Funding (loans and grants)

During the second quarter of the year, the Small and Microenterprise Promotion agency (SMEPS) was funded with a total

of YR 199,152,600 (USD 800,000). The funding was meant to enable SMEPS to carry out its activities and projects in the field of youth employment, and the value added chains for coffee, honey and seasonal crops. SFD also continued to provide grants and technical support to Al-Ittihad MF amounting to YR 48,749,000 (USD 194,996) to cover its operating losses and allow it to continue its financial services in the governorates of Abyan, Hadramout and Aden. A grant amounting to YR 19,650,900 (USD 78,600) was provided to Hadramout MF to implement the activities of the "Al-Hayat Al-Karima Project", focusing on agricultural, livestock, fisheries and food products, particularly in rural areas. In addition, SFD disbursed YR 105,953,683 (USD 423,815) to support the Takaful funds of Nama, Al-Watania, and Al-Ittihad MFIs.

Being the main sponsor of the Yemen Microfinance Network (YMN), SFD disbursed a grant of YR 33,409,250 (USD 133,637) to help the network cover its operational expenses and implement various activities and projects in the field of training, studies, research, and promotion of the microfinance industry. Finally, YR 8,333,332 was transferred to a number of MFIs as part of a project that would allow each of these entities to establish an internal department for operational risk management.

Thus, the total amount of grants disbursed by SMED during the quarter amounted to YR 415,248,765 (USD 1,660,995).

The Loan Guarantee Program (LGP)

During the third quarter of 2017 LGPhas carried out several activities towards the start of actual business (guarantee of loans). Among these activities: the continuing development of the MIS for tracking the loan guarantees portfolio, the translation of the operations manual in Arabic, contracting a certified public accounting firm to review and certify the accounting manual, visiting  similar programs to take advantage of their experiences, as well as the hiring of an IT administrator in the month of June. During the quarter, the program team has visited a number of programs and institutions is likely to work with in order to explain the policies and standards of LGP. In addition, contacts with international donor organizations were initiated to attract technical support and new funds for the program.

Establishment of a risk management unit in the MFIs

SMED has supported the establishment of risk management unit in the National Microfinance Network (NMF), as well as Namaa, Azal, and Al-Ittihad MFIs. Such initiatives are important in helping the MFIs in assessing their operational risks and develop strategies to manage them in order to avoid or reduce their negative effects, especially in light of the critical conditions being faced by the MFIs as a result of the war in Yemen.

Supporting war-affected clients and Takaful funds in the MFIs

The agreements for supporting war-affected customers and the Takaful funds of several MFIs were reviewed, which included those with Namaa, Al-Ittihad, and the National MF foundation. The country is still undergoing a war that has caused an economic crisis and security imbalances, leading to a significant increase in material losses on the part of enterprise owners, and an increase in the number and amounts of non-performing loans. This in turn has led to significant losses in those entities covered.

Auditing and field certifications

During the quarter, field confirmations of MF clients were completed in Aden MF, which had started in March. During April, a second field visit was carried out in Al-Basateen area in Dar Saad to verify some customer samples so that the unit could form a clear and final opinion on quality of the loan portfolio of the institution. Another team from the unit visited Hadhramout MF in May to review and conduct an analytical review of its financial operations. The team also reviewed the administrative aspects in the program, in addition to conducting field validations of a large sample of customers in various branches of the MFI.

Automated software systems

In the second quarter, the IT in the SMED unit team completed the development of the LGP's MIS system and delivered it fully to the IT officer in the program. The team also contributed to his selection as part of the establishment plan. During the quarter, the IT team also analyzed the data of the automated systems in all the MFIs (in particular Maeen loan tracking system), preparing reports and producing statistics and related graphs. The IT team also evaluated the possibility of introducing a customer verification mechanism based on fingerprints recognition to be part of Maeen. Also, the IT team carried out the regular maintenance of all automated systems in the MFIs, provided technical advice and support, and updated the credit bureau's database.

Yemen Microfinance Network (YMN)

During the second quarter of this year, the network carried out several training activities, including a four-day strategic planning course during the period April 9th-12th 2017, and another five-day training course during the period 20th-24th of the same month on preparing and writing administrative reports. In addition, another five-day training course was held during the period 23rd-27th of the same month dealing with the subject of developing microfinance products. These courses were attended by staff at various managerial levels working in MFIs. During the period May 8th-11th the Network held a training course for MFIs staff on writing project proposals for donor organizations. Finally, on the 13th of June 2017 under the title "Exchange of Experiences Program", YMN organized a meeting attended by a number of managers and staff from the programs and institutions working in the small and microfinance sector in Yemen to exchange experiences. During the meeting, the experiences of the National Microfinance Institution and the Azal Microfinance Islamic Program were presented, as well as a number of main issues related to operations, control procedures such, the development of new financial products, and the experiences of both sides in meeting the challenges caused by the current crisis in the country.