What does it take to reform and rebuild the Yemeni economy?

Before discussing development in Yemen from an economic perspective, we must consider the extensive destruction that the war has caused to the infrastructure and various economic sectors. Yemen, which is suffering from one of the worst humanitarian crises in the world, faces huge economic challenges that require reform and reconstruction as a basic condition before considering any sustainable development strategy.

The war has destroyed most of the productive and service facilities, including ports, airports, and industrial areas, in addition to the collapse of the banking and financial system. This destruction has left the Yemeni economy in a position where it cannot meet the basic needs of the population, attract investments, or even operate vital sectors. Therefore, any development efforts must be preceded by a comprehensive reform and reconstruction process aimed at restoring the basic economic components.

Banking System: The financial and banking system is one of the pillars that has been severely hit during the war, paralyzing financing and investment operations. The banking sector suffers from division between areas controlled by the conflicting parties, which has distorted monetary policies and reduced confidence in the national currency. Restoring financial unity and restructuring the banking system is imperative to secure capital flows and restore confidence among local and international investors. In addition, anti-inflation and exchange rate stability policies should be strengthened. The continued deterioration of the national currency has directly affected the purchasing power of the population, raising poverty and hunger rates to unprecedented levels.

Productive sectors:Reconstruction also includes the rehabilitation of key productive sectors such as agriculture and fishing, which are the backbone of the Yemeni economy. These sectors were a major source of income and employment opportunities before the war, but have been severely damaged by bombing, displacement, and lack of technical and logistical support. Rehabilitating damaged agricultural lands and rehabilitating rural infrastructure such as irrigation canals and agricultural roads will contribute to enhancing food security and reducing dependence on humanitarian aid. As for the fishing sector, it needs investments to rebuild small ports and storage facilities, in addition to providing the necessary equipment for fishermen who have lost their livelihoods.

Energy sector: It also needs great attention during the reform phase, as the country suffers from long power outages and the destruction of many power plants. Investing in renewable energy, such as solar energy, can be a practical and sustainable solution given the available natural resources. This type of investment not only serves the daily needs of the population, but also contributes to providing an attractive environment for industrial and service investment.

Transport and logistics: They are the lifeblood of the national economy. Any reconstruction plan must include the repair and reconstruction of major roads, seaports and airports. The war has destroyed most vital logistics facilities, affecting the flow of goods and services between governorates and foreign trade. Rehabilitating this infrastructure will be a key factor in boosting economic activity and facilitating the movement of goods and people, which will support a faster economic recovery.

Legal environment:Economic development requires a stable legal and regulatory environment, which requires the next government to work on reforming institutions and rebuilding trust between the state and society. Endemic corruption, which was a major cause of the economic decline before the war, must be seriously addressed through structural reforms that ensure transparency and accountability. Improving the management of natural resources, especially oil and gas, will be essential to rebuilding the state treasury and providing the necessary funding for infrastructure projects.

International aid: The role of the international community will be crucial at this stage. International aid must shift from its current focus on humanitarian response to supporting reconstruction and economic development programs. Providing financial and technical support to the Yemeni government will ensure the implementation of long-term development projects rather than relying on temporary solutions. There must also be strict oversight mechanisms to ensure that aid is used in a transparent and efficient manner, benefiting the national economy.

Private Sector: Achieving sustainable economic growth in Yemen also requires strengthening public-private partnerships. The Yemeni private sector, despite suffering major setbacks during the war, has the potential to play a pivotal role in reconstruction if the right environment is provided. Enhancing the role of this sector by providing investment incentives, such as tax exemptions and soft loans, will help drive production and create new jobs.

In conclusion, Yemen will not be able to achieve any development progress unless the disastrous effects of the war on the economy are addressed. Reform and reconstruction must be a top priority to create the right conditions for sustainable growth.

This transitional phase requires careful planning, local and international cooperation, and a comprehensive economic vision that takes into account the needs of the present and the prospects of the future. The Yemeni people need to regain confidence that their economy can recover and grow, and this is everyone’s responsibility.