At the end of March 2015 the escalation of the underlying conflict in Yemen has significantly eroded the recovery gains made since 2012, pushing the already fragile country into an acute humanitarian crisis of unprecedented scale. According to the Humanitarian Needs Overview 2016, humanitarian partners now estimate that 18.7 million people require some kind of humanitarian assistance to meet their basic needs or protect their fundamental rights.
The crisis has exacerbated an already difficult complex situation. The 2015 Human Development Report (HDR) 2015 ranks Yemen 160th among 188 countries and territories1 ; which is a setback from the 154th rank in 2014. An average of 40 per cent of the population are multi-dimensionally poor, with around 19.4 percent being severely poor. The World Bank estimates that the poverty level has doubled nationally from an average of 34.1 to 62 per cent2 . Poverty was already on an increasing trend between 2005 and 2014, but sharply deteriorated in 20153 . In 2015, the economy of Yemen contracted by about 28 per cent of Gross Domestic Product (GDP). The decline of the hydrocarbon industry contributed further to the deterioration of the economic environment in Yemen. The latest decision by the Government to move the Yemeni Central Bank from Sana’a to Aden brings the economy at the forefront of the conflict and will further deteriorate the financial situation, particularly in Houthi and GPC-controlled parts of Yemen. The economic war of attrition risks to cause the complete collapse of basic service delivery and push the country to the brink of a famine. A case in point is the health sector. According to WHO, only 37% of hospitals remain fully functional. Institutional capacities built up over decades are eroded on daily basis making recovery and eventual reconstruction more difficult.
The escalation of the conflict, is seemingly affecting progresses made in the past two decades in terms of human development. The Preliminary Damages and Needs Assessment estimates the 1 Human Development Report 2015, UNDP. 2 Country Engagement Note for the Republic of Yemen for the Period FY17-FY18, The International Development Association, International Finance Corporation and Multilateral investment Guarantee Agency, The World Bang Group, June 2016, P. 6 3 Ibid. 3 cost of the conflict at a (partial) total of USD19 B (USD7 B in damages and USD12 B in losses)4 . Most of poverty alleviation projects programs associated with Social Welfare Funds (SWF), Social Fund for Development (SFD), its Labor-Intensive Work Program (LIWP)/Cash for Work (CFW) program and the Public Works Program (PWP) were suspended due to the conflict5 . The suspension of these programs due to lack of funding resulting from the conflict6 left millions of people without social protection and threw million others benefiting from associated employment and income generation schemes without income. The DNA also reports that 40 per cent of full time and 38 per cent of part time employees were laid off from manufacturing establishments7 . The effects of the conflict have been catastrophic to the private sector. The UNDP Business Survey Report estimates that over a quarter of all firms suspended their operations, including 35 per cent of the service sector, 29 per cent the industrial enterprises and 20 per cent of trading companies8 . This swelled further the already critical unemployment rate in the country. Combined with effects of conflicts in sectors (social, agriculture, fishery and livestock, trade and industry, banking system, etc.) worsened the humanitarian crisis.