When Crisis Is Not a Moment but a Persistent Reality

When crisis strikes, humanitarian relief is the first lifeline, and rightly so. But after the food parcels are delivered and the shelters erected, what comes next? How do we shift from short-term survival to long-term stability, especially in places where crisis is not a moment, but a persistent reality?

This is the question we ask every day in Yemen, where the conflict that began in 2014 continues to shape daily life. And while there is no one-size-fits-all answer, we’ve found that credit guarantee schemes - when they're designed with crisis in mind - can be a powerful bridge between emergency response and sustainable development.

From aid dependency to financial self-reliance

In protracted crises like Yemen’s, where institutions are weakened and markets are fractured, small businesses are often the only engines of income and stability for millions. Yet most micro, small and medium-sized enterprises (MSMEs) in these settings face a double bind: they urgently need financing to survive and grow, but banks see them as too risky to lend to, especially in conflict zones.

That’s where the Credit Guarantee Schemes step in.

Launched by the Social Fund for Development in 2017 during Yemen’s ongoing conflict, the Yemen Loan Guarantee Program offers partial credit guarantees to financial institutions to encourage lending to MSMEs. These guarantees support the private sector by absorbing part of the perceived risk to give banks the confidence to lend to entrepreneurs who would otherwise be excluded.

Up to Q2 2025, we’ve guaranteed over 16,600 loans, mobilizing nearly $65 million in credit to over 13,500 businesses, 50% of which are located in rural areas. That’s not just provisioning capital; it is cash flowing into livelihoods, food production, local markets and stability.

Guarantee schemes as part of the humanitarian-development nexus

In humanitarian circles, there's increasing focus on the “triple nexus” - linking humanitarian relief, development and peacebuilding. But finance often gets left out of that dialog.

Guarantee schemes like YLGP can fill that gap. They work at the intersection of emergency need and market-based recovery, helping households move from dependence on aid to dignity through economic agency.

Take the story of Fatima Al-Samawi. A Yemeni widow, she supported her family for two decades by running a small grocery store, despite poverty, loss and rising competition. But as the ongoing conflict drained her resources and customers began to default on their debts, she nearly lost everything. Then, she received a microfinance loan from one of our partner financial institutions, backed by the program's guarantee. With that timely support, Fatima was able to restock her store, pay off her debts and continue supporting her family. She revived her dream of launching “Al-Hajah Fatima Supermarket.” Her journey illustrates how credit guarantees can transform financial hardship into a path to recovery and dignity, especially for female entrepreneurs navigating crises.

Think of how different this outcome could have been without access to credit. While one-off aid can feed a family for a short time, sustainable finance feeds an economy with a longer lasting impact.

Inclusion isn’t automatic, it must be intentional

In fragile settings, market forces alone won’t ensure inclusion. Guarantee schemes must actively work to reach those most often left behind. In Yemen, the YLGP uses tailored products and outreach strategies to encourage banks to lend to women-led businesses, youth entrepreneurs and first-time borrowers. In fact, over 50% of our guaranteed borrowers are youth, and over 9,500 were accessing finance for the first time.

We’ve also invested in green MSMEs, backing over 1,000 loans for solar systems and supporting small agribusinesses that adopt climate-resilient practices. These aren’t just financial decisions, they’re part of a broader strategy for sustainable recovery.

What we’ve learned, and what others can take away

Yemen is often seen as an outlier - too fragile, too complicated. But our experience with YLGP suggests that credit guarantees can function, and even thrive, in high-risk environments, if the following principles are in place:

• Local leadership: Our team is based in Yemen, understands the context and adapts quickly to changes on the ground. This proximity has been key to building trust and designing realistic, responsive solutions.
• Partnerships are essential: We work with financial institutions, development partners, local and international networks. The guarantee isn’t a standalone financial tool; it’s part of a broader effort to rebuild the financial ecosystem.
• Design for fragility, not stability: Crisis settings require flexibility so that guarantee limits, repayment schedules, and risk-sharing ratios must be tailored for volatility.

Building lasting resilience

Credit guarantees won’t replace humanitarian aid, nor should they. But they can complement it, helping transition communities from emergency handouts to long-term empowerment. In places like Yemen, this isn’t just desirable; it’s vital.

As the global community revisits how to connect humanitarian aid with long-term development, it’s essential to acknowledge the understated yet powerful role of financial tools like credit guarantees. When effectively implemented, they do more than mitigate risk, they help build lasting resilience.