PRESS RELEASE: UN and Social Development Fund to Establish Microfinance Network in Yemen

Original article available here.

NEW YORK, July 20 – The United Nations Development Program (UNDP) signed four projects this week in Yemen, one of which will create the first National Microfinance Network in hopes of improving job availability to the working poor in Yemen, particularly among women and youth.

The project aims to promote economic growth that will lead to significant reduction in poverty in the future by improving the productivity of small enterprises and rural households in Yemen. It will receive funding from the Social Fund for Development (SFD) along with the UNDP.

Started in 1997 by the UNDP and SFD, the microfinance sector in Yemen has recorded progress and is currently serving approximately 35,000 active clients, but it is still largely limited to urban areas. UNDP’s Communication officer Sausan Ghosheh told MediaGlobal, the newest project “aims to support exchange of experiences and expand project outreach to rural areas enabling job creation, products diversification and promotion of self employment through involvement of poor in income generating activities.”

According to the official project document, only an estimated four percent of people in Yemen participate in the formal finance sector, while about 80 percent of the population is employed in the informal sector and an estimated 17 percent of the country is unemployed. The project aims specifically to help youth because their rising unemployment rates threaten the stability of Yemen in the future.

“The project will provide direct technical assistance to build the Network’s capacity to provide quality, effective, demand driven services to its members and the industry at large, developing its core competencies in the following key areas: training and technical assistance; information dissemination and exchange; and, industry transparency and standardization,” added Ghosheh.

By offering training assistance and information dissemination, the project will create jobs for locals, increase the number of eligible workers to staff the network in the future, and help locals better understand the microfinance market before the network is fully self-sufficient.

In monitoring performance data and openly sharing the results, the project hopes to gain investor confidence and increase opportunities for private development and funding. Monitoring will also show weak areas of the project and hopefully lead to improvements in performance and outreach to a needy population.

The project will cover the start-up and operating costs of the network for the first three years of operations. As part of the deal, the network is required to have a realistic, long-term strategy for financial viability, and it will be evaluated during the three years it is covered by the SFD and UNDP to ensure it is making progress toward its goal.

To help ensure its long-term viability, the project aims to partner with local Yemeni training institutes, such as the Arab Academy and community colleges. In the short-term, the project will provide funding for curriculum development and training materials, as well as training for teachers.

In the future, Ghosheh told MediaGlobal “the Network will act as a source of local industry information, undertaking action research that will have direct application by microfinance enterprises wishing to enter into new markets and better understand their working environment. The Network will further facilitate information exchange through exchange visits, topical working groups and seminars. These services will be critical for entering frontier markets and raising the level of understanding of many microfinance enterprises to client needs.”

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