Yemen: Famine a Strong Possibility in 2017
According to the United Nations (UN), Yemen is currently experiencing the world’s largest food security emergency. After almost two years of war between the Yemeni Government, supported by a Saudi Arabian-led coalition of Arab states, and the Iranian-backed Houthi movement, Yemen’s economy has deteriorated. Months of unpaid salaries as a result of the on-going conflict is just one of many factors that now contribute to two-thirds of the Yemeni population being in desperate need of humanitarian aid. Wheat prices were already heightened due to inflation, but further turmoil within the banking sector has made the situation worse.
In August 2016, the Yemeni Government moved the country’s central bank from Sana’a, the country’s capital city, to the southern city of Aden. Sana’a is currently under the control of the armed Houthi movement, forcing the Saudi-backed government to relocate. Despite evacuating from the war-plagued capital city, the central bank has created further implications for the country’s trade finance. After Yemen’s exiled president, Abd Rabbuh Mansur Hadi, ordered the relocation of the country’s central bank away from Houthi rebels, he also appointed a new governor who declared that the central bank has no money. In December 2016, wheat exports to Yemen ceased due to a shutdown in trade finance and the central bank’s failure to ensure import guarantees. Yemeni importers have found that the only way to obtain foreign exchange is by way of currency smuggling, further restricting the availability of securing food imports.
The central bank’s inability to secure import guarantees has meant that local importers cannot ensure payment to foreign suppliers. Richard Stanforth, a humanitarian policy adviser with Oxfam, notes that the politicisation of the central bank and attempts by both warring sides to control the institution are pushing people to the brink of starvation. FDI reported on Yemen’s worsening food crisis in 2015. Since then, conditions have worsened. According to the UN’s Humanitarian Co-ordinator in Yemen, Jamie McGoldrick, wheat stocks are unlikely to last much beyond three months. It is also likely that other key food grains, such as rice and barley, are in an equally low supply. In August 2015, Yemen struggled to ensure a stable food supply after the bombing of the Hodeidah port in the Red Sea, destroying a key entry point for aid and commercial imports. Now, as a result of the central bank’s crisis, food insecurity has worsened for millions who are already suffering from acute malnutrition.
Some cargo ships have secured alternative methods around the payment freeze to enable wheat deliveries into Yemen. Given the small quantities of these imports, however, it is unlikely that the imported supplies will improve Yemen’s dire food shortage. According to the head of the European Union’s delegation to Yemen, Antonia Calvo, private sector food entities play a crucial role in ensuring Yemen’s food supply. It is crucial that the central bank regain liquidity to facilitate foreign food imports again. One possible way to stimulate this activity is by greater foreign investment that would stimulate economic activity. Given that donations of food, water and medical supplies have become a priority for international aid organisations, however, it is unlikely that the banking sector will be able to rely on outside assistance. From this perspective, it seems that political circumstances must improve before the country’s economy can support food imports. Wheat is a staple food product in Yemen; without the crop, famine for millions of Yemenis appears inevitable.
In January 2017, the World Bank announced it would provide two grants totalling US$450 million (just over $588 million) in emergency support for Yemen. Without further country donations, however, the threat of starvation remains severe. The UN has indicated that a further US$2 billion ($2.61 billion) is still required to perform humanitarian work in the country. Seven million people are currently experiencing severe food insecurity; it is crucial that foreign governments, international aid organisations and multi-national corporations intervene before Yemen becomes an even greater humanitarian disaster.