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

Policy brief Feb 2026 Sustainable Growth, financial access and State Fragility initiative

Remittances are Yemen’s largest source of external finance, accounting for nearly 20% of GDP in 2023. An estimated 70-75% of remittance income is used to meet immediate household needs.

Yemen’s remittance landscape is shaped by structural constraints, including financial sector fragmentation, limited access to formal banking services, and weak regulatory oversight. These factors limit the ability of remittances to contribute to longer-term economic recovery.

Experiences from other remittance-receiving countries, including Somalia, Kenya, Sri Lanka, Rwanda, India, and Pakistan, highlight how financial inclusion, digital infrastructure, and regulatory coordination can improve the economic impact of remittances.