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.

The total number of active borrowers in microfinance institutions and programs (MFIs) during the fourth quarter has reached 83,490, while the active loan portfolio has amounted to YR 943,830,000. SFD also has provided grants to SMEPS, Yemen Microfinance Network, the National Foundation, Alitthad Program, and Loan Guarantee Program (LGP). SFD has been the main supporter of these institutions, especially in light of the current crisis in Yemen that has been lasting for more than four years. The support was meant to enable these MFIs to continue to provide its services to the owners of income generating activities. It has amounted to a total of YR 913,305,319 during the quarter.

2. Support for War-Affected Clients (Phase II)

 The project aims at compensating 4,000 war-affected microfinance clients to recover their activities lost or damaged by the war. During the quarter, nearly 945 customers have been compensated for more than USD 586,000, from the original project budget of approximately USD 3.7 millions.

3. “Gharsa” Project

 The project aims at expanding the provision of microfinance services in rural areas, training and qualifying cadres working in the agricultural and rural sector, as well as covering operating expenses and purchasing fixed assets to open new branches. In this regard, the branch of the National MF Foundation in Marib was opened in the fourth quarter at a cost of USD 30,000 covered by SFD.

4. Support for the Expansion of Financial and Non-Financial Services in Integrated Intervention Areas

 The project aims at forming Village Loan and Saving Associations (VLSAs) in a number of integrated intervention areas. This qualitative project is being implemented in partnership between the Training and Institutional Support Unit at SFD and the Small and Micro Enterprises Development Agency (SMEPS). The project has started during the quarter by mobilizing local communities in intervention areas and established rural savings and finance groups in several districts. During the period, SMEPS has carried out a field survey to identify economic needs and local resources in the intervention areas.

5 - Development of Automated Systems and Software and Others

 a) The SMED website

 Over the course of the quarter, work has continued on the development of the unit’s website by the addition of industry-wide indicators. In addition, the data analysis of microfinance institutions and programs has been developed by creating the possibility to generate graphs and compare results.

b) Introduction of fingerprint technology

 Efforts have been continued to introduce such technology into programs and institutions in a pilot manner so that the client can be registered and verified to avoid any imbalances that may occur.

c) The mobile application to evaluate agricultural loans

 Following the SMED excel-based Evaluation Tool, a new Android-basedmobile application has been developed in the last quarter of 2018. The loan officer in the field will be able to evaluate the activities of the client who wishes to obtain an agricultural loan, and assess the feasibility of the loan using a mobile phone. This application is expected to improve accuracy, speed of work, and increase productivity.

d) The credit bureau (CB)

 The SMED IT team has worked during the fourth quarter on developing the mechanism for searching for customer names in order to obtain better search results. The team has also continued updating the bureau’s database.

e) Introducing geographic mapping technology for client concentration

A software mechanism has been developed during the quarter that would allow users to find out the concentration of microfinance clients on geographic maps in cities and rural areas, and add this new quality feature to the unit’s website so that any user can view the geographic distribution of microfinance clients in Yemen.

f) Human Resources Automated System

 Routine technical support has been provided to microfinance programs and institutions solving problems and using this system designed by SMED.

g) Technical support for the loan tracking system Maeen

 During the quarter, a number of technical aspects have been developed in the system, in addition to linking it to the mobile application for evaluating agricultural loans. Furthermore, routine technical support for the system has been provided to the MFIs during the quarter.

h) The MFIs Evaluation Tool

 A team of the SMED unit has completed the development and adoption of a tool to evaluate MFIs during a workshop held in Amman (Jordan) in early November. Technical in accomplishing the task was provided by the German consulting firm LFS. The tool has been designed using Excel, and allows a comprehensive evaluation of MFIs (programs, institutions, and banks) operating in the sector according to the mechanism used by rating agencies. The tool is expected to be used starting from 2019.

6- Training of microfinance staff

 During the quarter, several small and micro-finance organizations have participated in a training session on how to conduct the feasibility study of small and agricultural activities. The training provided was technical support by the German consulting firm LFS and funded by the German Development Bank (KFW), where several general or particular refresher courses were conducted according to individual needs. During these sessions, the difficulties faced by these entities in the field have been examined and amendments were made to the feasibility study system according to each case. The training involved staff from 15 programs and institutions, as well as 13 trainees on the microfinance product. These, in turn, have trained many of their colleagues after returning from their training mission.

II. The Loans Guarantee Program (LGP)

 LGP provides guarantees for small and micro-entrepreneurs in Yemen who do not have enough collateral to obtain funding for their economic activities from programs and institutions. The number of guarantees issued since the beginning of 2018 has reached 300, totaling YR 127,523,000. The fourth quarter has witnessed an increase in the issuance rate, with 142 guarantees issued totaling YR 71,848,000. In order to expand, LGP has begun in the fourth quarter to cover those new branches of microfinance programs and institutions that have opened in less than two years, in addition to guaranteeing micro loans less than one million Riyals. The program alsohas focused on developing the skills of its staff and enhancing their skills and capabilities. Staff from LGP has attended a financial analysis training course organized by the Yemen Microfinance Network (YMN) in October.

III. Yemen Microfinance Network

 In order to play a positive and effective role in promoting the microfinance industry in Yemen, the network has implemented many activities during 2018, the most important of which are the following:

The study of credit benefit: The training course was conducted in Aden in November, as YMN Yemen Network is keen to organize training courses in other governorates in order to facilitate and enable the participation of local MFIs and pass the benefit. The course has brought together practical and theoretical experiences that benefit staff in the sector in line with reality.

The integration of 10 graduates of the program Sawlf: In November, an agreement was signed with Mercy Corp (the funding agency) to qualify 10 trainees who have graduated from this program with several functional and life skills.

Training of microfinance employees (Pragma): With funding from “Pragma”, YMN implemented in November a training project called “Training of Microfinance Personnel”, which aims at training temporary employees in the microfinance sector, as well as candidates for employment. The project included 4 training courses: Microfinance Principles, Feasibility Study, Arrears Management, and Marketing of Microfinance Products. The implementation of the project lasted for a total period of 22 days.