Microfinance network to decrease poverty and unemployment

2 Aug
Malak ShaherPublished:02-08-2010

SANA’A, August 1 — Ten years ago, Fatima Fadhel had only one stove to bake puddings and sweets to support her family. She went to Al-Awael Microfinance Company and asked for support to start her own business.



Al-Awael Microfinance Company in Taiz, funded by the United Nations Development Program (UNDP), is an example of 11 non-profit microfinance institutions in Yemen that support poor people of both sexes to start their own private businesses all over the county, especially in urban areas.

One commercial bank, one foreign exchange company that has now become a microfinance bank, six non-governmental organizations, one company, and two foundations make up these 11 institutions.

The Yemen Microfinance Network (YMN) was launched officially on August 1st in Sana’a under the patronage of the Minister of Planning and International Cooperation, Abdulkareem Al-Arhabi, and the Director of the Yemen Social Fund for Development, Osama Al-Sami.

Fatima, who is now 53, expanded her business with the help of more than ten loans from the Al-Awael Company.  Now she runs two ovens and employs five workers in her business.

“We have been supporting Fatima Fadhel and 12,000 others to start their own businesses since 2000,” said Mohammad Attya, the Chairman of Al-Awael Microfinance Company.

He added that they have five branches in Taiz, four of which are concerned with supporting women.

“Most of our agents are women in Taiz city. 98 percent of the 132,000 loans in our institute go to women.  They have proved to be successful, and they helped decrease poverty because their small projects involve other poor people, like Fatima’s project does,” he explained.

YMN is a member-based association registered in August 2009 under the Ministry of Social Affairs and Labor. The YMN project consists of the microfinance member institutions.

The UNDP Resident Representative, Pratibha Mehta, said that the project aims to build supportive infrastructure to enhance the capacity of local institutions to provide a range of financial services and products to the entrepreneurial poor.

She said that the project also helps widen the scope for participation of youth and women in economic activities and creates job opportunities.

Mehta also stressed the fact that the project not only helps decrease unemployment but also creates confidence and dignity among those who are assisted.

However, she said that the project needs the fertilization of new ideas because it is still only in its first stage.

Sharar Al-Muliki, the YMN managing director, said that the project faces challenges in Yemen. Some people believe that taking a loan is a form of usury, which is forbidden in Islam.

Therefore, he said that the project offers two kinds of loans, conventional loans and Islamic loans as a way to encourage people to join the project even if they believe that only Islamic loans, which do not require the payment of interest, are appropriate. 

As one of the challenges facing YMN is a lack of human resources, they will be organizing ‘training of trainers,’ (TOT) sessions to train new people who will be able to instruct those who take loans.

In Yemen, where 42 percent of people suffer from unemployment and poverty, according to the World Bank, microfinancing began in 1997 in cooperation with the Social Fund for Development.

YMN is a partner of Sanabel, the Microfinance Network for Arab Countries, which was established in 2002 in Tunisia to launch a network designed to serve microfinance institutions in the Arab world. In 2002, Yemen had two representatives in the network, out of a total of 17 representatives from seven Arab countries.

Currently, in 2010, Yemen is one of 13 countries that are members of the Sanabel network. The other twelve countries are Bahrain, Egypt, Iraq, Jordan, Lebanon, Mauritania, Morocco, Palestine, Saudi Arabia, Sudan, Syria and Tunisia


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