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Yemen: Social Fund for Development

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Fighting Poverty‎
Access to basic services and economic opportunities


In Yemen, more than one-third of the population of 23 million live in poverty, a number that threatens to worsen given a growing population, shrinking water resources, and an economy heavily dependent on a single commodity, oil. However, the government is working with the International International Development Association (IDA), and local communities, to do better at providing the basics: classrooms for children, trained health care workers, improved water systems, and new roads.



Yemen is one of the poorest countries in the Middle East and North Africa region, facing daunting challenges in an uncertain global and regional environment.  Living conditions for much of Yemen’s population of 23 million remain difficult. Yemen’s gross domestic product (GDP) per capita stands at US$1,209, 34 percent of the population lives in poverty, and the country ranks 140 out of 182 countries in the 2009 Human Development Index.  Yemen is also hampered in poverty reduction efforts by a myriad of factors: rapid population growth (over 3.5 percent a year); a lack of clear alternatives to the oil economy; limited institutional capacity and outreach of the State; rapidly-depleting water reserves (with aquifers feeding major cities expected to dry up within the next 15-to-30 years); poor infrastructure; and acute gender inequality issues.

Reducing poverty in Yemen requires, among others, village-level infrastructure improvements and greater access to social services delivered through diversified, localized approaches that address the needs of marginalized rural areas. Poverty is pervasive in these rural areas, where much of the population resides. The dispersion of the population and the difficult topography pose a serious challenge to delivering social services: Yemen has around 35,000 official villages (with approximately 136,000 human settlements), many with less than 100 households, which makes the provision and maintenance of social services very expensive.


Working with IDA, the Yemeni authorities are seeking to address many of these considerable problems through the Social Fund for Development (SFD). Through implementation in three phases, the Social Fund has become an important safety net tool to poverty reduction through its provision of development opportunities to the poor.  The SFD is now capable of delivering a range of social risk management functions for the poor and vulnerable population, within the changing country context and government needs.  Its main programs are: (i) the community and local development program, which supports community-based subprojects in various sectors; (ii) the small- and micro-enterprises development program, which provides technical assistance to microfinance providers, and creates an enabling environment for small and micro enterprise development; (iii) a capacity-building program that focuses on capacity-building of local entities, including local and central government bodies, non-governmental organizations (NGOs), and communities; (iv) and a labor-intensive works program, which provides a cash-for-work safety net to poorer households. This is designed to provide financial support during shocks and any stagnation of agricultural seasons, while increasing the productive assets of these communities.  IDA supported this program through Global Food Crisis Response Program (2008-2009), and as a result, helped the country to mobilize more funds from the European Community and the UK’s Department for International Development (DFID), which are currently supporting the program.  Lessons learned from these earlier program interventions will be applied to the Social Fund for Development Phase IV Project.


Analysis shows that the SFD is successful in reaching 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). Extending basic service coverage to the poorest communities continues to be the main focus of SFD’s operations.

  • For example, under the third phase alone, the Community Development Program’s support included building and rehabilitating 7,606 classrooms, which in turn benefits 684,046 children (this large impact is due to double shifts in urban and semi-urban areas as well as very large classroom size in large cities).
  • Additionally, the program was successful in training 220 health care institute cadres and 1,992 health care workers, building 187 water harvesting systems, carrying out 114 hygiene and environmental awareness campaigns, and building 92 feeder roads benefiting 531,810 people.
  • Of the US$9.1 million grant allocated to workfare program from the Global Food Crisis Response Program Trust Fund, US$6.7 million has been paid as wages which benefited 40,813 people (16,820 households). The Program also provided needed basic infrastructure to needy communities in the fields of irrigation, water harvesting, soil protection, and agricultural terraces rehabilitation.

Bank Contribution

The SFD was established in 1997 with World Bank advice to the government to strengthen its social safety net and adopt the demand-driven approach in community development. The Bank has been a lead financial and technical provider to the SFD throughout the three phases, which provided successive credits of US$30 million, US$75 million, and US$60 million. Through its current fourth phase, IDA is financing US$60 million under a grant that includes US$38.8 million from the pilot IDA Crisis Response Window. The Bank is also playing a role in promoting development concepts and practices, tested and proven effective by SFD, in other government development programs to boost their effectiveness and efficiency. Examples of such concepts and practices include: improvement of quality and efficiency of service delivery; community participation; and the demand driven approach to service delivery.



The Bank has played a lead role in donor mobilization in support of SFD operations as well as in donor coordination and harmonization. The number of donors supporting SFD has increased from six donors in phase one to fourteen donors in phase three, which includes the Arab Fund, DFID, the European Union, the Dutch Government, the Islamic Development Bank, Germany’s GTZ and KfW, the Kuwaiti Fund for Development, the OPEC Fund, and the Saudi Fund for Development. Taking into account all donor support, the total phase three budget has reached over US$1 billion.


Moving Forward

Through the implementation of the initial three phases, the Social Fund has become an important safety net tool to poverty reduction through its provision of development opportunities to the poor. The SFD is now capable of delivering a range of social risk management functions for the poor and vulnerable population with the changing country context and government needs: SFD can strengthen local institutions (risk mitigation), increase access to basic services (risk reduction), and assist groups affected by external shocks through workfare programs (risk coping).



The village was in need of a road. So when the project came, we got the road and received the building materials

— Mr. Ghalib Ahman, a young father of two from Hababa Village in Taiz Governorate, has worked on a road project there for eight or nine hours a day.

The program also encouraged women to participate. The women carried water and the food.


  Men work, women work, and we all work.

— Smara Jani from the same village.


For more information, please visit the Projects website.

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