Social Fund for Development: Addressing Poverty & Unemployment [Archives:1998/38/Business & Economy]

September 21 1998

The Social Fund for Development (SFD) is considered one of a new institutions recently established in some developing countries. Experience has shown that these institutions are successful in cushioning the hardships associated with reform programs, and in inducing greater community participation. They also are able to operate efficiently in the optimal use of funds. This is due to the flexible management approach used to deliver basic services to the beneficiaries in a sustainable and cost-effective manner.
Mr. Abdulkarim Ismail Al-Arhabi, Managing Director of the SFD, talked to Ismail Al-Ghabiry of Yemen Times, who filed the following interview.
Q: What are the aims of the Social Fund for Development?
A: The SFD is a government institution, that was established by Law No. 10 of 1997. The initiative was taken by the World Bank and other donors to lay the foundation stone for an efficient public institution that would contribute to the government efforts towards alleviation of poverty and unemployment in the country. This is the main aim of the SFD.
Q: What programs are implemented by the SFD?
A: The SFD is implementing three programs. The first one is the Community Development Program – the largest program within the SFD. It is supposed to provide basic services to the most needy communities in the country. The Community Development Program covers services like family health care, basic education, water, environment and small public works.
The second program is the Small and Micro-Enterprise Development. With small enterprises, we have a strategy to work together with commercial banks and the Small Enterprise Development Unit. So we agree on certain criteria with these banks, and we provide them with the know-how to enable them to deal with small entrepreneurs.
The idea is to open up the banking sector for small entrepreneurs, which previously was not accessible to them. This sector, generally speaking, is very conservative. So we are going to provide them with the lending funds and, most importantly, the know-how of the business for small entrepreneurs.
The second area is micro-enterprise development, in which we have launched certain programs. Micro-finance is a straight forward banking operation. We have an income-generation program, and we have certain programs which are functioning in the country. So far in this area we have been quite successful.
The aim of small enterprise development is to generate long-term employment. In the area of micro-enterprise, the SFD aims to provide poor people with income-generating opportunities.
The third program is called Institution Capacity Building. It means the provision of capacity building to the NGO sector but also capacity building of the SFD itself.
Q: Have you succeeded in encouraging the banking sector to lend to small entrepreneurs?
A: So far the response has not been very encouraging from commercial banks, only two banks have agreed to go into business with us.
Q: How many governorates do you cover?
A: The SFD covers the whole country. We have developed our own policies and criteria for distribution of funds among governorates on the basis of population and poverty level. We go to different governorates applying the same criteria.
One of SFD’s major qualities is to be as transparent as possible. So the information is available to everybody regarding the resources and application. Transparency is extremely important for the SFD. In our commercial efforts we insist on informing the public about our policies. This is one of the major features of the social fund. The SFD is just half a year old. Institutions need more time just to start by recruiting and training people, etc. We already have more than 200 projects around the country.
Q: What other services does the SFD provide?
A: The SFD does not deliver services, but works with the community. We ask the sponsoring agency to mobilize a certain level of community participation.
The total cost of the projects is YR 1.7 billion, which is only the SFD contribution. The contribution of the community is 5 to 50%. Sometimes, we just finish a job that has already been started by the community, such as building schools, hospitals, etc.
Q: To what extent does the government cooperate with the SFD?
A: So far we have had a lot of cooperation from the government and parliament. The SFD is a new idea, which demands a new approach. It is still hard to be accepted by some people.
Q: Who are the SFD’s executive board members?
A: The SFD is actually attached to the highest authority. We also have two NGO and two private sector representatives.
Q: How many applications for small project support have you received up to now?
A: We are trying to be as efficient as possible, we don’t have so many levels and layers of responsibility. The whole SFD is a man-driven establishment. We don’t collect information and make plans, but promote the SFD services. It is up to the community to come up with ideas.
So far we have up to 4,000 applications. The money allocated for the SFD is not much, so we have to improve its capacity to deliver services. Then we can develop as many projects as possible to satisfy certain community needs.
Q: Can you tell us more about SFD branches and employees?
A: The SFD is a very hectic operation, you have to work very hard. We need highly motivated people and, to a certain extent, socially committed. So far we have 58 staff members in the SFD’s headquarters and four branches. We are planning to have nine branches, as of next year. Our four branches are in Aden, Mukallah, Hadhramaut, and Hodeida. We will have branches in Taiz, Ibb, and Dhamar.
Q: Does the SFD have any publicity or information organ?
A: We have a newsletter which is distributed to newspapers and other media organs, international aid organizations, NGOs, etc. Our main tool for promotion is the newsletter, and at the end of the year we have an annual report.
This is a very tough operation. The SFD operation is based on two things. One is targeting the most needy communities, which is not easy. We have developed certain mechanisms to reach that, but we still have to work on that very hard. The second thing is sustainability and, most difficult, to develop the SFD’s function. This is a big challenge.
Q: From where does the SFD get its funds?
A: The funding of the SFD comes from the World Bank, the European Union, the Arab Bank, the Dutch Government and, of course, the Yemeni Government.
Q: Is there any form of cooperation between the SFD and the Islamic Bank for Development?
A: Representatives of the Islamic Bank for Development visited us, and were delighted by what we are doing. The Islamic Bank is now considering providing the SFD with US $10 million.