Sustaining Small Businesses in Yemen
Over seven years of conflict has devastated Yemen’s infrastructure, economy, and prevented citizens from accessing essential goods, services, and maintaining stable employment. According to the 2022 Yemen Humanitarian Response Plan — in a population of just over 30 million — more than 23.4 million Yemenis require humanitarian assistance, while 17.4 million face crisis levels of food insecurity.
The country’s small and micro enterprises (SMEs) have suffered significant losses, not only including damage to their production assets and infrastructure, but also a diminished consumer base, financial restrictions, and limited access to basic services. This has had cascading impacts on the local economy in terms of income generation, job creation, poverty reduction, the continuation of local goods and services, as well as gender equality.
According to Hisham Al-Haimi, Project Manager at the Yemen Microfinance Network, “Many business owners have been directly affected by bombings and clashes. Some of their projects have been indirectly affected by the lack of oil derivatives, road closures, forced displacements, and the instability of the national currency.”
In addition, the global fallout from the COVID-19 pandemic deprived millions of Yemenis of remittances coming from relatives and friends abroad as incomes shrank due to diminishing economies and lockdowns.
Conflict and Fragility
Rebuilding a life is not easy. In Yemen, it requires an openness to uncertainty, the support of a community, and an unwavering hope of a brighter future. To survive Yemen’s prolonged conflict, ongoing pandemic, and precariousness, the most vulnerable populations must find the will to continue knocking on doors in search of new opportunities.
With its dire economic and healthcare conditions, everyday life in Yemen is not only difficult for many, but the future also appears bleak.
The Power of the Small
Without the intervention and support of microfinance institutions, the SME sector would have been completely decimated. Entrepreneurs would have been unable to provide for their families and entire communities unable to meet the ever-increasing cost of living.
In partnership with the World Bank, the United Nations Development Programme’s (UNDP) Microfinance Client Compensation Project has supported five national microfinance institutions and provided over 5,800 small and micro enterprises with financial grants — stimulating job creation, reducing poverty, and improving community outcomes. UNDP proudly partners locally with the Yemen Microfinance Network (YMN) to implement the projects in 10 governorates.
Supporting Women-Owned SMEs Shapes Entire Communities
“I have orphaned children who depend on me.”
Thirty-year-old Radhya Al-Qubati is a mother and a sculptor. For nearly two decades she has worked as an artisan and has managed to continue her business throughout the conflict, despite the challenges and difficulties it has imposed — particularly its devastation to the tourist sector.
“Tourists have always been my main customers because they buy in high volume, and I set affordable prices. Once the sector hit a standstill, my sales were so low that I had to give deep discounts just to get by and provide for my orphaned children,” recounts Radhya.
From UNDP, Radhya received a financial grant and was able to purchase materials for her work such as rings, shearing, and blades, as well as a much-needed water tank. She managed to improve upon her previous business and is now able to focus on more than mere survival. She can now buy nutritious food, focusing on her family’s diet and health, and has significantly improved their standard of living — including making home repairs and renovations.
Like Radhya, Ali Qarima is now able to provide for his eight children by crafting Jambiya, a traditional Yemeni dagger worn by men. With UNDP’s grant, he was able to rent a workshop, purchase machinery, and — most importantly — rebuild his life after fleeing a conflict zone.
Income Support to Women
While hope can emerge even under the most trying of circumstances, sometimes it is not enough without the support, encouragement, and empowerment of a community. More than a grant, this funding has helped women to enter local markets, grow their own small businesses, and operate independently and autonomously. UNDP’s support has assisted more than 400 SMEs led by artisans, like Radhya, who produce handicraft products.
One such beneficiary is 45-year-old Sa’adyah Al-Badah, a mother of nine children. Before the conflict, she used to work for her husband’s business and would make dresses and embroider as a hobby. “After my husband suffered a heart attack and his salary was cut off due to the conflict, I had to transform my hobby into a job to provide for my family. I had to make whatever items were popular to earn a living.”
With access to UNDP’s financial support, she was able to purchase material, accessories, and a mannequin so that she could work from home. She was also able to set up shop in the local market. Receiving the funding helped her expand her client base, take on a steady stream of work, and ensure her children were able to go to school.
“I pay for all our household expenses, cover my store’s rent, and have employed four of my neighbors for the past two years. I’m proud of being the breadwinner, helping my neighbors and their families to sustain themselves and am now confident that I can face any adversity head-on,” beams Sa’adyah.
UNDP’s Microfinance Client Compensation Project has helped beneficiaries to restore their businesses, which, in many cases, were their only sources of income. The results of a recent study carried out by the YMN — which targeted a sample of microfinance clients in 10 governorates — showed that 72 per cent of the targeted men and 63 per cent of the targeted women reported an increase in income, and 81 per cent of microfinance clients are employing up to three workers. More than 87 per cent of the beneficiaries have maintained their projects and continue working on them, despite the harsh circumstances and challenges facing Yemen’s SMEs.
To date, the percentage of business sectors benefiting from the project is 34 per cent commercial, 23 per cent service industry, 21 per cent livestock, 18 per cent handicraft, and 4 per cent agriculture.
Far more than a source of employment and a steady income, the UNDP and YMN beneficiaries have been able to reclaim their lives, reap meaning from their commercial activities, and contribute to their families and broader communities.
Funded and supported by the World Bank’s International Development Association, the Yemen Emergency Crisis Response Project (YECRP) was implemented by the Social Fund for Development (SFD) and the Public Works Project (PWP) in partnership with UNDP Yemen. The US$ 400 million project provided economic stimuli in the form of large cash-for-work projects, support to small businesses, and labour-intensive repairs of socio-economic assets, benefiting vulnerable local households and communities across Yemen