VZCZCXRO4269
RR RUEHDE RUEHDH RUEHDIR
DE RUEHYN #0293/01 0481346
ZNR UUUUU ZZH
R 171346Z FEB 09
FM AMEMBASSY SANAA
TO RUEHC/SECSTATE WASHDC 1216
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RHMCSUU/FBI WASHINGTON DC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 SANAA 000293 
 
SIPDIS 
 
USTR FOR JASON BUNTIN, DEPT OF COMMERCE FOR TYLER HOFFMAN, 
USAID FOR NATHAN PARK, USTDA FOR CARL KRESS 
 
E.O. 12958: N/A 
TAGS: EAID ECON EFIN EINV YM
SUBJECT: FIRST MICROFINANCE BANK, AL-AMAL BANK 
REESTABLISHED IN YEMEN 
 
¶1.  SUMMARY: Al-Amal Bank has renewed its commitment to 
microfinance since November 2008.  The bank is targeting 
micro-enterprises, low-income families, and women.  It is 
basing its five-year business plan on reports from the Social 
Fund for Development (SFD) and International Finance 
Corporation (IFC) as well as recommendations from the 
Al-Amana Microfinance Bank in Morocco.  Al-Amal Bank is a 
welcome addition to the underdeveloped Yemeni banking sector. 
 END SUMMARY. 
 
AL-AMAL BANK RENEWS COMMITTMENT TO MICROFINANCE 
------------------------------------------- 
 
¶2.  Mohammad S. A. al-Lai, Executive Director of the Al-Amal 
Microfinance Bank, told Econoff on February 16 that the bank 
has renewed its commitment to microfinance in Yemen since 
November 2008.  Although the Al-Amal Bank was established in 
2002 as the first microfinance bank in Yemen, it reorganized 
itself under new leadership in 2008.  According to al-Lai, 
the bank has 4500 active clients and USD 1.2 million in 
disbursed loans.  Although the loan amounts are small (USD 
50)4000), they target Yemenis who would otherwise not 
qualify for loans.  The bank also particularly targets women 
as clients; a minimum of 65% of total active clients are 
women.  Al-Lai told Econoff that Al-Amana Bank, the most 
successful microfinance bank in the Middle East and North 
Africa region, is mentoring Al-Amal by training employees in 
microfinance best practices.  According to al-Lai, other than 
Al-Amana, there is a paucity of experience of microfinance 
experience in the region.  (Note: Established in 1997, 
Al-Amana is a highly successful USAID initiative, becoming 
independent five years after establishment.  End note.) 
 
¶3.  Ali Azaki, Director of Research and Development at 
Al-Amal Bank, told Econoff on February 16 that the bank 
intends to provide inclusive financial services for all 
Yemenis.  By targeting low-income families and 
micro-enterprises, it is providing financial services to an 
emergent market within Yemen.  Azaki said that Al-Amal has a 
five year business plan, which aims to provide financial 
services to underserved Yemenis, to expand the bank across 
Yemen, and to evolve into a sustainable institution.  Over 
the course of five years, Al-Amal bank intends to expand to 
100,000 active clients and USD 60 million disbursed loans. 
Al-Amal Bank is basing its business plan on studies by the 
SFD and International Finance Corporation (IFC).  In 1997, 
the SFD identified 32,000 possible active clients and 12 NGOs 
that would benefit from microfinance.  In addition, in a 2000 
study, the SFD identified one million potential microfinance 
clients.  Similarly, according to a December 2007 IFC report, 
there are 400,000 micro small enterprises (MSEs) in Yemen. 
 
¶4.  Al-Amal Bank emerged from the combined efforts of the 
Social Fund for Development (SFD), the Arab Gulf Program for 
United Nations Development Organizations (AGFUND), and 
contributions from the private sector.  Its capital (USD 5 
million) comes from three sources: the Yemeni Government 
(45%), the AGFUND (35%), and the private sector (20%). 
(Note: al-Lai also mentioned that much of the capital is 
coming from Yemenis outside of Yemen, particularly in Saudi 
Arabia, but did not specify the amount.  End note.) 
 
A WELCOME ADDITION TO YEMENI BANKING SECTOR 
------------------------------------------- 
 
¶5.  The Al-Amal Bank is a welcome addition to the 
underdeveloped Yemeni banking sector, where 17 banks serve 
five to six governorates, according to Al-Lai.  Yemeni banks 
are not present in all 22 governorates, and suffer from 
limited investment opportunities.  Because the banking sector 
is restricted to urban areas like Sana,a, it works with only 
4.2% of Yemenis and misses approximately 120,000 actual 
population centers.  (Note: Only two million people live and 
work in Sana,a; the other 20 million people live outside of 
Sana,a.)  Al-Lai said that Yemeni banks tend to work only 
with large businesses.  (Note: They would be considered 
medium-sized businesses by world standards.  End note.)  If 
Yemenis have wealth, they save it at home or retain it in the 
form of material objects, such as gold, he added. 
 
¶6.  COMMENT: Yemen is the least developed country in the 
Middle East and North Africa region with almost half of its 
22 million people living below the poverty line, on less than 
USD two per day.  Microfinance efforts are an infusion of 
much-needed capital to entrepreneurial Yemenis.  Previously 
 
SANAA 00000293  002 OF 002 
 
 
not active in Yemen, microfinance is a way to combat poverty. 
 As the first microfinance bank in Yemen, Al-Amal is a 
pioneer within an underdeveloped banking sector and a 
struggling economy.  END COMMENT. 
 
SECHE