Promotion of the Microfinance Sector in Yemen

A devastating civil war is being waged in Yemen, the poorest country in the Arab world along with Sudan. In 2014, the conflicts between Houthi rebels from the north and the interim government escalated. Since that time, Houthi rebels have gained control of most of Yemen’s populated area. A coalition led by Saudi Arabia is fighting the Houthi rebels. Acts of war have destroyed large swaths of infrastructure; there are frequently civilian casualties. In many places, the state is not capable of acting. Around 24 million of the 28 million inhabitants depend on humanitarian aid. And epidemics like the recent cholera outbreak repeatedly cause problems.

KfW has been active in Yemen for 50 years. The conditions for our work there have become much more difficult because, since the end of 2013, only local employees from the KfW offices have been working due to security concerns in Sana’a.

The aim of the upcoming project / consultant Services are:

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 with comparison with internal controls best practices.
• Assessing the targeting mechanism of MFIs that SFD-SMED uses, also against the use of responsible finance principles.

Monitoring of clients and their needs to inform business decisions

• Design standardized questionnaires (possibly using a digital tool like Kobo Tool[1]Box).
• 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, IDPs, 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.

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, in order to reflect it on the MFIs.• Support SFD-SMED in formulating an action plan.

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).

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.

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.

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.