Yemen Port Cities Development Program: Challenges

1
Yemen Port Cities Development Program
Challenges Successes to Date

• LED Thematic Group Seminar
• Enabling the Role of Cities Analytical
  Approaches and Operational Implications
• Stephen Karam
• Sr. Urban Economist
• Finance, Infrastructure Private Sector Group
• Middle East North Africa Region
• January 10, 2005

2
National Level Challenges

• Trade growth in MENA has been a meager 2
  compared to 8 annually worldwide, and MENA
  countries have the lowest non-oil export GDP
  ratios in the world.
• The End of the Rentier State Like many of its
  Gulf neighbors, Yemen is heavily dependent on its
  oil revenues (comprising over 50 of Yemens GDP
  today), but these are expected to be fully
  exhausted in less than 10 years, with virtually
  no FDI outside the oil sector.
• Regional and National Security remains a
  significant concern
• With high population growth, MENA countries need
  to create 5-6 million jobs each year just to keep
  pacewith decreasing prospects for emigration.
• Regional growth, distribution and migration
  patterns reveal a consolidation of a few major
  urban areas, mainly Sana'a and coastal areas-
  Aden, Mukallah and Hodeidah.
• The push from inland areas to coastal areas,
  where critical water aquifers are located, is
  likely to continue as rural Yemenis struggle to
  survive in the countrys arid climate.

3
Competitiveness Assessment

• Strategic Location of Yemen
• Comparative Advantage of its Port Cities
• Aden Trans-shipment and Trade
• Hodeidah Agro-industry
• Mukalla Fisheries industry
• Within Port Cities
• Backward and forward linkages (potential,
  existing, and barriers) between ports, airports,
  free zones, light industry and commercial areas,
  formal and informal sectors.

4
PCDP Bank Intervention

• PROJECT TYPE Adaptable Program Loan
• (with both vertical and horizontal elements)
• Duration 12 Years
• Credit amount US97 million
• Phases
• Phase I Strategic development, improving
  public/private interface (local reforms), and
  small investments in Aden clusters.
• Phase II National reforms on Customs and Ports
  and strategic investments in national assets in
  three major port cities.
• Phase III Implementation of reforms, private
  sector involvement in ports, and program rollout
  to small tertiary ports.

5
PCDP Approach

• The PCDP is assisting Yemens Port Cities to
• Develop a vision, a strategy and an action plan
  for local economic development
• Improve the performance of key Government
  agencies that interface with the private sector
  at the local level (customs, business licensing
  and registration, industrial land, public
  services)
• Revitalize port city business districts/clusters
  that are key to growth and employment generation
  and
• Take a gradual approach, supporting
  community-driven initiatives in neighborhoods as
  a key foundation stone for larger, more strategic
  public investments. Example Sira Fish Market

6
LED Market Access

• Example Sira Fish Market
• Goal Physically reinforce business linkages and
  provide greater market access for poor
• LED ME Based on Measurement of Change in
  Physical Space (Market Access) and Capacity/Usage
• Increase in avg daily number of fishsellers
• Increase in avg daily revenue of fishsellers
  (based on auctioneer yield
• Increase in sheltered/open market areas, planned
  to double and triple following completion of
  civil works
• Improve sanitary conditions, facilities and
  attractiveness of area to potential customers
• Provide better access to Sira Island
• Link a potential tourism site (Sira Castle) with
  a commercial point of sale

7
Repairs to Causeway and Market Area at Entry to
Sira Island (circled below) Secures Market Access
for Traditionally Poor Fishermen and Fish Sellars
to Adens Growing Tourism Market
8
Limited Shelter from the Sun and Run-down
Facilities deter customers
9
Improved Point of Sale Displays and Sanitary
Conditions Should Enhance Appeal of Siras Fish
Market to Customers
10
Overcrowding and inability of fish sellers to
access the market regularly hampers business and
incomes for the poor
11
Underutilized but well-located public land will
be more efficient in generating economic
opportunities/tax revenues following market
rehabilitation
12
New Public Sector Initiative has Spurred Private
Sector Investment
13
Proposed Rehabilitation of Sira Fish Market and
Island (involving new private sector initiative)
14
Other Achievements

• Govt Buy-Back of Poor Performing Concession at
  Aden Container Terminal -- New Management
  Contract Under Tender
• Govt Restructuring of Aden Free Zone Authority
• Newly established 3P Fund (Private-Public
  Partnership Fund) with private sector
  contributions
• Devolution of new private sector investment
  authorizations (regardless of amount) to port
  cities on pilot basis
• Devolution of city urban planning, including
  masterplan updating to the port cities on pilot
  basis

15
Remaining Challenges

• Mainly Institutional How to sustain LED
  strategy formulation and updating in weak
  institutional environment?
• Incentives City/ Governorate Level Staff are
  not incentivized given low compensation and
  expectation that they have second jobs

16
LED Going Forward

• Scaling up from small-scale, confidence-building
  measures to larger scale, higher impact
  interventions
• Data Shortages Data limitations at the city
  level is a key problem
• Measuring Impact How to gauge impact of larger
  scale investments given difficulty of controlling
  for external factors. How do we know what impact
  an LED approach has had?