PEST Analysis of Yemen

Political environment
Summary
After the unification of south & north Yemen in 1990, Republic
of Yemen was formed. Following this, President became head of
state of five member presidential council that was formed. The
House of representatives was brought into place by 1991
constitution. In 1994 presidential council got abolished and
directly elected president was elected. In 2000 term of office
was increased for house of representatives and the president.
Later Abd Rabuh became president in 2014.
The country was filled with contentions and turmoil. Majorly the
conflict was happening between the President forces and Zaidi
rebels known as Houthis.
After fighting six wars Houthis established their control in 2014.
They took control of the capital by end of 2014. In early 2015,
Houthis pressurized President to resign. They created
commission of 18 member to rule over country. Again next
month, Hadi withdrew his resignation. Now he worked on and
formed interim govt. All actions by Houthis were made
unconstitutional. Then in March, he fled. Saudi Arabia launched
airstrikes and restored former govt.
Structure and policies
Key policies
It is highly vulnerable economy as it is dependent on oil. It is
poorest in the region. Poverty is increasing. Its population is
growing at quite high rate. Food insecurity is quite high. There
is high unemployment. The govt. has taken steps to remove
fuel subsidies and improve civil service reform.

Performance
Governance indicators
Yemen is low at voice and accountability. It shows that less
number of people can participate in choosing government. It
has indicates low freedom of expression, association, and its
availability. Though it was placed higher than Saudi Arabia in
the index

Technological Environment
Summary
Literacy rate was 63% in 2011. It provides free compulsory
education. From age 6 to 15. But the attendance is not
compulsory. The NBEDS aims to educate 95% of children and
decrease gap of gender.
Its telecom industry is not so developed. Mobile penetration is
also low at 68.8 percent. Mobile and internet penetration is
lesser. Though growing steadily.

Evolution
The govt. tried to increase competition in mobile telephone
sector since 2001. TeleYemen tried to cover cities Aden, Sanaa
and Taiz in 1992. In 2001, it awarded Sabaphone 15 year

licence to give mobile services. In 2005b and 2006

subsequently China Mobile and some Yemeni investors was
awarded another contract.

Structure and Policies

There is no Yemeni law on Internet. The laws related to crimes
governance, protection of expression or regulation of internet
service. The only thing is that National Dialogue Centre is trying
to come up with policies related to technology sector.

Future Trends in Yemen

The government has recently increased it budget for
Information and Communication technology. But considering
the increase, its not sufficient to develop and improve
mechanisms to collect, analyse and exchange the agricultural
information that are relevant and useful. The major problem lies
in lack of clear policy related to recruitment of public officials.

SOCIAL LANDSCAPE
Summary
With 26 million population in 2014, according to CIA, it has
Arabs as major group. But Afro-Arabs, Europeans and Arabs are
also part of country ethnic groups. Sunni and Shia Muslims are
major religious group. The infant-mortality rate is high,
sanitation facilities are not adequate and immunization is also
low against certain diseases. Donors and bank is trying to
improve anti poverty guidelines. Even institutes like IFAD, FDA
have tried to contribute to anti poverty policies of rural areas in

a lot of ways.

Demographic composition
About 56% of population is between 15-64 as of 2015. It shows
that Yemen has young and working population. 2.5 % of
population is above 65. The birth rate is 31 per 1000. Sex ratio
is 1.05 which is good enough.

Religious composition
Shia and Sunni Muslims constitutes majority of population.
Although few Hindu, Christian and Jews groups are also there.
Education
Educational sector development did not take place though
many govt. initiatives was taken. Education was made
mandatory and free still lower literacy rate. The government
also removed fees and distributed books. Still literacy rate
remained low at 66.2 percent.

Healthcare
Its health sector has inadequate financial resources, inefficient
management, and corruption too. In 1998, a health reform
strategy was formed to provide health coverage through
primary health care expansion, drugs at reduced rates etc. The
government tried to decentralize decision making for the
healthcare sector by granting various powers to districts.
Although there was funding by foreign govt. and organizations,
the sector remain plagued. Not enough developments could
take place. Also, low coverage of public services led to

increased leadership of private sector in this field and hence

price was increased making it unaffordable to poor households.

Performance
Healthcare
By the estimates of World Bank, Health care expenditure was
5.4% of GDP in 2013 and 5.5% in 2012. The public expenditure
was 1.45% of GDP.

Education

By estimates of world bank, spending of public on education

was 4.56% of GDP in 2009.

Income distribution
By estimates of UNDP in 2014, HDI of country was ranked at
154th out of 188. The countrys gini coefficient(which measures
income inequality) was 3.6 in 2006.

ECONOMIC LANDSCAPE
Yemen
Summary
The natural gas reserves of Yemen is quite high. Its first plant
started in 2009. The countrys agriculture is very diverse. Crops
such as sorghum dominate. Many fruits and cotton are grown.
Though mangoes being highly valued. It is a very
underdeveloped country in Arab world. It has very low
employment rate that is 35 %. It has a young population,
dwindling resources. It has very less oil reserves. Its economy
depends on oil taxes.

Its oil reserves will deplete by 2017. A big problem is

cultivation of Qat, a narcotic plant and has 40 percent of water
drawn from Sana river and its rising. It can cause a huge
problem as it takes much more water to harvest.

The crops are drying in Sanas basin area. A lot of crops got
displaced. Because of which prices of food is rising at alarming
rate. Due to which additional 6 percent of population went into
poverty in 2008 alone. The government has made efforts to
replace Qat with coffee plantations. Corruption is quite high in
local regions. It has driven away regional and international
funds. FDI is mostly is hydrocarbon sector.
The country had low growth in early 1990s.The government
supported Iraq during first gulf war which led to fall in foreign
aid. Also decreased agriculture activities and industrial output
crippled the economy. The economy recovered due to high oil
production for two years but again plummeted with put break
of civil war in 1994.
They financed their deficit by borrowings from banks. Its fiscal
health improved in 2001 because of structural reforms. But
economic performance was still poor due to stagnant
agriculture growth and low oil production.

Fall in oil prices led to economic crisis and fiscal deficit.

Economic growth was around 3.5 percent in 2007-10. But due
to protests and decreased output, economy contracted by 15%.
In 2012, the economy improved, and started growing at 2.4 %.
And in 2013 economy grew by 3.2%
The economy grew by 3.5 % in 2014. The service and
industrial sector constituted major part of GDP. Agricultural
sector did not contribute much to GDP. It was mainly due to
underdeveloped irrigation and technology industry. There is
high unemployment in the country which is a v

The economy is estimated to have grown by 3.53% in 2014.

The services and industrial sectors are the chief contributors to
GDP. Crude oil and natural gas production are the chief
industrial activities. The agricultural sector is the lowest
contributor to GDP and continues to languish due to inadequate

irrigational facilities and low technology intensity. A high

unemployment rate remains a huge challenge for the
government.

SWOT analysis -Yemen :

1-Strength:

It is a fast growing economy

Yemen has started getting foreign aids
Many international organizations are fighting
poverty in the country.
There has been stability in terrorism as it has
partnered with USA
They will get a full membership of GCC soon.
Newly discovered oil reserves
Relationship with international community has
improved
There is improvement in all economic sectors.

2- Weakness:
The borders are long with neighboring countries
The population is not evenly distributed to its geography.
Distribution channels are dominated by wholesalers.
The cost of operations are quite high due to geographical nature

3- Opportunity:

It has long geographical area.

population is 25,000,000
The income rate is improving
Proven oil reserves
Encouragement of investment
health professionals should be trained properly
Many MNCs exist.
Implement social and economic reform.
Diseases are seasonal
4- Threats:
There is a lot of smuggling
Government has no control over prices
It is an open market
the generic companies use unethical methods
1.

1. IRAQ STRENGTH

1 OIL
2 LITERACY RATE MORE THAN 75%WHICH IS THE VERY IMPORTANT THING
IN MIDDLE EAST HAVING GOOD LITERACY RATE INCLUDED 84%MALE AND
65%FEMALE
3 NATURAL GAS AND SULPHUR

WEAKNESS
1 SECTARIAN CLASHES BETWEEN SUNNI AND SHIA
2 YET NOT STRONG POLITICAL SYSTEM
3 CORRUPTION ON LARGE SCALE IN OIL FIELD

OPPERTUNITIES
1 ESTABLISH GOOD RELATION WITH MUSLIM COUNTRIES
2 REACH THE AMERICAN AND EUROPIAN MARKETS THREATS

Strengths
-monetary assistance provided
Weaknesses
-future profitability
-competitive market
-cost structure

Opportunities
-growth rates and profitability
-new markets
-growing economy
-growing demand
-global markets
-income level is at a constant increase
-venture capital

Threats
-external business risks
-increasing rates of interest
-cash flow
-tax changes