Microfinance in Yemen - Afrah Ahmed (23 years) Her small project in the Yemeni capital Sanaa, which is accustomed to micro-loans; and is now poised to request her third loan, but when asked whether she previous loans have helped to improve her life, came a lukewarm response.
She added in an interview with Network (IRIN), "benefited from only somewhat, because life is very difficult, and I do not have money in the house, and no one works.'m Looking for a solution to improve life."
The question whether the micro loans "succeed" in lifting people out of poverty is still under discussion not only in Yemen but in all parts of the world.
Said David Rodman, a senior fellow at the Center for Global Development in Washington, and author of a recent book on microfinance entitled "due diligence": "I would not call it a great way to address the problem of poverty, it achieved modest results at modest cost."
"I think it's something that enriches the economic fabric of society and contribute to the economic transformation process in a way that a modest but useful, and this is one of the meanings of development."
Microfinance includes financial services such as microcredit and micro-savings (which makes it easy to save small amounts of money).
It seems that five randomized control studies conducted in
Morocco, the Philippines, Mongolia, India and Bosnia and Herzegovina have shown that micro-credit can improve business profitability, but does not seem to improve poverty indicators such as household spending and the number of children in schools.
Due to having 15 years of experience and the necessary legal framework, Yemen is (the poorest country in the Middle East) of the leading countries at the regional level in terms of the granting of microcredit, and microfinance sector wider (which also includes, in addition to microcredit products, such as accounts savings for people who are normally excluded from mainstream banks).
Although large-scale unrest that swept across the country over the past two years, the expansion of this sector to a large extent, although it is still far from achieving all of its possibilities.
According to Adel Mansour, author of the report of the Social Fund for Development in 2011, the MFI has been able to reach 439 thousand people between 1998 and the end of 2011 in a country with a population of 25 million people suffer from poverty rates exceeding 40 percent.
The success of the Mujahid, executive director of network Yemen Microfinance "We estimate (we need) million customers in order to achieve the microfinance industry what we aim to it, which is to help the poor. But under current figures, we are not satisfied with the achievements of the industry."
Roots
The roots of microfinance in Yemen to 1997 when it was the establishment of the Social Fund for Development with the support of donors and government department. In 2009, the Bank was inaugurated hope, which is the first bank dedicated to microfinance in the Middle East and North Africa.
The Bank of Hope since its inception 60 A with an average loan size of approximately $ 200, which is now the largest source of microfinance in Yemen.
Mohammed said Lai, the founder of the bank and its chief executive, "We see ourselves as a bank for the majority of Yemenis."
He added that the loans are used in a variety of ways, particularly as a way to secure funding for small and medium enterprises, although the Bank of hope gives some consumer loans to qualified borrowers as well.
Although these consumer loans not exceeding a quarter of the loans provided by the Bank of hope, but there is concern at the global level of conversion of micro-credit sometimes to cover short-term needs such as bills of health and food, instead of providing capital for micro.
In order to adapt to the Yemeni market, the majority of customers choose
microcredit loans are compatible with the principles of
Islamic finance.
Shooting a cause for concern
Regardless of the model used, the repayment rates of microfinance in Yemen is very high, and more than 99 percent in many cases.
According to the report by the Social Fund for Development, the proportion of risky loans (which are defined as total accounts in arrears for more than 30 days) 1.6 percent in 2010, and was the rate of defaults final less than that in that year.
Lai pointed out that "our lending have a reciprocal relationship with the health of our customers. If the client's son's disease, for example, may not repay the loan."
I would call it a great way to address the problem of poverty, it achieved modest results at modest cost and over the past two years, became repayment more cause for concern, and industry microcredit is not immune from instability prevailing in the country resulting from the uprising "Arab Spring" in Yemen.
In 2011, risky loans increased more than five-fold, and offer loans to very slow, as the office of at least one, in the troubled southern province of Abyan, looted and forced to close.
Financial literacy
While the industry is trying to recover from the turmoil, there are still many challenges impeding lending to the poor, including the ability of persons who did not receive formal education to understand how these services work.
And can understand the mechanism of action becomes problematic loans for people with limited knowledge of financial matters, as reported by Mujahid.
And trying to donors and institutions to address this problem through institutions such as the promotion of service SMEs (SMEPS), which provides subsidized management training for entrepreneurs.
But small business owners who use microcredit are a minority in these courses.
The broader question that you ask Mujahid for the microfinance in Yemen - as others have done in other places - is whether truly serve the poor.
"It did not happen a real assessment of the impact of the microfinance industry since it began in 1997."
The report concludes the Social Fund for Development, which uses very few measurements of the economic impact, that people are extremely poor - often in rural areas - have not benefited from the financial services in Yemen, despite efforts to reach them.
Experiments were lending very poor people in Yemen relatively unsuccessful, the report says, because "the basic needs of survival is more important than managing a small activity requires constant effort and dedication to work."
As interest rates - or the equivalent in the Islamic system - which starts from 18 percent make borrowing difficult for the very poor people and those who wish to establish a new business.
The high interest rates in part to inflation in Yemen, with a lot more than 10 percent, and the national currency relatively volatile.
And banking services via mobile phone, and marketing campaigns roaming, and push for increasing the number of savings accounts and borrowers very poor through partnership Social Fund for Development with the Yemen Post and Social Welfare Fund are factors that can help society in greater use of financial institutions.
But Ali Abdul Wafi, an economist and former member of parliament, it is believed that the greatest responsibility for the growing financial sector rests with the government.
And despite the fact that the Yemeni government has adopted a strategy the granting of micro-credit in 2005, and issued a law microcredit in 2009, but Abdul Abdul Wafi did not think they played an active role enough.
"The government may be busy with other issues, but they must pay attention to the financial sector it is extremely vital for the economic situation in Yemen."
And believes that Yemen needs to "further advocacy and interest microcredit industry, because it is a tool to combat poverty, and not just for charity."
IM John Chow
IM John Chow
