Case Study

Microfinance in Yemen: Hopes vs. Reality

A first insight into the impact of war on the country's microfinance industry
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Despite the unstable and challenging environment facing the microfinance industry in Yemen ever since the 2011 crisis (Arab Spring), up until the beginning of 2015, the industry had been looking ahead to better performance and a more promising year in 2015. This positive outlook was evidenced by the steady (although moderate) increase in microfinance outreach with higher numbers of active clients across all Yemen Microfinance Network (YMN) member MFIs.

In 2015, however, war broke out in Yemen. The internal conflicts and clashes in the months up to February 2015 had a negative impact on the microfinance industry’s performance. Due to the severity of the situation nationwide, it has been extremely challenging for YMN to collect and disseminate information and performance indicators from its member MFIs on a timely basis especially since the MFIs themselves are facing difficulties in reaching their clients in the field in several provinces. This is mainly due to the hostile environment characterized by an absence of security, and lack of electricity and fuel for operations and transportation, instable performance of communication services and destruction of infrastructure.

The biggest obstacle facing MFIs, however, has been the displacement and relocation of thousands of their clients. This paper presents data collected from six member MFIs as of the end of May 2015, as part of YMN's effort to document the impact of the war on the microfinance industry, focusing on its member MFIs and their respective clientele.

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