IFC Helps Yemeni Businesses Thrive amid Unrest with Good Corporate Governance
Two years of political uncertainty and a troubling security situation have taken their toll on small and medium enterprises (SMEs) in Yemen. But IFC teams have stayed in the country despite the unrest, helping to show that improved corporate governance can offer companies a silver lining: improving their performance, facilitating women’s ability to play a prominent role in business, and attracting essential investment.
“One of the biggest obstacles facing the growth of the Yemeni economy is old fashioned management styles for family businesses,” said Hamoud Al-Motawakkel Vice Chairman of The Yemeni Group for Contracting and Engineering (YGCE). “This is one of the most important reasons preventing any real growth in the size and quality of businesses in Yemen.”
That hurdle has been compounded by the nation’s political unrest, adding a layer of security concerns that damage the business environment, particularly in the construction sector.
Family businesses like YGCE are believed to represent about 95 percent of the total workforce in Yemen. So, IFC teams have delivered training events and workshops across the country, to SMEs, banks, and financial institutions, raising awareness on the benefits of good corporate governance practice and providing technical assistance.
Najaat Jumaan, a board member in her family business, Jumaan Trading and Industry, says the project was particularly well received by women. Though there remains work to be done, she argues women have since had success in implementing IFC’s recommendations.
“New methods—like developing a clear strategic direction for the company, supporting and guiding the executive director, and establishing committees to support the board—have changed my company for the better,” said Jumaan. “IFC has a role to play in increasing the awareness of the value that women can add to their company’s success and providing more technical assistance for businesswomen.”
Overall, IFC reached out to nearly 600 companies in Yemen, either directly or through local partners. Along with encouraging gender diversity—by furnishing female board members with the corporate governance skills they need to guide their business—companies have also benefited by improving performance and making themselves more attractive to investment.
“The work environment in our company is now healthier than ever before,” said Al-Motawakkel. “The new internal structure, including a formal board of directors and a strong financial department, has lifted the general performance.”
“Our management style has been transformed, so we have well defined roles and responsibilities at all levels, and it has given us the confidence to manage any kind of project,” he added.
Thanks to IFC’s recommendations, YGCE is now able to develop real estate projects without waiting to be commissioned. In addition, the company’s new ambitions are attracting local and regional investors.