Yemen and its economy faces immense challenges to recovery in the medium-term, though pre-war it showed promise in some sectors that could attract investment again one day.
Yemen historically relied on oil exports but reserves are dwindling, forcing economic diversification. Prior to conflict— the government targeted agriculture, fisheries, mining and tourism as growth sectors.
Yemen’s long coastline and strategic location at the mouth of the Red Sea positioned it well for port and logistics investment serving East Africa, the Gulf and global trade. Modernized facilities could boost transit revenues.
However— restoring investor confidence requires a durable political settlement and security across Yemen first. Infrastructure damage from the war must be repaired. Investor-friendly reforms to commercial laws, taxation, employment regulations could stimulate FDI once stability returns. Transparent natural resource contracts respecting environmental/social standards also help.
In Yemen – International support for post-conflict stabilization and economic recovery programs will be vital. Coordinated efforts are needed between Yemeni authorities, Gulf neighbors and multilateral lenders.
More research is needed on specific opportunities and challenges across various sectors in Yemen, lessons from other post-conflict contexts, and models for managing transition risks over the short and medium term. International partnerships will also be important.
Any post-conflict investment drive should prioritize local SMEs and cooperative business models where possible to spread economic benefits more widely. This fosters stability by empowering local communities and addressing unemployment that militant groups exploit.
Regional and international trade partnerships post-conflict can help Yemeni firms comply with standards for Gulf/Western markets and identify competitive advantages. Trade capacity building is as important as capital investment to ensure private sector recovery is inclusive and sustainable.
