Guarantee Program Expert for the Promotion of the Financial Sector and of Micro, Small and Medium Enterprises (MSME) in Yemen

As one of the poorest countries in the world, Yemen is facing a multitude of problems including food insecurity, malnutrition, and poor sanitary and health conditions. Since 2015, the country has been undergoing a war that has further deteriorated the situation, displacing millions, causing casualties, and resulting in a catastrophic loss of economic wealth. In 2019, the UN estimated that about 75% of the population needed humanitarian assistance and protection.

Nevertheless, the micro, small and medium enterprises (MSME) continue to operate in Yemen even in under very difficult circumstances. The Yemen Microfinance Network (YMN) war impact assessment has identified several risks affecting the economic and financial environment in Yemen (such as climate change, import and export restrictions, airstrikes, population displacement, and more) while the World Bank has listed seven main constraints to the development of the private sector in the country (SME closures and shrinkages, access to finance, lack of investment, decreased sales, decline of financial intermediation, banking sector instability, and overreliance on cash payments and money exchange companies).

Overall Objectives of the Project

The purpose of the project is to strengthen the Yemeni microfinance sector and secure sustainable access of micro, small and medium enterprises in Yemen to financial services. The ultimate goals of the main project are to contribute to the promotion of the private sector in Yemen and to contribute to the creation of employment and the fight against poverty. The main project also aims at helping the final beneficiaries’ (clients of the microfinance sector) to cope with the current conflict in Yemen.

Scope of Work

The following tasks provide the general framework of the Consultant’s assignment. The Consultant is expected to provide expert services to Social Fund for Development/ Small and Micro Enterprise Development (SFD/SMED) for the accompanying measure for ensuring project implementation according to agreed rules and regulations: The services are structured in 7 work packages as described in more detail below. The consultant is expected to show a certain degree of flexibility to be able to react and adapt to the volatile environment and needs in the Yemeni context.

Work Package 1: Strengthening of responsible finance standards within the MFIs addressed by the program, sector wide and within SFD-SMED.

• Holistic assessment of MFIs regarding the adherence to such standards and internationally recognized principles (covering a range of organizational units within MFIs: Products, HR, IT, Risk Management, Marketing, Internal Audit, Management, Branches, Operations, Finance).

• Working towards introducing/strengthening responsible finance principles in the MFIs (e.g., SMART Campaign principles).

• Assess the loan disbursement procedures in comparison with internal controls best practices.

• Assessing the targeting mechanism of MFIs that SFD-SMED uses, also against the use of responsible finance principles.

Work Package 2: Monitoring of clients and their needs to inform business decisions

• Design standardized questionnaires (possibly using a digital tool like Kobo Toolbox).

• Visiting clients and assess satisfaction with the service and financing needs.

• Designing a way to measure the impact of loans for a sub-sample of visited clients (probably by means of a before-after analysis).

• Assess issues relating environmental and social safeguards.

• Assess in how far vulnerable groups are reached (women, Internally Displaced Persons, people with disabilities).

• Provide photographic or video evidence.

• Formulating recommendations for the MFIs’ business model.

• Formulating recommendations to SFD-SMED and KfW.

• Social impact topics (benchmarking social returns) based on the client assessment.

The Consultant is asked to present a concept to effectively include remote monitoring techniques, to be able to monitor clients in hard-to-reach areas but also to be able to include third parties in the overall monitoring process.

Work Package 3: Improvement of IT-infrastructure

• Supporting SFD in assessing the needs to improve the IT infrastructure with a focus on software and systems used by MFIs and SFD/SMED (no focus on hardware). Actual programming to be done by SFD-SMED.

• Formulate an analysis report of the systems need.

• IT Audit system flow charts, to reflect it on the MFIs.

• Support SFD-SMED in formulating an action plan.

Work Package 4: Improve the use of data to improve MFIs’ business

• Assessing the current availability of data in the sector and at SFD-SMED.

• Improving the use of data for sector development.

• Training on data analysis / statistical analysis.

• Support the further promotion of the recently developed app for agricultural and small lending. Support the integration of a scoring card into the model (flow charts to reflect on the current apps).

Work Package 5: SFD-SMED’s Strategic Plan

• Support SFD-SMED in developing its strategic plan (the plan itself will be developed by SMED).

• Bringing in international expertise.

• Analyzing SMED’s role in the sector overall.

Work Package 6: Loan Guarantee Program

• Support SFD-SMED in analyzing the existing data and implementation of the program.

• Support SFD-SMED in evaluating individual and portfolio guarantee models.

• Bringing in international expertise.

Work Package 7: Targeting of vulnerable groups and areas

• Carry out a field survey/study on the vulnerable groups (Women, IDPs, Youth, Start-ups, and people with special needs).

• Support SFD in developing a strategy to improve targeting of vulnerable groups.

• Formulate an Action Plan.

Note: Work is expected to be done remotely because of the current circumstances and thus, the international experts are not expected to travel to Yemen.