From cash to capital: Leveraging remittances for Yemen’s economic future

Produced in partnership with the International Growth Centre

Remittances are one of Yemen’s most significant financial lifelines, sustaining millions of households and contributing to financial stability amid conflict and economic uncertainty. While foreign direct investment and international aid flows have been particularly constrained by compliance risks and security concerns, formal remittance channels are also shaped by these pressures, alongside sanctions, de-risking, and regulatory fragmentation. Despite these constraints, remittances have remained one of Yemen’s largest and most consistent external financial inflows, with formal transfers estimated at almost USD 3.8 billion in 2023. A small-scale migrant survey conducted for this report paints a more nuanced picture, with approximately two-thirds of respondents reporting using formal channels, while the remaining relied on informal mechanisms. Existing structural barriers, financial fragmentation, and regulatory challenges prevent remittances from being fully leveraged for economic recovery.

This report examines how remittances function within Yemen’s economy, the obstacles that limit their impact, and potential policy solutions to improve their efficiency while maintaining accessibility. Based on data analysis, expert interviews, and global case studies, this report outlines key findings and actionable policy recommendations that can strengthen the remittance system and enhance Yemen’s financial resilience.