Economic Development and the Telecommunications Sector in Yemen

Sawt Al-Amal (Voice of Hope) – Hanan Hussein

The telecommunications sector is one of the most prominent sectors that plays a vital role in economic development. It is one of the key sectors that drives growth and progress in various fields and industries. Information and communication technology has become an essential element in all aspects of life, including the economic, social, security, and political domains.

The Importance of the Telecommunications Sector

Many experts and economists believe that the telecommunications sector contributes in several ways, such as facilitating access to information, improving decision-making processes in various economic sectors, enhancing communication within companies, institutions, and individuals, promoting trade and investment, and stimulating innovation by providing the necessary tools and technologies for developing new products and services. Additionally, it provides financial services (financial inclusion) by offering digital financial services to everyone.

Communications: A Fundamental Component of the Public Budget

According to the International Growth Centre (IGC), the telecommunications sector is a fundamental contributor to the economy, with continuous growth averaging 7% between 2015 and 2018. A significant number of jobs are directly or indirectly linked to the sector, and its impact on public finances is substantial. Revenue from the telecommunications sector mainly comes from fees and taxes imposed on mobile phone companies, which constitute the largest share of public revenues. Despite the absence of official statistics, many sources indicate that telecommunications sector revenues are likely to exceed 150 million US dollars annually.

Amal Al-Junaid, a business development specialist at a leading commercial company, points out that the telecommunications sector is typically utilized in commercial advertising, such as the opening of commercial malls, through service carrier companies such as Yemen Mobile, YOU, SabaFon, and Y Telecom, which are currently operating in Yemen. These companies carry out diverse advertising about the weather, opening of stores and malls, offering promotions, and more, generating substantial returns that contribute to the overall budget.

Amal adds that telecommunications and information technology companies in Yemen are usually used as a means for advertising and marketing, in addition to promoting a certain culture within the society. They also contribute to providing promotional services for commercial stores, products, and markets through offer applications and delivery, which significantly ease citizens’ expenses on transportation, allowing them to access everything with just a click.

The Role of the Sector in Achieving Economic Development

The telecommunications sector in Yemen has greatly contributed to enabling and sustaining economic activity over time by connecting companies with markets and consumers simultaneously. It has also supported and strengthened social ties by linking individuals and communities within Yemen with expatriates abroad. Furthermore, the sector has facilitated vital humanitarian operations targeting citizens in various Yemeni governorates through international, local, and relevant organizations, highlighting the multidimensional value of information and communication technology in all fields.

Amal Al-Junaid emphasizes that the telecommunications and information technology sector plays an extremely significant role in nurturing the economic sector under the most challenging conditions in Yemen. Despite the ongoing conflict in various Yemeni governorates and the damage to many state sectors, the telecommunications sector, despite its challenges, continues to operate continuously through landline and cellular communication services as well as diverse internet services. This has contributed to supplying the national economy with financial resources that have helped stabilize the economy, even if in a modest manner.

According to a report published on the Yemen’s Economy Reimagined Initiative website, titled “The Impact of Conflict on the Telecommunications Sector in Yemen”, some companies have paid temporary extension fees for their operating licenses in order to negotiate a new license. For example, MTN Yemen paid $36.4 million in 2016 to extend its expired license for 29 months, which ended in December 2017.

The report also added that the government has been collecting annual fees from public wireless communication companies, in addition to licensing fees, to compensate for some of the costs of regulating the telecommunications sector. This includes granting licenses for distributed and allocated frequencies in different regions and fulfilling other obligations. For example, MTN Yemen, which estimated in 2016 that it held 42.8% of the local market share, was supposed to pay an annual amount of 1.7 billion riyals under the licensing agreement granted to it in July 2000 for a duration of 15 years.

The telecommunications and information technology sector contributed about 7% of the real gross domestic product between 2015-2018, providing many important direct and indirect employment opportunities by linking to other sectors of the national economy. The sector is also of great importance for social development and human capital, as it helps connect individuals and communities, and provides them with the necessary technological capabilities for social communication and information exchange in an increasingly interconnected global society.

The Role of the Telecommunications Sector in Economic Development

One of the most notable examples of the role of the telecommunications sector in economic development is e-commerce, which has used business applications to facilitate financial transactions and provide broader shopping opportunities. Information and communication technology has greatly contributed to the growth of e-commerce, leading to increased buying and selling opportunities and the creation of new jobs in Yemen, especially for women who have undertaken online electronic projects to market their products, as well as various electronic projects including designing new websites and applications for companies, public institutions, organizations, and diverse private projects.

The telecommunications sector facilitates financial services such as online banking, mobile payments, and learning online. It has also provided opportunities for distance education for students in many schools and institutes, allowing easy access to information and knowledge from around the world. Additionally, it enables remote healthcare services for patients in remote areas through the use of health apps, electronic patient records, and scheduling appointments.

Challenges of Telecommunication Services

Amal Al-Junaid emphasized that the main challenges in the telecommunications and information technology sector are significantly evident in rural areas. While all the awareness and promotional messages reaching citizens in Yemeni cities achieve the desired impact and response, they do not elicit the same reaction in rural areas due to weak network coverage, resulting in unsatisfactory outcomes.

She added while talking to Voice of Hope newspaper that there are obstacles and difficulties that the telecommunications sector has not yet overcome, despite the technological advancements. Many citizens have turned to social media to stay informed about various fields, commercial and marketing sectors, and entertainment, distancing themselves from electronic service providers like direct messages (SMS).

The focus has shifted to direct promotion and advertising on social media platforms, as they are closer and more extensive. When citizens receive SMS messages, they often disregard or even ignore them, leading to the marketing sector not gaining any returns from these individuals.

Furthermore, some researchers believe that the main challenges lie in the significant digital gap in accessing information and communication technology between developed and developing countries. Additionally, the occurrence of electronic attacks and breaches poses a significant threat to the telecommunications sector. This results in a lack of privacy in society, raising concerns about data protection and privacy.

The telecommunications sector is one of the key sectors driving economic development and can play a significant role in achieving sustainable development goals, such as eradicating poverty, achieving gender equality, and protecting the environment. It is important to address these challenges to ensure that the telecommunications sector fully contributes to economic development across Yemen.