Socio-Economic

N UP ME YE EN GDP SOCIO- DAA SOCIO-EEC M $ ECONOMIC TE ONOMIC $ YE

UPD UP GDP DA A SOCIO-ECONOMICS $ TE Ministry of Planning YEMETE N 2018 & International Cooperation Economic Studies & Forcasting Sector N SOCIO-ECONOMICME Issue (35) July, 2018 YE UPDATE Private Sector: Vital Role in Times of War Introduction In this edition: With their ancient cultural heritage, Yemenis have man- First: Economic, Social and Humanitar- aged to establish prosperous civilizations that played an important role in the East-West trade. They have distin- ian Role of the Private Sector. guished themselves throughout history with their entrepre- Second: Main Difficulties and Risks Fac- neurial spirit which endowed them with long experiences that enabled them to accumulate capital and build effective ing the Private Sector. partnerships with the regional and international private sec- Third: Priority Interventions. tor. The private sector played a major role in leading the First: Economic, Social and Humani- economic activity prior to the war by contributing over 50% of GDP and providing employment for 69.4% of total tarian Role of the Private Sector: employed population(1). It was also a major contributor to • Role of the Private Sector in Economic the public budget deficit through treasury bills and Islamic Sukuk. During the ongoing war, the private sector has be- Activity: come more important and provided an excellent example The Gross Domestic Product (GDP) refers to the value of in supporting humanitarian relief efforts and responding to final goods and services produced by the society over a given market demands for goods and services. While the public period of time. By distributing the real GDP into public and sector reached a state of collapse, the already weak private private sectors, it’s noticed that the contraction rate in the pub- sector continued to perform its development role, includ- lic sector (-31%) was higher than the private sector (-18%) ing the provision of education, health, water and electricity, during the years of 2015-2016(2). Thus, the private sector’s and importation of fuel and other commodities even at high contribution to the real GDP increased from 62.3% in 2014 prices, thereby emphasizing that it has greater flexibility to 70% in 2016 (Figure 1). This reflects the private sector’s and better ability to cope with war conditions. stronger immunity and better ability to cope with war condi- The private sector has been struggling to survive despite tions compared to the public sector, which reached a stage the deep wounds and violent shocks it sustains day by day, of almost total collapse, especially after the division of state most notably the negative repercussions of the public fi- economic institutions since late 2016. Therefore, the already nance crisis, liquidity crisis, physical damages, economic feeble private sector became the main player in the Yemeni losses in enterprises and restriction of internal and external economy, along with the international and national organiza- transactions. To mitigate the challenges and risks facing the tions that endeavor to fill part of the vacuum left by the public private sector, it is important to reach an economic settle- sector in delivery of basic social services. This requires sup- ment to distance the private sector from war and conflict in porting the private sector and strengthening its role in turn- order to ensure the continuity of the economic activity and ing the wheel of economic growth and generating work and improve the livelihoods of people. income opportunities now and in the future.

Figure (1): Size of private sector and its share in the real Facts and Indicators GDP ($billion & %)

YER 600 / USD Over 41,000 Retirees ** 1800 70.0% The parallel exchange rate 33% of retirees in the GAIP with- 1600 in mid-September 2018. out pensions since March 2017. 1400 66.9% 1200 22.2 million 3 million * 1000 62.6% people in need of humanitarian people displaced (IDPs & re- 800 64.6% 64.3% 63.0% assistance in 2018 *. turnees) as of September 2017. 600 62.3% 400 6 in 10 * 47.1% 200 people are food insecure Cumulative decline in real 0 in December 2017. GDP during 2015-2017. 2010 2011 2012 2013 2014 2015 2016 Pre-war During war GDP – Private sector (YEM billion) GDP – Public sector (YEM billion) Sources: 24.3 million *** GDP of private sector to GDP (%) * UN Agencies. 90% of the population lack ** General Authority for Insurance access to public electricity. and Pensions (GAIP), 2017. Source:CSO, National Accounts Bulletin 2016. *** WB, June 2016. UUP N UP N ME ME D YE P D YE AT SOCIO EN GD $ SOCIO- ATE SOCIO EN GDP $ E -ECONOM M ECONOMM -ECONOM M IC $ YE IC IC $ YE N UP ME YE EN GDP SOCIO- DAA SOCIO-EEC M $ ECONOMIC TE Issue (35) July, 2018ONOM IC Page$ 2 YE Yemen Socio-Economic Update

At the level of the main economic sectors, the private sector used to dominate the real GDP of the Agriculture sector by 100%. This highlights the vital role of the private sector in Yemen’s national economy, especially since the Agriculture Sector provides about 20-25% of the total food commodities available in the country, and spreads geographically in rural areas where pockets of poverty are concentrated in Yemen. Table (1) indicates the growing Table (1) Private Sector contribution in the Main Economic Sectors at constant Prices (%) contribution of the private sector to man- 2010 2011 2012 2013 2014 2015 2016 Description/ Year ufacturing, construc- Pre-war During war tion and services sec- Public sector 0 0 0 0 0 0 0 tors during the war, Agriculture despite the numerous Private sector 100 100 100 100 100 100 100 damages and chal- Public sector 37.1 39.4 41.2 39.5 61.2 60.8 47.8 (A) Manufacturing lenges facing it . This Private sector 62.9 60.6 58.8 60.5 38.8 39.2 52.2 means that the private Public sector 61.2 58.7 56.1 61.6 55.6 53.6 53.2 sector is more resilient Construction and has greater ability Private sector 38.8 41.3 43.9 38.4 44.4 46.4 46.8 to absorb shocks and Public sector 25.7 31.5 32.6 34.0 35.7 37.7 33.3 Services* adapt to the repercus- Private sector 74.3 68.5 67.4 66.0 64.3 62.3 66.7 sions of the ongoing * Include wholesale and retail trade, restaurants, hotels, transportation, storage, communications, finance, insur- war, compared to the ance, real estate, personal services, community services and government services. public sector. Source:Central Statistical Organization, National Accounts, 2016.

• Social and Humanitarian Role of the Private Sector: The private sector plays a vital role in the social and humanitarian fields, where it used to provide employment for 20% of the total employed population, according to the Labor Force Survey 2013-2014. If all laborers in the non-public sector are considered as private sector employees, the private sector’s contribution to the employment of workers will increase to 69.4% (Figure 2 ). Findings of the quick survey on the crisis’ impact on employment and labor market— conducted by the Central Statistical Organization and the International Labor Organization (ILO) in three governorates (Am- anat Al-Asemah, Hodeida and Aden) in November 2015 indicated that total number of jobs in the three governorates decreased by about 132,000 (12.8%) between 2014-2015. Although not representative, if this were replicated nationally that would equate to 600,000 total job losses. The agriculture and services sectors were at the forefront of the most affected sectors by job losses. The loss of jobs was partly compensated by an increase in the construction workers by 8% due to the start of reconstruction activities in Aden and the resort of some residents to maintain the purchasing power of their money in the form of real estates (Table 2). Despite the negative repercussions of the ongoing war on enterprises, a survey conducted in 2017 revealed that all employers reported that they retained majority of their workforce through negative adapta- tion strategies such as the reduction of salaries and working hours(5). This is in contrast to state employees, who haven’t received monthly salaries in most of the Yemeni governorates since late 2016. Private activities have become a haven for the state employees and a source of income for many of them.

(A)The increase in the private sector contribution to GDP is not attributed to the raise in the absolute value of the private sector’s GDP, but to the fact that the public sector is declining more than the private sector.

UUP N UP N ME ME D YE P D YE AT SOCIO EN GD $ SOCIO- ATE SOCIO EN GDP $ E -ECONOM M ECONOMM -ECONOM M IC $ YE IC IC $ YE N UP ME YE EN GDP SOCIO- DAA SOCIO-EEC M $ ECONOMIC TE Issue (35) July, 2018ONOM IC Page$ 3 YE Yemen Socio-Economic Update

Figure (2): Employed Population by Status in Table (2) Composition of and impact on employment by sector in Employment, Labor Force Survey 2013-2014 Sana’a City, Al-Hodeida, and Aden 2014 2015 Absolute Percentage 2014 2015 Item/Year total total change change share share Contributing (thousands) (Percent) family workers Private Sector Employees Agriculture 146.8 73.9 -72.9 -49.7 14.2 8.2 11% 20% Industry 74.2 71.2 -2.9 -4.0 7.2 7.9 Construction 57.7 62.3 4.6 8.0 5.6 6.9 Own-account worker Trade 324.3 277.0 - 47.2 -14.6 31.4 30.8 31% Puplic Sector Treansport 151.1 123.1 -28.0 -18.5 14.6 13.7 Employees Other Private Services 86.1 100.1 14.0 16.3 8.3 11.1 31% Private Services 561.4 500.2 -61.2 -10.9 54.4 55.6 7% Public Services 191.5 191.9 0.4 0.2 18.6 21.3 Employer Services 752.9 692.1 -60.8 -8.1 73.0 76.9 Total 1,031.5 899.5 -132.1 -12.8 100.0 100.0 Source:ILO, 2016, Yemen Damage and Needs Assessment, Crisis Impact on Employment and Labor Market..

In education and health, the private sector had 899 basic and secondary education schools out of 16,730 school in 2016. In addition to 101 universities and colleges in high education accommodating 83,177 stu- dents out of 310,340 student in 2014(3). The private sector owned over 60% of the country’s health facilities in 2014(4). Since late 2016, the collapse of the public education and health system has been accelerated by the ongoing war repercussions, including the salary crisis for state employees, suspension of operating costs of public facilities in most of the governorates, while the private sector continued to provide education and health services to people. However, these services remain inaccessible by many low-income people due to their high costs. Private companies facilitate the flow of medical supplies to pharmacies and health facilities nationwide. Most international and national humanitarian organizations operating in Yemen relied on Yemeni companies to get medical supplies for the cholera response during April-September 2017 because of the ability of the private sector to import the needed supplies urgently.

Yemen imports most of its food needs from abroad. According to the UN Logistics Cluster, commercial imports accounted for 96.5% of food commodities that entered the country during January-March 2017, while INGOs have imported 3.5%(5). Humanitarian organizations rely on the private sector to provide sup-

ply chain services such as Figure (3) Commercial vs humanitarian Figure (4) Type of Assistance Provided transportation, storage, imports (Jan 2017 - Mar 2017) to Conflict Affected Persons in August 2017 customs clearance and re- Financial shipping services. Private Commercial Humanitarian Food enterprise owners provide Health Services Humanitarian organiza- FOOD (mt) Non-Food Items tions with various goods and services, including au- IDPs Livelihoods tomobiles, generators, food 1,262,616 43,768 Feeding Programme baskets and cash transfer Awareness FUEL (liters) services. Education For sure the reliance of Electricity 525,689 - INGOs on local companies Support for Women to carry out more of their Shelter Support 0510 15 20 activities and continuity to purchase from inside Ye- Source: Logistic Cluster and WFP, Snapshot on shipping, Food Source : UNDP and Connecting Business Initiative, Private and fuel imports, March 2017. Sector Organizations/Companies Engagement in Emergency Pre- men increases the employ- paredness, Response and Recovery, Preliminary Survey Results, ment and income opportu- August 2017. nities and allows foreign exchange to flow into local markets, thereby supporting the national currency.

Out of its social responsibility towards the society, the private sector implements charity projects and provides hand of assistance to charities and the poor. For example, the private sector established the Yemeni Food Bank in 2017 as an independent humanitarian civil society organization to combat hunger in Yemen. At the inauguration ceremony, businessmen donated about YR300 million. According to a questionnaire conducted by UNDP on 53 private organizations in Yemen in August 2017, 81% of these organizations were providing assistance to conflict affected persons(6). These organizations reported that the most important types of assistance they provide include financial services, food and health services (Figure 4).

Second: Main Difficulties and Risks Facing the Private Sector: 1. Physical Damages of the Ongoing War: In May 2017, the World Bank estimated the funding requirements for reconstruction and recovery in Ye- men at about $88 billion, including the reconstruction cost of physical assets of $25 billion(7)(B). Despite the lack of updated and comprehensive data on war damages to the private sector enterprises, findings of a rapid survey conducted by the Small and Micro Enterprise Promotion Service (SMEPS), in cooperation with UNDP in six governorates (Abyan, Taiz, Hajjah, Aden, Sa’ada and Sana’a) during August-September 2015, indicated that 26% of enterprises were forced to shut their doors, 95% of the closed enterprises sustained partial and complete damages(8). At the governorate level, enterprises operating in Taiz and Aden were most affected by 95% and 90% respectively (Figure 6). By governorate and the degree of damage (complete/partial), it’s noticed that the highest incidences of complete damages have been recorded in enterprises operating in Sa’ada governorate by 43% of the total affected businesses surveyed in Sa’ada (Figure 5).

Figure (5) Incidence of physical damage be- Figure (6) Percent of businrsses report physical damage because tween partial and total across governorates (%) of war

95% 90% Sa’dah 85% 43%- 57% Sana’a 20%-80% 69% 58% Hajjah 25%-75% Aden Taiz 23%-77% 41% 14%-86%

Abyan 10%-90% Complete damage per governorate. AbyanTaiz HajjahAden Sa’dah Sana’a Partial damage per governorate. Source:SMEPS & UNDP, Impact of the Yemen Crisis on Private Sector Activity, Aug.-Sep., 2015 In May-July 2017, the International Labor Organization (ILO) conducted an assessment of the damages to small and medium-sized enterprises in Sana’a city and its outskirts, which included 460 businesses (73% small enterprises and 27% medium enterprises). The assessment shows that the majority of these projects were affected by the war in 2015(9). However, enterprises that remained closed were less than 10%, while 41% of businesses resumed their operations partially. Findings of the survey revealed that 5% of the businesses were completely destroyed; 22% sustained significant damages to human, material and economic assets and 58% sustained limited damages. While some of the enterprises sustained physical damages, most of them (97%) sustained economic losses such as disruption of work, loss of expected revenues and a decline in the number of workers and customers(9).

(B)These estimates do not necessarily reflect the total magnitude of current war damage and losses because the damages are increasing day by day and the survey methodology is deficient in terms of the geographical and sectoral coverage. Additionally, damages weren’t examined on the ground, but the assessment methodology was mainly based on remote data collection.

The average financial com- pensation required for a medium-sized enterprise to resume its operations was estimated at $40,541, while small entrepreneurs need $18,108 on average. Most of the required funding covers materials and assets(9). In order to recover, small entrepreneurs reported that they needed to borrow money while medium- sized entrepreneurs were more interested in getting equipment and operational capital to resume their operations.

2. Restrictions on Internal and External Transactions: The ongoing war has severely affected the basic infrastructure in large parts of the country, including roads, bridges, land, sea and airports and imposed severe restrictions on movements of people and internal and external trade, thus raising the costs of the private sector. For example, armed confrontations in Haradh-Al-Tawal area resulted in the closure of the Al-Tawal Port since May 2015, the most important land port, thereby forcing people and goods to pass through Al Wadeeah land port, which is more than twice the distance far from the highly-populated areas in Yemen(10). It takes more time, effort and money and poses higher risks compared to using usual roads. Most of the commercial shipments were referred to Aden Port and then had to pass through several checkpoints along the roads before reaching traders’ warehouses in Sana’a and other cities. This delays the shipments add high financial costs, including customs duplication. Not to mention the increase in internal transportation costs on such shipments that may be higher than the cost of shipping due to the monopoly of the Syndicate of Heavy Transport Trucks Drivers for the internal transportation from Aden Port(10). Table(3) indicates the approximate transporting costs for 20 ft. and 40 ft. containers (or their equivalent) from Aden/ Hodeidah to Sana’a in 2017, compared to the pre-war period. These fees have undoubtedly increased currently.

Table (3) Transport Costs for 20 ft. and 40 ft. Containers Before and During Conflict

Pre-conflict During the conflict Price increase

20 ft. 40 ft. 20 ft. 40 ft. 20 ft. 40 ft. Hodeidah – Sana’a 150,000 230,000 250,000 340,000 66.67% 47.83% Aden – Sana’a 230,000 310,000 315,000 430,000 36.96% 38.71% * Since the war broke out payments are required at various checkpoints along transport routes; however, these are not included in the above prices Source:Ala Qasem and Brett Scott, Deeproot Consulting, Navigating Yemen’s Wartime Food Pipeline, November 2017. Shipping of goods to Yemen is very expensive and shipments that used to take a month prior to the war need three to four months now due to the delays in entry and clearance of ships in Yemeni ports and the imposition of additional insurance premiums due to war risks at $500 per shipment equivalent to 20 feet and $1,000 per shipment equivalent to 40 feet. The insurance costs are even added to shipments going to Aden despite the city being declared as a safe area, i.e., not a subject of the UN Verification and Inspection Mechanism for Yemen (UNVIM)(10).

Figure (7) Average delays in entering ports in July 2018

The operational status of ports as shown on the map is based on information provided by Wilhelmsen Ship Services AS. Sources: Logistics Cluster, WFP, WSS reports

SALEEF

RAS ISA (SHORE TANKS)

RAS ISA (SBM)

AL HUDAYDAH ASH SHIHR * No berths in Jul MUKALLA

BALHAF

MOKA

OPEN ADEN IMPORTANT Port delays refer to the time span between arrival at CLOSED anchorage area and berthing; it does not include the time elapsed while awaiting clearances.

Source:Logistics Cluster and WFP, Yemen Humanitarian Imports Overview, July 2018.

In addition, air freight costs have increased because insurance companies impose 200% as insurance fees on Yemen Airways(10). Airports in Sana’a, Aden, Hodeida, Mukalla, Seiyun and Taiz sustained damages. Air flights were resumed only at Aden and Seiyun airports, with international flights limited to Cairo and Amman, while other airports in Hodeida, Taiz and Mukalla remain closed. In Sana’a, only UN humanitarian flights are allowed to land at the airport. This hinders shipping the goods of the private sector and the transfer accumulated foreign currency balances of the private sector and banks to and from Yemen. In addition, strict limitations have been placed on cash transfers between areas under the control of the parties to the conflict. The majority of correspondent banks suspended dealing with Yemeni banks in US dollar remittances and opening documentary credits due to the classification of Yemen as a high-risk area. This greatly affects the provision of banking services such as international remittances and commercial fi- nancing, which are vital to the good performance of the economy and to enable the private sector to import goods and services. Foreign banks that agree to open documentary credits require cash insurances by 100% of Yemeni bank balances for these credits, thereby raising the prices of imported goods.

3. Public Finance Crisis: The private sector has a close interrelationship with the public finance. on the one hand, it is a major contributor to the public budget through the payment of taxes and fees, purchase of treasury bills and Islamic Sukuk and provision of hydrocarbon revenues produced by foreign companies. On the other hand, the public expenditure is a key driver of the private sector’s activities and demand for its products and services, thereby improving employment and income levels in the economy as a whole.

However, the collapse of public finance system as a result of the ongoing war have had a heavy impact on the private sector. The ratio of public revenues to GDP declined from 31.4% in 2014 to 16.1% in 2016 due to the disruption of hydrocarbon exports, suspension of donor support to the public budget and contraction of tax revenues. Under pressure from the declining revenues, the ratio of public expenditure to GDP declined from 36.1% in 2014 to 30.1% in 2016(11). The situation worsened further with the division of public finance and collapse of the public budget following the relocation of the Central Bank of Yemen (CBY) to Aden in September 2016. This had disastrous consequences on the public and private activities. Figure (8) clarifies the transmission channels of the public finance crisis to the private sector in more details.

Figure (8) Implications of the Public Finance Crisis on the Private Sector

Suspension of fuel subsidies and disruption of the op- Suspension of salaries in most gov- erating expenses for public facilities in large parts of the ernorates, as well as the social welfare country, including water and electricity through the public assistance and pensions. This affects in- grid. This raises the production, transportation and storage come levels and leads to a contraction in costs; contributes to the low productivity and revenues of the demand for private sector products. the private sector and reduces its capacity to expand and generate employment and income opportunities.

Freezing the projects of the Public Non-payment of domestic public debt interests and instal- Investment Program, which has greatly ments, thus depriving investors in treasury bills from the returns affected the contracting sector and its of their financial investments and leaving the banking sector vulnerable to a severe liquidity crisis, which has adversely af- activities. fected entrepreneurs. Non-payment of hundreds of billions Placing further tax and customs burdens on the private sector arrears owed to the contracting sector and undermining the confidence between the public and private and suppliers. sectors.

4. Aggravation of the Liquidity Crisis: The liquidity crisis has contributed to the nonpayment/reduction of wages and salaries and the layoff of some workers from enterprises, thereby reducing their purchasing power for food and non-food staples and deepening the contraction in demand for the private sector’s products. As a result, the economic activity has deteriorated and unemployment and poverty rates have increased. Additionally, the foreign exchange liquidity crisis has led to growing obstacles and higher costs on the private sector and restricted its ability to import goods and services such as wheat, rice, sugar, medicine and fuel. The direct purchase of U.S dollar by goods’ importers from the parallel exchange market puts strong pressure on the exchange rate, thereby increasing the cost of imported goods. For example, the retail prices of food commodities reached to 39%-104% in May 2018 compared to what it was in pre-crisis period affected among other factors by the foreign exchange scarcity(12). This poses a threat on food security in the country and requires securing trade finance facility for basic commodities and fuel at a fixed exchange rate. The banking sector is currently facing a severe liquidity crisis, where about 65% of bank’s total assets are out of control and unavailable for use in the form of government securities, balances (deposits and required reserves) at the CBY and loans offered to the private sector in danger of default(13). Therefore, banks are unable to meet the demands of their clients (business owners) in a timely fashion. This has affected the activities of those clients, weakened their confidence in the banking sector and made them prefer to keep liquidity outside banks. Not to mention the emerging challenges of the liquidity crisis, such as the large difference between the payment in cash and check or refusal to accept checks, low exchange rate of the earlier series of U.S. banknotes (before 2006) compared to the new series, in addition to the increase in the percentage of non-performing loans which reached 52.5% of the total loans and facilities of banks to the private sector in December 2017(13). Therefore, banks demand large guarantees on credit, which hinders the private investments.

5. Deterioration in Doing Business: Yemen is ranked 186 among 190 countries worldwide in the World Bank’s Doing Business Indica- tor-2018 (Figure 9). This places Yemen among the top five worst countries on the map of the world’s Do- ing Business. The countries that are worse than Yemen are South Sudan, Venezuela, Eritrea and Somalia. Yemen’s rank has significantly dropped from 101 in 2012 to 186 in 2018, making it difficult for Yemen not only to attract foreign investments, but also to regain the national migrant capital and foreign companies that left Yemen due to the conflict. Figure (9) Trend of Yemen Rank in Doing Business Indicator at World Level During (2010-2018)

200 189 189 189 190 190 183 183 183 185 180 179 186 160 170

140 133 137 120 129

100 105 104 101 Yemen, Rep. 186 80 South Sudan 187 60 Venezuela, RB 188 Eritrea 189 40 Somalia 190 20

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Yemen Rank Total No. of countries (Worst World Performance)

By comparing Yemen’s rank with the countries of Middle East and North Africa Region in the main indicators of the Doing Business, it’s noted that Yemen scored the worst performance in indicators of trading Across Borders, getting electricity and credit. In addition to the deterioration of Yemen’s rank in other indicators such as ease of doing business and dealing with construction permits. This reflects the suffering of the private sector inside Yemen.

Table (4) The Republic of Yemen and the MENA Region: Doing Business Indicators, 2018

Worst regional performance Best regional Performance Indicator Yemen Rank Rank Economy Rank Economy Ease of Doing Business Rank 186 185 Libya 21 UAE Starting a Business 163 167 Libya 31 Oman Dealing with Construction Permits 186 186 Yemen, Syria, Libya 2 UAE Getting Electricity 187 187 Yemen 1 UAE Registering Property 82 187 Libya 10 UAE Getting Credit 186 186 Yemen, Iraq, Libya 90 UAE, Saudi Arabia, Egypt, Iran Protecting Minority Investors 132 186 Djibouti 10 UAE, Saudi Arabia Paying Taxes 80 167 Egypt 1 UAE, Qatar Trading Across Borders 189 189 Yemen 53 Jordan Enforcing Contracts 140 175 Djibouti 12 UAE Saudi Arabia, Iraq, Resolving Insolvency 156 168 63 Tunisia Libya Source: World Bank Group, Doing Business Report, 2018. http://www.doingbusiness.org

Third: Priority Interventions: Traditional policies and interventions are no longer useful to encounter the challenges and risks that plague the Yemeni private sector in light of the ongoing war and conflict in the country. In this context, the Chamber of Commerce and Industry expressed its views for the solution by presenting the private sector’s initiative for economic settlement between the parties to the conflict to ensure the continuation of economic activity and enhancement of livelihoods in Yemen. This edition highlights the terms of this initiative as fol- lows: 1- Ensuring the independence and impartiality of the CBY and unifying its administration under one independent and neutral leadership, or at least ensure full and direct coordination between the CBY struc- tures in Sana’a and Aden if it is not currently possible to unify the administration. 2- Ensuring full freedom of land, sea and air transport, focusing on: ● Facilitating the foreign trade movement by opening all land, sea and air ports without exception to al- low the flow of the private sector’s goods and the movement of businessmen and travelers. ● Facilitating the movement of travelers, businessmen and goods between different areas of Yemen, as well as neutralizing all seaports, airports, roads and bridges from military operations. ● Restoring the full operational capacity of Yemeni ports, including Hodeida Port, by repairing the damages and expediting ships unloading and entry to the ports, and abolishing the monopoly of the Syndi- cate of Heavy Transport Trucks Drivers for the internal transportation from Aden Port. 3- Neutralizing all sovereign state revenues, by focusing on: ● Directing all oil and non-oil sovereign resources, including foreign aid, to one party such as the CBY or an agreed upon special fund under a neutral Yemeni leadership and the supervision of the international community (EU and / or IMF and WB). ● Agreeing on aspects to spend these revenues, most importantly paying the monthly salaries and wages of all state employees throughout Yemen according to the 2014 payrolls and providing the inevitable operating expenses for the health and education sector at all stages. 4- Neutralizing electricity from war and conflict by focusing on: ● Neutralizing electricity plants and networks from war and conflict, and imposing international sanc- tions on saboteurs. ● Re-operating the public and local power plants. ● Providing periodic maintenance for the power plants and repairing and maintaining the electricity transmission networks. ● Ensure the safety of engineers and technicians and their freedom of movement between different areas throughout Yemen by the parties to the conflict. 5- Resuming hydrocarbon production and exports by focusing on: ● Rehabilitating and operating the oil and gas facilities to ensure the resumption of hydrocarbon production and exports. ● Rehabilitating and operating the Aden and Marib refineries, thus supplying the local market with nearly half of its fuel needs. 6- Mobilizing donor support for agricultural, fisheries and livestock activities and improving livelihoods of citizens. 7- Neutralizing the private telecommunication companies from war and conflict, focusing on: ● Paying all financial obligations and taxes of the telecommunication companies to the CBY or the special fund as agreed. ● Enabling employees and engineers of the telecommunications companies to move freely between all Yemeni areas for the maintenance of transmission stations and equipment. ● Coordinating between the concerned authorities on how to control these companies and releasing their equipment held in some ports.

Annex: Map of access roads in Yemen:

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N DISPLAYED AND ACCEPTS NO LIABILITY FOR RELIANCE ON Al Qasabah Al Sawab ! Al Buq' Thamud ! ! THE !DATA. PLEASE TAKE CARE TO VERIFY THE Karah Al Rakwah INFORMATION BEFORE USE. Al Saifi PLEASE ALSO NOTE THAT THE MAP REFLECTS ONLY CONFIRMED INFORMATION RECEIVED BY THE CLUSTER, AND DOES NOT COVER ALL ACCESS ISSUES IN YEMEN. THE Ibn Tawwah ! Sa'ada ! MAP DOES NOT REFLECT THE POLITICAL SITUATION OR ADDRESS SECURITY ISSUES. Sihar SA'ADA Al ‘Anaqah ! Dahyan ! ! THIS MAP NEEDS YOUR HELP Barat IF YOU HAVE UPDATED ACCESS INFORMATION Al Madraj II ! AL JAWF YEME ! Quflat Ùdhr CONCERNING ACCESS, PLEASE CONTACT THE LOGISTICS Al Madraj I Al Marhinah ! CLUSTER INFORMATION MANAGEMENT OFFICER Laffat al Barakan ! ! Haradh R Se d Mujir Qa`tabah At Tayn AMRAN Huth ! ! Khaiwan Albdah Wadi Mure Huth !! Bayt Ma‘tan Al Hazm HADRAMAUT Hawari ! Al Àbr a HAJJAH ! AL MAHARAH Tarim Al Lati ! ! ! Abs Ar Rizwah Shafar ! Al Mahabishah ! Ghuraf ! Khamir ! ! ! ! Ghuraf L Seiyun T Ma'all al : ! 7-10 LOHEIYA Shiras Raydah ! Bayt Ghathamah Al Qatn 505 Hajjah Shurayfah ! ! Fardet Nahem ! Hawra Loheiya ! Ma'all Bissin ! ! days ! Ash Amran ! ! Bayt Shabanah nm c Shahili Alaman Wadi ! MARIB ! Z'arwan Ash Shi`bah Khifa Shibam Al Mahwit ! Jidr Ma'rib ! Al Qanawis Zeham ! Al Faish ! Al Harajah ! Al Zeham Makhsan Al Jabal ! Shabwah Kamaran Az Zaydiyah ' ! ! 15°21'N Niàydah ! ! AL MAHWIT Osaifera SALEEF PORT ! As Salif Sana'a ! Sa'ada \! c! Makshela Al Daragah ! RAS ISSA Al Kharshah Sayhut ! ! SANA'A ! Bajil Al Badiyah c ! Mankkah As Sawm ! ! BRIDGE Harrah Ad Dis Ex. Port Suda ! Al Qutay' Obal SHABWAH Name Status ! ' Al Marawiàh ! Attar Bayhan Ghayl Ba HODEIDAH Hodeidah! Ma`bar ! Dhi Yurwak ! ! Madinat ! ! Wazir Al Daragah Closed ! ! ! Ash Shir ! c! Al Hammadi Al Mansuriyah ash Al Huzum ! ! Al Jabin DHAMAR Ash Shihr ! As Sali Attar Closed Shirq ! RAYMAH ! LT Hamle Closed Dhamar Ataq : Az Zilah Al Maswa ! ! ! Qurayr ! Al Mukalla 7- Bayt al Faqih ! ! Ar Rawdah Huth Closed 733 1 Rada` ! c! 0 Ad Dahi ! ! MUKALLA Mawkaah Closed d ! Alkasabah Sanaban As Sadah nm a Yarim ! ! Quta‘ah Rasyan River Closed ys n ! Madaran ! AL BAYDA Wadi Mure Closed ! Al ‘Aram ! Zabi! d ! Al Jarrahi Al Masawi‘ah Damt Ayn al Al Tuhayta' ! Ad Dalil IBB ! Al Khabr Al Faish Restricted ! ! Juwayri Za‘lin ! Al Mabraz Mu‘ayin ! ! ‘Awwayn Al Madraj I Restricted Rida' al Ghaythi ! Access Constraints as of 22 May 2018 Bayt ‘Ukaysh ! Al Bayda ! Mukayras ! As Sa! bal !! ‘Arasi ! Balhaf Al Madraj II Restricted ! Hays ! ! Jiblah Ib! b Lawdar c! Al Asluf ! BALHAF Al Saifi Restricted AL DHALE'E ! ABYAN ! Am ‘Ayn Al Khawkhah ! Ar Rawnah ! Am Khudayrah Al Zeham Restricted ! ! Al Qaìdah Dhalie Jirdan Maqbanah !! ! Al Dhale'e Alaman Wadi Khifa Restricted Haml!e Taizz Masliqah Tanah River ! ! ! Maqrabah ! ! ! ! ! Al 'awban Albdah Restricted ! !! Bi’r! ! Ar Ramadah ! As Sudd ! ! Al Habilayn ! Bash! ahAl Misrakh Ahwar Alkasabah Restricted Najd Qusaym ! ! ! ROAD ! Ad Dimnah Thabrah ! Rasyan ! Al Khalil h Al Baradah ! ! Al 'anak! ah Al ‘Aws Barakan Restricted River ! Al Muqdar ! ! From To Status MOKHA Al Mafraq Ar Ra! hidah Dar ! Mokha Fardet Nahem Restricted ! x. Salala ! ! At Turbah At Ta nnan Jaàr days Closed c Al Ànad 4 E Al Hudaydah (Al Jarrahi) Al Hudaydah to Al Mukha via Hays TAIZZ Ash Shamsarah ! ! ! ! 3- Hawari Restricted 13°11'N Al Qurayyah ! Ash Shaykh : ! Dar Salim Zinjibar LT Closed Sanawi Salim nm Al Hudaydah (Hays) Al Hudaydah (Al Khawkhah) Salak Lahj ! 703 Karah Restricted LT ! Closed As Saymar ! Sana'a (Khwlan) Marib (Sirwah/Marib City) Khaiwan Restricted : ! LAHJ ! Al Jarba’ Eritreaa Dhubab Sana'a (Nihm) All routes in Nihm district Closed 249 3 ! Laheman Restricted 0 Al Mansurah Restricted hour ! Aden AbyanAll routes in Zingibar district Makhsan Restricted nm Kharaz ' ADEN ! ! ! ! Al BaydaAll routes in Al Bayda Restricted Imran ! Obal Restricted s Falaisec! ! As Suwaydi Al Hudaydah (Al Mansuriyah)Al Hudaydah via Zabid/Al Jarrahi/Rida' (Ibb) Restricted ! ! Osaifera Restricted Mayyun Al Khaymah Al Jawf All routes in Al Jawf Restricted Sa'ada Restricted G u l f o f A d e n AmranAll routes in Amran Restricted Shiras Restricted Dhamar Al Bayda (Rada and Damt - Al Dhale'e) Restricted Zeham Restricted Hajjah All routes in Hajjah Restricted Al Rakwah Restricted-Light Hajjah (Abs/Hajjah) Sana'a via Amran/Shibam Restricted Al-Hadid Restricted-Light ours Marib (As Sawm/Dhi Yurwak)Al Bayda (Madaran) Restricted Bayt Shurayfah Restricted-Light : 12 h LT Al Baradah/Ash Shamsarah/Al Muqdar/Al Makshela Restricted-Light nm Taizz Restricted 176 Misrakh/Taizz City Mankkah Restricted-Light LT: 3 days i TaizzTaizz City/Al Asluf - Ar RawnahAl Qa'idah Restricted Qurayr Restricted-Light Taizz (Dhubab) Taizz (As Suwaydi) Restricted DJIBOUTI 1922 nm Ex. Duba Tanah River Restricted-Light Road Closed Closed International DjiDjibboouuttii c! Airport Functional National Capital Road Difficult to Restricted: alternative ' \! Boundary ' Airport Closed Major Town access access aside the BOSASO' !! Governorate bridge* Intermediate Boundary a Road Open Port Functional Restricted-Light: alternativec! c! ! Town Coast Line Primary Road access aside the bridge rber Port Closed (Soft Vehicles only)* c! ! Small Town 11°3'N Sea Route Closed Be Secondary Road Sea Route Open ! Village

Ex. h *DetourSomali mightaa not be accessible during rainy season. Ethiopia ± Date Created: 22 May 2018 Prepared by: YEM CO GIS Unit Data Sources: UNGIWG, GeoNames, GAUL, WFP, LC Somalia 0840 0160 Somalia BERBERA Contact: [email protected] Map Reference: © OpenStreetMap Contributors and OCHA The boundaries and names and the designations used on this map Website: www.logcluster.org YEM_OP_LC_AccessConstraints_2018_A3L 43°36'E ! 45°45'E Kilometers 47°53'E 50°3do'E not imply official endorsement or acceptance by the United f c Nations. Source: https://logcluster.org/map/yemen-access-constraints-map-22-may-2018

Key Sources:

1. Central Statistical Organization, Labor Force Survey 2013-2014. 2. Central Statistical Organization, National Accounts, 2016. 3. Central Statistical Organization, Statistical Yearbook, 2014. 4. Ministry of Public Health and Population, Annual Statistical health report, 2014. 5. Ali Al-Azaki, Sana’a Center for Strategic Studies, International Aid Organizations and the Yemeni Pri- vate Sector: The Need to Improve Coordination in Humanitarian Crisis Response, March 2018. 6. UNDP & Connecting Business Initiative, Private Sector Organizations/Companies Engagement in Emergency Preparedness, Response and Recovery, Preliminary Survey Results, August 2017. 7. World Bank, toward blueprint for the recovery and reconstruction of Yemen, May 2017. 8. SMEPS & UNDP, Impact of the Yemen Crisis on Private Sector Activity, Aug.-Sep., 2015. 9. ILO and Afcar for Consultancy, Small and Medium-Sized Enterprises Damage Assessment in Sana’a City and its Suburbs, July 2017. 10. World Bank Group, Yemen policy note 3: Private sector readiness to contribute to reconstruction and recovery in Yemen, May 2017. 11. Ministry of Finance, Government Finance Statistics, 2016. 12. WFP, YEMEN Market Watch Report, Issue No. 24, May 2018. 13. Central Bank of Yemen, Monetary and Banking Developments Data, 2018. 14. Ala Qasem and Brett Scott, Deeproot Consulting, Navigating Yemen’s Wartime Food Pipeline, Novem- ber 2017.

Contact Person For more detailed information about items in this update please contact: Mr. Abdulmageed Albatuly Email: [email protected] Tel.:+967 771 555 730 www.mpic-yemen.org “This monthly update is supported by UNICEF YCO”

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