The Second Yemeni Economic Conference
Sana'a  18 - 20 April, 1998

Abstract 21

For the last three years, since the beginning of 1995, the Republic of Yemen has been witnessing an uninterrupted activity towards financial, monetary and structural reforms. These reforms are incorporated in consecutive and gradual programs prepared in collaboration with the International Monetary Fund and the World Bank, and are funded by both institutions through several lines of credit.

Despite the fact that these reforms have been able to accomplish relative progress in the economic situation, nevertheless, they have also dragged some negative implications on incomes and the livelihood of the poor and low income groups. The social safety net which has been proposed as an alternative to the more costly comprehensive set of government social policies is seen to be insufficient. Moreover, there is no national strategy to eradicate poverty, but only some inefficient social policies that are supposed to enhance social development and ensure social protection. These policies should be put to function in conjunction with growth policies.

This paper attempts to examine how effective the social safety net is in securing real social protection to impoverished groups, and in insulating other regions and social groups from the dangers of poverty. The paper also looks at the social safety net from different angles relating to: its objectives, the time period it covers, the necessary finance, and its practical results. As a consequence, the following conclusions are reached:

Humble targets are set for the net, mainly because they are based on the 1995 poverty estimates which are much less than those reflecting the current poverty situation. Also, the program is limited, since it aims at alleviating poverty and not protecting against it; and on poverty resulting from the economic reforms and not all the poor deserving protection.

The social safety net is given a temporary status with a limited time period that should not exceed five years.

Available finance is limited, given the various programs and the diversity of the objectives of each program such as infrastructure, creating job opportunities, etc.

Covered groups are limited since the means and tools are concentrated in only three programs: the Social Care Fund, the Public Works Project, and the Social Development Fund.

Absence of integration, since the operation of the safety net programs does not take place parallel to the implementation of the reform program. Also, although three years of the program have already lapsed, only two of the three social programs are currently operational.

Lack of accurate poverty indicators leads to difficulty in implementing a criteria to target eligible cases. Moreover, in many cases, the social status and political influence have a decisive role in directing those services.

One of the most dangerous loopholes is the attempt to abolish subsidies completely by the end of 1999, and to put in place a cash compensation scheme for those living below the subsistence level. Such policy would be detrimental to the majority of the population and in particular to the rural population, as the rural poor account for 81% of the total poor. Moreover, with the absence of programs directed to support agricultural development along with underestimated poverty indicators, these policies would do more harm than good.

Finally, the paper concludes by proposing some recommendations regarding the strategy and the polices to be followed in order to alleviate poverty, secure social protection, and enhance the role of the social safety net.