Microfinance Institutions in Yemen “Hurdles and Remedies”

Abstract

The objective of this paper is to investigate the different types of hurdles limiting the growth and development of microfinance institutions operating in Yemen, and to suggest relevant recommendations that be used as a backup in the process of taking remedial measures. The study is both descriptive and analytical in nature. The data collected is based on both primary and secondary sources. The primary data was collected during the field study of ongoing PhD research study on the role of microfinance in mitigating poverty and unemployment in Yemen conducted in October 2015 by Mr. Ali Alshebami. Only a sample of nine MFIs was selected from The MFIs operating in the market, as the remaining MFIs could not be easily reached due to the prevailing persistent internal war situation. A few of these hurdles include but not limited the existence of insufficient funds necessary for financial business and the availability of poor physical infrastructure in the rural areas. In addition, the shortage of qualified human resources, the poor diversification of products and services, the political instability of the country, the wrong perception about lending to the poor and many others. Among other remedial measures, investible funds and designing of integrated financial products with the inclusion of micro insurance are essential, these two vital ones along with including the International Journal of Social WorkISSN 2332-7278 2017 http://ijsw.macrothink.org 11 financial linkages between MFIs and formal banking institutions should be adopted for more enhancement. The study confirms that there are several difficulties and challenges, which hinder the MFIs from progressing and achieving their mission in terms of outreach to the poor people.

The Role Of Islamic Banks In Yemen In Supporting Microfinance Institutions

“…However, microfinance institutions that adopt this lending practice impose higher interest rates, especially between those that intend to be financially independent and those that do not wish to rely on subsidies or contributions (Liman, Hashim & Arshad, 2017) MFIs are those institutions that mostly focus on targeting poor people in different parts of the world, particularly in developing countries. Yemen is one of the poorest developing Arab countries in the world, especially in the Middle East and North Africa region, which suffers from many developmental problems.Since the establishment of the Microfinance concept in Yemen in 1998, the government has continued to support the microfinance sector there but badly by establishing the bodies required to support it financially and technically (Alshebami & Rengarajan, 2017).In addition, The Yemeni government has taken a major step to strengthen the country's small and medium-sized enterprises and microfinance sectors so that poverty can be somewhat alleviated and new jobs created by helping MFIs operating there.…”

Toward Better Resilience during the War Crisis; Case Study of Three Microfinance Institutions in Yemen

“…Since the beginning of the war in March 2015, the institutions have been affected by several turbulence factors that hinder their performance (Alshebami & Rengarajan, 2017;Yemen Microfinance Network, 2015).…”

Impact of the Current Conflict on Small and Medium-sized Enterprises in Yemen

“…This led to a sharp decline in production and household income levels. It is considered one of the poorest and low developing countries due to its political instability, poor economic performance, the armed clashes ABSTRACT taking place in different parts of the country, and finally the high rate of poverty and unemployment among people (A. S. Alshebami & Rengarajan, 2017). Poverty rates rose sharply, with nearly 80% of the population living on less than $ 3.2 per person per day following the purchasing power parity (World Bank).…”