Top donors to Yemen

Yemen is one of the world’s least developed countries. Ranking 154th out of the 187 countries listed in the Human Development Index, it is also the Arab region’s poorest nation. Recurrent power struggles have bled the country dry. Prior to the latest escalation of violence — which took a bloody turn when so-called Houthi rebels took control of the capital Sanaa — Yemen was already struggling with myriad challenges. More than half of the population was dependent on humanitarian assistance, while over 10 million suffered from malnutrition. Further challenges included an acute water crisis, a weak education system and an economy in tatters. But in spite of the sheer magnitude of its problems, Yemen has received comparatively little aid from the international community. Based on official development assistance figures published by the Organization for Economic Cooperation and Development, Devex found that donor support for Yemen barely exceeded $6 billion in the past decade. However, there are also more encouraging trends at play: donor contributions are on the rise, growing significantly in 2012 and 2013. Further analysis of OECD data reveals that in recent years, only a limited yet diversified set of donors has provided consistent, sizable aid funding to Yemen. This includes financial institutions like the World Bank and the Arab Fund for Economic and Social Development, multilaterals such as the European Union, and donor countries like the United States, the United Kingdom, the United Arab Emirates, the Netherlands, Germany, Sweden and Japan. However, it’s important to note that Yemen receives funds that are not captured by the OECD’s credit reporting system. For example, Saudi Arabia is thought to be the country’s most important economic benefactor, and has recently pledged $274 million in humanitarian aid. When the latest cycle of violence subsides, Yemen will be left with an even grimmer reality. In a matter of weeks, violence has killed and displaced hundreds, and a lack of fuel and power has triggered a complete breakdown in basic water and sanitation services. Such a dire situation has prompted the United Nations to call for $273.7 million to respond to some of the most urgent humanitarian needs in the next three months. And as Yemen looks to the future for brighter days, Devex takes a closer look at its top five donors in 2013. World Bank ($208.9 million) The World Bank’s lending arm for the world’s poorest nations — the International Development Association — is a long-standing major donor to Yemen, disbursing $208.9 million worth of interest-free credits and grants to the impoverished country in 2013 alone. Activities carried out by the D.C.-based financial institution have a strong social focus. In 2013, it invested $97.4 million — or almost half of its budget for that year — into multisector aid for basic social services. A flagship initiative of the World Bank in Yemen is the Social Fund for Development, a national poverty reduction and social protection program established in 1997 with the international community’s support. Over time, the program has managed to attract funds from Western and Arab donors alike — including the U.K.’s Department for International Development, Germany’s GIZ and KfW, the EU, the Arab Fund and the UAE. Through its community-driven approach, the SFD has been touted by proponents as particularly effective and resilient in the delivery of vital services to the poor, overcoming geographical remoteness and political instability. But others note that such large-scale financing for a parallel public organization — evaluated at over $1 billion in total — diverted attention away from the need to strengthen the central government’s core functions. United States ($190.4 million) After nearly a decade of ever-growing military involvement in Yemen, the U.S. asserted its position as the Arab nation’s top bilateral aid donor for the second year in a row. In 2013, official development assistance from the Obama administration reached the unprecedented amount of $190.4 million. OECD data shows that before 2011, the U.S. didn’t even feature among Yemen’s leading donors. The recent shift, some argue, is illustrative of how political turmoil in the midst of the Arab Spring spurred greater U.S. support to the country. Increased assistance from Washington to Sanaa predominantly focused on short-term humanitarian results rather than long-term development goals. Between 2011 and 2013, U.S. emergency relief to Yemen nearly quadrupled, jumping from $32.1 million to $116.6 million. This has led the U.S. to become the single-largest contributor of humanitarian aid to Yemen on record, with its assistance way ahead of the amount contributed by the European Commission — the next largest donor. Of its spending on longer-term development programs, the U.S. focused the bulk on government ($36.7 million), and particularly on supporting decentralization and elections. This is proof of the United States’ burgeoning efforts to help the transitional government defuse internal tensions revolving around governance. United Kingdom ($148.9 million) In 2013, the United Kingdom disbursed $148.9 million worth of aid to Yemen — a sum that hoisted it to third place among the country’s top donors. Since initiating the Friends of Yemen conference — a group of states, regional groups and international organizations seeking to galvanize international support for Yemen — the U.K. has taken on an increasingly active role in the Arab state’s donor landscape. In 2011, the British government announced its plan to allocate 275 million pounds ($431.6 million) to Yemen by 2015. Operational constraints have forced the U.K. to concentrate its aid money on the Yemeni population’s most basic needs. In 2013, DfID set aside $57 million and $59.8 million for emergency relief and social welfare services, respectively. But amid the realization that Yemen’s chronic humanitarian crisis is in need of a shift in approach, DfID has been experimenting with new ways of delivering urgent assistance — notably by piloting a multiyear program for humanitarian aid. Like the U.S., U.K. aid engagement in Yemen is closely linked to global security considerations. As a result, rising political tensions since 2011 have prompted DfiD to start directing some funding to governance and reform programs. In 2013, for instance, the British government provided $8.5 million in support to the public sector. Germany ($124.1 million) Engaged in Yemen for more than 40 years, Germany is often depicted as the country’s most trusted Western donor. In 2013, it handed out $124.1 million worth of ODA to Sanaa — its most generous aid envelope yet. Thanks to long-standing relationships with local officials, Germany has taken the lead in improving Yemen’s social infrastructure and services. In 2013 alone, German grants amounted to about 30 percent ($103.1 million) of total aid to the sector. Allocating $34.2 million to education, $33.2 million to health and $21.1 million to the water sector in 2013, Germany’s aid approach in Yemen appears particularly well-balanced. Further, technical assistance is widely perceived as one of Germany’s biggest strengths, especially with regard to water policies and strategies — an area where Yemen is in dire need of capacity building. Over time, Germany has gradually decreased funding for humanitarian relief operations. This should be understood in the context of enhanced humanitarian support from other prominent donors, including the U.S. and the EU. Arab Fund for Economic and Social Development ($78.6 million) Despite being less-known, the Arab Fund ranked fifth among Yemen’s top donors in 2013, disbursing $78.6 million. As a pan-Arab development finance institution, the Arab Fund supports projects that are in line with member countries’ development plans and programs. In Yemen, this has translated into grants and expertise heavily focused on land transport ($28.7 million) and social welfare services ($18.9 million). Most notably, the Arab Fund is one of the many supporters of the SFD, giving out a $18.9 million package in 2013. In its 30 years of existence, the Arab Fund has extended more loans than grants. But along with Egypt, Lebanon, Palestine and Sudan, Yemen is one of its largest grant recipients — both in volume and in number. 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