Prepared by the Special Unit for Microfinance, UNCDF
For UNDP, Yemen

June 2001

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Introduction

The MicroStart Yemen technical review was conducted in June 2001 by Ahmed Abou Elyazeid, Micro Finance and Small Business Development Expert and Pan Yemen Consult. The findings of the mission were formulated and conveyed in this report with the assistance of Deena Burjorjee, Programme Officer, SUM UNCDF. The purpose of this mission was to review the progress made under MicroStart Yemen to date and to make recommendations for enhancing its performance in the remaining 17 months. The mission gave special attention to MFI institutional and financial performance, the effectiveness of the ITSP's efforts to build the capacity of the Local Technical Service Provider and the LTSP's ability to provide adequate technical follow-up and support in the field. The mission has drawn some lessons and made recommendations to enhance project performance through the remaining 17 months.

As the MicroStart project in Yemen is a component of UNDP's broader Support to the Yemen National Poverty Alleviation Programme, the findings of the this mission will be fed into the Mid-Term Evaluation of the larger Poverty Alleviation Programme being undertaken simultaneously.

Background

On June 18, 1998 The MicroStart project was signed by the government of Yemen as a pilot component of The Support to Yemen National Poverty Alleviation Programme. The main objectives of this project were:

• To develop the capacity of local participating organizations to deliver sustainable micro finance products to the poor.
  
• To increase the ability of the poor to use micro finance, both savings and credit to increase their economic well being.
  
• Develop local expertise to provide technical services to micro finance practitioners

Alexandria Business Association (ABA) was selected as the International Technical Service Provider (ITSP) for the project, who in turn subcontracted Pan Yemen Consultant as their local counterpart (LTSP). Three local NGOs have participated in the project, the Charitable Society for Social Welfare (El Islah), the Social Organization for Family Development (SOFD) and the Women's Association for Sustainable Development (WASD). The fourth grant recipient was the Ta'iz Women's Union; however, the project was removed from its umbrella organization due to internal disputes over fund management issues and is currently operating as a separate project. All of the programmes have been disbursing loans for one year and have received Micro Capital Grants totaling US$150,000 except for The LTSP has received $67,000 of its $115,000 contract leaving a balance of $48,000 and ABA has received $300,000 of its total $500,000 contract.