January 30, 2003—In a move to strengthen Yemen’s investment climate, encourage growth and create jobs in the port cities of Aden, Hodeidah and Mukalla, the World Bank recently approved a US $23 million credit to the country. The loan is the first in a three-phase initiative to develop Yemen’s coastal cities over a period of 12 years at a total cost of US $96 million.

With a gross national product per capita of US $460, Yemen’s 18.5 million people remain among the poorest in the world. About 42 percent of households live below the poverty line, and approximately 25 percent are unemployed or underemployed. One of the challenges facing Yemen is to reduce its dependence on its rapidly depleting oil reserves by turning to non-oil sectors. Another important challenge for Yemen is attracting private investment.

The first phase of the Port Cities Development Program will focus on Aden, Yemen’s commercial hub, whose strategic location at the tip of the Arabian peninsula once made it the second busiest port in the world. The program in Aden will begin with small-scale infrastructure investments, such as improving facilities at a local fish market and road works at an industrial estate, to elevate small business growth and build linkages to Aden’s transport facilities. Training and investment planning will begin in parallel in both Hodeidah and Mukalla.

To attract private investors, the first phase will also focus on enhancing the ability of Aden’s local government to deliver transparent and efficient services to the private sector through administrative modernization, automation of business transactions and information and communications technology.

The Port Cities Development Program coincided with Aden's preparation of a City Development Strategy (CDS), aided by the technical and financial support of the Cities Alliance. The CDS aims at developing a shared vision for the city's future and local priorities for action by bringing together key stakeholders—including NGOs, the private sector, Aden University and women's organizations—in a participatory process to collectively shape the local economic development agenda of Aden.

"The City Development Strategy offers an example of how civil society participation is incorporated in every stage of its design by engaging local residents in planning their future," said Ahmed Eiweida, World Bank Urban Development Specialist.

Another component of the program will be the preparation of an economic development strategy for Yemen’s three largest port cities. The development strategy would capitalize on each city’s comparative advantage such as transshipment and vessel servicing in Aden, agro-industries in Hodeidah and fisheries in Mukalla. Larger-scale, investments will be planned in Phase I for subsequent phases of the Program in all three port cities.

"At these difficult moments for the country, this Program serves to remind everyone of the tremendous potential of Yemen. It is a reminder of Yemen's rich trading culture, its fantastic locational advantage, and its ability to plan long term for its future development," said Omar Razzaz, World Bank Country Manager who is leading the project.

For more information on this project, please click here.

For more information on the World Bank’s work in Yemen, please visit: http://www.worldbank.org/ye