonate strongly in the Yemeni con- findings and recommendations. This includes: text. The dearth of resilient national institutions to act (1) making country strategies more fragility as drivers of resilience to violence, and the increasing focused; (2) developing strategies/interventions shift of tribal institutions from contributors to resil- covering development, security, and justice; ience to contributors to conflict, indicate the need for (3) increasing attention to jobs and private sec- a strong focus on national institution building, both tor development, including public employment within and beyond the government. This will neces- schemes early on; (3) readjusting and agree- sitate overcoming distrust and skepticism among the ing to the level of risk tolerance early on with stakeholders in the short-term to enable a sustained management and co-financiers, and revisiting effort for institution building in the long term. The portfolios; (4) identifying a financing strate- international community can only play a supporting gy to include IDA, MDTFs and Bank resourc- role in what will necessarily be a nationally bred and es like the State- and Peace-building Fund led agenda, but international diplomatic, financing, (SPF) to ensure consistent financing of criti- and security actions will certainly contribute to the cal sectors under evolving political scenarios; success or failure of the effort. 158 Annex 2. Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios A. Conflict and Food Insecurity Table 1 Annex Chapter 2: Overview of Scenario Assumptions Annual Growth Rate   (change from previous year in percent) Population Government Transfers to &labor TFP consumption households Remittances force   Agriculture Industry Services Base 0 2 2 4 4 4 3 Conflict 2011 Stagnation –12 –12 –12 –12 –23 –9 3 Slow transition –12 –12 –12 –12 –23 –9 3 Agriculture-led transition –12 –12 –12 –12 –23 –9 3 Industry-led transition –12 –12 –12 –12 –23 –9 3 Service-led transition –12 –12 –12 –12 –23 –9 3 Accelerated transition –12 –12 –12 –12 –23 –9 3 Transition 2012 Stagnation –4 –4 –4 –2 20 11 3 Slow transition –4 –4 –4 –2 20 11 3 Agriculture-led transition –4 –4 –4 –2 20 11 3 Industry-led transition –4 –4 –4 –2 20 11 3 Service-led transition –4 –4 –4 –2 20 11 3 Accelerated transition –4 –4 –4 –2 20 11 3 Transition 2013–2020 Stagnation 0 0 0 0 0 0 3 Slow transition 0 2 2 4 4 4 3 Agriculture-led transition 1 2 2 4–5 (* + #) 4–28 ++ 2–6 +++ 3 Industry-led transition 0 3–6 * 2 4–5 (* + #) 4–28 ++ 2–6 +++ 3 Service-led transition 0 2 3–6 ** 4–5 (* + #) 4–28 ++ 2–6 +++ 3 Accelerated transition 1 3–6 * 3–6 ** 4–5 (* + #) 4–28 ++ 2–6 +++ 3 Source: Government of Yemen and JSEA Staff. Note: * TFP for the industry sector is assumed to grow at three percent in 2013 after which it grows at six percent for the remainder of the period. ** TFP for the services sector is assumed to grow three percent in 2013 after which it grows at six percent for the remainder of the period. + The annual growth in government consumption increases from four percent in 2013 to five percent in 2014 and 2015 and goes back to four percent from 2016–2020. ++ The annual growth in households’ transfers is 28 percent in 2013, falls down to five percent in 2014 and 2015 and then reverts to a growth rate of four percent till 2020. +++ The annual growth in household remittances is two percent in 2013, rises to six percent.in 2014 and 2015 and finally becomes four percent till 2020. # Annual growth rises from four percent in 2013 to five percent in 2014 and 2015 and falls back to four percent growth for the remainder of the period. 161 Joint Social and Economic Assessment Table 2 Annex Chapter 2: Correlation between Conflict and Food Insecurity   Correlation coefficients Total 0.224 *** Sana’a (urban) 0.192 *** Amran (rural) 0.156 *** Al-Hodeidah (urban) 0.385 *** Source: Based on UNICEF (2012). Note: ***, **, * coefficient is statistically significant at the one percent, five percent, and ten percent level, respectively. The percentages of households with children afraid of playing outside (that is, proxy variable for direct exposure to conflict) and with a hungry family mem- ber (that is, proxy variable for household food insecurity) are based on the following questions (addressed to the children’s care taker): “During the past two weeks have you or any family member experienced going to bed hungry due to lack of food?â€?–“Yesâ€?. “During the past two weeks has any child become afraid of playing outside?â€?–“Yesâ€?. Table 3 Annex Chapter 2: Relationship between Conflict and Food Insecurity – Fixed-Effects Logit Model Results   (1) (2) (3) (4) (5) (6) (7) (8) Household 1.762 ***         1.795 *** 1.100 *** 1.564 *** 1.985 *** 0.979 *** insecurity 0.212 0.233 0.233 0.233 0.249 0.257 Lagged, t–1 0.373 * –0.058 0.224 0.253 Lagged, t–2 0.118 0.250 Neighborhood 3.399 *** 3.584 *** insecurity 0.484 0.578 Lagged, t–1 1.556 *** –0.398 0.555 0.632 Lagged, t–2 –1.300 * 0.677 Round –0.044 ** 0.043 ** 0.109 *** 0.020 –0.081 *** 0.013 0.084 *** –0.021 0.019 0.021 0.025 0.022 0.020 0.022 0.027 0.024 Log likehood –417.0 –379.7 –322.6 –344.3 –392.2 –344.5 –283.6 –325.4 Observations 1,303 1,093 973 1,087 1,303 1,093 966 1,093 Groups 95 85 82 85 95 86 81 86 Source: Based on UNICEF (2012). Note: ***, **, * coefficient is statistically significant at the one percent, five percent, and ten percent level, respectively. The percentages of households with children afraid of playing outside (that is, proxy variable for direct exposure to conflict) and with a hungry family member (that is, proxy variable for household food insecurity) are based on the following questions (addressed to the children’s care taker): “During the past two weeks have you or any family member experienced going to bed hungry due to lack of food?â€? – “Yesâ€?. “During the past two weeks has any child become afraid of playing outside?â€?–“Yesâ€?. 162 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios B. Model and Methodology used economy. Within the DCGE model, profit maximiza- tion implies that factor payments W are equal to aver- The model described in the following are used to eval- age production revenues (eq. [2]). Total labor, land uate alternative future scenarios which essentially try and capital supply s are fixed, implying full employ- to capture the central conditions for economic growth, ment and inter-sector mobility (eq. [10]) and land is poverty reduction, and reduction in child malnutrition. assumed to be agro-ecological zone specific, thus giv- ing us four factors of land, one for each region in the B.1 Yemen DCGE model model. Consequently, declining farm/factory produc- tion causes factor demand to fall, which in turn low- Table B.1 presents the equations of a simple DCGE ers economy-wide factor returns and affects produc- model illustrating how changes in economic output tion in other sectors as well. affect employment and household incomes.148 Produc- Foreign trade is determined by comparing domes- ers of each commodity c produce a level of output Q by tic and world prices, where the latter are fixed under employing the factors of production F under constant a small country assumption. The simple model imple- returns to scale (exogenous productivity α) and fixed ments trade as a complementarity problem. If domes- production technologies (fixed factor input shares δ) tic prices exceed world import prices wm (adjusted (eq. [1]). In the case of Yemen, there are 12 agricul- by exchange rate E) then the quantity of imports M tural activities and commodity sectors, nine industry increases (eq. [3]). Conversely, if domestic prices fall sectors and four service sectors. In order to provide below world export prices we then export demand X a deeper analysis, agricultural activities were spatial- increases (eq. [4]) and to capture that relationship, ly disaggregated into the four regions; the Highlands, the Yemen model uses an Armington elasticity of 4 the Red Sea and the Tihama, the Arabian Sea, and, and an export transformation elasticity of 2. To ensure the Internal Plateau and Desert (all except for cof- macroeconomic consistency, a flexible real exchange fee and fisheries, they are only grown in two zones). rate adjusts to maintain a fixed current account bal- Furthermore, the 12 agricultural production activi- ance b (measured in foreign currency units) (eq. [8]). ties are regionally split into livestock (four), fishery TFP growth determines the growth of GDP, the mac- (four), forestry (one), and crop production activities roeconomy and the interactions between the econo- (34), where all agricultural production activities are my’s agents of production and consumption. If a neg- specific to each agro-ecological zone. Other produc- ative shock should occur, e.g., in this case of Yemen tion sectors and commodities included in the model a conflict situation, TFP growth will be negative. The are mining, including oil and gas (one), food pro- negative growth shock is translated into reduced sec- cessing (one), light manufactures, and (other) man- toral production, reductions in the use of factors of ufactures (one). Electricity and water appear as two production, and through the model’s linkages, impacts separate sectors, and services include trade and trans- on factor income, household income, possibly falling portation, other private services, social services, and exports, and possibly rising imports. other public services. Factor incomes are distributed to households using The Yemen DCGE model includes three main fac- fixed income shares θ based on households’ initial tors of production, labor, capital and land. Labor is disaggregated into unskilled, semi-skilled and skilled 148  The model description draws on Breisinger, Ecker, and Engel- labor for both the private and public sectors. To cap- ke 2011. Petroleum subsidies in Yemen. IFPRI Discussion Paper 1071. Thurlow, J., Tarp, F., McCoy, S., Hai, Nguyen Manh, Bre- ture their distinctive nature, capital is split into cap- isinger, C., Arndt, C. 2010. The Impact of the Global Commodity ital that is specific to the oil and gas sector and cap- and Financial Crises on Poverty in Vietnam Journal of Global- ital that freely moves across all other sectors of the ization and Development. Volume 2, Issue 1. 163 Joint Social and Economic Assessment Table 4 Annex Chapter 2: Mathematical Presentation of the Dynamic Computable General Equilibrium Model – Core Model Equations Production function δfc (1) Qct = αct â‹… Πf Ffct Factor payments Wft â‹… ∑ c Ffct = ∑c δfc â‹… Pct â‹… Qct (2) Import supply Pct ≤ Et â‹…Wcm ⊥ Mct ≥ 0 (3) Export demand Pct ≥ Et â‹…Wce ⊥ X ct ≥ 0 (4) Household income Yht = ∑fc θhf â‹…Wft â‹… Ffct + rh â‹… Et (5) Consumption demand Pct â‹… Dhct = βhc â‹… (1 – v h ) â‹…Yht (6) Investment demand Pct â‹… Ict = Ï?c â‹… ( ∑h V h â‹…Yht + Et b ) (7) Current account balance m wc â‹… Mct = w c e â‹… X ct + ∑ h rh + b (8) Product market equilibrium Qct + Mct = ∑h Dhct + Ict + X ct (9) Factor market equilibrium (10) ∑ c F fct = s ft Land and labor expansion s ft = s t –1 â‹… (1 + φf ) f is land and labor (11) Capital accumulation Pct –1 â‹… Ict –1 f is capital (12) s ft = s t –1 â‹… (1 – η) + ∑c k Technical change αct = αct –1 â‹… (1 + y c ) (13) Note: Subscripts Exogenous variables c Commodities or b Foreign savings balance (foreign currency units) economic sectors f Factor groups (land, r Foreign remittances labor, and capital) h Household groups s Total factor supply t Time periods w World import and export prices Endogenous Exogenous parameters variables D Household α Production shift parameter (factor productivity) consumption demand quantity E Exchange (local/ β Household average budget share foreign currency units) F Factor demand γ Hicks neutral rate of technical change quantity (continued on next page) 164 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table 4 Annex Chapter 2: Mathematical Presentation of the Dynamic Computable General Equilibrium Model – Core Model Equations (continued) I Investment demand δ Factor input share parameter quantity M Import supply η Capital depreciation rate quantity P Commodity price θ Household share of factor income Q Output quantity κ Base price per unit of capital stock W Average factor return Ï? Investment commodity expenditure share X Export demand Ï… Household marginal propensity to save quantity Y Total household φ Land and labor supply growth rate income Source: Thurlow et al. 2004. factor endowments and are combined with foreign consumption expenditure and in addition to reduced remittances r adjusted by the exchange rate (eq. [5]). income from factors, reduces demand which may then Incomes Y are then saved (based on marginal propen- reduce prices. The interaction between all the agents sities to save Ï…) or spent on consumption C (accord- used in the model will eventually reach a stable equi- ing to marginal budget shares β) (eq. [6]). The bud- librium where, depending on the relationships speci- get shares were calculated using detailed sectoral data fied the result may be reduced output, wages, demand from the Central Statistics Organization (CSO), and the and ultimately GDP. latest Household Budget Survey (HBS 2005/2006) for The model’s variables and parameters are calibrat- Yemen. Household income elasticities were economet- ed to empirical data from a social accounting matrix rically estimated using a semi-log inverse function sug- (SAM) that captures the initial structure of Yemen’s gested by King and Byerlee (1978) and based Yemen’s economy in 2009. The 2009 Social Accounting Matrix HBS 2005/2006 for rural and urban households sepa- is updated from the 2007 Yemen SAM using various rately. These elasticities range from, for example, 0.31 national and international datasets. For the agricultural for cereals to 2.2 for transport and 1.95 for fuel, with sector all the detailed data relied upon the 2011 Agri- urban household elasticities tending to be lower than cultural Yearbook from the Ministry of Agriculture and their rural counterparts. Irrigation. The data sources above have been comple- Household savings and foreign capital inflows mented with the most recent data from Government are collected in a national savings pool from which and are consistent with discussion held the Interna- investment demand I is financed (i.e., a savings-driv- tional Monetary Fund, the World Bank and the United en investment closure) (eq. [7]). Finally, prices P equil- Nations Conference on Trade and Development (UNC- ibrate product markets such that demand for each TAD). For example, the SAM is fully consistent with commodity equals supply (eq. [8]). The model there- GDP at market prices as discussed between the gov- fore links production and trade to household incomes ernment and the IMF in early 2012: via changes in market prices, employment and fac- tor returns. Thus if production falls, two mechanisms GDP= C + I + G + (X–M) work together, factor income will fall as a result of Private consumption (C) = YR 4.25 billion reduced factor demand, at the same time supply falls Public consumption (G) = YR 0.75 billion leading to an increase in prices, which in turn raises Investment (I) = YR 0.69 billion 165 Joint Social and Economic Assessment Net Exports (X–M) = YR –0.59 billion rates for each region, rural and urban, and the national GDP = YR 5.10 billion total are obtained by comparing expenditure levels (in real terms) to the official poverty line defined for HBS. After the calibration, the parameters are then adjusted over time to reflect demographic and econom- Nutrition ic trends and the model is re-solved for a new equilib- rium each year. The model is recursive dynamic with The prevalence of stunting for children under five years the dynamics occurring from 2010 to 2020. Between of age is chosen as an indicator to measure nutrition- periods the model is updated to reflect exogenous rates al impact of economic growth under different poli- labor expansion φ (eq. [11]). The rate of capital accu- cy scenarios for 2012–2020.149 To translate economic mulation is determined endogenously, with previous growth as projected by the DCGE model we estimate period investment converted into new capital stocks elasticities that translate changes in GDP into chang- using a fixed capital price κ (eq. [12]). This is added es in the prevalence of malnutrition. GDP growth elas- to previous capital stocks after applying a deprecia- ticities with respect to the prevalence of malnutrition tion rate Ï€. Finally, the model captures total factor are directly derived from cross-country estimations productivity (TFP) through the production function’s that fit time series data of GDP levels and malnutri- shift parameter α, with the rate of technical change γ tion prevalence rates such as available from the World determined exogenously. Changes in TFP is the main Bank’s World Development Indicators (WDI) database driver of changes in output for the simulations con- (2012). Following this approach, we estimate the prev- ducted in this paper, which will be described in more alence rate of child stunting in a country as a func- detail in Section 4. tion of the country’s GDP per capita using a nonpara- metric regression to explore the relationship between B.2 Microsimulations the variables and then choose a functional form that best fits this relationship in the data. Specifically, we Poverty apply a locally weighted regression on the data from all low- and middle-income countries (with available The DCGE model links to a micro-simulation model, observations), using STATA’s locally weighted scat- which allows for the endogenous estimation of changes ter plot smoothening (lowess) command. Given the in economic output on poverty. All HBS sample house- holds are included in the micro-simulation model and their total expenditures are linked to each of the eight 149 There are five reasons to support this choice: First, young chil- representative households included in the DCGE model dren’s nutritional status tends to be most responsive to chang- es in living conditions and to be vulnerable to food insecurity. according to their rural/urban and zonal locations. Second and closely related to the first, protein-energy deficien- The linkages between the DCGE and micro-simula- cy and micronutrient deficiencies are usually most prevalent tion models allow for the analysis of micro impact of among young children. Third, anthropometric measures cap- the changes in representative households’ consump- ture the nutrition outcomes of inadequate food intake in terms of macro- and micronutrients, adverse health conditions, and tion induced by changes in their real expenditures. The the interaction of both. Fourth, from the three common child endogenous changes derived from the DCGE model for anthropometric measures height-for-age (identifying stunting), the respective household groups are used to recalcu- reflects best the cumulative effects of chronic under-nutrition late consumption expenditures of their corresponding and persistent disease burden, and is therefore a good overall, long-run nutrition indicator. Fifth, by focusing on young children, households in the survey dataset. New levels of total who are often the weakest individuals in the household, we cap- consumption expenditures are recalculated based on ture aspects of unequal intra-household distribution of resourc- individual households’ budgets, and the new poverty es that are ignored when looking at household-level indicators. 166 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios shape of the curve, we apply a fractional polynomial countries for different years between 1980 and 2009.The regression of degree one on the data and let the data regression results suggest that one percent GDP per cap- determine the specific functional form and respective ita growth reduces the prevalence rate of child stunting parameter estimates).150 by 0.139 percentage points on average in the long run. The fractional polynomial regression shows that To test the sensitivity of this semi-elasticity esti- the specification of the functional form with best sta- mate, we divide the total sample into two subsamples tistical fit of the data has GDP per capita in logarith- and run the fractional polynomial regression of degree mic form and is defined as for each subsample. We separate countries based on their effectiveness in translating growth into reduction Stunt = b0 + b1 * [In(GDPpc) + b2] +ε, of child stunting.151 Inter-country differences may be due where Stunt is the prevalence rate of child stunt- 150  Thus, we do not control for other country-specific factors ing in percentage; GDPpc, the GDP per capita level, such as income distribution, literacy/enrollment rate, vaccina- normalized by 10,000; b0, b1, and b3, the coefficients tion rate, and water and sanitation network coverage that may to be estimated; and ε, an error term. Per capita GDP systematically change in the course of economic growth and affect nutrition outcomes. is measured in constant 2005 international dollars at 151  The effectiveness of a country is considered as above (below) purchasing power parity. The sample of low and mid- average, if the sum of the deviations of the observed values from dle-income countries contains observations from 123 the predicted value is negative (positive). Figure 1 Annex Chapter 2: Relationship between Child Stunting Prevalence and GDP per Capita in Low- and Middle-Income Countries, Fitted by Locally Weighted Polynomial Regression (dashed line) and Fractional Polynomial Regressions of Degree One (solid lines) 80 60 40 20 0 0 5,000 10,000 15,000 Source: Based on WDI database (2011). Note: The chosen bandwidth of the locally weighted polynomial regression curve is 0.8 (that is STATA’s standard bandwidth). The data are fitted by locally weighted polynomial regression (dashed line) and fractional polynomial regressions of degree 1 (solid line). PPP = purchasing power parity. 167 Joint Social and Economic Assessment to the structure of growth, distribution policies, more Table 5 Annex Chapter 2: Regression Results and more effective nutrition-beneficial investments, More Less and so on. The subsample of more effective countries All effective effective includes observations from 68 countries, and the sub-   countries countries countries sample of less effective countries includes observations Coefficient (standard error)     from 55 countries. The specifications of the function- b0 27.87 35.04 20.18 al form with best statistical fit for the subsamples are 0.53 0.55 0.43 identical with the functional form for the total sam- b1 –13.90 –14.56 –13.79 0.53 0.57 0.42 ple (though the coefficient estimates differ, of course). b2 1.052 1.035 1.069 In more effective countries, the average child stunting F-value 685.8 659.0 1073.8 reduction resulting from a GDP per capita increase by R-squared 0.593 0.734 0.824 one percent equals 0.146 percentage points, and 0.138 Adjusted R-squared 0.593 0.733 0.824 percentage points in less effective countries. Thus, the Observations 472 241 231 semi-elasticities for less-effective countries and for all Source: Based on WDI database (2011). countries are very similar. Given that Yemen belongs to the less-effective countries according to our classifica- tion but reforms toward more effective use of available scenarios, we use the overall semi-elasticity (–0.139) resources are generally assumed under our transition for all our projections. C: Supplementary DCGE Model Tables and Figures Table 6 Annex Chapter 2: MacroSAM for Yemen, 2009 Direct Import Commodity   Activity Commodity Factors Households Government ROW S-I Tax Tax Tax Total Activity 8.000 8.000 Commodity 3.000 4.000 0.752 1.000 0.691 10.000 Factors 5.000 5.000 Households 5.000 0.533 –0.596 0.096 5.000 Government 0.078 0.213 0.057 –0.271 0.077 ROW 2.000 2.000 S-I 0.354 –0.079 0.416 0.691 Direct tax 0.213 0.213 Import tax 0.057 0.057 Commodity –0.271 –0.271 Tax Total 8.000 10.000 5.000 5.000 0.077 2.000 0.691 0.213 0.057 –0.271 Source: Yemen DCGE Model, 2012. 168 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table 7 Annex Chapter 2: Social Accounting Matrix (SAM) Disaggregation Activities Activities cont’d Commodities cont’d Factors cont’d Wheat 1 Livestock 1 Other mining Public sector, skilled Wheat 2 Livestock 2 Food processing Profit Wheat 3 Livestock 3 Light manufacturing Oil sector profit Wheat 4 Livestock 4 Oil refinery Land 1 Sorghum and millet 1 Fishery 2 Other manufacturing Land 2 Sorghum and millet 2 Fishery 3 Electricity Land 3 Sorghum and millet 3 Forestry Water Land 4 Sorghum and millet 4 Oil and gas Construction Households Other cereals 1 Other mining Trade and transport Rural Households in region 1 Other cereals 2 Food processing Other private services Urban households in region 1 Other cereals 3 Light manufacturing Social Services Rural households in region 2 Other cereals 4 Oil refinery Other public services Urban households in region 2 Fruits 1 Other manufacturing Livestock Rural households in region 3 Fruits 2 Electricity Fishery Urban households in region 3 Fruits 3 Water Forestry Rural households in region 4 Fruits 4 Construction Oil and gas Urban households in region 4 Vegetables 1 Trade and transport Other mining Other agents Vegetables 2 Other private services Food processing Enterprises Vegetables 3 Social services Light manufacturing Government Vegetables 4 Other public services Oil refinery Rest of the World Pulses and oilseeds 1 Commodities Other manufacturing Savings and investments Pulses and oilseeds 2 Wheat Electricity Taxes Pulses and oilseeds 3 Sorghum and millet Water Direct tax Pulses and oilseeds 4 Other cereals Construction Commodity tax Coffee 1 Fruits Trade and transport Import tax Coffee 2 Vegetables Other private services   Other export crops 1 Pulses and oilseeds Social services   Other export crops 2 Coffee Other public services   Other export crops 3 Other export crops Factors   Other export crops 4 Qat Private sector, unskilled   Qat 1 Livestock Private sector, semi-unskilled Qat 2 Fishery Private sector, skilled   Qat 3 Forestry Public sector, unskilled   Qat 4 Oil and gas Public sector, semi-unskilled Source: Yemen DCGE Model, 2012. 169 Joint Social and Economic Assessment Table 8 Annex Chapter 2: Detailed Poverty Results Initial   (2009) 2010 2011 2012 2016 2020 Base National 42.8 42.3 41.8 41.3 38.8 36.3 Rural 47.6 47.3 46.9 46.5 44.0 41.5 Urban 29.9 29.2 28.5 27.6 25.1 22.5 Stagnation National 42.8 42.3 54.4 57.3 58.7 59.6 Rural 47.6 47.3 59.0 61.8 63.0 63.8 Urban 29.9 29.2 42.4 45.3 47.5 48.7 Slow transition National 42.8 42.3 54.4 57.3 54.0 50.8 Rural 47.6 47.3 59.0 61.8 58.7 55.9 Urban 29.9 29.2 42.4 45.3 41.4 37.4 Agriculture-led transition National 42.8 42.3 54.4 57.3 52.5 49.3 Rural 47.6 47.3 59.0 61.8 57.4 54.5 Urban 29.9 29.2 42.4 45.3 39.6 35.7 Industry-led transition National 42.8 42.3 54.4 57.3 50.6 43.9 Rural 47.6 47.3 59.0 61.8 55.4 48.4 Urban 29.9 29.2 42.4 45.3 37.7 32.0 Service-led transition National 42.8 42.3 54.4 57.3 50.6 42.3 Rural 47.6 47.3 59.0 61.8 55.6 47.4 Urban 29.9 29.2 42.4 45.3 37.3 28.9 Accelerated transition National 42.8 42.3 54.4 57.3 46.8 33.9   Rural 47.6 47.3 59.0 61.8 51.5 38.1 Urban 29.9 29.2 42.4 45.3 34.3 22.7 Source: Yemen DCGE Model, 2012. D: Costs of Investments Table 9 Annex Chapter 2: Health Program Costs for Treatment of Malnourished Children Aged 0–5 Years, at 2005 Prices in US$ Hospital Level Severe malnutrition 30.28 Primary Health Care Level Children between 2 months and 5 years Acute Respiratory Infections Severe pneumonia or very severe disease 0.15 Pneumonia 0.17 Cough or cold–mother counseling Diarrhea Severe dehydration 1.39 Some dehydration 0.23 No dehydration 0.16 Severe persistent diarrhea 1.35 (continued on next page) 170 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios Table 9 Annex Chapter 2: Health Program Costs for Treatment of Malnourished Children Aged 0–5 Years, at 2005 Prices in US$ (continued) Persistent diarrhea 0.16 Dysentery 0.18 Fever Very severe febrile disease 0.43 Fever/Malaria unlikely 0.02 Severe complicated measles 1.14 Measles with eye or mouth complications 1.07 Measles 0.06 Ear Problems Mastoiditis 0.16 Acute ear infection 0.17 Chronic ear infection–mother counseling Malnutrition Severe malnutrition (pre-referral) 0.06 Very low weight 4.00 Anemia Severe anemia (pre-referral) 0.06 Anemia 1.00 Infants Under 2 Months Bacterial infection Possible serious bacterial infection (pre-referral) 0.48 Local bacterial infection 0.70 Diarrhea Severe dehydration 0.75 Some dehydration 0.23 No dehydration 0.16 Severe persistent diarrhea 0.75 Dysentery 0.05 Feeding problem or low weight Not able to feed (pre-referral) 0.48 Feeding problem or low weight 3.00 Total 11.78 Source: Compernolle (2005). 171 Joint Social and Economic Assessment Table 10 Annex Chapter 2: Foreign Aida and Total Investment   2013–2016 2017–2020 Foreign Aid Total b Growth Foreign Aid Total 2 Growth   Flow Investment (in percent) Flow Investment (in percent) Baseline scenario 2,978 24,515 4.0 3,365 38,529 4.0 Agriculture-led 4.2 4.0 Low efficiency 3,669 25,897 3,472 38,427 High efficiency 3,323 25,205 3,418 39,570 Industry (electricity, water, roads etc.) 5.0 5.2 Low efficiency 5,329 31,117 7,010 58,985 High efficiency 4,154 28,887 5,187 53,251 Services (communication, transport, social) 5.6 6.3 Low efficiency 4,716 30,011 6,141 52,810 High efficiency 3,815 28,289 4,481 48,976 Accelerated growth scenario 6.7 8.0 Low efficiency 7,758 36,191 9,893 71,166 High efficiency 5,336 31,371 6,356 60,363 a Not including the urgent emergency needs. b Includes foreign aid flows. E: The Private Sector in Yemen Medium-sized firms were the most likely to identify bureaucratic interpretations of regulations as incon- Even prior to the 2011 crisis, Yemen faced a difficult and sistent, and also reported the highest rate of business mounting challenge in moving toward diversified, private inspections (an average of 42 inspections annually) sector led economic growth. Yemeni enterprises have and were most likely to have experienced the expec- consistently identified corruption as a leading constraint tation of associated informal payments. These chal- to private enterprise activity and growth, and increas- lenges have increased over the years. For example, ingly reported electricity, access to land, and political the number of tax inspections had reportedly doubled instability as well as regulatory policy uncertainty as between 2005 and 2010 (from an average of 5 to 10 other key constraints.152 Corruption has been reported per year), and the number of police inspections was as the leading constraint across firm size, ownership, reported to have nearly tripled (from an average of 5 and sector. Medium-sized, domestically owned firms to 14 per year). The rates of inspection for domestic, were more affected than larger firms. Expectations of private, non-exporting firms are the highest.153 informal payments/gifts were most frequently report- Although corruption is more costly in Yemen than ed in relation to interactions with municipal police, tax in any other MENA country for which parallel data is officials, and sanitation/environmental inspections as available, the cost of unreliable power is even worse. well as in relation to obtaining permits and licenses In the last survey, the average firm estimated a loss of (construction, import, etc.) and electrical connections. the equivalent 13 percent of sales value to power out- Also contributing to the lack of transparency in ages and fluctuations. the business environment was the inconsistency and unpredictability of regulatory interpretation by pub- 152  Yemen Investment Climate Assessment Update, World Bank lic officials. Over 60 percent of firms surveyed did not 2011. believe regulations were implemented consistently. 153  Ibid. 172 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios These challenges continued through the 2011 cri- of coping mechanisms to address insecurity and high- sis until today as reported in interviews with Yemeni er costs, including limiting business to the immediate business owners in March 2012. However, these issues urban areas, temporary business closures, re-routing were overshadowed by new concerns over political trade through more costly but more secure routes, and stability and physical security.154 Insecurity in urban even shutting down businesses altogether in favor of areas, but even more so for the transport of goods and inputs on inter-city roads, is a key concern voiced by Interviews with members of the Sana’a Chamber of Com- 154  business owners in Yemen. Business owners in various merce, Yemen Businessmen’s Club, and other business repre- sectors, from consumer goods (food and pharmaceu- sentatives from banking, telecommunications, and transport ticals) to petroleum related services, reported a range sectors in Sana’a in March 2012. Figure 2 Annex Chapter 2: Percent of Yemeni Enterprises Evaluating Constraints as “majorâ€? or “very severeâ€? 2005 2010 Macroeconomic Corruption Tax rates Electricity Corruption Access to land Tax administration Political instability Anti-competitive or Regulatory policy 0 20 40 60 80 80 60 40 20 0 Source: Investment Climate Assessment Update, World Bank 2011. Figure 3 Annex Chapter 2: Losses Due to Investment Climate Weaknesses 25 1.83 20 0.43 5.60 6.43 15 1.55 0.63 1.05 1.69 2.02 4.83 10 0.97 1.98 4.13 12.90 0.57 9.83 5 8.67 7.99 1.29 1.29 0.63 0.10 3.25 1.49 2.08 0 Morocco Jordan Egypt Lebanon Libya Syria Yemen Losses due to the theft as a % of total sales Management time cost of regulatory compliance* Breakage/spoilage of theft in transit Informal payments to public ofï¬?cials Electricity 173 Joint Social and Economic Assessment operating from neighboring countries. For example, current black market prices estimated to range from some fishing exporters reportedly have begun to re- YR 50–YR 250 per liter.156 Nonetheless, a continuous route their export shipments through the Salalah port shortage of diesel has elevated this issue to the top of in Oman, since the route from Mukallah to Aden port the private sector agenda, and places greater urgency has been found to be insecure, increasing the cost of on rationalizing pricing of fuel over the medium term. shipment. Factory owners reported moving production These findings are also supported by an assess- facilities to neighboring Saudi Arabia due to increasing ment of the General Investment Authority (GIA) on insecurity and higher costs of production in Yemen. the crisis’ impact on larger enterprises or investment They plan to export to the Yemen market in lieu of projects (those registered through the GIA). A report local production. prepared by GIA emphasizes the impact on invest- These interviews also highlighted the increasing ments of several key factors: loss of foreign workers, challenge of reliable power supply, which had already insecurity on inter-governorate roads, diesel short- emerged as a critical business constraint in the 2010 ages, power outages, and depression in demand.157 survey. Electricity is reportedly even more of a prob- Through outreach conducted in 2011/2012, the GIA lem today due to repeated and extended power out- identified a total of 59 enterprises or investment proj- ages and increased power shedding in urban areas ects with a total investment capital of YR 214 billion where private enterprises tend to be located. In 2010 as distressed as a result of the 2011 crisis.158 Most of power outages were most frequent in Ibb, Hodeidah, these investments were in the service and industrial and Ta’iz, with about two thirds of firms in Ibb and sectors, with a notable concentration in tourism and Hodeidah reporting this as a serious constraint. But fishing. While not representing the highest levels of power outages were also reported as a serious con- investment (which is concentrated in Sana’a), the high- straint in Ta’iz, Sana’a, and Aden. Power outages are est numbers of distressed investments were noted to likely to have increased in importance in Sana’a since be in Abyan, where elevated insecurity brought most 2011. While generators are used as a coping mechanism productive activities to a standstill. Significant invest- (37 percent of enterprises reported owning one),155 the ments in Hadramout, Al-Muhra, Al-Bayda, and Hode- costs are more prohibitive for small enterprises, mak- idah were also affected. ing them more vulnerable to power outages and result- The private sector is the engine which will lead ing in greater production losses for smaller firms with Yemen towards sustainable, equitable development, less financial resources. and which is the genuine source for employment. It is A key issue not previously reported as a con- therefore necessary to create some economic space it straint but which has emerged since the 2011 crisis is for to operate and grow and begin to improve its com- the shortage and cost of diesel. This was perhaps one petitiveness. Helping the private sector to recover and of the most emphasized issues by private enterprises grow requires efforts at multiple levels, ranging from during the assessment, affecting enterprises in every sector. During the height of the 2011 crisis shortages 155  Investment Climate Assessment Update, World Bank 2011. related to the sabotage of the Mareb pipeline and other 156  World Bank staff estimates. 157  Report on Distressed Investments, General Investment security events pushed black market prices for diesel Authority, 2012. as high as YR 250–750 per liter (compared to the offi- 158  By comparison, GIA had previously identified a total of 875 cial price for small scale consumers of YR 50 per liter). distressed investments and enterprises with a total investment Despite high unofficial prices, often diesel was sim- capital of YR 779 billion from 2001–2008, which seems to reflect a higher level of distressed capital on an annualized basis in 2011, ply unavailable, bringing many productive activities but a lower number of enterprises. This may however simply to a halt. Oil grants from neighboring countries have be due to variation in GIA’s outreach and analytical approach helped ease shortages to a limited extent, reflected in between the two periods. 174 Macroeconomic and Social Impact Analysis of the 2011 Crisis in Yemen and Alternative Transition Scenarios deep governance reforms, to infrastructure investment priority is thus to help smaller enterprises, to re-engage, to addressing the issues of Yemen’s weak competitive- re-invest, and re-invent their businesses through reha- ness. In the medium term, however, priority needs to be bilitation and the introduction of new products, access given to encourage the private sector’s re-engagement to new local and export markets, use of new processes, and investment. This will require taking confidence- logistics, and equipment, and development and pro- building measures that could demonstrate progress on curement of new skills and skilled labor. some of the private sector’s key concerns: improving It will be critical not to lose sight of the longer-term political stability, security, a predictable and transpar- objectives of improving competitiveness through infra- ent business environment, and reliable energy supplies structure investment, a focused program of regulatory (including electricity and diesel). Even with confidence reform, and investment in skills and innovation. Con- building measures, rebound will be take time, partic- structive dialogue and partnership between the private ularly for the vast majority of Yemen’s private sector and public sector will be key to establishing the levels that are small and medium enterprises with a limit- of trust and cooperation between the government and ed scope for coping with the crisis and limited finan- private sector which is necessary to make the transi- cial resources for recovery and re-investment. A key tion to private-sector led growth in Yemen. 175 Annex 3. Employment and Livelihoods Yemen: Formal employment Employment % workers Employment with GDP Per who are Employment Employment in the Public University capita informal in Rural Areas age 15–24 Sector education Unemployed (2000 US$ constant) % % Inf % (*) % % Inf (*) (*) % % Inf % % Inf (*) Yemen 560 91 72 94 22 97 39 12 5 41 15 Egypt 1786 58 57 70 23 87 30 11 17 24 9 Iraq 731 67 27 76 23 85 37 12 13 25 18 Jordan 2245 44 17 28 22 50 36 6 26 22 13 Lebanon 5859 56 50 67 29 69 14 — 17 28 9 Morocco 1718 82 44 94 35 91 19 19 9 37 10 Syria 1330 71 50 76 32 89 27 11 7 24 8 Source: Thriving for Better Jobs, the Challenge of Informality in the Middle East and North Africa, World Bank, 2011. 177 Annex 4. Expanding Social Service Delivery Social Welfare Safety Net Programs in Yemen Social assistance Labor market Social security • Subsidies • Social Fund for Development • General Authority for Social Security • Cash assistance through Social • Microfinance institutions (Al-Amal and Pensions Welfare Fund Bank, National Microfinance, etc.) • The Social Security and Pension • Food distribution with the support • Public works (private and mixed) of WFP • The Agricultural and Fisheries’ • Army Pension Fund • Social care welfare systems Production Promotion Fund • Police Pension Fund. • Martyr’s Fund • Small Enterprise Development Fund • Tribal Affairs’ Authority • The National Program for • Disabilities’ Fund. Community Development and Productive Families • Others. Private/Informal Social Safety Net Private Social Safety Net Traditional/Community Based Social Assistance Civil Society Organizations Retailers • Remittances from relatives working • Charitable Association distribution Credit lines from retailers domestically or/and abroad of food, cash and in-kind; providing Al-Kuraimi Microfinance • Interest free loans programs for medium- to long-term SFD surveys conducted in 2009 and 2010 • Donations by people during religious development. indicated that buying food on credit is a occasions and other times (zakat and main coping strategy in rural Yemen. It is sadaga) believed to be in urban areas also. • Revolving savings • Pooled labor and money • Shared food, contributions to wedding and funeral expenses, etc. 179 Joint Social and Economic Assessment Social Welfare Fund’s Geographic Distribution Table 11 Annex Chapter 4: Distribution of SWF Recipients per Governorate Estimated eligible Poverty Estimated recipients in the recipients in the Yemen incidence population population Population Number of 2005/6 Governorate 2010 SWF Cases number percent number percent percent Ibb 2,490,187 140,176 651,324 26 450,234 18 30.07 Abyan 512,239 50,199 177,742 35 169,588 33 45.68 Amanah 2,087,638 71,323 291,788 14 129,491 6 14.89 Al-Baydha 675,427 59,883 296,798 44 286,459 42 51.85 Ta’iz 2,804,926 190,296 875,933 31 666,878 24 37.8 Al-Jawf 516,843 52,490 284,873 55 283,375 55 49.58 Hajja 1,732,092 141,395 771,182 45 654,513 38 47.53 Al-Hodieda 2,545,293 144,455 597,712 23 427,805 17 31.72 Al-Mukalla 1,218,043 72,899 260,254 21 163,723 13 35.59 +Seiyun Dhamar 1,558,103 70,447 293,140 19 112,863 7 25.84 Shabwah 552,013 60,527 290,716 53 288,987 52 54.13 Sada 814,777 38,018 191,254 23 154,339 19 16.55 Sana’a 1,078,479 58,971 272,124 25 154,033 14 28.13 Aden 707,237 41,012 154,100 22 74,044 10 16.88 Lahej 849,977 82,216 359,257 42 336,963 40 47.2 Mareb 279,609 24,831 113,423 41 102,620 37 45.88 Mahweet 580,486 37,390 176,052 30 134,513 23 30.75 Al-Mahara 104,836 12,951 49,074 47 10,208 10 8.85 Amran 1,031,358 80,062 367,089 36 361,440 35 63.93 Al-Dhalea 553,032 44,931 225,746 41 182,517 33 44.24 Raymah 461,389 35,939 177,733 39 99,892 22 34.07 Total 23,153,982 1,510,411 6,877,314 30 5,157,986 22 34.78 Source: Social Welfare Fund Note: The above table is indicative, since the methodology for measuring poverty differs from that for measuring SFW’s targeting. Although the indicators for proxy means-testing are derived from the same data: 2005/06 HBS. The eligible recipients exclude categories E and F which are not poor and therefore not eligible for assistance. 180 Annex 5. Expanding Basic Service Delivery Table 12 Annex Chapter 5: Incidence Rates for Selected Communicable Diseases 2010a 2011 Diarrhea (bloody & non-bloody) 130,008 174,713 Typhoid & Para Typhoid 16,106 27,127 Hepatitis A 2,238 3,275 Dengue 4,925 719 Hepatitis B& C 1,270 978 Malariab 198,963 142,152 Bilharzias is 4,205 4,720 Cholerac 31,789 Typhoid Paratyphoid 16,106 Diarrhea & gastroenteritis 130,008 119,438 Brucellosis 1,685 2,588 Tetanus neonatorum 54 39 Diphtheria 3 4 Whooping cough 1,385 1,149 Acute poliomyelitis 117 98 Rabies 1,198 553 Dengue Fever 4,925 3,907 Chikungunya d 0 13,500 Yellow Fever 0 0 Varicella (chickenpox) 1,890 1,479 Measlese 825 681 Rubella 143 156 Acute Hepatitis A 2,238 2,001 Acute hepatitis B–C 1,270 823 Mumps 2,652 2,033 Leishmaniasis 633 518 Schistosomiasis (Bilharziasis) 4,205 1,940 Biennial meningitis 203 153 Nontauerial meningitis 441 346 Registered PLTB 3,557 Percent Death 3.2 # and proportion of tuberculosis cases 9,050 (continued on next page) 183 Joint Social and Economic Assessment Table 12 Annex Chapter 5: Incidence Rates for Selected Communicable Diseases (continued) 2010a 2011 Detected and cured under directly observed treatment short 2,769 course Proportion of children u5 sleeping under insecticide treated bed 45 percent nets ( percent of all houses) Proportion of children u5 with fever treated with appropriate anti- malarial drugs HIV prevalence among population aged 15–24 years 55 # of patients on ART Condom use at last high risk sex Proportion of population aged 15–24 years with comprehensive correct knowledge of HIV/AIDS Proportion of population with advanced HIV infection with access 0.07 to antiretroviral drugs Source: Government of Yemen and JSEA Staff. a MoPHP & CSO 2010, 2011. b The figures for 2010 might have included some cases of Dengue& Chikunguniya. c AWD/Cholera outbreak in Abyan, Aden, Lahj, Al-Dhalae and Ibb resulted in 31,789 cases with 124 deaths during 2011. d 13,500 total affected out of which 199 cases hospitalized and 72 deaths. e In 2012, the Government reported officially a measles outbreak with a total of 2,878 cases and 126 deaths due to low coverage of 2011. Water • Plan at sub-basin level, as well as for the basin as whole. Data should be split out by sub- Recommendations on basin planning for Sana’a made basin, published and shared with stakehold- at the Stakeholder Conference at the completion of ers, and used as a tool for participatory plan- SBWMP Phase I. ning at the sub-basin or district level. • Adopt different approaches for four groups • Consider the following sharpened water of sub-basins with different characteristics: resource management objectives for the basin: (1) urban, (2) urbanizing, (3) rural overlying • Ensure affordable safe water for domes- the deep aquifer, (4) rural greenbelt/farm- tic and industrial use; ing area. • Ensure sustainable farm incomes in ‘green- • Hold a conference to bring together practice in belt’ areas reserved for farming; preparing and executing basin plans in Yemen, • Ensure that any transfer of water between in order to draw up guidelines or best prac- uses is done on a win-win basis, and that tice notes. there is no uncompensated harm. • Design in detail a planning process along the • The deep Tawilah sandstone aquifer should be lines discussed above: reserved for drinking water, and certain areas should be declared ‘green belt’ areas for farm- 1. Set up a small but effective IWRM basin ing and environmental protection. planning unit in NWRA Sana’a Branch, • Adopt a 20–25 year, five year and one year assisted by a decision support system and planning time frame, and establish M&E modeling capability, to set water manage- accordingly. ment goals and objectives and to prepare 184 Expanding Basic Service Delivery Health – Malnutrition – Human Impact Stories Ahmed Tawfiq, Male—one year and four months, here with his grandmother, from Haraz. Sick since he was four months old. Family is well off, the father is a butcher. Manal Abdullah—female, 16 months old with her mother. Tahani Nasser, mother of five and currently pregnant. From Mareb. Manals’ state started to deteriorate in the last four months. Ikhas Faisl, nine months, from Sana’a capital here with her grandmother, started having diarrhea at the age of three months. His grandmother is Zahra Hussein. Reduced amount of food in the house, due to rising food prices. Ikhas mother has seven children. Her father said they should leave her to die. They had been giving her flour stirred in water. No money for milk or basic foods. The grandmother decided to save the girls’ life, on her own expenses, since her son didn’t want to take care of her. Laila Yehia, female—four months from Amranwith her mother, Saleha Saleh, mother of seven. Laila got both breast milk and artificial milk and now she has been sick with diarrhea for one month. Mohamed Ali, 13 months old, here with his mother, Hind Ali, mother of three children, currently pregnant. She has already lost two children. a long term plan, and five year and annu- 3. Agree with the Ministry of Finance on al action programs. the annual programming arrangements 2. Develop a three-part governance structure and on how financing and implementa- (Basin Committee–local councils–water tion programs for all water-related invest- user associations. ments and operations can be integrated at the basin level. 185 186 Table 13 Annex Chapter 5 – Water: Implementing the Agenda: Links to Reform Priorities, Readiness, and Impacts in the Recovery Period Short term recovery impacts Immediate rehabilitation Labor- Impact on Support to longer or Rapid intensive lagging or term reform agenda Available financing re-equipment impact on public sensitive Priority agenda (NWSSIP, NASS) vehicle or project Implementation readiness need? poverty? works? areas 1. Water resources management Strengthening and Yes WSSP, PAWS On-going, but needs to be Some No No Possible reorienting NWRA HQ refocused on NWRA in a support role Water resources Yes WSSP, PAWS On-going, but needs Some Longer term No Possible Joint Social and Economic Assessment studies, planning, prioritizing and monitoring etc. operationalizing Support to Yes WSSP, PAWS On-going but needs Some No No Yes decentralized (financing) strengthening and planning (basin Continuation of the mainstreaming approach, NWRA Sana’a Basin IWRM decentralization etc.) initiative, similar approaches in other basins backing basin plans Support to community Yes WSSP, GSCP, IIP, Much can be done through No Yes Possible Yes water management NGO programs etc. existing projects etc., but a ‘mainstreaming strategy’ needs to be developed 2. Water and agriculture Groundwater use Yes (involvement WSSP, GAFSP and Well-equipped implementation Some Should be, Possible Possible efficiency of private sector, PPCR (financing) network if properly integration with NIP/GSCP (project) targeted community water management) Surface irrigation Yes (equity of water WSSP, GAFSP Well-equipped implementation Some Should be, Yes Yes improvement (large allocation, sustainable (financing) network if properly and small scale spate) WUAs, IMT) NIP/IIP/GSCP targeted (project) (continued on next page) Table 13 Annex Chapter 5 – Water: Implementing the Agenda: Links to Reform Priorities, Readiness, and Impacts in the Recovery Period (continued) Short term recovery impacts Immediate rehabilitation Labor- Impact on Support to longer or Rapid intensive lagging or term reform agenda Available financing re-equipment impact on public sensitive Priority agenda (NWSSIP, NASS) vehicle or project Implementation readiness need? poverty? works? areas Rainfed, livestock, Yes (restructuring of WSSP, GAFSP RALP coverage is limited. Not known Yes Yes Yes water harvesting, AFPPF, ‘Aden Agenda’ (financing) Development models may watershed reform of MoA RALP (project) need to be further identified management services, introduction and prepared. Implementation of ‘payments for capacity not clear (RDAs? environmental services’ Governorate Agricultural [PES)) Directorates) Adapting farming Yes (strengthening of WSSP, GAFSP The approach needs to be No Should be, No Yes practices AREA and extension (financing) carefully prepared if properly on a ‘demand-driven’ GSCP, RALP (projects) designed basis, ‘Aden Agenda’ reform of MoA services 3. Rural water supply and sanitation Accelerating extension Yes WSSP, PAWS On-going, but needs more Some Yes Possible Possible of sustainable focus on efficiency and coverage by sustainability GARWSP, including mainstreaming the demand-responsive approach, efficient delivery etc. Reaching the poorest Yes WSSP, PAWS, SFD, On-going, but needs to be Possible Yes Possible Possible communities through PWP, UNICEF, NGO scaled up sustainable, affordable programs technologies, partnerships with CBOs/NGOs, community contracting etc. Improving sector- Yes WSSP, PAWS etc. On-going, but needs n/a n/a n/a n/a wide collaboration, improvement as set out in the including planning, NWSSIP Update capacity building, and effective and honest M&E 187 Expanding Basic Service Delivery (continued on next page) 188 Table 13 Annex Chapter 5 – Water: Implementing the Agenda: Links to Reform Priorities, Readiness, and Impacts in the Recovery Period (continued) Short term recovery impacts Immediate rehabilitation Labor- Impact on Support to longer or Rapid intensive lagging or term reform agenda Available financing re-equipment impact on public sensitive Priority agenda (NWSSIP, NASS) vehicle or project Implementation readiness need? poverty? works? areas 4. Urban water supply and sanitation Firm up sustainable Yes WSSP, KfW, AFESD Elements exist in plans Some Longer term Possible Yes water sources for etc. Continuation etc. but need revising and Sana’a, Ta’iz and Ibb of the Sana’a Basin implementing IWRM initiative, similar approaches in Joint Social and Economic Assessment other basins backing basin plans Improving coverage Yes WSSP, KfW, AFESD The reform agenda and next Yes Possible Possible Possible with priority to etc. steps are clear (see Equity the poor, ensuring Each utility should and Efficiency in Yemen’s affordable service present its Business Urban Water Reform, 2009 provision and a Plan for achieving the publication by MoWE with business approach objectives GIZ/KfW/World Bank) Innovative and pro- Yes WSSP, KfW, AFESD Some projects ready (e.g.al Possible Yes Possible Possible poor approaches (low etc. Qabel OBA, SFD decentralized cost technology, PPP, GPOBA sanitation) or outlined (e.g., OBA etc.) Sana’a PPP) Assessing feasibility of Yes WSSP, KfW, AFESD Desal: some work underway No Unlikely Possible Possible desal and/or out-of- etc. e.g., Hail Said. Transfer: basin water transfer SAWAS, Hydrosult, basin plans (Sana’a, Ta’iz and Ibb) Expanding Basic Service Delivery Urban Water Supply and Sanitation national strategies (NWSSIP, NASS); (2) a planning and delivery mechanism at the And what should donors do sub-sector level; and (3) a decentralized tool for integrated planning at the basin There have been real advances in harmonization and or governorate level; alignment of donor programs, and these need to be • Tracking results through sector-wide mon- continued. Also, donors must make sure that the new itoring and dissemination of results; sector-wide approaches do not lead to a hiatus in good • Supporting sector-wide participato- programs from the past. Donors need to continue and ry forums, especially the Joint Annual strengthen these programs with more sustainable insti- Review (JAR); tutional arrangements. Donors could: • Strengthening MWE and supporting the reorientation of the National Water 1. Sign up for the National Water Sector Strat- Resources Authority (NWRA) to become egy (NWSSIP) Update and the Sana’a Decla- a decentralized agency supporting the ration, and actively participate in the prepa- community-based ‘bottom up’ approach ration of the priority action/investment plans to water management; for NWSSIP and for the National Agricultural • Supporting reform in agriculture and Strategy (NASS). MAI, including: (i) improving and then 2. Given the reality that the Yemeni economy operationalizing the NASS sector strategy and society have to adjust to ever-increasing and investment plan; (ii) demand-driven water scarcity, donors could establish a pro- research and extension; (iii) market-based grammatic technical assistance that will con- water technology transfer; (iv) operational- tinue to guide the Government—mainly the ization of the National Irrigation Program Ministries of Planning (MOPIC) and Finance (NIP); (v) restructuring of the Agricultur- (MOF), together with the Ministries of Water al Fund (AFPPF); and (vi) introduction (MoWE) and Agriculture and Irrigation (MAI)— of Payments for Environmental Servic- on overall economic planning, taking water es (PES) etc. as the determining constraint. Such support could, for example, help to develop a water 4. Support WSSP and other investment mecha- strategy 2030/40 for Yemen indicating the pol- nisms but ensure that the mechanisms deliver icy options in view of ever-declining water on coherent and sustained sub-sector reform availability and how this trend might impact and investment programs for: (i) the competitiveness of the economy, and (ii) the future of the water-dependent rural • Integrated water resource management population. (IWRM) and community-based water 3. Remain proactive at the level of sector-wide management within basin plans (fol- reform and support, working with MWE and lowing on from the Sana’a Basin Project MAI on: (SBWMP) etc.); • Rural water supply and sanitation (follow- • Implementing NWSSIP and NASS; ing on from the Rural Water Supply Proj- • Getting the Water Sector Support Program ect (RWSSP) etc.); (WSSP) model to work as: (1) an inte- • Urban water supply and sanitation (follow- grating mechanism for financing within ing on from the sector reform agenda and 189 Joint Social and Economic Assessment the Urban Water Supply Project (UWSSP) Education etc.); • Community water management and water Infrastructure Impact use efficiency for groundwater-based irri- gation (following on from SBWMP, the Since the middle of 2011, the Ministry of Education Groundwater and Soil Project (GSCP) etc.); started to record all damages encountered at the • Spate irrigation improvement and man- schools and education offices in all governorates. agement (following on from the Irrigation According to a report by the MoE 810 schools were Improvement Project (IIP), GSCP etc.); and attacked and 20 education office in 12 governorates, • Rainfed, water harvesting, watershed man- and total estimated cost, for repairs and rehabilita- agement, hill dams for poverty reduction tions amount to: and food security (following on from the Rainfed Agriculture Project (RALP) etc., • YR 5,861,532,150 for repairs and rehabilitations and perhaps with PES). • YR 2,630,493,900 for equipment and furniture. Table 14 Annex Chapter 5 – Education: Impact of 2011 Crisis towards General Education Repair and Rehabilitation Cost of repair and No. Gov. No. of schools and educ. Offices rehabilitation Cost of equipments 1 Sana’a city 23 schools 180.000.000 276.542.000 2 Ta’iz 10 schools and education office 66.307.650 52.707.000 3 Aden 67 schools 606.000.000 595.740.000 4 Sana’a gov 80 schools 340.000.000 280.000.000 5 Lahj 61 schools + edu. Office 263.800.000 263.520.000 6 Abian 120 schools + edu. Offices 2.300.000.000 460.000.000 7 Alohleah 34 schools 242.000.000 140.000.000 8 Sa’ada 220 schools + edu. Offices 1.553.600.000 388.400.00 9 Haajah 2 schools 10.400.00 3.300.000 10 Amraan 17 schools + edu. Office 138.000.000 138.000.000 11 Hadramout 106 schools 74.424.500 14.884.900 12 Alhudiadah 70 schools + edu. Office 87.000.000 17.400.000 Total 5.861.532.150 2.630.493.900 Total 8.492.026.050 Source: Government of Yemen and JSEA Staff. * all information’s from reports prepared by technical office and emergency committee at MOE. 190 Expanding Basic Service Delivery Table 15 Annex Chapter 5 – Water: Crisis and Cost of Rehabilitation and Equipment, 2011 No. Gove. No. of schools Cost of rehabilitation Cost of equipment Total cost 1 Sana’a City 23 101.493.000 34.940.000 136.433.000 2 Ta’iz 14 85.160.650 — 85.160.650 3 Abyan 128 2.300.000.000 460.000.000 2.760.000.000 (estimated cost done by Experts for unreached areas) 4 Amran 18 38.000.000 — 138.000.000 5 AlHudeida 71 85.200.000 — 85.200.000 6 Hadramout 87 68.774.000 — 68.774.000 7 Sa’ada 221 2.118.700.000 — 2.118.700.000 8 Aden 79 816.826.280 263.748.200 1.080.576.480 9 Lahij 137 940.820.000 1.582.350.000 2.523.170.000 10 Aldale’a 34 242.000.000 — 242.000.000 11 Hajah 2 10.400.000 3.300.000 13.700.000 Source: Government of Yemen and JSEA Staff. * emergency committee MOE 2012 Number of schools affected by 2011 crisis and cost schools in Aden are inhabited by people from Abyan. of rehabilitation and equipment according to each These reports indicate that disruption to children’s governorate.* education occurred mostly in Sana’a Ta’iz and Aden. Some reports mentioned that little is known about Around 10,000 IDPs escaped from Abyan to Aden and the situation of education in governorates that are inac- Lahj with their children who stopped learning. Most of cessible, like Shabwa, Aljawf and Abyan where most Aden schools are now having shifts in schools to pro- of schools are closed. It clarified also that around 36 vide opportunities for children to learn and in some schools in Sa’ada governorate were destroyed, and 76 cases there are tents are using as classrooms. 191 Annex 6. Example of a Matrix 193 194 Table 16 Annex Chapter 6: Example of a Matrix linking the TPSD Priorities and Project Proposals with Offers from Donors Areas of Intermediate Intervention/ Challenges/ Results/ Outcomes by High-level Transitional   Action Constraints Milestones end-2014 Compact Implementation Mechanism (sources of funding)                     Donors (specify) Actions National by Program budget Donors Costing Multiannual (yes/no) Non- Serial Actions by (by name) (US$ mn.); (yes/no) specify Humanitarian/ ODA ODA Remarks, Numbers         GoY/Year /Year if available specify years years Grants terms terms if any Joint Social and Economic Assessment References ——— 2012a. Yemen profile, timeline: http://www. Bundervoet T, Ph. Verwimp and R. Akresh. 2009. bbc.co.uk/news/world-middle-east-14704951. Health and Civil War in Rural Burundi. Journal ——— 2012b. Egypt profile, timeline: http://www.bbc. of Human Resources 44(2): 536–563. co.uk/news/world-africa-13315719. 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