I. Financing activities (loans and grants)z

 In the third quarter of 2019, the SFD signed several financing agreements with MF programs and institutions (MFIs) totaling YR1.1 billion. The National MF Foundation (NMF) received YR 300 million, and Azal and Hadhramaut MF Programs YR605.5 million and YR200 million respectively. The funds were meant to enable those entities to continue financing the projects of their clients in the various governorates of Yemen.

 I. The internal activities carried out by the SMED Unit

1- Funding activities

 As a result of the increasing demand for financial services by owners of small and micro projects, and in order to ensure the continuity of funding activities, during the first quarter SMED has funded programs and institutions with an amount of YR 2.72 billions in loans. The MFIs funded have included Azal MF Program, the National MF Foundation, and Namaa MF Foundation.

2- Grant Activities

 As for grants, during the quarter the unit has granted the Yemen Microfinance Network (YMN) and the Small and Micro Enterprises Development Agency a total amount of USD 2.7 millions, in order to finance the training and consulting activities they carry out. It is worth noting that the total number of active clients in MFIs has reached 85,219 active clients by the end of March 2019, while the total active loan portfolios with these entities has reached about YR 14.664 billions.

3- Supporting war-affected clients (Phase 2)

 In the first quarter of 2019, clients were compensated for a total amount of USD 6,000. In addition, the debts of 848 insolvent clients were canceled, amounting to USD 230,000. The cumulative number of beneficiaries from the project has reached 3,840, with compensation totaling USD 1.7 million as of the end of the first quarter of 2019. The project aims at compensating 4,000 microfinance clients affected by the War and enabling them to restore their lost or affected activities.

3- Supporting the expansion of financial and non-financial services in the areas of the Integrated Intervention Project

 The number of groups formed during the quarter has reached 83 groups, comprising at least 1,900 members among men and women, comprising five separate directorates which represent the project's work areas. Also, several training activities have taken place during the quarter, in which at least 1,800 members have been trained in the principles of savings groups. About 400 members have been trained in the field of bookkeeping of operations, group activities, as well as administrative and organizational skills.

4- SFD Partners Workshop

 On February 18th-19th, a workshop was held to enhance partnership and communication between all players in the MF sector in Yemen. The workshop was attended by about 30 representatives from various MFIs operating in the country, in addition to other related parties such as the Small and Micro Enterprise Development Agency (SMEPS), the Yemen Microfinance Network (YMN), and the Yemen Loan Guarantee program (YLG). Discussions dealt with the challenges, difficulties and opportunities facing the MF sector in light of the current situation in the country. These problems and future plans for the sector were discussed with a view to enhancing cooperation between all participating entities.

5- Internal audit and auditing activities

 In the period from Feb. 24th-Mar. 10th, field approvals were carried out on 1,534 clients of Al-Ittihad in the governorates of Abyan, Aden and Lahj. During the same period, field validations were made on 58 clients at the branch of the National MF Foundation (NMF) in Aden. Likewise, an audit was carried on the accounts, records and procedures of NMF at its headquarters in Sana'a.

6- Development of automated and software systems

 6.1 Unit Website

 Throughout the quarter, work has continued on developing the SMED website. Work has included completing the data entry of programs and institutions, and showing the results in their final form after ensuring they were correct. This followed work in the previous quarter in designing all the new templates in the reports and graphic charts.

6.2 A mobile application for studying agricultural finance

 Throughout the quarter, work has continued on developing the SMED website. Work has included completing the data entry of programs and institutions, and showing the results in their final form after ensuring they were correct. This followed work in the previous quarter in designing all the new templates in the reports and graphic charts.

6.3 The Credit Bureau

The Unit's IT team has worked during the first quarter to develop the site's updated mechanism so that it has became possible for MFI to update the database directly and on a daily basis.

6.4 Introduce geographic mapping technology for customers concentration

The Unit's IT team has worked during the first quarter to develop the site's updated mechanism so that it has became possible for MFI to update the database directly and on a daily basis.

6.5 The human resources, loan tracking, and accounting computerized systems

 During the quarter, routine technical support was provided to MFIs in solving technical issues and provide routine technical assistance in operating the three systems.

6.6 The MF Programs and Institutions Assessment Tool

A team from the unit has evaluated the work of Al-Ittihad MF Program in Abyan through the application of this tool, which was designed using Excel and with the technical assistance from a German consulting firm. The tool allows for a comprehensive evaluation of programs, institutions and banks operating in the sector of small and microfinance in accordance with the mechanism of rating agencies.

II. The Yemen Loan Guarantee Program (YLG)

During the first quarter, the program has continued its activity as a guarantor towards those clients who need guarantees to obtain suitable financing from MFIs. Since the beginning of 2019, the program has issued 71 guarantees to SMEs who took loans for a total in excess of YR 142.2 millions, while the value of the guarantees issued was estimated at YR 93.4 millions. Other activities have included attending several workshops and training courses, and conducting a training workshop for Al-Amal MF Bank attended by some of its finance specialists and branch managers to explain the mechanism of work on the feasibility study of agricultural loans.

III. The Yemen Microfinance Network

In an effort to enhance its supportive, positive and effective role in advancing the microfinance industry in the country, YMN has implemented during the first quarter of 2019 several activities, the most important of which were:

1- Training course for trainers

During the period Feb. 11th-14th, a training course lasting 4 days was held for trainers from MFIs on the standards of the International Finance Agency (IFC) in training trainers and exchanging experiences among them.

2- Training course for consultants

 YMN organized a training course between Feb. 18th and 21st, lasting 4 days, with the participation of a number of employees in the MF sector. The aim was to enable participants to develop their capabilities in providing consultancy services, based on the experiences they have gained through their work in the MF (each in his field of work).

3- A panel discussion on ways to support the sector of female MF entrepreneurs

 Within the project of "Women Economic Empowerment" being implemented by CARE in cooperation with the Foundation for All Girls, YMN hosted on Feb 28th this specific panel discussion. The panel discussed the role of these bodies in supporting women's economic empowerment, the nature of women's MF products, as well as the most important challenges facing female entrepreneurs, and how to address them. The session was organized by the network over the period Mar. 9th-14th. Working groups were formed, and each of whom prepared an integrated project proposal. The proposals were presented in the last day, and evaluated and discussed to improve and correct them.

4- Course for preparing project proposals to donors

 The session was organized by the network over the period Mar. 9th-14th. Working groups were formed, and each of whom prepared an integrated project proposal. The proposals were presented in the last day, and evaluated and discussed to improve and correct them.

5- Financial analysis course

The training course lasted over the period Mar. 23rd-27th, and was attended several by representatives from MFIs. The course aimed at forming relevant staff in the MF sector among accountants and financial managers on financial analysis of MFI.

7- Training course in Product development

This training course, which lasted from Mar. 25th to Mar. 29th, was targeted at middle managers interested in how to develop financial products for MFIs. The course enabled the participants on how to study and implement plans for developing financial products, and know the most important concepts and methods and their stages in product design.

8- Financial saving workshop for youth

As part of the Global Money Week 2019 event, YMN organized on Mar. 28th a workshop on financial savings for young people between the ages of 18 and 28. The workshop, which was attended by 45 young men and women, aimed at providing the participants with skills, knowledge and concepts in financial savings. This, in turn, which would help them establish their own projects or obtain employment in various fields.

I. Internal Activities in SMED Unit

  1-        Loans, cash grants, technical support expenses and training

 As a result of the increasing demand and need by SME owners for financial services aimed at helping them develop their projects and improve their living conditions, during the third quarter of 2018 SFD

1. Funds and grants

Due to increasing demand by SME owners for financial services, and a shortage of funds to meet demand by microfinance institutions (MFIs), SMED has funded both Hadramout MF and Al-Ittihad MF programs and Nama MF Foundation for a total of YR 918,000,000 during the quarter. In terms of grants, SMED has provided during the quarter grants to Yemen Loan Guarantee Program (YLG), Al-Ittihad MF Program, National MF Foundation and Nama MF Foundation totaling YR 214,223,737. The grants were meant to finance their activities in the field, rural expansion, marketing and promotion activities, and improve governance. Other grants were also provided amounting to 35,152,734 YER for the formation, training and monitoring village savings and loans associations (VSLAs). The grants were also disbursed to sustain other activities, such as: supporting the expansion of financial and non-financial services in the areas of Integrated Interventions, development of IT systems in MFIs, support of Thimar MF Program, field validations of MFI loans and loans of war-affected clients. The total number of active clients at microfinance banks, programs and foundations at the end of June 2019 has reached 85,097 active clients, of which the percentage of women was 41%, totaling YR 15.98 billions.

2. Support for war-affected clients (Phase 2)

During the second quarter of this year, 189 clients have been compensated, of which %33 were women, totaling USD 105,000. At the end of June 2019, the cumulative number of beneficiaries supported has reached 4,028, totaling USD 2.2 millions. The project has achieved its target of compensating 4,000 SMEs affected by the War with in-kind grants to re-launch or expand their businesses, and help them restart their activities.

3. Support the expansion of financial and non-financial services in the Integrated Intervention Areas Program

During the quarter, SMED has continued its support for the expansion of financial and non-financial services in the integrated intervention areas in the governorates of Dhamar, Ibb, Amran, Lahj and Hadhramout by conducting field follow-up visits to evaluate the village savings and loan associations (VSLAs) and their activities. The number of groups formed during has so far reached to 83, comprising 1,947 members (men and women) in the aforementioned governorates. The groups have so far accumulated about YR 20 millions. In addition, 234 electronic accounts have been opened via mobile phones for the beneficiaries of the Cash for Work Program.

4. Internal Audit Activities

In order to verify the integrity of internal control procedures and obtain reasonable assurances on the data of a number of MFIs, a financial and administrative evaluation of the activities of Yemen Microfinance Network (YMN) and Hadramout MF Program was conducted. Also, a field validation was carried out at the Nama Foundation on 207 clients at branches of Sana'a. In addition, a training project was developed to qualify consultants in field validations of clients in order to expand the base of consultants able to carry out field validations of MFI clients.

5. Thimar MF Foundation

In order to ensure that the continuous provision of financial services by SFD in the Governorate of Taiz for income-generating activities, SMED has developed a project to establish a new foundation (Thimar) in place of Al-Awael Microfinance Company, which was suspended due to the security unrest in Taiz.

6. Development of the computerized automated systems

1.6  The Desktop Recognition System

SMED has continued to develop and test the applications, both using the fingerprint or eye print. The aim of the system is to facilitate the registration and verification of microfinance clients. This will play a major role in facilitating lending procedures. SMED has developed a computerized mechanism that extracts the data from the Computerized Accounting and the Loan Tracking systems, and inputs them in the SEEP monthly reports, which are currently inserted manually by MFIs. The mechanism has been tested in Azal MF Program.

2.6  Computerized input mechanism for the SEEP monthly reports

SMED has developed a computerized mechanism that extracts the data from the Computerized Accounting and the Loan Tracking systems, and inputs them in the SEEP monthly reports, which are currently inserted manually by MFIs. The mechanism has been tested in Azal MF Program.

3.6  Developing the SMED English website

During the 2nd quarter of 2019, the English version of the SMED website has been developed further, including updating data and indicators, as well as adding success stories.

4.6  Design of the agricultural loan application using the mobile phone

The development of the mobile application for agro-loans has been completed and tested in more than one institution. This mobile application will help automate and speed up the loan application process in the field for loan officers, and raise the efficiency and accuracy of work.

5.6  A workshop on the mobile application for agro-loans

After having trained loan officers from the National MF Foundation in a previous workshop, SMED carried out a three-day training workshop for 8 loan officers from Azal MFI.

7.  Development of marketing and public Relations Activities of MFIs

SMED has established a project aimed at increasing promotion, marketing and public relations activities targeting a number of microfinance institutions and programs (National, Nama, Hadramout, Al-Ittihad, Azal). The final aim of the project is to give MFIs the necessary skills to build a positive image in front of donors in order to attract more funds, improve their relationship with stakeholders, and be able to attract more clients. During the quarter a total of USD 49,200 was disbursed to NMF and Nama.

II. Yemen Loan Guarantee Program (YLG)

YLG is the first program in Yemen that provides guarantees to clients whose guarantees are not sufficient to obtain a loan, or are unable to provide guarantees. During the second quarter, YLG has provided guarantees for 179 borrowers, amounting to YR 236,492,998. YLG also signed partnership with four MFIs: Hadramout MF Program, Al-Ittihad Program, Nama Foundation, and the Bank of Yemen and Kuwait. YLG also organized a workshop for the VOLIP partners to discuss the challenges and constraints they face during the lending phase. In addition, YLG has initiated the registration procedures for membership of the Global Network of Guarantee Institutions (GNGI). Finally, a number of the staff members have participated in a training course in Egypt on Credit Risk Assessment and on Countering Corruption.

III. Yemen Microfinance Network (YMN)s

In continuing its role promoting the MSME financial sector in Yemen, YMN carried out several training course during the 2nd quarter of 2019, as follows:

1.  Emergency Response Project

During the quarter, YMN has continued to implement and finalize the First Phase of the project. The Social Fund covers the cost of compensating those MFI clients who have been affected by the War, while YMN directly implements the disbursements. During the quarter, the network has launched the Second Phase of the project, in which 2,000 MFI clients are expected to be compensated by the end of 2019.

2.  Risk Assessment – Egypt

In collaboration with Prima Foundation, and with the support of MEDA Foundation, YMN has coordinated during the second quarter a -3day training course in Cairo (Egypt), where participants from a number of Yemeni MFIs were trained on Risk Assessment Mechanisms.

3.  Accounting for non–Accountants

A training session in this field was implemented by YMN in Seiyun. The course targeted non-financial staff in MFIs, with the aim of introducing them to the basic concepts of accounting.

4.  Customers Service

Another training course was conducted by the network in Seiyun dealing with customer service in MFIs. The course targeted those in the sector requiring direct communication and dealing with customers, by developing their in identifying customer needs and problems, and providing quality services to different types of microfinance customers.

 I. Internal Activities of Small and Microenterprises Development Unit

1. Funding and Grant Activities

 SMED has continued to support its programs and institutions during the fourth quarter of 2018 through a number of new and previous projects. Loans have been disbursed to Namaa MF Foundation for YR 200 millions, as well as YR 100 millions to Azal MF program, and another YR 100 million to NMF. Thus, the total amount of loans disbursed to MFIs and programs has amounted to YR 400 millions during the fourth quarter.

Funding

In the second quarter of 2018, SFD and Al Nahdha Social Association signed an agreement to finance Hadramout Microfinance Program with an amount of 200 million (approximately USD 433,624) to enable it to continue financing the activities of the clients located in Sayoun, Tareem,