VZCZCXRO4882
PP RUEHDE
DE RUEHYN #2143/01 2110646
ZNR UUUUU ZZH
P 300646Z JUL 06
FM AMEMBASSY SANAA
TO RUEHC/SECSTATE WASHDC PRIORITY 4784
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORP  PRIORITY

UNCLAS SECTION 01 OF 02 SANAA 002143 
 
SIPDIS 
 
SIPDIS 
 
PLEASE PASS TO NEA/PI FOR SONIA FRANCESKI. 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON EFIN KMCA KMPI YM
SUBJECT: MEPI SUPPORT FOR IFC CONTRIBUTES TO REFORM IN YEMEN 
 
SANAA 00002143  001.2 OF 002 
 
 
¶1. SUMMARY:  After establishing its offices in Yemen over a 
year ago, the International Finance Corporation (IFC) is now 
addressing issues that are critical to reforms required by 
the Millennium Challenge Corporation (MCC) and the World 
Bank.  At the request of the ROYG, the IFC will undertake an 
initiative to reduce the number of days to establish a 
business in Yemen.  They have also undertaken other programs, 
partially funded by the Middle East Partnership Agreement 
(MEPI), for lease financing, lending to small and 
medium-sized enterprises, and gender-specific business 
training. END SUMMARY. 
 
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IFC Helps Get Businesses Up and Running 
--------------------------------------- 
 
¶2. On July 18, Econoff met Saad Sabrah, Yemen Country Officer 
for the IFC, a recipient of MEPI funding through the Private 
Enterprise Partnership Middle East and North Africa 
(PEP-MENA).  Sabrah explained that he was recently approached 
by the Ministry of Planning and International Cooperation 
(MOPIC) to help the ROYG design an initiative to reduce the 
number of days and the cost of opening a new business.  This 
objective has achieved special prominence in the ROYG's 
reform agenda due to its inclusion as a key indicator for 
both the MCC and the World Bank.  (NOTE: The IFC is a 
subsidiary organization of the World Bank. END NOTE.) 
 
¶3. In the World Bank's 2006 Doing Business Report, Yemen 
ranked 90th among 155 countries, and 151st in the catagory 
measuring ease of starting a business.  In reponse to MOPIC's 
request, the IFC will launch a Business Start-up 
Simplification Project, to reengineer the registration 
process and create a "one-stop shop" for new businesses.  The 
project is expected to last 18 months and cost USD 800,000, 
half of which will be funded by PEP-MENA and the other half 
from the Royal Netherlands Embassy.  Unfortunately, the 
initiative's results will not be reflected in the Bank's 
report until 2008, but in the interim MOPIC intends to 
highlight the inauguration of the IFC program as evidence of 
reform. 
 
¶4. Sabrah noted that there are regionally specific issues as 
well when it comes to business start-ups.  Only 73 of the 
1700 total official businesses registered over the the past 
year were located in Aden, Yemen's second largest city. 
According to the Sabrah, this is largely due to land 
disputes, a situation the IFC hopes to improve by partnering 
with ongoing World Bank programs in the area. 
 
----------------------------- 
Getting Finance to the People 
----------------------------- 
 
¶5. Sabrah has spearheaded several initiatives in the 
financial sector.  Over the past six months, the IFC trained 
and advised the ROYG on a financial leasing law, and expects 
a draft to be submitted to Parliament by the end of July. 
Sabrah intends to introduce technical assistance to leading 
Yemeni banks to support lending to small and medium-sized 
enterprises, and may invest between USD 5-7 million.  The IFC 
is also shopping for donors to support a policy reform 
project in Yemen's mining sector. 
 
---------------------------- 
Supporting Women in Business 
---------------------------- 
 
¶6. Econoff attended a separate meeting with Shaheen Sidi 
Mohamed, Program Manager for Gender Entrepreneurship Markets 
at the PEP-MENA center in Cairo.  The IFC recently completed 
a survey on gender and business in Yemen, which identified 
business management training as a primary concern.  In 
response, the IFC is introducing a gender-specific version of 
its Business Edge curriculum, which is currently offered at 
three training institutes.  They have begun training female 
instructors, and are looking to obtain subsidies from 
international donors and local companies.  The existing 
Business Edge curriculum has already been used to train 3700 
businesspeople, 35 percent of whom are women.  Mohamed also 
expressed interest in partnering with another MEPI-funded 
program, Women in Technology, managed by the International 
Institute of Education. 
 
¶7. COMMENT:  The IFC office in Sanaa was a bit slow to get 
off the ground, but is now poised to make a significant 
impact on the reform process.  If the program can succeed in 
delivering improvements in the investment climate, 
specifically in the number of days required to register a new 
business, it will help build confidence within the donor 
 
SANAA 00002143  002.2 OF 002 
 
 
community and improve Yemen's reputation as a place to do 
business.  The gender programming offers less immediate 
benefit for reform in Yemen.  The decision to expand Business 
Edge (a for-profit enterprise of the IFC) to make it gender 
specific is a relatively minor accomplishment, given the 
broad needs of Yemeni women.  The IFC's overall efforts to 
help make financing available to small borrowers may 
ultimately have more impact for the average Yemeni, both male 
and female.  END COMMENT. 
Khoury