SANAA, 3 December 2007 (IRIN) - From what was historically known as 'Arabia Felix' - a land of prosperity and happiness - Yemen has become the most impoverished Arab country, a top-level international report says. It concluded that overall poverty reduction had been painstakingly slow and that people in urban areas had fared better than those in rural areas.

The report, prepared by Yemen's government, the World Bank, and UN Development Programme (UNDP) and entitled Yemen Poverty Assessment, was released on 3 December in Sanaa, Yemen's capital. Its findings were based on the Household Budget Survey which ran from April 2005 till March 2006.

The report said poverty in Yemen's rural areas did not decline as much as it did in urban areas: The percentage of poor people declined from 42.4 percent in 1998 to 40.1 percent in 2005/06 in rural areas, but in urban areas poverty declined from 32.2 percent to 20.7 percent in the same period because urban areas benefited greatly from oil-led growth.

Yemen's economy is highly dependent on oil production, with the country's oil exports accounting for around 85 percent of export revenues and 33 percent of gross domestic product (GDP), according to the Yemeni government.

"Oil -based growth does not benefit the poor, especially the rural poor. The oil sector does not contribute to employment among the rural poor population, being a highly industrialised sector demanding skilled labour, which is mostly imported," the report said.

Flavia Pansieri, UNDP resident representative, said that in rural areas poverty rates more or less stagnated, which means development was not reaching these areas in the same way it was reaching urban areas. At least 75 percent of the Yemeni population live in rural areas.

"Attention should be drawn to rural areas both by providing services and also making it possible for the people there to grasp opportunities to pull themselves out of poverty," Pansieri said, adding that it would be difficult to achieve the Millennium Development Goal (MDG of halving poverty by 2015) in rural areas.

The report further noted that poverty worsened by 10-15 percent in 12 governorates in central-northern, central-southern and eastern parts of Yemen.

Seven million poor people

The report specified that poverty in Yemen as a whole had declined from 40.1 percent in 1998 to 34.8 percent in 2005/06.

"However, due to continued population growth the absolute number of the poor remained at around seven million, the same number as seven years ago. The pace of poverty reduction is modest compared to the MDG goal adopted by the government," it said.

According to the report, real gross domestic product (GDP) per capita grew, on average, by 2.1 percent per year between 1998 and 2005/06, and that poverty declined by almost 2 percent annually.

The poverty gap index is 8.9 percent, implying a monthly poverty deficit per capita of about 1,431 riyals (about US$7). In other words on average a poor person would need to get another 1,431 riyals a month to be lifted out of poverty, said the report.

"Perfect targeting of the poor would require only about 124.4 billion riyals per year (about 4 percent of GDP) to fill the gap between the actual spending of poor households and the poverty line, thus lifting everyone out of poverty. The food poverty gap averages about 2,100 riyals for the food-poor, some 75 percent of the average consumption of the food-poor," the report added.

"The achievements in reducing poverty during the past seven years highlighted in the report makes the case for rigorous review and renewal of joint efforts to fight poverty," said Yemeni Minister of Planning Abdul-Karim al-Arhabi.

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