Yemen Monitor / Newsroom:
Small enterprises in Yemen are witnessing a severe collapse due to intensifying banking and economic crises amidst an escalating conflict between different regions, pushing many to the brink of bankruptcy.
Al-Araby Al-Jadeed newspaper indicated that these enterprises are facing “near-bankruptcy” after decisions regarding the relocation of bank operation centers—and the subsequent repercussions—placed them at the “intersection” of multiple crises, at a time when customs procedures have severely tightened the noose around them.
According to experts, these small and medium-sized enterprises (SMEs) were directly affected by a drop in liquidity and the rise of financing risks to unprecedented levels, stripping them of the capacity to operate and hire. Economic sources stated that nearly 40% of these institutions have reached the stages of closure and bankruptcy, particularly those with capital ranging between $50,000 and $100,000, in addition to widespread and heavy losses caused by customs issues and banking tensions.
In a statement to Al-Araby Al-Jadeed, economic expert Ahmed Shamakh confirmed that the banking sector is suffering from a clear state of collapse that has negatively impacted financing services, specifically the financing of small enterprises, which represent a fundamental economic barrier against poverty and unemployment in light of the continuing war. Shamakh pointed to the weak financial solvency of 17 banks operating in the country, which further exacerbates the complexities of the crisis.
In turn, business development consultant Issa Abu Haliga explained that small and medium enterprises (SMEs) are living in the “eye of the storm,” with declining liquidity and an expanding financing crisis leading to the cessation of activity for many of these projects. Abu Haliga added that the closure rate has reached approximately 40% for SMEs, alongside significant losses incurred by larger institutions.
Experts indicated that the tensions between the Central Bank in Aden and its counterpart in Sana’a are complicating matters further. Aden has halted merchant containers at customs ports, causing massive losses for merchants until agreements were reached to deposit their sales daily into recognized bank accounts. In contrast, Sana’a exerts counter-pressure, making it difficult to achieve an efficient balance.
Banking expert Ali Al-Twaiti told Al-Araby Al-Jadeed that the requirement to deposit sales from Sana’a into accounts in Aden places small business owners in a precarious position. They are besieged by arbitrary government measures from both sides, which increases the difficulty of obtaining finance, raises costs, and delays customs procedures.
Under these circumstances, goods arrive after long waits to a market suffering from stagnation and weak purchasing power due to price inflation and the multiplicity of fees and levies from both parties. This forces business owners to sell large quantities on credit, which doubles their losses and traps them in a growing cycle of debt that may lead to total bankruptcy.
