Yemen

The March 10 agreement between Saudi Arabia and Iran to re-establish diplomatic relations is a positive step in the Yemen peace process and is expected to facilitate associated negotiations in the near term. Though many difficult issues remain to be negotiated, the March 20 prisoner exchange agreement between the parties to the conflict in Yemen is an indicator of successful dialogue. In March, levels of conflict remained largely unchanged in the main frontline areas of Al Dhale’e, Al Hudaydah, and Taizz. However, hostilities surged in Harib district of southern Marib. From March 1 to 25, around 445 households were newly displaced, nearly half of whom were displaced from Harib district of Marib. Overall, however, the number displaced in March to date is 55 percent less than in the same period of last year, according to IOM data.

With the beginning of the holy month of Ramadan on March 21, increased social support in the form of food and zakat (gifts) is expected to slightly improve food access and reduce consumption gaps for many poor households. However, given the high number of food insecure people and reduced resources among middle-income and better-off households due to years of poor economic conditions and high food prices, the ability of many middle-income and better-off households to provide zakat is expected to be constrained relative to the pre-conflict period. Additionally, food prices typically increase seasonally around this time of year due to high demand during Ramadan, further constraining purchasing power for all wealth groups. 

According to WFP, distributions of emergency food assistance continue to occur approximately once every six months in most areas, with most distributions expected to be equivalent to around 65 percent of households’ minimum monthly energy requirements. As such, emergency food assistance is expected to be covering around 38 percent of beneficiary households’ minimum energy requirements,1 though assistance is also commonly shared with non-beneficiaries. Given limited income-earning opportunities and above-average food prices, many poor households will likely continue facing food consumption gaps despite assistance, with Crisis (IPC Phase 3) and Crisis! (IPC Phase 3!) outcomes expected to persist in most areas. Hajjah and Marib are of particular concern given large displaced populations and the impacts of conflict. Emergency (IPC Phase 4) outcomes are expected in Marib throughout the projection period, and in Hajjah during the remainder of the off-season for cereal production before improvement to Crisis! (IPC Phase 3!) occurs around April.

In late 2022, oil exports from territory controlled by the internationally-recognized government (IRG) came to a complete halt due to the threat of drone strikes targeting oil infrastructure by the Sana’a-based authorities (SBA). While some 2,500 barrels of crude oil per day are now reportedly being sent overland from Shabwah to power stations in Aden, in early March SBA authorities threatened to target the trucks if this continues. Given the shortfalls in IRG revenue and high electricity demands during Ramadan and the summer months, Aden and other IRG areas are likely to increasingly experience blackouts as power stations run out of fuel due to disruptions in supply, as support from the current Saudi fuel grant is not sufficient to meet needs. 

On February 19, the IRG Ministry of Agriculture, Irrigation, and Fisheries Wealth issued a mandate to stop all exports of fish and marine products. As a result, fish prices dropped in many markets across IRG-controlled areas. In Aden, for example, average monthly retail prices of Bagha fish (purchased largely by poor households) in February 2023 declined by 4 percent compared to the previous month, though prices remained 25 percent higher than the same time last year. As such, benefits to consumers of fish due to the lower prices have been only marginal thus far. As a result of the decision, many fishermen and daily wage earners that work along the marketing chain have experienced income losses, primarily due to the loss of export markets.

In IRG-controlled areas, the ongoing loss of oil export revenue continues to worsen the overall economic situation and increase pressure on the IRG’s ability to fulfill its obligations. Despite that, the Aden-based Central Bank of Yemen continues to conduct weekly auctions of foreign currency. From January to February 2023, the value of the local currency against the USD on the parallel market in Aden city remained stable at around 1,254 YER/USD, according to data from FAO. This is 11 percent higher than February 2022 (representing a loss of value). Meanwhile, the value of the local currency in Sana’a city has remained generally stable for more than two years at around 550 to 600 YER/USD. The value in February 2023 was 549 YER/USD, 9 percent lower than in February 2022 (representing a gain in value).