Businesses call for peace: positive effects of the truce on business performance in Yemen

A new study by Yemeni business representatives highlights the positive effects of a 6-month truce on business performance and employment.

Press release | 10 January 2023

SANAA (ILO News) - A new study produced by the Federation of Yemen Chambers of Commerce and Industry (FYCCI) with the support of the ILO analyses the impact of a UN-sponsored truce on business operations in the country.

The study, titled The Impact of the Truce on the Activity of the Private Sector in Yemen, also presents the views of private sector leaders on how an extended truce could impact business performance in the future.

The study presents data collected in companies in four of Yemen’s governorates: Sana’a, Hadramout, Al-Hodeidah, and Taiz.

The study found that over 50 per cent of the surveyed companies registered positive changes in their business results during the six months of the truce which began in the spring of 2022, with sales increasing by 80 per cent and profitability by 63 per cent.

The study reports that the truce contributed to the overall improvement of the business environment, including a more reliable oil and electricity supply, availability of foreign currencies, a more stable exchange rate, and improved access to roads and ports.

Because of the short duration of the truce, the impact on employment has been limited, with only 10 per cent of the surveyed businesses reporting an increase in the number of full-time employees.

Most private sector establishments expect that renewing the truce for longer periods of time or turning the truce into a sustainable peace process in Yemen would enable the private sector to expand its activities and increase the demand for labour, the report notes.

FYCCI representatives said in a statement that peace is a necessity for Yemeni society and businesses to thrive, and that any upcoming truce between the parties to the conflict in Yemen should work with extreme urgency to achieve the following:
  1. Building peace and enhancing security and political stability to encourage national and foreign investments, while paying particular attention to building partnerships between the private sector, government agencies and donors in reconstruction efforts.
  2. Unifying economic institutions and ending double regulation and taxation practices.
  3. Prioritizing selected infrastructural projects including rehabilitating the public electricity grid, opening roads across the different Yemeni governorates and enabling the full operationalization of Yemeni airports and ports.
  4. Paying civil and military employees and retirees their salaries, which provide an important source of aggregate demand in the economy.