MICROCAPITAL BRIEF: Survey Conducted by Yemen Microfinance Network (YMN) Indicates Microfinance Institutions Facing Operational Difficulties Because of Ongoing Political Tension

According to a survey conducted by the Yemen Microfinance Network (YMN), a member-based nonprofit organization, microfinance institutions (MFIs) in the country have been negatively affected by the ongoing political climate and are facing an uncertain future. Eighty-eight percent of MFIs reported that operations have been “impeded” by structural problems that include fuel shortages, power cuts and breakdowns in communication, while only 45 percent of MFIs have implemented a contingency plan to manage the financial stress. Mr Mohammad Al-Lai, chairman of YMN, estimates that the total value of loans outstanding in the country stands at YER 5 billion (USD 21 million).

Because no external funding or international assistance has been made available, new microloans are unlikely to materialize while MFIs will likely suffer as they may resort to writing-off an increasing percentage of their portfolios. Some microfinance clients have defaulted on their loans, possibly due to the cited lack of liquidity in the Yemeni economy.

By Rohan Trivedi, Research Associate

About Yemen Microfinance Network (YMN):
The Yemen Microfinance Network (YMN) was launched on August 1, 2010 by the United Nations Development Program (UNDP) and the Social Fund for Development (SFD) in order to develop the capacity of local institutions to facilitate the delivery of financial services and products to “the entrepreneurial poor.” YMN encourages its members to build sustainable and inclusive models, with a focus on extending financial services to women and youth. As of July 2011, YMN’s members include three microfinance banks, two microfinance-focused foundations and one microfinance company.

Sources and Additional Resources:

[1] Yemen Times: “Microfinance sector in Yemen in trouble”, http://yementimes.com/defaultdet.aspx?SUB_ID=36379

MicroCapital.org story, August 5, 2010: “MICROCAPITAL BRIEF: Yemen Microfinance Network (YMN) Holds Official Launch”, https://www.microcapital.org/microcapital-brief-yemen-microfinance-network-ymn-holds-official-launch/

MicroCapital Universe Profile: Yemen Microfinance Network (YMN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Yemen+Microfinance+Network+%28YMN%29

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