Demand for Microfinance in Yemen: Market Survey

This paper helps existing MFIs identify and explore actual client needs in order to ensure maximum outreach to the poor and people in need for microfinance services in Yemen. It provides information regarding the demand for existing and new microfinance products and services by current and potential clients. The paper also assesses the potential market for micro and small financial services and current use of financial products and services in the country. In addition, it discusses general characteristics of micro and small entrepreneurs (MSEs) and the perception of financial institutions among entrepreneurs in Yemen. Key findings include:

• Potential market for MSE finance in Yemen has a size of around 1.78 million microenterprises and 85,000 small enterprises;
• MSE entrepreneurs largely rely on supplier credit to finance stock;
• 76% of the surveyed sample declared their business as the most important income source;
• Lack of availability of electricity and security issues as their most important challenges faced by MSEs and female entrepreneurs;
• Respondents had very limited knowledge about financial institutions and only 9.2% of the respondents got to know their financial service provider through direct marketing;
• Investing in education and marketing campaigns can help raise awareness about the benefits and conditions of microfinance.