Transforming Yemen’s Economy Through Remittances
During better times, this remittance agency would be crowded.
Remittances have emerged as a lifeline for the Yemeni economy, providing essential support across various sectors. Ensuring a steady flow of remittances and encouraging Yemeni expatriates to increase their contributions are crucial objectives for all stakeholders. This focus is especially critical amidst the ongoing conflict, deteriorating economic conditions, and worsening humanitarian crisis.
The importance of remittances became even more apparent after the United States deferred sanctions on the Ansar Allah group, citing concerns about their potential humanitarian impact. This decision underscored Yemen's reliance on global financial links to mitigate the impact of the conflict and directly affects vulnerable and marginalized citizens who have had no stake in the ongoing, absurd conflict since 2015.
This crisis, coupled with inflation, has led to a brain drain of young, skilled workers to more economically stable areas, severely weakening sectors such as food production, construction, and contracting—sectors that rely heavily on remittances from Yemeni expatriates, particularly those in the United States, Saudi Arabia, and the Gulf states.
According to reports from the International Organization for Migration (IOM) and Saudi authorities, the number of Yemeni expatriates in Saudi Arabia is expected to exceed 2.2 million by 2024, with two-thirds of these individuals regularly sending money home. In the United States, about 70,000 Yemenis have settled, about 90% of whom are unaccompanied men who work, save, and support their families back home.
The Cash Consortium of Yemen (CCY) supported by international organizations and conducting studies on the humanitarian impact of remittances, reported that the main destinations for Yemeni remittances include Arab countries such as the United Arab Emirates, Oman, Saudi Arabia, and Egypt, as well as Western countries such as the United States, Canada, Germany, France, and the United Kingdom. The latest data issued by the CCY indicates that remittances declined at the beginning of the year, with ongoing analyses suggesting that this trend will continue, as confirmed by statements by many moneychangers in various regions.
Closed remittance agencies due to a lack of customers.
Hamoud, a beneficiary of remittances from his brother in America, highlights the challenges faced by Yemenis who rely on international remittances. He says that money changers often refuse to deliver remittances in US dollars, citing a lack of liquidity at the central bank. This forces beneficiaries to exchange their remittances for Yemeni riyals and then buy dollars at a higher price, which he says results in financial losses.
Hamoud also adds that high inflation in Yemen has eroded the value of remittances, making it difficult for families to maintain a decent standard of living. He says many expatriates have responded by reducing or stopping their remittances altogether. This in turn has had a significant impact on the Yemeni real estate market, which has been largely stagnant since early 2024.
The challenges faced by Hamoud and other Yemenis who receive remittances underscore the urgent need for policies and reforms to address Yemen’s economic crisis. Increasing the availability of foreign exchange, improving the efficiency of money transfer services, and implementing measures to mitigate the impact of inflation are crucial steps towards stabilizing the economy and improving the lives of Yemenis.
