At the heart of Yemen’s recovery lies the urgent need to strengthen its economic resilience. Economic resilience refers to the capacity of institutions, markets, and communities to absorb shocks, adapt, and transform in the face of persistent crisis. Yemen’s economy continues to reflect sever impact of over nine years of violence and conflict. Against this backdrop, promoting resilience means restoring core economic functions, supporting private sector recovery, and improving donor co-ordination; all essential factors for safeguarding macroeconomic stability and enabling sustainable development.
Between 2020 and 2024, the OECD partnered with Yemeni authorities to strengthen the conditions for sustainable economic growth, especially through private sector development. These efforts were carried out under the first phase of the EU-OECD Project on Promoting Economic Resilience in Yemen. The project was delivered through a wide variety of tools, including workshops, peer-to-peer exchanges, and trainings, targeting 12 different public institutions and over 200 officials on various work streams. The activities coordinated by the OECD established a new source of insight for the understanding of Yemen’s economy and provided action-oriented policy analysis towards resilience-building.
Beyond technical support, the OECD’s analysis has played a practical role in improving coordination among donors. Its evidence-based work helped partners align their interventions around shared priorities and a more coherent, sequenced approach to economic support in Yemen. The OECD’s inputs also supported the Internationally Recognised Government in articulating its Economic Recovery Plan and broader reform agenda. The recommendations and diagnostic work carried out under the project fed directly into the design of the plan’s priorities, helping to shape a more actionable and realistic roadmap for implementation. At the international level, the OECD has contributed to wider reflections on fragility through its work with the International Network on Conflict and Fragility (INCAF) and the States of Fragility framework. This has helped place Yemen’s challenges within a broader global perspective, ensuring that lessons from the country inform, and are informed by, international approaches to resilience-building.
The first phase of the project aimed to strengthen the country’s economic resilience in three pillars. First, it sought to establish a baseline functioning of key central level economic institutions, both through the strengthening of human capacities and the enhancement of policy planning capabilities within these institutions. Second, the active engagement with economic practitioners from both the public and private sectors aimed to create a more conducive environment for private sector development. Third, the continued co-ordination with the donor community and international organisations sought to encourage synergies and complementarity of approaches and improve effectiveness in the provision of aid for economic development in Yemen. The publication is an analytical outcome of the first phase of the project and provides recommendations to support the IRG in achieving the six objectives outlined in the 2024 Plan for Economic Developments and Urgent Priorities, aimed at reinforcing the country’s economic resilience.
Despite these initial efforts, Yemen's economy continues to face structural challenges, which include the country's fragmented institutions, limited capacity-building efforts, and gaps in regulatory frameworks. First, Yemen experiences a growing public deficit due to a decline in public revenue and poor cash flow management. Improving domestic revenue mobilisation and budget management, by strengthening the human and physical capacities as well as the governance of tax and customs administrations, will allow the government to finance public investment and social spending, which are key drivers of economic growth.
Second, the significant challenges faced by Yemeni financial institutions, resulting from the split of the Central Bank of Yemen and the gaps in the regulatory and supervisory frameworks, have hindered the sector’s stability and limited households and businesses’ access to formal financing services. These challenges eroded the public trust in the banking sector. Addressing regulatory and supervisory gaps, notably in the anti-money laundering and countering terrorism financing (AML/CFT) and financial consumer protection frameworks, as well as implementing targeted measures to ensure MSMEs and households’ access to banking services, will be instrumental to restore trust in the banking sector and ensure its resilience.
Third, the statistical system faces major constraints. Human and physical capacities in statistical units are limited, the legal framework is incomplete, and institutions work with little coordination. As a result, Yemen cannot collect or analyse key economic data, which are essential for evidence-based policymaking and for guiding donor support.
Finally, involving the private sector in the decision-making process is a prerequisite for Yemen's future development and economic growth. International evidence consistently demonstrates that a dynamic private sector is a critical driver of economic resilience, particularly in fragile and conflict-affected contexts. Investment and trade can accelerate economic recovery by restoring productive capacity, integrating economies into regional markets, and generating much-needed foreign exchange. At the same time, micro, small, and medium-sized enterprises (MSMEs) play a pivotal role in job creation, income generation, and service provision, especially where public institutions are overstretched. By supporting entrepreneurship, easing regulatory barriers, strengthening value chains, and facilitating access to finance, countries facing prolonged crises can promote inclusive growth, rebuild livelihoods, and reduce vulnerability to future shocks. In Yemen, enabling private sector recovery is therefore not only an economic imperative, but also a stabilising force that can contribute to social cohesion and long-term development. Creating the conditions for a sustainable and inclusive public-private dialogue in Yemen, specifically in the Energy, Trade, and Investment sectors, is critical for economic stabilisation and the transition towards a post-conflict recovery.
Going forward, the second phase of the project will be guided by three core principles: Continuity, Opportunity, and Relevance. Continuity recognises the necessity of building upon existing institutional capacities to deepen economic resilience sustainably. Opportunity arises from the OECD's strengthened relationships and contextual knowledge in Yemen, enabling the expansion of work on statistical capacity, anti-corruption measures, climate adaptation policy development, and women’s economic empowerment. Relevance underscores the project’s strategic role in supporting post-conflict reconstruction efforts and re-engaging the Yemeni economy regionally and globally through trade and investment.
Operationally, Phase 2 will focus on stronger implementation. OECD experts will work more closely with Yemeni counterparts, providing hands-on support within institutions and helping them carry out day-to-day reform tasks. This approach will be complemented by targeted policy advice, practical roadmaps and tools that translate strategic goals into clear and measurable actions. By aligning with broader international initiatives and facilitating economic components of peace processes, the project aims to continue to play a pivotal role in shaping Yemen's economic recovery and sustainable development trajectory.
