Yemen to launch banks for microfinancing SMEs [Archives:2007/1059/Front Page]
By: Moneer Al-Omari
SANA'A, June 13 – While launching the fourth annual conference on microfinancing in Arab nations, known as “Sanabel,” Yemeni Prime Minister Ali Mujawar on Tuesday announced his government's intention to establish microfinance banks in an effort to help decrease unemployment and alleviate poverty, as well as care for orphans and others with special needs.
The announcement was timed with declarations by officials at the Central Bank of Yemen regarding conducting studies to establish a new banking law that will allow non-banking institutions to accept deposits and be specialized in providing microfinancing, facilities and loans to medium-seized and microfinance investors.
Additionally, Mujawar announced that the German Construction Bank and the International Finance Corporation intend to establish a commercial microfinancing firm in Yemen. However, the company will only receive customer deposits, not provide banking services. Such microfinance companies may operate under Yemen's 1992 Investment Law.
The prime minister further revealed that his government intends to establish banks whose sole objective is to provide loans to small investors and small and microenterprises, calling on commercial and Arab banks to provide such loans to the poor, as well as work to improve and develop microfinance services.
Mujawar praised the Social Fund for Development's role regarding developing and upgrading such small projects, as well as overcoming all of the difficulties standing in their way. Further, the fund has ushered in a national strategy for small and microenterprises.
Minister of Planning and International Cooperation Abdul Kareem Al-Arhabi assured that Yemen has established 12 microfinance institutions providing more than 150,000 loans. He said the program seeks to target more than a million beneficiaries nationwide.
Asma' bin Hamidah, who chairs Sanabel's board of directors, noted that while the microfinance industry in the Arab world is rather new, having come into existence in the mid-1990s, it has achieved vast success.
In 1997, 90,000 small investors received loans amounting to $40 million; however, beneficiaries now number approximately two million receiving more than $900 million in loans.
Hamidah calls for expanding the services of small enterprise microfinance in the Arab world, whose population is 300 million, of which approximately 60 million live on less than $2 a day, noting that they seek to reach approximately 10 million beneficiaries by 2010.
The United Nations Development Program's microfinance program provides individuals loans to establish small projects through which they can support themselves and their families. It particularly seeks to help those families living in utter poverty, especially those in rural areas. The UNDP program was modeled after a Bangladeshi experience by 2006 Nobel Prize winner Mohammed Younis.
Established in 2002 by 16 founding members from seven Arab nations, Sanabel is a regional web of microfinance institutions in Arab countries. As of the end of March, 53 Sanabel affiliates were providing services to more than 1.5 million beneficiaries.
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