Three months have passed since Mohamed Zamam was appointed governor of the Central Bank of Yemen (CBY). In an effort to calm markets, his initial actions have emphasized continuity. First, Zamam has quieted fears that he would purge those affiliated with his controversial predecessor, Munasser al-Quaiti. He has pledged that he will refrain from sacking current members of the bank’s leadership for a period of six months. That said, Zamam may add a new team, based between Cairo and Amman, to handle technical matters. This group would likely include high-performers who are close to Zamam and would thus be highly influential.
Our contacts in the CBY have highlighted Zamam’s general commitment to preserve whatever was left of the bank’s independence. This extends even to his decision to keep the bank in Aden, owing to his desire to appear unbiased in light of his roots in northern Yemen. This is an interesting move at a time when President Abdo Rabbu Mansour Hadi’s government is decamping to Marib and is frequently outside of Yemen altogether. Notably, when Zamam met Marib Governor Sultan al-Arada, he did so in Riyadh. Indeed, since assuming leadership of the CBY, he has not yet visited its branch in Marib.
One of Zamam’s challenges will be managing this semi-autonomous entity. Flush with cash, owing to the income from Safer’s cooking gas production and Marib city’s new status as a financial hub, the Marib branch has increased its staff from 15 to 25 over the past three years. Nonetheless, it still does not send its funds to the central bank in Aden. 20% of the Marib branch’s revenues are redirected toward the local governor’s office staff, as well as to pay security forces and local ministerial employees. These payments are likely a source of large-scale corruption carried out by senior officials.
Cooking gas produced at Safer is also a major source of corruption. The military’s allocation of LPG is too high for the number of troops, so commanders sell the surplus. Marib is also the re-export hub to send cooking gas into Houthi-held areas. This means that many merchants based in Sana’a physically travel to Marib to deposit money for the gas in the CBY branch there, while a smaller number of sales are handled through bank transfers. Unlike the rest of the country, Marib has not suffered from a liquidity crisis: one central bank contact noted that the local branch was forced to start renting a new building in Marib city simply to store hard currency.
The conditions of the CBY’s Mukalla branch are similarly unique. Local authorities have been able to store oil from PetroMasila at Dabba port, where it is sold. In contrast to oil profits in Marib, a 20% share from Hadramawt sales was initially deposited (in dollars) into a Saudi bank account established in the name of the Yemeni government. Now, though, Zamam has succeeded in redirecting these dollar payments to a CBY account abroad in Arab Bank and al-Ahli Bank.
Zamam has sought to make good on Hadi’s promises to regularize the 20% payment to Hadramawt. It appears that Hadramawt Governor Faraj Salmayn al-Bahsani directly accessed two initial payments last year. 3bn Yemeni rials ($12mn) were recently translated to the CBY branch in Mukalla, allowing the branch to begin to pay salaries to local employees. However, the ongoing liquidity crisis has forced authorities to rely on agencies like Kuraimi and al-Omqy to delivery salaries, in spite of the fact that the latter firm is on the US Treasury Department’s specially designated nationals list in relation to its use by al-Qaeda in the Arabian Peninsula (AQAP). The CBY has increasingly relied upon Kuraimi, particularly with regards to salary payments and money transfers across conflict lines. Our contacts in the central bank speak highly of Kuraimi’s effectiveness and integrity, yet Zamam has nevertheless initiated efforts to reduce the CBY’s reliance on the firm and instead pay salaries directly through banks.