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FEATURE STORY November 23, 2021

Blended Concessional Finance is Helping to Address Critical Food Security Challenges in Yemen


Local man selling traditional bread. Sanaía, Yemen. 

Photo: ©Foad Al Harazi/World Bank


  • The ongoing conflict and instability in Yemen have devasted the economy, forcing 80 percent of the population to rely on humanitarian assistance to survive. The global COVID-19 pandemic is increasing the risk for food insecurity and acute malnutrition in the country.
  • A financing package supporting Hayel Saeed Anam (HSA) Group, the country’s largest food conglomerate, is providing the working capital necessary to maintain operations and continue serving the Yemeni domestic market with essential foodstuffs.
  • The first-loss guarantee of up to 50 percent, provided by the International Development Association’s Private Sector Window (IDA PSW), was critical to de-risk the transaction, making it possible for investors to enter the challenging Yemeni market.

Yemen is suffering from one of the world’s worst humanitarian crises. According to the United Nations, 24 million people—80 percent of the population—require humanitarian assistance to survive. The ongoing conflict and instability have devasted the economy, forcing it to contract by over a third. 

Due to the global COVID-19 pandemic, remittances and humanitarian assistance fell significantly in 2020. A currency crisis and rising global food costs are further exacerbating the situation. Yemenis now experience some of the highest risks for food insecurity and acute malnutrition in the world.

The country is almost entirely dependent on imports for its staple foodstuffs. The Yemeni private sector, which handles most of the country’s food supply, has been facing enormous challenges. Supply chain disruptions, difficulties importing and distributing fuel, and the destruction of critical infrastructure, as a result of the conflict, are all making the operating environment for businesses exceptionally challenging.

"Blended concessional finance facilities like the IDA PSW can help re-balance the risk and reward profile of a project, making it possible for IFC and other private sector investors to step in to provide the working capital that is so desperately needed."
Samuel Munzele Maimbo
Director, Development Finance

The International Finance Corporation (IFC), with support from the International Development Association’s Private Sector Window (IDA PSW), is helping to provide safer and fortified staple food products to Yemen’s population. IFC mobilized a US$75 million financing package for Hayel Saeed Anam (HSA) Group—one of the country’s largest food conglomerates—providing them with working capital necessary to maintain operations and continue to serve the Yemeni domestic market with essential foodstuffs. 

"The IDA PSW can play a pivotal role in these challenging markets," explains Samuel Munzele Maimbo, Director of IDA Mobilization and IBRD Corporate Finance. “Blended concessional finance facilities like the IDA PSW can help re-balance the risk and reward profile of a project, making it possible for IFC and other private sector investors to step in to provide the working capital that is so desperately needed.”  

Established in 1938, the family-owned HSA Group is one of the largest multinational businesses operating in Yemen, manufacturing and supplying essential goods and services to multinational organizations, communities, and families in Yemen and across the Middle East and North Africa. Due to the strict advance payment requirements of international raw material suppliers from Yemeni importers, the lack of commercial bank financing in Yemen, and difficulties accessing foreign currencies, HSA Group has faced significant challenges in financing its ongoing business. Given the extremely fragile and insecure business environment in Yemen, access to long-term financing from banks and other investors is very limited. Even short-term debt financing is prohibitively expensive, if available at all, and rates can run above 30 percent. These constraints were putting tremendous pressure on the working capital and cash conversion cycles of HSA Group. 

The financing package, committed in December 2020 and disbursed in July 2021, includes a five-year loan of up to US$55 million from IFC and US$20 million from FMO, the Dutch Entrepreneurial Development Bank. Given the significant risks involved in the transaction stemming from the challenging macro-economic context of Yemen, concessional support from the IDA PSW was critical to de-risk the transaction. IDA PSW’s first-loss guarantee, of up to 50 percent, transferred a significant portion of the credit risk associated with the transaction to IDA PSW, thereby enabling IFC to invest in Yemen for the first time in over a decade and giving FMO the confidence to invest alongside IFC and meet the financing needs of the client.  

“This financing package will help ramp up the distribution of staple food products and increase the number of Yemenis that can put them on their table,” said Hela Cheikhrouhou, IFC's regional Vice President for the Middle East, Central Asia, Turkey, Afghanistan, and Pakistan. “It’s also a great example of how development finance institutions can reduce business disruption in conflict-affected countries.” 

The support to HSA Group will allow the company to continue operations, safeguard the jobs of more than 5,000 people, and potentially increase the number of employees as production grows. Further, the company has requested to work with IFC’s advisory services to create a more inclusive workforce and improve gender balance among its white-collar employees. With the goal of increasing female employees by 24 percent during the life of the project, this undertaking has the potential of significant impact for women in the labor force in Yemen. 

Ensuring the supply of quality and fortified foodstuffs in a place where the prospect of famine is acutely high is vital. HSA Group is a market leader and has a critical role to play in helping to address the food security challenges in Yemen. The project will help build resilience in the food sector and demonstrate to other investors the potential viability of the sector and the country.