Microfinance to flourish in 2012
Sadeq Al-Wesabi (author), Aden Microfinance Foundation (photographer)
Yemen’s microfinance sector saw massive deterioration in 2011 with some institutions and banks plundered by armed men in war-torn areas, while many clients were unable to pay off loans after fleeing fighting in their home towns and villages.
Many of the institutions that faced difficulties collecting loans – often from thousands of clients – were in Abyan governorate where fierce clashes broke out between Al-Qaeda militants and Yemen’s security in May last year, forcing thousands out of their homes and into neighboring governorates.
However, microfinance advocates are optimistic that the sector will bounce back this year, especially after the return of security and calm to the majority of Yemen’s cities.
Rana Al-Salami, executive manager of the Aden Microfinance Foundation (AMF) told the Yemen Times that the sector is a vital lifeline for those unable to find jobs or who have been made redundant.
The idea of microfinance, where small loans are offered to the poor to fund businesses, with low repayments and very little interest, was started in Bangladesh in 1974. Mohammed Yunus, an economics lecturer, lent a group of poverty-stricken villagers $27. Later, Yunus won the Nobel Peace Prize and microfinance became a global phenomenon.
It took off in Yemen in 1997 with the Social Fund for Development (SDF) and there are presently 11 active microfinance institutions, offering finance to thousands.
She called for unemployed Yemenis to think about serious projects and start their own businesses. "Loans are on hand for anyone as soon as the idea of a project is available," she said.
She added that the AMF aims to strengthen the role of women in society both economically and socially, reach customers in both rural and urban areas and contribute to the development of the microfinance industry in Yemen.
"We are going to increase the maximum limit for loans from YR 500,000 ($2,250) to one million," she said.
Al-Salami said that most of the AMF’s clients are women, saying, “They are more honest and committed clients.”
Petrol shortage and last year’s political unrest negatively affected the AMF and other microfinance institutions, she explained.
In Aden governorate, several banks and microfinance institutions shut down in 2011 but the Aden Microfinance Institution struggled to continue.
“We insisted on continuing despite difficulties and we decided to challenge our problems,” she said.
The Yemen Microfinance Network honored AMF members this month for their hard-working and effective contribution to the sector – even in the face of a complicated security situation.
The AMF now plans to make more Yemeni’s aware of the service, “It’s a new sector and many people know nothing about it."
Sharar Al-Mulaiki, a managing director of the Yemen Microfinance Network (YMN) said that it is considered one of the most innovative and effective ways to reduce poverty and unemployment, increase income and contribute to the state’s economy.
With the aim of improving the sector in Yemen and raising awareness of microfinance among Yemenis, the YMN ran a Microfinance Promotional Campaign for ten days in December.
They used a number of promotional tools including newspapers, local TV and radio stations, billboards, flyers, promotional items and a workshop to highlight the benefits of microfinance.
"The campaign was very successful, reaching all the targeted audience as planned and showing the huge demand for microfinance services in Yemen," said Khalil Al-Mikhlafi, research and development executive at the YMN. The YMN also produced a short documentary on microfinance in Yemen, shown on the Yemen TV channel.
Al-Mikhlafi told the Yemen Times that the microfinance sector witnessed notable growth during 2010 with the number of active borrowers reaching more than 65,000 and over 55,000 active savers.
He indicated that in 2011 the microfinance sector, like many other industries, was affected by the ongoing uprisings and demonstrations.
Al-Mikhlafi said that sector’s reach in Yemen is still limited, reaching 5 percent of the estimated demand of a potential one million people.
However, Al-Mikhlafi expected the industry to grow notably during the coming year. “We expect the beneficiaries to increase from 65,000 active clients by the end of 2011 to 100,000 active clients and more than 100,000 savers by the end of 2012,” he said.
“It’s a promising sector because it helps both the reduction of poverty and unemployment. It gives the poor a chance to improve their lives and income.”