Small businesses in Yemen fall victim to both war and a currency crash

Yemen, TAIZ — Adeelah Aqeel has been sewing clothes for two decades, and in early 2015 she decided to open a shop in Taiz city to start realising her dream.

But her business of selling and renting clothes to brides didn’t last longer than three months, as violent battles started spilling into the neighbourhood and the store was damaged.

“I borrowed money and sold jewellery to start my business but the war damaged everything. Only a few dresses are left,” Adeelah told TRT World.

Adeelah was the sole breadwinner for her family of ten. So in 2019, she decided to re-open the shop.

“I brought the clothes from the old shop but no one came to buy or rent them as they are old - so I borrowed some money and bought new clothes,” she added.

“I also sewed others and started to work in the new shop together with my mother and a cousin and we managed to get a good income from the shop.”

However, things didn’t last much longer after the recent collapse of the Yemeni rial against foreign currencies.

During the last two months, the Yemeni currency has collapsed in a dramatic way in the areas under the control of the International Recognized Government (IRG), from 600 rials to 1 dollar in 2019 to more around 1,400 against the dollar this month. For perspective, in 2015 it used to be 215 rials to a dollar.

“The recent collapse of the currency killed my business. I sold some clothes but couldn’t buy new ones and even the customers can’t buy clothes with the new prices,” Adeela said.

“The shop now has almost stopped and I’m struggling to pay the rent which used to be YR 150,000 ($125), but is now more than double.”

Adeelah doesn’t have any other source of income and is doing her best to continue but it isn’t really in her hands.

“Last time it was the battles which damaged my shop but now it is the increase of prices that is closing many small businesses.”

The currency crash has naturally led to the bankruptcy of several small businesses in the southern areas of Yemen but that isn’t the case in the areas under the Houthi control as 1 dollar equals 600 rials in those areas.

Yasin Al-Kamel, 28, has been working in a small sports equipment and supplies shop in the city of Taiz since 2017. Yasin said that he used to earn a good income by taking advantage of most of the shops for sports equipment and supplies being closed because of the war.

“It is difficult to find a job amid the war so I decided to start selling sports supplies and that was good until the recent collapse of the currency,” Yasin told TRT World.

“I bought the goods in my shop when the exchange rate of the dollar was around YR 800 and sold them during a different time and then couldn’t buy new ones. Earlier this month I hardly paid back debts and closed the shop.”

Yasin stated that his dream was to have a bigger shop especially as there are more so many people interested in sports in Taiz, but the state of the economy forced him to close down.

“Since the beginning of 2021 there were more people who came to buy from my shop but during the last two months the majority are only looking for food.”

Yasin doesn’t have any other source of income and is now jobless after closing. He hopes things will get better and he can reopen his shop one day.

Maher Al-Salimi, 30, a footballer with a local club in Taiz confirmed that he used to buy from Yasin on a monthly basis, but recently he stopped because he can no longer afford it.

“The prices of T-shirts and sport suits are now inaccessible for us. We can hardly pay for transport and basic things,” Maher told TRT World.

Nadhem Abdulrahman, a sociology tutor at private universities in Taiz, stated that small businesses are usually “victims” of the currency collapse as their owners neither have enough experience nor money.

“Small businesses owners usually struggle in war-torn countries or countries that don’t have a stable economic system as they can’t face any economic developments like collapse of currency or difficulties of getting the goods,” Abdulrahman told TRT World.

“In Yemen it is normal to see small businesses collapse because of the currency collapse as neither owners of small shops nor customers can afford to buy new goods.”

He stated that during the beginning of the war in Yemen, many small businesses went bankrupt because purchasing power was weak and it was happening again today.

“The majority of Yemenis only buy basic food and they don’t afford anything else while most of the small businesses don’t sell basic food but secondary items,” he added.