YMN conducted a workshop titled ‘The impact of the current situation on Microfinance in Yemen’ (Challenges and Possible Interventions) on Wednesday 27^th July 2011 in Taj Sheba Hotel, Sana’a. The workshop was held under H.E Dr. Amaat Al-Razaq Hommod, Minister of Social Affairs and Labor. The workshop was attended by over 60 participants including microfinance institutions, banks, government, donor support organizations, media, embassies, academicians etc with the aim of high-lighting the current situation and its impact on the microfinance sector and finding possible interventions.

The following challenges and impact of the situation were summarized as:  

• Mass migration of clients from their livelihood areas as in Abyan, Taiz and Alhasaba area in the capital Sana’a;
• Shortage of fuel and electricity resulted in stopping many of the client’s projects, and increasing prices of transportation, which weakened follow-up and communication among the MFIs’ components;
• Complete looting and theft for some MFIs and branches as in Abyan and Taiz;
• Delay in re-payment in many microfinance institutions;
• The MFIs suffered from significant financial losses due to the high operational costs of administrative processes;
• Significant decline in number of loans newly dispersed due to the high risk associated with the current situation, although the clients are much in need for loans in those difficult circumstances;
• Many MFIs were negatively affected with the withdrawals of savings and reduction in the number of savers, as they fear the financial future of their respected MFIs; 
• Active borrowers dropped from 69,596 Feb 2011 down to 50,916 as of June 2011.
• Portfolio at Risk increased from 1.4% Feb 2011 up to 5.9% as of June 2011.
• Active savers decreased from 52,369 Feb 2011 down to 43,367
• Operational self-sufficiency decreased from 119% down to 92% as of June 2011
• Increase in prices of basic services reduced the living conditions of many microfinance clients;
• Staff morale is highly affected due to his/her vague vision, portfolio and future career;
• Some institutions are unable to fulfill their obligations to donors and partners and may reach to a stage where they fail to repay their financial obligations;
• Weak infrastructure and lack of contingency plans for some MFIs has increased the impact of the current situation.

The network expressed its role in the current situation which concentrated around information gathering and dissemination, coordination among all stakeholders, advocating the situation and continuous monitoring and evaluation. The network also outlined its role in managing the risk and its role in preparing MFIs and clients for such situations. The workshop gave a platform for information exchange and discussion, MFIs presented their case studies first hand on how they were affected and what actions they took, and the participants were also briefed on how to manage risk.

 MFIs contributed to the workshop and gave ideas on what role the network and strategic stakeholders should play including funding organizations, the suggested actions were:

• Help MFIs launch the micro-insurance product
• Have a credit bureau for the microfinance sector
• Some form of campaign on educating the society on how to manage finances
• Provide the MFIs with some experts, offering their technical assistance in this area
• Promotion and awareness on the importance of the current situation
• Look into rural-finance; targeted clients are fleeing to rural areas for safety, what rural products can be offered
• Human resource aspect of the MFIs, how are they affected and how they can be helped
• Documentation of the current situation and keep up to date
• Ensure information exchange and dissemination
• Facilitate sharing of contingency plans amongst MFIs

 The Network will be preparing a full documentation on the workshop and share with the wider audience, at the same time devise an action plan for the coming months in order to minimize the impact on the microfinance sector.

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