IDA-IFC Agribusiness Program Phase 1

pipeline

Yemen faces severe fragility and conflict compounded by climate shocks, widespread poverty, and collapsing services, creating one of the world’s worst humanitarian crises. Since 2015, real GDP has fallen by 43 percent and nominal GDP per capita by 70 percent, with further declines projected for 2025. About 75 percent of Yemenis live in poverty, food insecurity affects over 60 percent of households, and malnutrition rates among women and children are among the highest globally. Infrastructure and governance have largely collapsed, with two rival authorities deepening economic and institutional fragmentation. Gender inequality remains extreme, and Yemen ranks near the bottom of global development indices. Recovery requires shifting from short-term humanitarian aid to a comprehensive development agenda focused on nutrition security, climate resilience, and institutional capacity to break the cycle of fragility and aid dependence.Agriculture is a cornerstone of Yemen’s economy, contributing nearly 29 percent of GDP and employing a similar share of the workforce, while supporting food security and rural livelihoods. However, the sector faces severe challenges, including water scarcity, reliance on rainfed farming, fragmented value chains, and poor infrastructure, compounded by insecurity and institutional fragility. Most jobs are concentrated in low-productivity rural areas, limiting growth potential. Despite these constraints, examples like the NANA dairy factory in Aden demonstrate agribusiness’s transformative potential to create jobs, enhance productivity, and link on-farm and off-farm activities.Yemen’s agrifood sector offers significant opportunities for recovery through targeted investments in high-potential value chains such as livestock, dairy, poultry, coffee, horticulture, and fisheries. These value chains combine strong domestic demand, export potential, and inclusive employment generation, particularly for women and youth. Strategic interventions—expanding access to finance, improving infrastructure, fostering public-private partnerships, and strengthening producer institutions—can unlock private investment and build resilience against economic and climate shocks. Women play a vital role in agriculture, yet face systemic barriers including limited land rights, lack of access to finance and technology, and restrictive norms. Gender-sensitive approaches and climate-smart technologies are essential to close productivity gaps and empower women as agents of change.Climate change poses severe risks to Yemen’s agriculture, with rising temperatures, erratic rainfall, and extreme weather threatening productivity, especially in livestock systems. Agriculture accounts for over 60 percent of national GHG emissions, with dairy alone contributing 29 percent. The proposed program aligns with Yemen’s climate and development priorities under the Paris Agreement, bundling interventions to enhance climate resilience, reduce emissions, and strengthen institutional capacity. Components focus on improving on-farm productivity, integrating value chains, and expanding access to finance, while promoting energy efficiency and food safety. Phase 1 targets the dairy sector, aiming to boost productivity through breed improvement, animal health services, and good husbandry practices, while addressing gender disparities and empowering women in livestock management.The Yemen Agribusiness Program is a joint World Bank Group initiative—led by IDA and IFC—designed to transform Yemen’s agrifood sector, strengthen food security, and promote inclusive economic recovery in a fragile context. Using a phased Multiphase Programmatic Approach (MPA), the program will begin with targeted investments in the dairy sector and later expand to poultry, horticulture, and grains. IDA will focus on public investments in infrastructure, institutional capacity, and policy reforms, while IFC will mobilize private capital, pilot commercially viable business models, and foster partnerships with anchor firms and financial institutions. The program aims to boost productivity, improve market access, and build climate resilience, while empowering women and youth and reducing import dependence.Targeted interventions will strengthen priority value chains through breed improvement, nutrition and health services for livestock, sustainable crop practices, and modern infrastructure such as cold chains and processing facilities. Producer institutions and MSMEs will be supported to adopt food safety standards, access markets, and engage in collective marketing and branding. IFC will complement these efforts by delivering advisory support to local firms, promoting inclusive supply chains, enabling access to finance, and facilitating food safety certification. Over five years, IFC plans to engage 8–10 private firms and SME banks, establish strategic partnerships with processors like HSA and Nana, and scale climate-smart, gender-inclusive practices. Together, these efforts aim to catalyze private investment, create jobs, and build resilience across Yemen’s agribusiness landscape.The project will focus on smallholder dairy producers in governorates within a 2–3 hour radius of Aden—such as Aden, Lahj, Abyan, southern Taiz, and Al-Dalea—to ensure milk quality and minimize spoilage during transport to a planned processing facility. Beneficiaries include approximately 10,000 farming households, farmer producer organizations, and MSMEs, alongside indirect actors in input supply, veterinary services, and logistics. The design adopts a farmer-centric approach to improve service delivery, strengthen market access through village-level institutions, and engage private sector agribusinesses—including IFC-supported enterprises—in aggregation, processing, and distribution systems.To address structural constraints in Yemen’s dairy sector—low productivity, fragmented markets, and weak private engagement—the project will implement a sequenced strategy: restoring farm-level capacity, improving quality and collection logistics, and enabling private investment. Public investment will catalyze technology transfer and productivity gains, complemented by IFC partnerships with local processors to expand processing capacity and shift sourcing from imported skim milk powder to fresh milk. Interventions will include breed improvement, animal health services, and adoption of Good Animal Husbandry Practices, alongside investments in cold chain systems and farmer training. Gender disparities will be addressed through inclusive approaches that empower women in production and market participation.The project comprises three components: (i) Productive and Climate-Smart Agriculture Support, focusing on breed improvement, balanced nutrition, and veterinary services to boost milk yields and reduce emissions; (ii) Strengthening Market Access and Value Chain Integration, enhancing milk collection, bulking, and food safety through climate-resilient infrastructure and partnerships; and (iii) Facilitating Access to Financial Services, enabling farmers and MSMEs to invest in productivity-enhancing technologies via tailored financial products and literacy programs. IFC will complement these efforts through value chain assessments, policy reviews, capacity building, and investment facilitation. Together, these interventions aim to increase milk production, improve quality, strengthen resilience, and create inclusive economic opportunities across Yemen’s dairy value chain.