SMED continued its activities during the second quarter of 2020 in supporting the development of small and micro enterprises in the country by providing financing microfinance programs and institutions (MFIs) with grants and loans. In addition, SMED continued its efforts in supporting various other initiatives and carrying out internal works with the aim of contributing to the sustainment and development of the sector.

I Funding activities

 1. Loans

Lately, Yemen's exposure to the global Covid-19 pandemic wave has cast its shadow on the national economy, in general, and to a certain extent on the local microfinance sector as well. As such, MFIs have requested less funds from SFD during the quarter as part of a number of precautionary measures taken to reduce risks, as well as due to a general decrease in demand for loans by borrowers during the period. Consequently, borrowing from SFD has stopped during the quarter, contrary to what had been planned earlier on. During the quarter, the total number of loans issued by MFIs to their clients has reached 9,068, for the amount of YR 9.5 billion. The goal was to develop the activities of small and micro entrepreneurs, especially in the fields of alternative energies and agriculture. The total volume of active loan portfolios held by MFIs has reached approximately YR 27.75 billion by the end of September 2020, distributed among nearly 88,000 beneficiaries. Since the establishment of the SMED unit, the cumulative number of loans issued by programs and institutions has reached 862,667, valued at more than YR 151 billion.

2.  Grants

SFD has continued its activities in providing cash grants and non-financial services to its small and microfinance partners. Such funding has reached approximately YR 637 million during the quarter, of which 76% was spent on the microfinance component of the VOLIP program  through Nama'a, NMF, Azal, Hadramout, and Al-Ittihad MF in Abyan. The project aims at empowering the beneficiaries of these entities economically and technically within the literacy and professional knowledge component of the program, and enroll them in the formal microfinance sector. The grants also included: support for the Small and Micro Enterprise Promotion Agency (SMEPS) in implementing its various activities in the fields of financial and non-financial services; supporting institutions and programs in compensating clients affected by the war; supporting and expanding financial and training services in areas of integrated intervention (formation and training of savings and rural finance groups - VSLAs).

Second – SMED Internal activities

 1.  Supporting the war-affected SME clients (phase 2)

The project aims at compensating clients whose businesses have been damaged because of the war by writing off their debts, and allow them to restore their business, and improve their standard of living and the standard of living of their families. About 224 SME clients (of which 141 were women) were compensated in the third quarter of 2020, for the amount of approximately YR 41 million. In addition, the debts of 111 defaulting clients were dropped, amounting to another YR 18.9 million (USD 1.466 million). Thus, the cumulative number of beneficiaries from the project has reached 5,047, so far, (48% of which were women) receiving compensations totaling USD 2,092 million by the end of the quarter.

  2. The Rural Savings and Finance Groups (VSLAs) Program

The program has continued over the quarter its operations in the various governorates it has expanded to, as its activities have increased significantly during this quarter compared to the previous one. The number of village groups has increased from 93 to 174, and the number of members has reached 4,161 compared to 2,357 at the end of the previous quarter. Women accounted for 44% of the total. Accumulated savings until the end of the quarter have reached more than YR 66.1 million. During the quarter, hundreds of group members have received training in several areas, including: savings, rural finance, bookkeeping skills, administrative and organizational skills, and training in various agricultural activities.

3.  Information technology and automated software systems

The unit's information technology team has continued to develop the SMED website by adding new reports and statistical charts. Work on updating the database of the web-based Credit Bureau and carrying out periodic maintenance has also continued. In addition, routine technical support was provided to those entities using the loan tracking system (Maeen), the HR system, and the automated accounting system, as well as making back-up copies of data to be kept at the SMED unit. Finally, during the period, the automatic issuance of monthly SEEP reports was activated in the National MF Foundation (NMF).

Third – Yemen Microfinance Network (YMN)

During the third quarter of the year, YMN has continued implementing various activities aimed at supporting the development of the SME sector in Yemen. YMN accomplished the technical assistance in digital transformation during the first half of July, by carrying out separate meetings with each of those MFIs that had participated in the Digital Transformation Workshop held in June. In July, YMN coordinated between the "Vidanvi" consultancy company and the member institutions to discuss the digital transformation strategy of each party, separately. As part of these activities, YMN also developed its own digital transformation strategy. During the quarter, YMN has also implemented several training courses, in which a wide range of employees from the MFIs participated, including managers, administrators and field employees. A course on Loan Feasibility Study (July 5th-12th, 2020) was organized online, where 8 trainees (males and females) participated. Also, during the period July 20th-23rd, 2020, a course in Risk Management was held, in which 20 employees from the MFIs participated. In addition, a course on small loans was held during the period (July 13th-17th, 2020) for 17 participants from MFIs. Finally, a financial analysis course according to the SEEP Framework was held during September 19th-24th, 2020, with the participation of 21 male and female trainees from the participating MFIs.