Yemen's economy is located in urban areas that are home to about 6.7 million people. Almost one fifth of this urban population lives below the poverty line, with over half of them without access to basic urban services living in informal settlements. Thus, Yemen's rapid rate of urbanization is an enormous opportunity for growth and faster poverty reduction.

The proposed project focuses on the port cities of Aden, Hodeidah and Mukalla, whose populations are growing at 4.7 percent, 3.7 percent and 3 percent per annum respectively. These three cities already have multimodal transport links that are critical for commerce. Together they are attracting more than a quarter of Yemen's rural-urban migration, and are growth magnets in their respective Governorates. With such promising outcomes, Benson Ateng, World Bank Yemen Country Manager commented, “in promoting the growth of such cities and bringing together players of the different market forces can only help in the gradual improvements of the Yemenis' livelihoods”.

The project's development objective will be to improve access to, and the efficiency of, select public infrastructure in those three port cities. By achieving this objective, the project supports the higher-level goal of enhancing their productivity.

Progress towards achieving the project's objective will be measured through the reduction in waiting time for fishing boats to off load their catch and an increase in the number of households provided with access to all season roads/footpaths, water, and sewerage connections in Hodeidah. In Aden this will be reflected in the increase in the number of sellers inside the four district markets and in Mukalla it will be the time savings for passengers landing and departing at Mukalla International Airport and the reduction in waiting time at the select urban road intersections during peak hours.

“Urbanization, followed by economic diversification will present a greater opportunity for market growth of needy communities fighting poverty”, said Deepali Tewari, World Bank Senior Municipal Development Specialist.

As the country urbanizes and the economy transforms, different cities will grow and attract production and people at different speeds. On-going reforms will enhance private sector growth in the non-oil sectors, and increase economic density in and around cities already experiencing rapid growth, particularly port cities, transforming these places to regional growth centers.