Yemen is among the poorest countries in the world with annual per capita income of US$600 (2005); 41 percent of the country’s population of about 21 million lives in poverty. Despite steady progress at the macro level, Yemen has some of the worst social indicators in the MENA region: just 28 percent of women are literate, only 31 percent of the population has access to free water, and only 70 percent of primary school age girls are enrolled in school. Rural poverty is pervasive, which poses a serious challenge in delivering social services. The principal hurdle is the insufficient capacity of government and non-governmental institutions to ensure effective, efficient, and equitable delivery of social services. What is more, the country depends heavily on the oil sector (for nearly 75 percent of income), but existing reserves are forecast to dry up within 8 to 10 years.
In 1997, the Government, through a World Bank project, established a Social Fund for Development (SFD). The aim is to improve access to basic social services for the poorest Yemeni. Through its first and second phases, the project encouraged innovative and participatory approaches to delivering social services. SFD III expanded the scope and scale of the project to make more of a difference for the poor.
The project is doing a good job targeting the poorest citizens: 50 percent of funds go to the poorest 10 percent of the population, 64 percent to the poorest 20 percent, and 73 percent to the poorest 30 percent. Only 3 percent of resources go to households in the top 10 percent. These figures are considerably better than goals at the time of project appraisal.
Highlights:
- 81 projects: education (30 projects), water (16), health (21) and roads (14).
- 543,136 children enrolled in SFD schools (target: 300,000),
- 399,755 beneficiaries having access to water (target: 240,000),
- 318,101 using new feeder roads supported by SFD (target 760,000), and
- Current SFD operations cost 5.5 percent of investment cost (target: less than 10 percent).
- The benefit incidence analysis also shows that SFD is targeting poor women. Half of SFD’s beneficiaries are female and about 12 percent of SFD-affected households are led by a woman (compared with 7.2 percent national average of households headed by women).
Since 1997, SFD has scaled up its operations, financing US$80 million (of which US$30 million was from IDA) in the first phase, US$175 million (US$75 million was from IDA) in the second phase, and a planned US$400 million (of which US$75 million will be from IDA) in the ongoing third phase.
In 2006 the Government has laid out a vision for SFD to utilize its strong procurement, financial management, and monitoring and evaluation systems to manage substantially larger amounts of investments with the existing SFD structure and a doubling or tripling of its operations. The Third Five-Year Plan (2006-2010) calls for SFD to disburse US$927 million for some 7,710 projects. In addition to above-mentioned IDA contribution, a grant in the amount of US$10 million under the Global Food Price Crisis Response Trust Fund has been signed, and SFD is preparing to design the impact evaluation of this particular program.
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