Assessment of MSE Financial Needs in Yemen

This report assesses the financial needs of micro and small enterprises (MSEs) in Yemen, and evaluates existing service providers in this market segment. It analyzes the demand-supply gap for MSE financial services, and makes recommendations to improve access to finance. There are approximately 400,000 MSEs in Yemen. The formal financial sector is underdeveloped, with the population lacking access to formal financial services. Most small entrepreneurs lack any information about financial products and services, and most MSEs do not use formal financial services. Despite the low frequency of loan usage, 52.6 percent of the enterprises surveyed would like to obtain a loan in the future. The potential market size for MSE services is estimated at 210,400 enterprises.The report states that there is a promising microfinance market in Yemen. Key findings include:

• Planned law on non-bank financial institutions will help the Government create a regulatory framework to encourage development of microfinance;
• Microfinance products in Yemen need to be easy to understand, appropriate to client needs and capable of being processed rapidly;
• Client education, good training systems and coherent career tracks will be essential to the success of new MFIs in the country.