Business Setup in Sana’a

Sana’a

Sana’a, the capital of Yemen, is one of the oldest continuously inhabited cities in the world. It is located in the Yemeni mountains and is generally the preferred destination of the travelers. It is also called the political and cultural capital and is a primary center of commerce of Yemen.  Its well-preserved medieval core has also historically been a tourism magnet. However, in the past few decades, Sana’a has struggled with rapid population growth and now has the largest concentration of poor people in the country.

During the last 50 years, Sana’a has sprawled outside the walls to be a metropolitan city. The rapid uncontrollable urban transformation of Sana’a is a significant example of the historic core of most Arab cities with regards to its formation, growth, and development. Because of valuable urban and urban development resources of Sana’a, it is known as a city with a high level of architectural and urban culture.

A Comprehensive Overview of Sana’a

The Municipality of Sana’a, Amanat Al-Asema, is the political and administrative capital and the most important cultural center in Yemen. Sana’a was known for having a booming mining industry. The hills around the city were mined for onyx, chalcedony, and cornelian. Within the last seven years, the city has enjoyed relative prosperity because of the implementation of improvements of services and infrastructure, especially related to water supply, telephone, roads, street lighting, drainage, and beautification and cleanliness of the city.

A vision for Sana’a’s better tomorrow includes national investment and capital accumulation, as it is the national capital and continues to be a prime location for the same. Some of the important features of Sana’a being one of the leading capitals when it comes to investment are:

• Sana’a has a relatively good level of infrastructure services, especially in terms of its road network
• Although Hodeidah, Aden, Taiz, and Mukalla all boast international airports, Sana’a’s international airport is by far the most important in terms of international connections and number of passengers, number of airlines, and volumes of cargo. A new airport/terminal is planned adjacent to the existing airport, with construction set to begin soon
• Sana’a is the seat of central government and all national-level agencies, which reduces transaction costs for investors
• Most of the international organizations and foreign embassies are in Sana’a giving easier access by firms to information on technology, market opportunities, and so on

In addition, there are natural and cultural factors that should be considered among Sana’a’s strengths:

• Attractive cultural heritage
• Mild and temperate climate throughout the year, a huge plus for attracting visitors from the Gulf region with its sweltering temperatures most of the year
• An age-old tradition of commerce and trade

In addition to the cultural & political importance of Sana'a, it has also importance in commercial, economic and tourism and about more than half of Yemen’s hotel is located in Sana’a and more than 30% of commercial and industrial areas of the country are located in the metropolitan area of Sana’a.

Economic Growth of Sana’a

Sana’a, as Yemen’s capital and largest city, enjoys a unique position within the national economy. In fact, the city’s strengths, ensures that, compared to other urban centers in Yemen; the capital will enjoy continued accumulation of capital and relatively strong economic growth. But the city cannot afford to rest on its achievements and existing strengths, since as with any large capital city, much of the fate of the nation’s economic future is intrinsically tied to the capital’s performance. And the country is in dire need of strong and sustained economic growth to meet its many challenges and to tackle the intractable problem of deep poverty. Therefore, Sana’a must adopt a strategy that stimulates private sector growth in ways that maximizes contributions to the national economy, complements economic activities in other urban centers, and provides support for national resource mobilization and crucially needed improvements in the national business climate.

Also, an economic development strategy for Sana’a desperately needs to address the city’s poverty, which means employment generation. This leads to a strategy of promoting those industry clusters for which Sana’a has a comparative advantage, especially those which are labor intensive.

Investment Opportunities in Sana’a

There are many industries and economic activity clusters in Sana’a that brings a comparative advantage for the city over others. They are:

1. Tourism

Sana’a, with its enticing architectural buildings and associated traditional markets, is already Yemen’s premier tourist destination. And tourism in Yemen has been identified as the economic sector with perhaps the greatest comparative advantage. Improving Sana’a’s tourism infrastructure and information, diversifying its tourism “products,” upgrading and enhancing its tourist sites, improving site management, and training and improved marketing are all activities that should stimulate tourism as a lead economic sector in the city.

2. Handicrafts and Traditional Manufacturing

Yemen has a long tradition of handicrafts and artisan manufacturing, and for many Sana’a is considered the main center for such activities. And handicrafts have direct and natural links to the tourist industry. Almost all engaged in handicraft production are small and micro enterprises, and they could benefit greatly from support in such areas as credit, enhanced product models, marketing and promotion outlets, production space, and skills training, especially for youth.

3. Private Health Clinic

It is estimated that over US$ 200 million per year is spent abroad by Yemenis on health care. If it were possible to attract serious private investment in modern, well-managed, and specialized health centers in Sana’a, Sana’a could attract patients from throughout Yemen and greatly reduce the need to travel abroad for health.

4. Real Estate and Construction

In the last couple of years, Sana’a has begun to be eyed by major Gulf real estate companies as an investment opportunity for up-scale property developments. Given the huge financial resources they have at hand, such interest can only increase. The core of demand for such projects is said to come from Yemeni expatriates seeking to invest in real estate, and in addition, there is increasing general demand for commercial and recreational projects.

Looking strategically at Sana’a’s potential to attract investors, perhaps the most significant strength is the city’s strategic geographical location and the proximity to the regions with high purchasing power, high demand for foreign goods and services, and, most importantly, huge financial surpluses looking for investment opportunities. Furthermore, there are strong cultural ties and a commonality of language between Yemen and these Arab neighbors (in particular with Saudi Arabia). However, for Sana’a to maximize its economic strengths, it needs to improve its investment climate. And then only it can achieve the success that this city of Yemen has been eyeing for.