Examining the Challenges and Opportunities in Yemen's Financial Sector

As an Economic Analysis Consultant with the Norwegian Refugee Council (NRC) and the Assessment Capacities Project (ACAPS), I recently had the opportunity to contribute to a comprehensive analysis of the Yemeni financial sector. Our aim was to examine how the ongoing conflict has impacted Yemen's financial ecosystem and identify the key risks and main drivers of economic destabilization.

The report, titled "The Yemeni Financial Sector: Challenges and Opportunities for Recovery," provides an overview of the complex web of businesses, regulatory bodies, and informal networks that comprise Yemen's financial system. Through extensive research and interviews with key stakeholders, we uncovered critical insights:

• The conflict has led to a bifurcation of financial regulatory authorities between the internationally recognized government and the de-facto authority, resulting in contradictory policies that threaten the stability of banks and exchange companies.

• The loss of correspondent banking relationships and access to foreign exchange has crippled the formal banking sector. Money exchangers have stepped in to fill the void, but limited oversight raises risks.

• The dysfunctional judicial system, inadequate financial infrastructure, and elite influence over banking undermine trust and access to financial services.

• Despite these immense challenges, opportunities exist to bolster financial inclusion through mobile money, strengthen compliance systems, and support the recovery of the micro-finance sector.

Drawing upon my specialized knowledge of Yemen's economy, I worked with the NRC/ACAPS team to translate these findings into actionable recommendations for the humanitarian/development community, international actors, and local authorities. Strengthening Yemen's financial system will be crucial for economic stabilization, facilitating critical imports, and expanding access to financial services.

While the challenges are steep, targeted interventions and reforms in the financial sector could unleash the country's economic potential and build the foundation for an inclusive post-conflict recovery. I'm proud to have contributed to this groundbreaking research and look forward to seeing how these insights can inform policy and programming to support the resilience of the Yemeni people. To read the full report, visit the ACAPS website. at https://lnkd.in/eizeViyw