The fishing industry in Yemen faces many structural challenges that have limited its production and potential contribution to overall economic output. Development of the industry’s infrastructure, human capacity and regulation was already poor prior to the outbreak of the ongoing armed conflict in Yemen. Since the war began five years ago the fishing industry has faced increased challenges, including a significant drop in the level of production with the displacement of many fishermen and associated workforce; fish processing plants halting production; surging fuel costs; the decline of local purchasing power leading to a drop in the local demand for fish products; and the disempowerment of the Ministry of Fish Wealth (MFW), among other challenges.
From November 26 to 28, 2019, a group of experts and fishing industry stakeholders convened in Mukalla, Hadramawt, as part of the Rethinking Yemen’s Economy Initiative, to discuss the industry’s challenges and recommend solutions. These talks discussed how the sustainable development of the industry and recovery from the impacts of the current conflict require collaboration between the government, the private sector and fishing communities, educational institutions, along with international stakeholders. In particular, given the inability of the MFW to carry out its basic institutional functions due to the ongoing conflict, it is crucial that the ministry’s executive privileges for short-term policy making and regulation be temporarily delegated to local councils and that they be empowered to regulate the industry during the conflict. The participants also identified longer-term policies for the government and international stakeholders to revitalize the industry and enhance its capabilities.
Recommendations included:
Background
Yemen’s fisheries sector holds untapped promise in contributing to the national economy, with a coastline of more than 2,500 kilometers and rich fishing grounds offshore.[1] Yet the sector has long faced many challenges, which have been exacerbated during the ongoing conflict. The most recent available data on the size of the industry, shared by the Ministry of Fish Wealth (MFW) in 2012, show that it contributes roughly 3 percent of the country’s gross domestic product (GDP) and constituted the country’s second largest source of export earnings after oil.[2]
The industry is divided into marine fisheries and aquaculture, with the former by far the dominant sector in the industry and the latter relatively limited in its size and output. According to the latest records of the MFW there are roughly 90,000 licenced fishers in the country,[3] almost all of whom are male[4] artisanal fishers; the size of the larger labor force engaged in fishing and fishing-related activities is some 500,000 people, who as family breadwinners support some 1.7 million people in the country.[5] The MFW reported in 2012 that there was only one operating aquaculture farm in Yemen.[6]
It is estimated that Yemen’s total annual fisheries production amounted to roughly 200,000 tons prior to the conflict; 40-50 percent of production was sent for export, generating revenues of about US$300 million.[7] There are both state-owned and private docks and fish landing facilities in the country, although there is no state-owned fishing fleet, meaning individual fishermen work either on their own boats or on privately rented boats. A study in 2018 showed that only 60 percent of fishermen own their boats while the rest work for day wages.[8] Of the 60 percent of fishermen who are boat owners, roughly one third reported partnering with others for joint ownership of their vessel.[9]
In the last decade, the sector witnessed major increasing environmental challenges, such as the destruction of coral reefs, pollution, climate change impacts and weather events such as cyclones, all of which have almost certainly impacted Yemen’s fish stocks, although a definitive assessment to this end has not been conducted (see challenges section below).
The conflict has also caused challenges with production, which has dropped by half; exports have dwindled to less than 70,000 tons per year since the war began.[10] Regular fuel shortages in Yemen have increased fishermen’s costs of operating their boats, while many fishermen have been displaced from coastal communities due to armed clashes and thus lost access to their livelihood and income. Even for those who have not been displaced, conflict and insecurity in coastal areas – such as along the Red Sea coast in Hudaydah governorate and in Aden – have regularly interrupted fishing activities.
Fundamental Challenges Facing Yemen’s Fishing Industry
Lack of Data and Knowledge
The most pressing challenge facing the fishing industry is the lack of scientific research and knowledge production regarding the size and health of Yemen’s fish stocks. The last assessment, which identified fishing areas, coastal and marine ecosystems, and fisheries breeding sites, took place more than 30 years ago.[11] The lack of recent stock assessments means the status of crucial aspects of the industry are unknown, such as the condition of commercially viable fish stocks, species under threat, coral reefs and other aspects of the marine ecosystem and habitat.
Modern commercial technology is not widely used, with most fishing in Yemen carried out using small-scale, low-technology artisanal techniques which limit overall production. Additionally, the sustainability of the sector is threatened by the growing popularity of destructive fishing techniques, such as deploying small-mesh nets that capture immature fish and excessive by-catch; bottom trawling that destroys coral reefs and marine habitat; and blast fishing using explosives.[12]
Inadequate Infrastructure
Yemen’s fisheries industry faces considerable infrastructural problems, such as rudimentary and small-capacity landing sites and fish processing facilities, which also often suffer from poor management. The absence of adequate landing sites and properly trained management and staff to ensure quality standards limits the industry’s ability to meet market quality standards, whether foreign or domestic. There is also a general lack of port and dock infrastructure, such as adequate breakwaters, cold storage facilities and access to affordable power generation. Indeed, at present, workers in the fishing industry lack the necessary training to absorb new technology to develop the sector, while Yemen also lacks a national code of best practices for handling, production, storage, distribution, export, import and sale of fish and fishery products, which lead to a reduction in value of caught fish. Such deficiencies in turn undermine efforts to protect the marine habitat – such as coral reefs and coral farms.
Lack of Public and Private Support
Currently, the MFW is incapable of carrying out the normal operations of a ministry, due to the lack of qualified staff and budget financing. Thus, there is almost no government oversight or enforcement of industry standards nor support for fish harvesting, processing, logistics, exports, international marketing or any other aspect of the industry. Indeed, quite the opposite: Fish processors face up to 25 percent tax on all fish production, which increases the price for consumers and hurts the competitiveness of Yemeni fish exports.
The conflict has led to challenges regarding communication with importing countries and the registration of exporting companies with the European Union, stemming from the relocation of the internationally recognized Yemeni government’s ministries from Sana’a to Aden in 2016, including the MFW. The relocation led to the loss of human capital and institutional knowledge, given that most public servants did not move with the official ministry.
Given the litany of challenges the sector faces – as well as the rudimentary state of technological adoption – private sector actors have been reluctant to invest in developing Yemen’s fishing industry. This has in particular stymied aquafarm development, given the associated upfront capital investment costs.
Looking Ahead
The many challenges the fishing industry in Yemen have roots that are not necessarily related to the ongoing conflict but the intensity of the war has aggravated the situation. In order for the fishing industry to fulfil its potential as an important component of the Yemeni economy, certain steps must be taken. The workshop participants have identified key steps for the government and international stakeholders for the maintenance and development of the fishing industry in Yemen:
Recommendations
Footnotes
[1] “National Fisheries Strategy (2012-2025),” Ministry of Fish Wealth, 2012.
[2] Ibid.
[3] Interview with an official at the Ministry of Fish Wealth.
[4] Although there are fisherwomen working in this industry, a number that anecdotal evidence suggests has increased during the current conflict, the industry and the profession remain heavily male-dominated.
[5] Alfarah, Ammar Mohammed, “The Impact of the War in Yemen on Artisanal Fishing of the Red Sea,” LSE Middle East Centre, 2018, http://eprints.lse.ac.uk/91022/. Accessed February 13, 2020.
[6] “National Fisheries Strategy (2012-2025),” Ministry of Fish Wealth, 2012: “The only operating aquaculture farm is Musallam Trading Company based north of Hodeidah on the Red Sea coast. The farm consists of 50 ha shrimp ponds with annual production of 400 tons (mainly Penaeus indicus and P. monodon).”
[7] Interview with an official at the Ministry of Fish Wealth.
[8] Alfarah, Ammar Mohammed, “The Impact of the War in Yemen on Artisanal Fishing of the Red Sea,” LSE Middle East Centre, 2018, http://eprints.lse.ac.uk/91022/. Accessed February 13, 2020.
[9] Ibid.
[10] Interview with an official at the MFW.
[11] “National Fisheries Strategy (2012-2025),” Ministry of Fish Wealth, 2012.
[12] Alfarah, Ammar Mohammed, “The Impact of the War in Yemen on Artisanal Fishing of the Red Sea,” The LSE Middle East Centre, 2018, , http://eprints.lse.ac.uk/91022/. Accessed February 13, 2020.
Executive Summary
This paper examines governance as the decisive factor shaping the success or failure of government reforms and current government plans in Yemen. It starts from a central premise: Yemen’s reform crisis is not primarily a crisis of planning or vision, but a crisis of structural weakness in the governance system that should regulate policy design, implementation, monitoring, and accountability. Yemeni experience, before and during the war, shows that reforms without a clear governance framework become formal decisions that are selectively implemented, stripped of substance, or unable to deliver sustainable impact.
The paper demonstrates that the implementation gap represents the central challenge facing government reforms—a gap resulting from overlapping mandates, multiple decision-making centers, weak institutional coordination, absence of effective accountability, lack of transparency and data, as well as the chronic disconnect between financial and institutional reforms. It also shows that corruption in the Yemeni context is no longer an isolated administrative phenomenon but has become part of deeper dysfunctions in the state’s political economy, making its treatment possible only through comprehensive governance reforms, not through discrete oversight tools.
Through analysis of a case study involving clearly formulated reforms that later stalled in implementation, the paper concludes that political decisions alone are not enough to ensure execution in the absence of an integrated governance system. Weak effective executive authority, the absence of a clear accountability chain, undeclared institutional resistance, and poor alignment between reforms and institutional capacities all contribute to disruption and operational paralysis.
Based on this diagnosis, the paper proposes a practical governance framework for reforms in Yemen. The framework treats reform as a continuous political-institutional process rather than an isolated technical or financial intervention. It is built on the need for a unified national reference for reform governance, clear mechanisms for assigning roles across institutions, a workable balance between centralization and local governance, and the integration of transparency and information systems at the core of the reform cycle. It also adopts a gradual approach that builds trust and reduces implementation resistance.
In light of this framework, the paper presents a package of practical recommendations to strengthen the governance of government reforms. These include adopting a unified national framework for institutional performance governance, strengthening financial governance through budget discipline and expenditure control, establishing a unified digital data system, and activating central and local accountability mechanisms based on clear performance standards, while also allowing regulated exceptional tools for economic crisis management. The paper emphasizes that these recommendations can succeed only through clear role distribution among the central government, local authorities, the private sector, civil society, and international partners, within a single national framework that leads the reform process without replacing state institutions.
The paper concludes that governance is not a procedural issue or an external condition, but rather the most realistic entry point for reconsidering government plans and transforming them into effective tools for economic recovery and institutional stability. Without systematically addressing governance gaps, government reforms will remain vulnerable to stumbling regardless of their technical quality or the support allocated to them. Building a clear and implementable governance system represents a genuine opportunity to rebuild trust between the state and society, improve resource utilization efficiency, and put Yemen on a more sustainable reform path.
Why this paper now?
The Yemeni government today does not primarily suffer from a lack of plans or weak vision; it suffers from a chronic inability to convert approved decisions and plans into tangible results. Experience shows that this pattern undermines the credibility of political decision-making and reduces reforms to low-cost rhetorical commitments for actors who do not intend to comply.
What does this paper show?
This paper proceeds from a clear premise: the reform crisis in Yemen is a governance implementation crisis, not a policy crisis. Government reforms, regardless of their technical quality or political level, will not be automatically implemented in the absence of a governance framework linking decision, implementing entity, resources, follow-up, and accountability.
What does political decision-making require now?
Addressing this gap does not require launching new plans. It requires specific decisions that reorganize how reforms themselves are managed, strengthen the implementation and accountability chain, and protect political decisions from undeclared institutional disruption.
Risks of inaction
Continuing the current situation means the persistence of implementation gaps, erosion of domestic and international confidence, and transformation of reforms into accumulated political and administrative burdens. This paper presents a practical framework for reform governance without creating parallel structures or suspending accountability rules, preserving the role of state institutions and enhancing their implementation capacity.
Executive Summary
The Republic of Yemen today faces one of the most complex investment environments in the region. This reality is the result of structural weaknesses that predated the war and were then intensified by political and institutional fragmentation, security deterioration, and economic collapse. Even so, international experience in fragile and conflict-affected states suggests that Yemen can combine high levels of risk with promising investment opportunities in sectors that can operate before full peace is achieved – provided that reforms are clear, political will exists domestically, and regional support is active.
Over the past decade, the war has produced financial and monetary fragmentation, multiple decisionmaking centers, and divergent laws and procedures. This has created two distinct economic environments: one in government-controlled (liberated) areas and another in Houthi-controlled areas. The result has been a sharp decline in confidence, weaker institutions, severe deterioration in purchasing power, and a continuing fall in the Riyal’s value, alongside rising operating, transport, and insurance costs. At the same time, many of these constraints predate the war: even before the conflict, Yemen was a difficult investment environment due to corruption, complex procedures, a weak judiciary, widespread illegal levies, and capture of state resources by influential power centers.
Despite this bleak picture, the regional and international context offers encouraging indicators that investment space can still be created, especially in government-controlled (liberated) governorates. Compared with Houthi-controlled areas, these governorates offer internationally recognized legal authority, open ports, limited but workable banking channels through official institutions, and stronger prospects for investor protection through international arbitration.
International experience in Iraq, Lebanon, Rwanda, and other conflict-affected countries shows that investment can begin gradually in sectors least affected by war, and that success in fragile environments depends on four pillars: understanding risks while limiting exposure, strong risk management, clear government reforms, and organized regional and international support. With current Gulf investment shifts toward Iraq, Lebanon, and Syria, Yemen – given its geostrategic location along major trade routes, its young population, and its strategic relevance to Gulf security – is a logical candidate to attract part of these investment flows.
There are also conflict-compatible sectors that can be entered today, such as:
These sectors operate by their nature in unstable environments and do not require comprehensive national stability, and can be a starting point.
The paper emphasizes that investment in Yemen, at this stage, cannot be treated as an unrestricted open
field. It must be governed by clear requirements, including a government commitment to supporting
investment, legislative reform, procedure digitization, elimination of illegal levies, access to international
arbitration, specialized government units for investor services, and the launch of a unified investment
window in Aden. It also requires regional guarantees and practical enablers through direct partnerships
with Saudi Arabia, the United Arab Emirates, and other Gulf countries.
Foreign investment also requires active participation by the Yemeni private sector through alliances,
stronger governance standards, audited financial statements, and partnerships with Gulf investors through joint ventures (JVs) rather than stand-alone efforts. It also calls for a new donor role that goes beyond relief to support joint investment, improve the business environment, and provide financing guarantees and blended-finance tools.
Geographically, while the analysis covers Yemen as a whole, the practical application of opportunities
focuses on government-controlled (liberated) governorates. This reflects the current impracticality of
operating in the Houthi-controlled environment, which is marked by sanctions, extortion, capital flight,
institutional destruction, tight control over companies, and the absence of minimum legal and institutional guarantees for local and foreign investors.
The paper concludes that Yemen, despite its fragility, possesses rare strength elements in the region,
including:
The paper presents practical recommendations for the Yemeni government, the Yemeni and Gulf private
sectors, and donors aimed at transforming Yemen’s investment environment from a deterrent environment into an enabling one through short- and medium-term reforms, strategic partnerships, and a limited number of high-impact model projects that can build confidence and unlock larger investment flows later.
Based on this analysis, foreign investment in Yemen is difficult but not impossible. In the right regional
context and with clear government reforms, it can become a major driver of economic stability, a lever for reconstruction, and a tool for integrating Yemen into the Gulf and wider regional economy. The most logical starting point is in government-controlled (liberated) governorates and in sectors compatible with the current conflict context, before moving to larger projects in a later political settlement phase.
The war has fundamentally altered Yemen’s trade finance system, transforming it from a reliable, unified, bank-led mechanism into several divergent, conflicting structures that have made import financing cumbersome, costly, and unstable. The conflict has led to the suspension of oil and gas exports — the country’s primary source of revenue and foreign currency — and resulted in the division of key economic institutions across regional zones of control. Specifically, the fragmentation of the Central Bank of Yemen (CBY) into rival branches (Sana’a and Aden) and the subsequent prevalence of dual currency and monetary systems has created a complex trade financing landscape. The two branches have engaged in a power struggle, issuing conflicting monetary and financial policies that weaponize all aspects of import regulation and financing.
The collapse of the formal banking system, combined with liquidity shortages, has eroded confidence in banks’ financial services and entrenched the rise of less-regulated financial transfer networks, which dominate the monetary cycle and trade facilitation. The fragmented regulatory environment has heightened the country’s vulnerability to global de-risking measures and exposed it to severe risks related to Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) requirements. Yemeni banks have struggled to access foreign correspondent banks, which has inflated import costs and exacerbated food insecurity in a country that imports up to 90 percent of its basic staples from abroad.
The US designation of the Houthis as a Foreign Terrorist Organization (FTO) and subsequent sanctions catalyzed a significant shift away from Yemen’s historically centralized financial system. The sanctions forced banks to relocate to government-controlled areas, eliminating the Houthis’ dominance over their primary operations. Today, these relocated banks are facing operational challenges due to the historic centrality of the financial system, the commercial market, and customer base in Houthi-controlled areas.
After the failure of several import financing mechanisms, the internationally recognized government, along with the Central Bank of Yemen in Aden (CBY-Aden), has recently begun implementing much-anticipated economic reforms that have stabilized the Yemeni rial. These reforms helped institutionalize a new mechanism for trade finance, culminating in the establishment of the National Committee for Regulating and Financing Imports.
To effectively operate on the ground, the Import Committee and CBY-Aden need to be fully empowered to curb currency destabilization and secure hard currency inflows, and to use those funds to finance basic commodity imports. The government should create a conducive business environment for banks to provide financial services and facilitate trade nationwide. Additionally, it should shift from short-term collective measures to long-term economic reforms. These should include working to access sustainable sources of hard currency to finance trade. Sustained financial support from Saudi Arabia and other donors is critical to replenishing the CBY-Aden’s foreign reserves and preserving the value of the rial.
Close coordination with international financial institutions and US decisionmaking bodies (such as the Department of the Treasury’s Office of Foreign Assets Control) is essential to enhance Yemeni banks’ capacity to comply with AML/CFT standards. Houthi authorities must suspend punitive measures against banks and traders and refrain from any future actions that could further deepen the monetary division and complicate trade financing.
In parallel, the UN and broader international community should exert immediate pressure on the warring parties to halt their weaponization of trade financing and respect the neutrality of the banking sector. They should help establish sanctions safeguards to protect humanitarian and remittance flows. As circumstances improve, the international community should support the creation of a nationwide trade financing scheme that is technically effective and insulated from political conflict.
Yemen’s e-commerce sector holds significant potential to drive economic growth and financial inclusion, particularly for women and rural communities, but faces major challenges, including poor internet connectivity, limited digital payment systems, and the absence of legal and regulatory frameworks. The country remains heavily cash-based, with minimal access to formal banking and fragmented oversight, exposing consumers and providers to fraud and limiting sector development. Internet infrastructure is among the worst globally, with only 17.7 percent of the population online in 2024, though the recent introduction of Starlink offers hope for improved connectivity. Conflict-related damage to transportation networks further hinders delivery services. Despite these obstacles, some businesses have found success, especially in urban areas, by adapting to logistical constraints. Yemen’s youthful, increasingly smartphone-connected population, along with emerging technologies and business models, offers promising opportunities for inclusive e-commerce growth—provided that policymakers invest in digital infrastructure, enact protective regulations, and create a supportive environment for online enterprise.
Historically, Yemen’s industrial sector has been characterized by small-scale, private initiatives, with 78% of establishments employing fewer than four workers and dominated by food, metal, and textile industries. Yemeni industry’s reliance on imported inputs and weak infrastructure left it vulnerable even before the 2015 escalation of war. Post-conflict damage has been extensive, with losses exceeding $35 billion, industrial output collapsing, and over half the workforce displaced. Legal frameworks exist but lack consistent enforcement. Gender disparities remain stark, with women accounting for just 1–6% of industrial employment. Environmental degradation further complicates recovery, driven by outdated laws and limited compliance capacity.
Despite this, some local industries have demonstrated resilience, particularly in informal light manufacturing. Drawing from regional and international models of industrialization, this RYE Policy Brief identifies viable paths for industrial renewal anchored in local resources, community participation, and adaptive governance.
Develop a national industrial strategy in partnership with the private sector, including identification of key sectors, support measures, and coordination mechanisms.
Simplify business registration, update laws, and establish industrial arbitration councils.
Expand training, develop women-friendly zones, and launch targeted financing for female entrepreneurs.
Fund industrial research labs and foster private-sector innovation partnerships.
Rehabilitate industrial zones with solar energy, logistics hubs, and streamlined port access.
Create an Industrial Finance Fund and expand concessional credit for SMEs.
Enforce pollution controls, incentivize clean tech adoption, and integrate safeguards into industrial planning.
Yemen is vulnerable to climate change and affected by ongoing conflict, facing worsening environmental crises such as water scarcity, degradation of arable land, and an increasing frequency of extreme weather events. The country’s capacity to address the impact of climate change is severely hampered by limited access to international climate finance. Obstacles include the absence of clear criteria for fund distribution, bureaucratic complexities that exceed local institutional capacity, an emphasis on mitigation over adaptation measures, and a preference for providing loans over grants. Fragmented governance and a decade-long climate data gap further undermine the country’s eligibility for funding. Yemen lacks accredited national institutions capable of directly accessing climate funds, which forces it to rely on international non-governmental organizations (INGOs). This reliance introduces additional layers of bureaucracy and high transaction costs.
This policy brief, based on a desk review and a two-day workshop held in Amman, Jordan, in November 2024, examines Yemen’s climate finance barriers and explores opportunities for improving its access to climate finance. The paper highlights funding allocation disparities, in which climate-vulnerable and fragile states receive disproportionately low shares of climate finance. For instance, Yemen received a mere US$0.60 per capita in adaptation finance between 2015 and 2021, compared to over US$100 per capita in stable countries during the same period.
The paper draws lessons from other countries, including Rwanda, Somalia, and Bangladesh, which improved access by utilizing national climate funds, engaging in diplomatic advocacy, and implementing community-based data initiatives. Recommendations emphasize urgent actions for Yemen’s government, including establishing a multi-stakeholder climate task force and climate fund, finalizing Nationally Determined Contributions (NDCs), and enhancing regional cooperation. For international actors, reforms such as simplifying accreditation processes, prioritizing grants, and supporting climate diplomacy are critical.