Deteriorated services & type of infrastructure affect,Investment & saving condition in Yemen [Archives:2004/779/Business & Economy]

October 7 2004

Mahyoub Al-Kamaly
A report on the national strategy of employment in Yemen ahs drawn up a very poor image of investment and saving situation, considering the total rates of private and public investments as being not enough for the growth of bigger rates compatible with growth of non-oil exports and increase in volume of labour force.
The report mentions that despite of the application of economic reforms and improvement of environment suitable for investment such as political and economic stability, the investment growth rate of investment amounted in 1995-2000 by 18% a year; a small number has shifted from the status of public sector to the private.
The report has added that deterioration of the infrastructure in Yemen constitutes a hindrance before accumulation of capitals and economic development. The multi-faced acute crisis of waters submits big barriers ands restraints. The amounts of annual rainfall hover between 500-800mm in the mountainous areas and about 50-100mm in coastal areas and do not exceed 50mm in the eastern regions.
The report also mentions that the energy is no better situation than waters. Despite of Yemen's capability of exporting electric power it suffers from inconvenient circumstances for generating it via a limited national network generating limited coverage. Overland transportation is also deteriorating and causing problems because of weakness of repair services and the telephone network is also short of covering the entire Yemeni area with the availability of 2.3 telephone line for each 100 persons.
The report mentions also that the essential problem concerning institutions lies in the judicial system. Legislations are not fully applied and there is an 84% of the population who do not trust judicial measures and this is reflected negatively on types of loans available and double the volume of floundering debts.
The report considers that the condition of the Yemeni judiciary doubles the amount of problems facing investors and savers. Yemen does also face security challenges every now and then affecting the treatment of investment impediments and the creation of environment suitable for investors.
As regards the administrative circumstances, the report reviewed Yemen's efforts for establishing legal establishments to catch up with organized economy, considering that putting the obtaining of license and commercial register as a condition, would place hindrances before investors especially levied and multiple duties, which impose burdens on owners of small projects.
The report has also a fond that liberalization of Yemeni economy was not enough to activate the growth based on export and employment. It has not successes in channelling resources towards commodities and services ready for circulation and thus Yemen remains horribly dependent on oil exports.