I - Financing activities

 1. Loan activities

During the quarter, SFD has granted loans to the National Microfinance Foundation (NMF) (YR 1.709 billions), Azal Islamic MF Program (YR 1.159 billions), Hadramout MF Program (YR 579 millions), and Nama’a MF Foundation (YR 574 millions). Accordingly, the total loan financing during the quarter amounted to YR 4.021 billions,

enabling those entities to continue financing the income generating activities of their clients, and help them and their families improve their standard of living. The total volume of active loan portfolios in the various microfinance programs and institutions at the end of the first quarter 2020 amounted to approximately YR 24.5 billions, while the number of active borrowers reached 88,778 people.

 2. Grant activities

 During the quarter, SFD has continued to provide grants to the Small and Micro Enterprises Development Agency (SMEPS), Nama MF Foundation, the National MF Foundation, and Themar Microfinance Foundation (recently established) with a total amount of approximately YR 1.2 billions. The grants were meant to enable the SMEPS to continue implementing its multiple activities in providing non-financial services, support and expansion of financial services in areas of integrated intervention, and to support the formation and training of the rural savings and finance groups (VSLAs) program. The grants were also meant at supporting the establishment of Themar MF Foundation, and the development of governance in microfinance programs and institutions.

II – Internal activities of the SMED Unit

 1. Annual meeting of SFDs microfinance partners

 The Social Fund for Development organized during the period 2020/2/12-11 the semi- annual meeting of its microfinance partners under the general title "Partial Funding of SFD to its Partners in the Field of Microfinance". More than 39 people representing 14 MF institutions, programs and banks in Yemen participated in the meeting. During the meeting, attends exchanged views, opinions and experiences on issues of common concern.

 2. Supporting War-Affected Clients (Phase 2)

 During the quarter, 229 clients (70 of them women) were compensated, amounting to YR 41,299,150. Thus, the cumulative number of beneficiaries reached 4,661 beneficiaries (%48 women), who were compensated with approximately USD 1.88 millions. The compensation aims at reducing the damages and effects of the war on owners of small and micro activities by reducing the financial burden on them. They are provided financial assistance to resume or continue their income-generating businesses affected by the war.

 3. Village Savings and Loans Groups (VSLAs)

Work continued in the VSLA Program, which operates in various regions of the country. During the quarter, 15 new groups have been established, including 9 female and 6 male groups, which included 298 members. This brings the total number of groups in the program to 98 with 2,226 active members (%45 of them females). The accumulated savings up to the end of the period amounted to approximately YR 56 millions. Funding for member projects also continued, with a total amount of approximately YR 14.5 millions disbursed to 92 members (males and females). In the same period, 814 members were trained in a number of technical fields, including: leadership, group organization and internal work, husbandry, entrepreneurship, and carrying out the feasibility study for small projects.

 4. Field audits of clients

During the quarter, a number of consultants working for the SMED Unit in field authentication of microfinance clients were trained and qualified in Aden Governorate. The aim was to add them to the pool of those with experience in field validation. Fifteen participants (males and females) participated in the training course, which was held in February. The SMED audit team also carried out a financial and administrative audit of the operations of the Loan Guarantee Program to verify the integrity of its internal control procedures, and give reasonable assurance of its financial operations during 2019.

 5. Governance development for programs and institutions

 During the first quarter, the unit's activity continued to improve the governance of its MF programs and institutions. Several meetings were held with the Boards of Directors in those institutions and programs, during which the consultant's reports and recommendations were discussed, and it was agreed to address their weaknesses in governance. Those organizations included the Nama Foundation, the Ittihad Program, the National MF Foundation, and Hadramout MF Program.

 6. The Yemen Loan Guarantee Program (YLG)

 The number of guarantees issued to SME owners during the quarter reached 269 guarantees equivalent to a value of 420.2 million riyals. As such, the value of existing guarantees has exceeded one billion YR. Since its establishment, the program has issued cumulatively 1,262 guarantees, amounting to about YR 1.6 billions.

 7. Information technology and automated software systems

During the quarter, the information technology team in the SMED Unit has carried out several activities that contributed to the advancement of the microfinance sector. These activities included making the necessary updates to the unit's website by, for instance, updating data and displaying news, publications, reports and indicators on microfinance. Customer data in the credit query was also updated routinely. The fingerprint-desktop application was tested and installed in all MFIs. The function of the system is to register customers and verify their identity in order to facilitate registration and verification, and avoid any possible errors when financing them. SFD also trained the finance specialists working in NMF, Ittihad MF, and Hadramout MF on the two mobile applications designed to study agricultural and commercial financing. The purpose of the two applications is to accurately assess the client's activity in the field and the economic viability of the loan, in order to avoid errors, improve work speed, and raise productivity.

III - The Yemen Microfinance Network (YMN)

During the first quarter of 2020, the network has established a number of activities that contribute to the development of the technical and knowledge capacity of the microfinance sector in Yemen, including the following:

 1. Training courses

YMN implemented a Training of Trainers (ToT) course in mid-January, targeting executives, directors, and training officers in microfinance institutions and programs. The course touched several issues, including modern methodologies in training and adult education, as well as an analysis of training needs, impact assessment and basic trainer skills. Also, a training course in Islamic Finance was implemented in mid-February, targeting all administrative levels of MFIs. The course covered the obstacles and risks related to Islamic finance, its various forms and how they are designed, the role of Islamic finance in microfinance, as well as a review of the suspicions revolving around it.

At the end of February 2020, a training course in Credit Feasibility was implemented, targeting operations officers, loan officers, and branch managers of MFIs. The course touched on several areas, the most important of which was to get acquainted with the tool for evaluating projects and small activities according to the model of the German consulting company "LFS". Work included developing the operational mechanisms of microcredit, how to evaluate the activity and analyze it financially, in addition to the practical application of the evaluation tool.

 The network also involved Nama’a Microfinance Foundation at the end of February in the implementation of two training courses. The first was on Fundamentals of Microfinance, and the second (on the job) on Enhancing Integrity and Combating Corruption in MFIs, which was dedicated to members of the Board of Directors and the senior leadership of the institution, as well as the Foundation's partners in the middle of February.

2. Plan additional remote courses

In light of the spread of the Corona virus, the network prepared an emergency plan to provide 9 remote training courses that would cover various fields of microfinance, and bridge the training gap resulting from the spread of the virus. The courses will be offered during 2020 within the network’s emergency plan, in addition to the original training plan that included 21 courses, for a total of 30 training sessions.

 3. Activation of the risk committee

YMN has reactivated the risk management committee that it had established at the outbreak of the War in 2015. The committee’s tasks are to propose plans to deal with the Corona virus outbreak crisis, and provide urgent consultations for existing MFIs according to best practices and on the basis of experiences in other countries that have experienced the pandemic.

 4. Financial Analysis According to the SEEP Framework

In mid-March, YMN held a training course in Financial Analysis using the SEEP Framework with the participation of operations officers, loan officers and branch managers of a number of MFIs. The course covered all the standard financial statements, how to reconstruct and amend them according to the SEEP Framework, and how to extract all analytical ratios.