Wael Zakout, the World Bank’s Country Manager in Yemen, speaks to the Yemen Times
The World Bank played a big role in raising the commitment ceiling and mobilizing regional and international support for the Friends of Yemen Conference, which took place in New York. Did the World Bank achieve its goals?
The donors' meeting, as well as the Friends of Yemen meeting, which was held in Riyadh and later on in New York, was a very successful story for the Yemeni people. We managed to raise $6.4 billion in pledges for Yemen in Riyadh, in addition to $1.5 billion in New York, and this is a great success.
The government requested $11.9 billion, and so we raised $7.9 billion for the transitional period, and we’re planning to have another donor meeting after the transitional period to raise an additional amount of money.
That’s not it. There are two other important aspects, which are not mentioned usually in the news, and I want to reiterate them. First is the international community came together to send a very important message to the Yemeni people, that they are not alone during this difficult time, and the entire international community is with the Yemeni people.
The second important element of the donors' meeting is an agreement between the donors and the government for a Mutual Accountablity Framework, which defines clear progress on economic policy reform by the government during a 1.5 year period, but also commitment by the international community to deliver the pledges that we promised the Yemeni people.
We’re going to work very closely with the government, civil society and the private sector to make sure that the money is delivered quickly, effectively and transparently. We’re also working with the government to support them in implementing a Mutual Accountability Framework.
There are very important economic policies the government has committed to do. We will be working with the government, as well as the other partners, to make sure the government has the resources but also the capacity to undertake these important reforms.
One economic analyst said there was indifference and ignorance from the government when it submitted an inappropriate plan for Yemen’s development priorities. Do you agree with him?
The government put a lot of effort into preparing the economic transitional plan. We provided comments on the plan. If you ask me whether the transitional plan is perfect for Yemen, I have my opinions, but I would not say that the government didn’t do a good job.
There are two things in my view that could be improved on in this plan. One is clear prioritization—the plan doesn’t have a clear priorities but the government established a ministerial committee to prioritize investment in programs.
The second part is the government needs to strengthen its capacity to implement their programs. In my conversations with the government, they have a great willingness to do the right thing, and they committed to undertaking reforms. The government needs to be strengthened so they are enabled to undertake these commitments.
We’re working with the government to strengthen its capacity to implement reform programs.
You said the World Bank has observed a government plan provided at the donors' meeting. How will you help the Yemeni government succeed in implementing a proper development program?
The government needs to show the Yemeni people that there is a difference. We clearly support the government's economic transition plan, and we will be working with the government to implement certain aspects of the plan. We will provide special support in terms of government capacity to implement its economic transitional plan. We will provide funding to generate jobs quickly because this is one of the major issues.
In summary, in three years we will be providing support, too. First, support will go to short-term things to restore services and creating jobs. Secondly, we will support intermediate-term to long-term things like health, education and infrastructure. Thirdly, with regard to building the capacity of the government, we will help to effectively implement the economic transitional plan.
There is concern over non-compliance of the donors regarding commitments made in previous donors meetings.
It’s a legitimate concern. We’re also concerned about this. Some countries promised and didn’t deliver on their promises. That’s why we will [have] a monitoring mechanism to monitor the fulfillment of the donors' commitments to Yemen. We will meet every three months, and we will use ‘name and shame’ and publish the names of countries and how much they spent out of their commitment. There are a lot of lessons that came out of the 2006 donors' meeting. We know that less than 25 percent of the money has reached Yemen.
Some economic analysts said that the amount of pledges was disappointing. Do you agree with this point?
I completely disagree with this. The donors' conference money raised for the transitional period, and the financing gap for the short time is $4.6 billion, and we know this is something that needs to be raised.
In fact, the international community was very generous, and we raised more than the intended target. I think those economists are not aware that we asked for pledges to cover the transitional period, and the idea is to have another donors' meeting after the successful completion of the transition period.
We’re hoping to have another donors' meeting in the summer or the fall of 2014.
If we compare the pledges that Yemen has received from the international community with that of other countries, it is a little bit higher than what Afghanistan has received.
This is very good news for Yemen. In my view, the problem is not in the money but in the ability of the government to absorb this money.
Are you confident the Yemeni government is capable of using this money properly to implement developmental projects needed for the transitional period?
This is probably one of the biggest challenges - the government's capacity to absorb this amount of the money to implement programs in a fast, effective and transparent way and also to deal with corruption. We’re working with the government to address many of these issues. I know the government is very committed and wants to do things differently because in 2006 the government was not able to absorb this large amount of money so we will provide all our support.
I don’t think the country will have another chance. The risk of failure will be huge if we fail to show the Yemeni people that things will improve, and that tomorrow will be better than yesterday. If the government doesn’t absorb this money or this money doesn’t reach normal Yemenis, the failure will be huge, not only for the Yemeni people, but also for the political process, for the region and for the world.
We understand, and I know the government understands the huge responsibility they have.
What are the World Bank’s biggest challenges when dealing with the Yemeni government?
Our relations with the Yemeni government are very strong. We have open and frank conversations on all aspects of development.
One of the major challenges for the World Bank operating in Yemen is the capacity of the government. The capacity of the government to implement large-scale programs is not strong.
There is another challenge facing the World Bank; it is the security situation that hasn't enabled us to travel outside Sana’a, where we can meet Yemeni people, civil society and governors. I, myself, have not [had the] chance yet to visit other governorates where I can interact with people there.
The third challenge is the corruption. It’s a very big problem, and we know if this is not addressed quickly, it will slow down the implementation of the programs because those who are involved in corruption usually use delay tactics.
Many people know that all systems of investigation of ministers and those above require the approval of two-thirds of Parliament or the president’s approval, and these systems act like a license for high-level officials to be involved in corruption so that nobody will touch them.
The government is clearly very committed. They are going to change this so nobody is above the law, and anybody who is involved in corruption will be investigated. Also, the government agreed on a Mutual Accountability Framework to establish a special court and train judges to deal with corruption cases to accelerate the prosecution of those who are involved in corruption.
Do you see serious intentions from the government to fight corruption?
Since talking to the Prime Minister, the Minister of Planning, the Minister of Finance and other ministers, I believe they are very committed to doing this. The question is whether they have the capacity to do it quickly, and this is something we’re working on with them.
We always say will isn’t enough. We need to establish a system, and we need to have laws, regulations and institutions, and without this, even with the strongest commitments from the President or the Prime Minister, we know it will not happen.
Right now, I can tell you that the system isn’t there, even if the Prime Minister said he will prosecute everybody involved in corruption. They don’t have the system, and there is [an] anti-corruption commission, but their mandate is limited. We need to work together with the government to establish a comprehensive system to deal with corruption issues.
How are the current World Bank projects in Yemen?
We have about 18ongoing projects the World Bank is financing right now in Yemen. Most of these projects are going well. Social funds for development are going well. Public works' projects are going well. We have programs in basic education and higher education. We have programs in water and health.
Regarding education projects, we will go beyond building schools, and we will focus on the quality of education because this is the area where the country has not made progress in over the last few years. Although, I think they made progress in the enrollment, and there is a higher percentage of children in Yemeni schools.
There are projects that are not going well like vocational training and power projects. Unfortunately, the two power projects we’re financing are not moving, and we’re discussing with the government what to do with them.
The government is incompetent in solving the power problems. In your view, what is the proper solution for the power problem?
The power problem in Yemen is multiple. Unless the government solves the political and security issues, they will not be solved.
There is a structural aspect in this problem. The power generation capacity in Yemen is much smaller than what the country needs. The government's ability to build power stations using their money is very limited because the government has many other obligations in health, education, public services and infrastructure and so on. They don’t have the money to invest in building a big power station.
What many countries have done is to use partnerships with the private sector to enable the private sector to build power stations.
Here, the private sector will not come unless there are two things, security and a power structure in general. Many countries have restructured their power sector, including a separation between generation, distribution and transmission.
Citizens also have an obligation. They should pay for electricity.
Let’s talk about unemployment in Yemen. What are the steps the government should take to solve it? And is employing many people in the public sector considered a solution?
Unfortunately not. The government has limited resources to employ so many people. The government's ability to employ more people is very limited because the more they employ, the less money they will have to pay salaries. Secondly, they will have little money to invest in health, education and other services that the community needs.
The solution for unemployment in Yemen is a private sector, and in order to make the private sector thrive and grow, the government has to create the right policies for the private sector like a taxation policy, access to land and an easing of business registration.
The government needs to focus on education because the human capability is very important for unemployment. They should also focus on infrastructure because you cannot have big factories coming to Yemen without securing power, water and transport.
How do you evaluate the government’s steps in officially employing tens of thousands of Yemenis in the past year?
I think it’s like a cancer patient to whom we give an aspirin. I don’t think it’s the right solution for the problem. We recognize that a lot of people are out of jobs, and the government wants to ease the pain.
There are two ways to do it. One thing is to employ them directly with the government, and the other way is to undertake the necessary reforms so they can get the private sector thriving and growing to employ them, and this step will take time.
What’s the role of the World Bank in encouraging the small private sector and protecting them from bankruptcy?
Unfortunately, we do not have tools in every aspect. With regard to small and medium enterprises—we don’t have programs to help them. We know during the crisis, they faced a lot of problems - credit markets have frozen and businesses have shrunk.
Let’s talk about qat. What do you think of the problem of expanding qat farming, especially considering Sana’a's basin is about to be drained?
Qat is the biggest problem Yemen is facing. I know it’s part of the culture, and I respect that, but the way I see qat as a problem is that most people chew qat almost the whole day, which takes a good part of their income, especially that of poor people. Instead of buying qat, they should spend money on nutrition and education for their children.
The second problem is that qat takes a good percentage of fertile land, which could actually be used to grow fruits, vegetables and healthy foods for the population.
Thirdly, it takes somewhere in the range of 40-50 percent of the water in or around Sana’a so it’s a multiple problem.
On the other hand, lots of people do not look at it as a cultural habit but as income. There are a lot of people living on qat. There are farmers and traders.
If you balance the positives and the negatives of these things, the government needs to deal with it in a very serious way. I truly believe that the government needs to deal with the qat issue to resolve it, but at the same time, they need to sustain a living standard for those who are involved.
There are a lot of examples around the world. North Carolina, for example, in the United States, used to be a tobacco state, and the American government and community at the time, decided to say that it is not right. They took a long-term approach, which helped tobacco farmers to do something else, but at the same time, they made sure that those who were involved in the tobacco trade were not affected.
It's a long-term agenda that require lots of education, lots of governmental policy and incentive to convert those farmers who are working on qat to grow alternative crops, which will generate the same income but reserve water.
Something needs to be dealt with, and things will not be solved overnight. It will take time, but also require imagination, good thinking and strategy.
I think the government can prevent civil servants from using qat during their duty. We see a lot of policemen and soldiers using qat while on duty. I think this is something the government can do something about and should do it.
You called on government officials to solve the qat problem while most of them are qat addicts …
As I mentioned earlier, it's a cultural habit, but the government needs to recognize the negative health, as well as economic aspects of qat. If they're going to chew qat once a week, the health and economic impact of qat will most likely be small.
I do hope the government takes it seriously.
You've talked a lot about the water running out in Sana’a’s basin. What are the steps the government should take to deal with this?
There is something that the government can do and should do it very quickly. It should prevent illegal drilling of water wells. There is a lot of well drilling going on in Sana'a's basin.
Unless the government seriously takes necessary action to close down all of these illegal wells, Sana'a will face a very serious water shortage in the coming years.
How do you see the future of Yemen in the coming two years?
I'm very optimistic in nature. I came to Sana'a in the August of 2011 and saw the armies facing each other. The country was very close to a civil war.
Now, there is great progress. You have the GCC Agreement. The National Dialogue is happening. You have had a presidential election; you've had the National Conciliation Government and you've had you've donors' meeting.
I think we're on the right track. I'm very optimistic about the future of Yemen.