Yemen 2018 Socio-Economic Update, Issue 36 - August 2018 [EN/AR]

Situation Report
Originally published



1st: Overview of the Banking Sector.

2nd: Importance and Structure of Microfinance Institutions.

3rd: Status of Small and Micro Finance.

4th: Challenges & Risks.

5th: Priorities


Microfinance industry is very important in reducing unemployment rates and providing livelihoods for a wide range of the most disadvantaged groups in society to help them to acquire income producing assets. The number of active borrowers from MFIs amounted to 85,863 in June 2018. Hundreds of thousands of men, women and children benefit from these loans. Returns of microfinance clients’ enterprises represent the main source of income for about half of them (48.3%).

Currently, microfinance indicators are relatively better than those during 2015-2016, trying to absorb the first shock and adapt to the current circumstances, with the resumption of 20% of the microfinance clients’ enterprises that were suspended during the war period. However,
MFIs and their clients’ businesses faced multiple risks, including exposure to damages and ongoing closure of 17.3% of total enterprises. In addition to vulnerability to severe energy, liquidity and exchange rate crises. As a result, the ratio of loan portfolio at risk has increased to alarming limits, exceeding more than 40% in June 2018, financial performance of MFIs has deteriorated and lending opportunities have contracted.

The spread of small and micro enterprises provides a supportive environment for stability and peacemaking. Unemployed youth are more likely to become frustrated and join armed clashes while engaging the youth in improving their own enterprises absorbs their incentives and motivations of violence and strengthens their tendency towards peace. Through this outlet, we call on the donor community to provide more support to the microfinance sector within the framework of humanitarian response programs in Yemen to enable the poorest and most-affected groups to have access to sustainable livelihoods, as an embodiment of the Chinese saying “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”