More than 85 percent of Yemen’s estimated outside financing is securedSuccess at Donors Conference [Archives:2006/1000/Front Page]

November 20 2006

Raidan Abdulaziz Al-Saqqaf
SANA'A, Nov. 18 ) The international community has responded favorably to Yemen's plea to assist in financing its development at the Yemen Consultative Group meeting, also known as the London Donors Conference, held Nov. 15 and 16 at Lancaster Castle in the UK.

Nearly 86 percent of Yemen's estimated outside financing needs were secured in order to implement the nation's third strategic five-year development plan, in the hopes of increasing Gross Domestic Product (GDP) to 7.1 percent by 2010 from the current 4.1 percent estimate for 2006, thus speeding economic progress, providing employment opportunities and decreasing poverty.

More than 42 countries and international development and financing organizations participated in the conference, contributing more than $4.73 billion in aid, grants and loans for Yemen.

Saudi Arabia was the largest donor at $1 billion, followed by the Kuwait-based Arab Fund for Development at $700 million. Other donors were Qatar and the United Arab Emirates at $500 million each, the United Kingdom at $222 million (GBP117 million), the United States at $220 million, Kuwait at $200 million in loans and the Sultanate of Oman at $100 million.

Other countries and organizations like the World Bank, the European Union and the Islamic Fund for Development also generously contributed funds, while organizations and countries like Bahrain offered technical cooperation, capacity-building and training in order to build human capital in Yemen.

The conference began with welcoming remarks by Daniela Gressani, World Bank Vice President for the Middle East and North Africa Region; Gareth Thomas, British International Development Minister; Abdul Rahman Al-Atieh, Secretary-General of the Gulf Cooperation Council (GCC) and Yemeni President Ali Abdullah Saleh.

During the opening session, Saleh pointed to the failure of the 2002 donors conference in Paris, where only 20 percent of funds pledged actually were given to Yemen to implement needed development projects. He hoped this year's conference participants would have a genuine interest in helping more than eight million Yemenis escape poverty.

Saleh added that regional stability very much depends upon conference outcomes and whether the international community will help his government fulfil promises made to the Yemeni people during the election.

A high-level delegation from the Ministry of Planning and International Cooperation arranged with several donor countries to ensure their active participation in the conference. President Saleh visited Saudi Arabia, communicating with several Gulf leaders prior to the conference in order to ensure its success in raising the required funds for Yemen's third development plan.

Failure to raise such funds would result in the plan's collapse, but also would have catastrophic consequences for Yemeni society and its economy, which currently is in a fragile condition, according to analysts.

Despite being surrounded by some of the region's richest nations, Yemen is the poorest Middle Eastern country and receives only a fraction of the aid given to other Least Developed Countries (LDCs). Yemen received $12.7 per capita in 2003, equivalent to 2.2 percent of GDP, compared to $33.4 per capita (18.7 percent), which is the average for LDCs.

Sources at the Ministry of Planning and International Cooperation indicated that this donors conference was expected to yield $10 billion in order to accelerate Yemen's development and make such development evident to the Yemeni people, especially after its government's cooperation with the United States in the war against terror and becoming instrumental in ensuring regional stability, coupled with such political milestones as holding democratic elections, decentralizing power and reforming the judicial system.

The two-day donors conference discussed several aspects related to Yemen's political and economic scenario, including its national reform agenda, regional economic integration, donor harmonization and implementing various development projects. Such discussions included considerable participation from several Yemeni government officials, intellectuals and academics.

President Saleh also declared Yemen's intention to join the Extractive Industries Transparency Initiative (EITI) in order to ensure transparency in managing Yemen's extractive wealth, following recommendations by a high-level delegation attending last month's third EITI plenary conference in Oslo. Thomas, whose Department for International Development initiated the EITI, applauded such declaration, further announcing that the UK will increase its annual aid to Yemen from this year's GBP10 million to GBP50 million by 2011.

At a concluding press conference, GCC secretary-general Al-Atieh stated, “I think a new history has begun in this region, the Arabian Peninsula area. Such cooperation and partnership is necessary to face present challenges in the region, as well as also outside it. It's very important to have this coordination, cooperation and integration in order to achieve the ambitions of the peoples of the GCC and Yemen.”

He added, “The GCC is very interested in all matters related to development and building Yemen's infrastructure within the reform agenda the Yemeni government has adopted, which is essential for development efforts in Yemen. This gives us confidence and gives donors confidence to support projects in Yemen. In the next stage, we'll work with our brothers in Yemen to translate these pledges into reality.”

Thomas stated during the conference, “Because of the huge challenges Yemen faces in terms of the number of children not in school, issues around potentially declining oil revenues and the need to improve access to employment and better health, as a result of my visit to Sana'a last week, Britain has decided to increase its aid budget to Yemen from some GBP12 million next year to some GBP50 million in 2010-2011.

“We're delighted with the way this donors conference has gone. As [Al-Atieh] said, to raise $4.7 billion is a hugely significant achievement for this conference. The challenge for Minister [of Planning and International Cooperation Abdul Kareem] Al-Arhabi and his colleagues in the Yemeni government and indeed for the international community who are Yemen's friends is now to focus on implementing such spending to ensure that money is well spent and that it genuinely delivers for the very poorest people,” Thomas concluded.

Analysts indicate that despite the conference's success in raising nearly 86 percent of required funds, the key issue is implementing and efficiently using such funds because the Yemeni government is known to be infested with corruption and dysfunctional when it comes to implementing development plans.

However, President Saleh seems confident that the key issue is partnership between Yemen and the GCC and developing Yemeni infrastructure in order to become more business-friendly, especially prior to next February's Invest in Yemen Conference in Sana'a, which seeks to attract more investment, especially from Gulf states, and may be the key factor for long-term development in Yemen.