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Newsletter October - December 2017

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Loans and grants

In order to enable programs and institutions to continue to provide financial services to micro and small entrepreneurs,

SFD has provided the National Microfinance Institution (NMF) with a loan of about YR 287.7 million (equivalent to $800,000). SFD has also provided financial grants to cover the losses incurred by a number of programs and institutions as a result of the crisis and war the country is undergoing. SFD has funded Nama Foundation and NMF, as well as Abyan and Hadramout programs, for a total amount exceeding YR 340.2 million (equivalent to USD 946 thousands) in order to support their budgets.

Loan Guarantee Program (LGP)

SFD supports LGP to help cover borrowing risks by participating in guaranteeing loans for small and microfinance clients who are unable to provide collateral and guarantees. In this regard, SFD has funded LGP with USD 2 million to enable it to begin issuing loan guarantee. In addition, LGP was funded with YR 28.6 million to provide the necessary requirements for its new headquarters and to cover operating expenses and consultancies, and its activities within the technical and education illiteracy program by the Islamic Bank. In this regard, SDF has signed an agreement with LGP to managing the lending component of the program, which aims at funding unemployed youth and women (1,000 beneficiaries in all) who have received training in literacy, and life, professional, and entrepreneurial skills. LGP has also signed partnership agreements with several MFIs, and was able to issue the first credit guarantee in the local MF industry in November 2017. LGP succeed in transferring 137 beneficiaries from Al-Mukalla (Hadhramaut Governorate) and Al-Hudaidah within the literacy program to various MFIs and provided them with the necessary guarantees.

Compensation of war-affected clients

Within the framework of the second phase project to compensate war-affected clients, and  implemented by SFD with funds from the World Bank and under the supervision of the United Nations Development Program (UNDP), LGP has signed several agreements with the Yemen Microfinance Network (YMN) and a number of MFIs to compensate their clients affected by the war. The agreements totaled more than YR 475 million, and aimed at compensating clients and cover operating expenses. Beneficiaries were Nama, Azal, Tadhamon and Abyan as well as Al-Kuraimi Bank.

The Decent Life Program

A field study was conducted to assess the impact of financing the activities of clients, especially in areas covered by the National Microfinance Institution. The Small and Micro Enterprise Promotion Services (SMEPS) conducted a study funded by SFD, in addition to clients training. The results showed that the activities had a significant impact on the breeding of livestock and bees, and in the food industry, and that there was a marked increase in productivity, quality and income for the beneficiaries. Also, SMEPS carried out 26 training courses on the target group in several governorates, in which currently 750 clients participate.

Financing to opening new branches of rural finance

Support was provided to Nama and Azal MFIs to open new branches in Al-Hudaidah, Amran and Dhamar Governorates, amounting to about YR77.8 million (about USD 216 thousand).

Developing a Microfinance Business Environment in Yemen

Within the framework of SMED's orientation towards raising the capacity and performance of the MF industry in Yemen, technical support funded by the German Government (via KfW) has been reactivated through the German consulting firm LFS. It is a key component in the context of developing a friendly environment for MF in Yemen. In this context, two workshops on risk management and credit analysis were held in Jordan for the staff of SMED during the period 24 November – 03 December 2017. The aim of the workshops was to develop SMED's strategy for the period 2018–20, so as to be in line with the new trends and conditions in Yemen, as well as the development of the MFIs evaluation tool. The training was coordinated by SFD, implemented by a German consulting company (LFS) and funded by the German Government/KfW.

Alternative Energy Project

A consultant in the field of solar and wind power has been contracted to undertake field visits to a number of MFIs to determine their needs for such systems. The breakout of the war has affected MFIs negatively in terms of either total lack of electricity from the power grid or its high cost and that of generators and fuel. Therefore, SFD decided to intervene through this project budgeted at $550 thousand to provide MFIs with alternative energy sources, especially solar.

Development of information systems

Due to the urgent need to verify the identity of customers not only at the MFI level, but also at sector level in an instantaneous way, and due to the existence of many different types of new and old documents of identification, SFD has devised the addition of a mechanism for automated identification of clients. This is to be through automated fingerprint recognition, which is still under development. The IT team also worked on developing and updating the database of the credit bureau's website. Work has also continued on the development of SMED's website, where a specialist consultant has been hired for the specific task. During the quarter, work has continued on the development of the automated accounting system. Its outputs (reports and financial statements) were linked to the SEEP framework used by SMED and all MFIs in Yemen for analyzing performance and financial indicators.

Yemen Microfinance Network (YMN)

SFD has continued the provision of financial support to YMN through a grant of about YR107.9 million (equivalent to approximately GBP 226,337), representing the second installment for covering its activities approved for 2017 (including operational expenses). The network plays a major role in the implementation of the many activities related to the compensation of war-affected clients and the provision of training courses and awareness programs for MFIs, in raising the capacity of its employees and members of the Board of Directors, and in contributing to the overall advancement of the MF industry in Yemen. During the quarter, YMN has implemented three training courses in customer service, financial and administrative reporting, and in advanced internal auditing. Also, during the quarter the network also implemented an exchange of experiences program in both Aden Foundation and Al-Ittihad Program in Abyan.

Small and Micro Enterprise Development Unit

Republic of Yemen

Social Fund for Development

Sixty street,Faj attan, Sana'a,Yemen

Tel :967-1-449669

Fax : 967-1-499670

 

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