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Yemen Needs Aid That Helps

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Amidst violent protests in 2012, Abdu Rabu Mansur Hadi took over the Yemeni presidency from Ali Abdullah Saleh. The war did not officially begin until 2015 when Houthi rebels, who were Hadi sympathizers, took over the capital city of Sanaa. The conflict has now cost more than 10,000 lives, and put millions in danger of starvation.

Over 17 million people are now experiencing intense levels of food insecurity in Yemen, and an additional seven million require immediate food assistance. Despite these conditions, the United Nations (UN) has yet to declare a famine, because to qualify at least 20 percent of the area has to be suffering from a level five of food insecurity. The level five is when twenty percent of households suffer from a lack of food and other necessities, to the extent that starvation will occur even with the presence of aid.

Without successful intervention, the occurrence of a famine appears eminent. The current structure of aid is insufficient with numbers in need far outreaching those being reached. Aid in the form of direct food transfers only addresses Yemen’s symptoms of food insecurity while ignoring the causes.

Yemen’s food crisis is financially driven. Despite the civil war, markets are still functioning and providing food. All of the 22 regions have some level of functioning markets where food is still available, albeit at decreasing rates. As of March, all the commodities tracked by the World Food Programme (WFP) were available within each governorate. The lowest ranking for any commodity was “sparsely available,” and not one was ranked as “mostly not available”, or “not available. However, half of all families are purchasing food on credit because cash is sparse and communities have already “sold their assets, spent their savings and exhausted extended networks of support”.

Reports from the WFP claim that public salaries have not been paid since September, while the Crisis Group reports that some salaries are still being sporadically received in the south and to a lesser extent in the Houthi controlled north. The people reliant on public salaries or pensions for their livelihood make up 30 percent of the population. Combined with unemployment rates of almost sixteen percent, this situation creates financial barriers that block those in need from buying available food. Actual data for cash availability is unreported, but analyzing the country’s deteriorating central bank provides an indication of the financial situation.

In September 2016, President Hadi moved the central bank from the Houthi-controlled Sanaa to Aden. Prior to this, the bank’s main functions were paying public salaries throughout the country, protecting national currency values, and contributing to the import of basic commodities. All this was accomplished without income generated from exporting hydrocarbon, which prior to the conflict accounted for 70 percent of the government’s budget.

Once the bank was moved to Aden, asset liquidity began to fall. Hadi ordered roughly $640 million worth of riyals printed, in an attempt to relieve the cash shortages. Unfortunately, the disbursement was not transparent and asset liquidity remains a problem. Foreign investment could potentially flush cash into their economy, but it is currently at a $1.2 billion deficit, and the small amount of revenue the government receives is deposited into external accounts in Saudi Arabia instead of flowing into the county.

The good news is preliminary studies show market-based aid can work around currency shortages. Between 2010 and 2012 the International Food Policy Institute conducted a study in Yemen weighing the benefits of a direct food transfer program vs. a food voucher program. Food vouchers increased the Food Consumption Score (FCS), which measures diet diversity, by 9 percent compared to food aid. The score was influenced by the recipients’ consumption of higher quality food such as non-wheat cereals, animal products, and meat. In addition, the voucher program actually cost less, $6.28 less per disbursement, which means aid organizations can maximize the reach of existing resources.

These food vouchers were adopted by the WFP in 2016 to meet some of the unique circumstances of Yemen’s food insecurity. This program, called Commodity-Voucher through Traders’ network (CV-TN), provides a family of six with a voucher that purchases enough food to last a month. The voucher is redeemable in local markets, and the use of existing supply chains means aid is able to access those who were previously out of reach due to the conflict. In June 2016, the WFP was able to reach the Al Qahira area of the city of Taz for the first time as a result of this program. Currently, the program reaches 20 of the 22 governorates both in Houthi and government-controlled areas. These programs are successful because they address Yemen’s cash problem instead of assuming a food shortage.

While underutilized –– with a goal of reaching only one million people last year –– vouchers mark an important step towards a market-based approach to aid distribution. Even in the midst of a civil war, functioning markets within Yemen have maintained food supplies. Vouchers work within this structure and are superior to traditional commodity transfers. They meet the current need in a more efficient manner, while enabling the future success of societies by maintaining markets and protecting commerce so that societies can rebuild after the crisis. In order for aid to be effective, it needs to take the form of markets instead of handouts.

Tirzah Duren is a current Young Voice Advocate who resides in Oregon. She enjoys studying food security and exploring the beauty of capitalism.

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