Industry in Yemen has Deteriorated Due to Conflict

Sawt Al-Amal (Voice of Hope) – Afrah Ahmed

“Yemen’s industry is a recent development, because it went through many starting points with its stages and characteristics. Before the revolution, the industry’s activity was limited to making some traditional and primitive artifacts and crafts,” according to the data of the National Information Center.

“There is no industry mentioned other than the oil refinery, which was established in 1956 in Aden, and the textile factory in Bajel, and this what was regarded as the industrial sector before the revolution. As soon as the revolution took place and in the seventies, the Yemeni economy witnessed a remarkable recovery, which included all fields of the economy. In addition, governmental measures began to develop plans, policies and programs aimed at supporting and encouraging the Yemeni industrial sector,” it added.

From the Seventies until the Early Nineties

In the early seventies until the beginning of the nineties, the manufacturing sector witnessed a significant development due to the policies followed by the government at the time. It is represented in the support and protection of local industries, which was reflected on the growth and expansion of the industrial production base, as well as the increase in the production and manufacturing capacity of local producers. This, in return, affected the increase in industrial establishments, which achieved high growth rates for the industrial sector during those years, according to the National Information Center.

According to researches and reports, Yemen’s economy and industry developed in an environment that was not conducive to establishing and working to construct investment factories. Furthermore, the Yemeni economy faced great challenges and obstacles. The pace of challenges and difficulties increased in light of the ongoing conflict, which caused great damage to the industry, both directly and indirectly, through bombing, the demolition of infrastructure, and the disruption of industrial supply chains.

According to information provided by the General Federation of the Yemeni Chamber of Commerce and Industry, in a study on “Industrial Production Index,” which issued recently, the cumulative losses in the output of the industrial sector, in both extractive and transformational forms amounted to approximately $35 billion between 2015 and 2020. This includes 30.5 billion dollars in public sector losses, which is represented in the revenues of the extractive industries (oil and gas), and about 4.5 billion dollars in the industrial sector losses.

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According to the latest industrial survey carried out by the Ministry of Industry and Trade and the Central Bureau of Statistics, there are about 28 thousand industrial establishments in Yemen, 78.43% of which are very small establishments (1-3 workers), 19.15% are small establishments (4-9 workers), and 1. 19% are medium enterprises (10-50 workers). On the other hand, about 0.51% of them are large establishments (more than 50 workers), and approximately 98% of the total industrial establishments belong to the private sector.

Before 2010

The Yemeni industry contributed to the economy during that period, when Yemen was one country and headed by one government as well, and when there were no conflicts or other difficulties that lead to the decline of industry and the economy. The growth of the manufacturing sectors during 2007 reached (9.22%) at constant prices, according to the National Information Center. The contribution of the extractive industries sector to domestic production at constant prices during 2007 was (19.2%).

Before 2014

Regarding the status of industry in Yemen prior to 2014, Adnan al-Hakimi, a former director at the Ministry of Industry and Trade, indicated that the industrial sector had developed by 60%. It also contributed to raising the economy through taxes and duties paid by the large labor force.

“During that period, there were some disadvantages, but there was encouragement and interest in the industry at a rate of 50 to 60%. This encouragement and interest was through the government motivation to these industries to permanently solve problems,” Al-Hakimi added.

Stressing that the industrial sector during those years employed a lot of manpower, since the increase in the number of workers affects positively the taxes that go back to the government treasury, and it improves the economy.

After 2015, the conflict intensified and the economy declined

Al-Hakimi confirmed that this period is the worst for the economy, industry and many sectors in Yemen because of the attacks it was subjected to by one of the parties to the conflict. Moreover, Yemen lost safety and the infrastructure was destroyed.

He added that throughout the course of those years and until now, the status quo of the industry has deteriorated and gotten worse, especially the economy – as he described it. This occurred due to many reasons such as, the failure to pay all or a portion of one’s taxes to the government, in addition to the fact that only small portions of the rest of the customs duties are paid, because Yemen has become governed by leaders who do not have joint decisions. This, in return, leads to the dispersion of the economy and a deterioration in its level. An example of this is Taiz, which, despite of being one governorate, is split into two governorates. Each governorate is controlled by a specific side of the conflict parties. This is a major reason for the decline of the economy and the weakness of industry in Yemen.

“The country has become divided into mini-states and the government into governments,” Abdul-Karim al-Hakimi, former director at the Ministry of Industry and Trade, concluded. Additionally, evaluating the situation of the sectors in light of the current political situation shows the decline of some of them. Investment in Yemen has become threatened by some parties to the conflict through seizing the lands on which some factories are built, because there is no economic stability in all of Yemen. As a result, most of the large, medium and small industrial companies closed down due to these factors.

An employee of the Ministry of Industry – who asked not to mention his name – said that due to the ongoing conflicts and their repercussions, the lack of government industry in Yemen, as well as the spread of private factories owned by Yemeni merchants has increased. This occurred due to the fact that the conflict has spread and the infrastructure has been destroyed, because the industry and internal trade in Yemen have become rather bad, as he described it.

“Bajil Cement Factory stopped because of the conflict. Many private factories also closed down, some of which were bombed, causing a decline in industry and the economy. No government ministry was able to issue orders or make decisions that cover all of the governorates of Yemen. In addition, industries and companies have become mostly affiliated with private parties, and government industries have greatly decreased,” he expressed.