Micro-financing helps a grocery store make the big time
Al-Mahwiti, an owner of a grocery store in Hodeida, is one of those who has benefited from micro-financing. He received initial funding of YR 150,000 from the Al-Kuraimi Exchange company, to be payed back in monthly installments.
Micro-financed business projects and micro-finance institutions have recently been flourishing through loans provided by banks and exchange companies.
The Yemeni economist, Ali Al-Wafi told the Yemen Times that micro-finance for small business is an effective economic strategy, which creates job opportunities and reduces poverty and unemployment.
“It is considered a key finance stream for large, medium and small businesses to increase their production,” he said.
“Where the public and private sector are not able to provide new career opportunities, micro-finance for small business projects are part of the solution to unemployment and poverty,” Al-Wafi added.
After the first loan, Al-Mahwiti saw the improvement in his grocery business and decided to borrow another YR 200,000. This he invested in buying new products to sell in his store. The final loan was for YR 300,000, which he paid back over eight months in monthly installments. The total interest he paid on the final loan was YR 40,000, which equates to a rate of interest of under 14 percent.
Al-Mahwit’s business began as a small shop made of zinc his father started near their house with an initial outlay of YR 5,000. It was successful, and its capital grew to over YR 200,000. He decided to visit the Al-Kuraimi micro-finance company to finance the development of the store and purchase a lot of equipment. With the financing to expand, he was able to grow his store to a value of YR 1,200,000.
“I thank God that Al-Kuraimi company was able to assist us. The income and capital of the grocery store have been improving. The customers used to come to buy supplies, however, the store didn’t always have those those supplies in stock,” Al-Mahwiti said to the Yemen Times. This is what prompted him to approach the Al-Kuraimi company on an ongoing basis.
Al-Mahwiti obtained a diploma in micro-finance business projects five months ago, coming first in his class. “This study helped me a lot and I learned many practical skills through it,” he said.
The Hodeida branch of the Al-Kuraimi Exchange company has funded several small business projects in the governorate. A large number of people who otherwise had no financial support have benefited from these business projects. For many it has allowed them to establish their own projects and fulfill dreams they would not have been able to achieve without this financial backing.
The director of the Al-Kuraimi Exchange company in Hodeida, Hamdi Al-Shamiri, says that the company has funded a lot of commercial and industrial micro-finance projects such as restaurants, groceries, internet cafes, and other shops. Fixed assets are purchased for shops such as refrigerators, computers, and foodstuffs. The recipient provides a quotation for items they would like to purchase. After doing a feasibility study of the potential recipient, gaining a guarantee and making sure the recipient understands the repayment schedule, the company then purchases the items for the business, whilst making a small profit for granting the finance.
Al-Mahwiti expressed to the Yemen Times his satisfaction with the great improvement in his income that has been able to help him support his father and three brothers. He hopes that he will be able to expand his small business into a much larger business in the future. He pointed out that the interest Al-Kuraimi charged him is less than other companies that offer to finance small businesses.
“Now my income has started to improve, I’m planning to get married soon,” he said.
Apart from the much needed financing, Al-Mahwiti puts the success of his grocery store down to the special care he takes of his customers. “I do not want to lose a single client. I help customers and even provide them free home delivery.”