Recommendations for addressing challenges limiting the growth of MFIs
The objective of this paper is to explore the different types of obstacles limiting the development of microfinance institutions (MFIs) operating in Yemen, and to suggest relevant recommendations for supporting MFIs to improve their performance. The data collected in this study is based on both primary and secondary sources. The primary data was collected during a field study on the role of microfinance in mitigating poverty and unemployment in Yemen conducted in October 2015. Only a sample of nine MFIs were selected from the MFIs operating in the market, as the remaining MFIs could not be easily reached due to the prevailing internal war situation.
Challenges for the development of microfinance in Yemen include:
Insufficient funds necessary for financial business;
Poor physical infrastructure in the rural areas;
Shortage of qualified human resources;
Poor diversification of products and services;
Political instability of the country.
Recommendations for supporting microfinance in Yemen include:
Investible funds and designing of integrated financial products with the inclusion of micro insurance;
Including financial linkages between MFIs and formal banking institutions.