Despite a gloomy outlook, the government plans to set up the stock exchange to attract investment and try to give its population of 23 million a stake in the economy. The bourse would start with 10-12 private and state firms, the news report said.
The planned exchange is a joint enterprise with Jordan, but Reuters says analysts are sceptical, because of rampant corruption, and because the country is growing increasingly violent and the government’s grip appears to be slipping. Yemen has been making headlines for months with a Shi’ite rebellion in the north, a separatist movement in the south, and a fight against a wing of al Qaeda that claimed responsibility for a failed attempt on a U.S.-bound passenger plane on December 25.
According to Reuters, analysts say Yemen may become a failed state as poverty spreads and the state’s authority dwindles. Yemen is the only country in the Arabian Peninsula without major oil resources.
Yemeni analyst Abdul-Ghani al-Iryani said the project shows the government has no sense of reality as the economy is on the brink of collapse and laws are not implemented, according to Reuters. Diplomats also said they expect it will be difficult to implement the project with Yemen facing so many other issues.
The U.S. government said in its 2009 Investment Climate report: “While Yemen’s investment-related laws are generally sound, enforcement is problematic at best.” Few investors outside the oil and gas sector come to Yemen, where banks have few links with the outside world and do not even control the local economy, and only 4% of Yemenis have a bank account, according to the report.
According to the central bank, a handful of foreign banks are active in Yemen, among them Calyon, the investment arm of France’s Credit Agricole and Qatar National Bank.