Taking stock of Yemen

As Yemen's IT market evolves, calls are growing for vendors to develop a reliable channel structure.

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By  Julian Pletts Published  September 21, 2008

Yemen is widely recognised as one of the region’s smallest markets and a territory that few IT companies talk about. But as the market evolves, the calls are growing louder for vendors to develop a reliable channel structure. They just have to overcome a number of obstacles first.

When searching the partner list of the various big name IT companies, Yemen will be notable in its almost consistent absence. However, it would be unfair to take vendors to task over their lack of focus on this market as there are plenty of factors stacked against it.

To start off with, Yemen remains one of the poorest countries in the Middle East with a low GDP per capita of US$2,300 and an economy that has seen an average growth rate of just 3% to 4% between 2000 and 2007.

Payment terms are a lot longer in Yemen than in other countries so if you are offering 30 days credit or 45 days credit terms you can definitely expect to have major delays in payment.

Up until recent years, the country's economy has been largely dependent on oil resources, but these are unfortunately declining and the government is attempting to diversify the economy.

Farming accounts for the majority of employment in the country with construction, industry and commerce making up less than a quarter of the labour force.

Also, geographically, Yemen presents the channel with something of a challenge in that it originally comprised two territories, Aden to the south, and Sana'a to the north, which were formally joined after years of hostility in 1994.

Commentators on the IT market in Yemen say that this historical gap leads to issues when it comes to working in the channel and might be the reason that some distributors rely on separate sub-distributors to reach both areas.

This leads to the next issue - the lack of development of the channel in the country. Coupled with the fact that a large proportion of the population lives outside the capital city Sana'a, distributors tend to be reliant on an extensive network of sub-distributors.

Golden Systems Electronics, an IT distributor that works in Yemen through a sub-distribution channel that includes established names such as Future Systems and Shammakh Systems, remains positive about the market but is under no illusions that progress in the country is not without its challenges.

"Another characteristic of the market is the payment terms," said Ehsan Hashemi, COO at Golden Systems Electronics.

"Of course, you cannot get credit insurance in a country like Yemen and, by the same token, payment terms are a lot longer than they are in other countries. If you are offering 30 days credit or 45 days credit terms you can definitely expect to have major delays in payment," he warned.

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