Aggravating Poverty problem in Yemen [Archives:2000/42/Business & Economy]

By Mahyoub Al-Kamali
The rate of poverty in Yemeni society has risen during the last five years in spite of proposals offered by World Bank to the Yemeni government for putting an end to negative aspects of the economic and financial reform program, whose implementation since 1995 has led to a drop in annual per capita income to about $ 250.
The reform policy has affected large segments of the Yemeni 17-million population although the government had taken measures on social protection with the so-called the social security network.
Poverty has become the gravest problem the Yemeni society is suffering from. Lifting governmental subsidies on foodstuffs has redoubled price rates for some commodities by more than 150%. Consequently the purchasing power of Yemeni currency has dropped and rate of unemployment has risen above 35%. This has added to the swelling numbers of the poor.
How the UNDP sees it
In pursuance of the UN policy to fight poverty and deal with its impact in the developing countries, the UNDP (United Nations Development Program) sent a mission to evaluate poverty situation in Yemen It had, in cooperation with government specialists, prepared a working paper containing important proposals about confronting the problem and how to solve it with available potentials.
In August 1996 those suggestions were discussed in a workshop held in Sanaa by the concerned government departments. Discussions resulted in setting important recommendations for curbing the phenomenon of the increasing number of the poor and ending it. But certain other factors had impeded implementation of the recommendations.
The international mission viewed that elimination of poverty in our country is connected with achieving a balanced economic growth, just distribution of income in favor of the poor, creation of jobs, decreasing taxes levied on people of limited income, drawing up programs to expand the social security network and allotting a portion of th resources for development of small enterprises.
The international mission stressed the importance of having representatives of local population groups as partners in establishing special productive projects, part of their cost to be financed locally. Another suggestion related to fixing prices of agricultural products and facilitating their marketing. One of the proposals called for increasing government spending on health and education services in addition to developing the infrastructure.
UNDP resident representative expressed the UN willingness to finance $ 45 million worth projects involving poverty elimination in Yemen. Most of the international mission proposals had not been carried out.
Social experts attribute delay in handling the poverty problems to the governments preoccupation in the policy of economic stabilization and enhanced structural reform without paying due attention to the social dimension in the process of implementation of reform plans. Added to those reasons is the scarcity of financial resources allocated to the program n poverty alleviation in the five-year plan beginning in 1996.
Researchers conclude that economic reforms could not ease impact of taxes and duties imposed on limited income people who have endured greatly due to increase in electricity, water and phone bills as well as in transportation and post fees and prices of oil products.
World Bank Suggestions
In the backdrop of complication of poverty problems and peoples objection to the negative effects of the reform program, the World Bank was aware of the volume of the programs impact on the people. Therefore it had suggested that the Yemeni government should establish two funds, one for social development, financed by donor countries and the other for social welfare to be funded by the government.
The proposal aims at creating jobs, establishing small projects in poor local communities, cutting unemployment, involvement of all poor groups in social development process and offer of help to widows, orphans and the handicapped.
Poverty challenges
Since its establishment, the social development fund, financially by the World Bank to the tune of $40 million, European Union with $20 million and Holland with $10 million, along with the fund financed projects did not contribute to cutting unemployment rate.
Latest official figures indicate that the fund has in the past 3 years implemented 1000 projects costing $81 million. The projects covered areas of education, health and small enterprises that should have been financed by the state budget.
The main purpose of the World Bank suggestion for of establishing a social development fund was to create job opportunities. Projects funded by the state do not create permanent jobs for the unemployed. Since poverty challenges seem to be very serious, dealing with them needs more viable plans.
Solutions to poverty problems provided by the Fund are partial and temporary. The situation requires funding big production projects to improve economic performance and create permanent jobs. To realize this end there must be an expansion in building government and investment projects. They should involve agriculture, industry, tourism and developing handicrafts to create more permanent job opportunities and to increase income of poor families.
Four years after establishment of the social care fund, thousands of families in need of help are still without that promised care without being enlisted in poor groups lists. Authorities concerned claim that the reason was the little financial allocation fixed for the fund. In fact the poor families complain of interference of political agents in categorizing the cases of families.
Aggravating Problem
With insufficient government measures for helping all poor families through the social security network, poverty problem in Yemen seems to be worsening, specially that the social care fund has not been able to meet needs of all poor and handicapped people. These projects mounted by the social development fund have not been able to bring relief to those local poor communities.
According to some researches poverty rates are between 19-41%, 19.9% in towns and 80.1% in the rural areas. This situation requires strategic planning to develop the rural and remote places.
These figures indicate existence of other problems, mainly the difficulty of modernizing a community dominated by an overwhelming majority of poor groups. This requires drawing up a comprehensive national plan to eliminate poverty and to improve the national economy performance in general.

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