Towards the Establishment of Exports Promotion Bank [Archives:2002/04/Business & Economy]

January 21 2002

Mahyoub Al-Kamali
The issue of developing the Yemeni exports to foreign markets is now high on the government agenda. And this trend has been enhanced by the government’s focus on increasing the amount of non-oil exports. However, what has been so far achieved in this respect is still below expectations, as the improvement did not exceed 2%. Mostly, the lack of financial power and the nonexistence of specialized entities to support manufactured goods are the major obstacles facing the growth of non-oil exports.
Sources at the private sector disclosed that Yemen’s experience in exporting raw materials to some Arab and European countries can be boosted on condition that the government adopts general policies to this end. However, these sources also stressed the need of establishing a bank to support and promote Yemeni exports to foreign markets on the basis that exportable national products should be financially supported so as to help develop the industrial and agricultural sector and handicrafts. The issue of allocating funds for Yemeni exports has been discussed at the national seminar held for this end in September 1998, but the concerned bodies have not seriously taken into account the recommendations made by FAMCO Ltd. Yemen in this respect. Yet, the rate of non-oil exports to oil exports have remained at 6%.
The financial and technical support to exports will provide producers with financial sources that will enable them to double their production capacity and to be more competitive on foreign markets. Some sources from the private sector in Yemen believe that the establishment of a bank for funding exports will promote the search for new markets for Yemeni exports, especially through carrying out promotional programs for Yemeni exports and introducing them to both importers and consumers.
Yemeni producers confirm that the idea offering loans at low interests is simply not enough amid the absence of a bank for promoting exports and stock market exchange. FAMCO Ltd. Yemen proposed in 1998 the establishment of a bank for supporting exports. The proposed capital for this bank is from US$ 30 to 50 million to be either entirely provided by the government or jointly with local banks and businessmen. Similarly, the government can ask for easy loans for the bank from the European Union and from some Arab or international monetary funds plus the support of Yemeni exporters. The bank will consequently be able to sign agreements for producers with the view of procuring production equipment or taking part in producing local goods and gaining benefits from running these activities.
There is a pressing need for the creation of the exports promotion bank so as to boost the industrial & agricultural sectors beside increasing national exports. Otherwise, the issue of development of national non-oil exports will be far from being realized.