Restoring safety and trust in Yemen’s banking system

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Monday, September 20, 2021
Abdo Al Aziz Al Yafaai, CEO of Afaq Gate Import Pharmaceutical and Medical Supplies
Photo: ERLP

Restoring safety and trust in Yemen’s banking system


“Before working with USAID/ERLP, I did not consider bank loans as an option for me, nor working with the formal banking system.” – Abd Al Aziz Al Yafaai, CEO, Afaq Gate Import Pharmaceutical and Medical Supplies


Until recently, when Abdo Al Aziz Al Yafaai wanted to secure a loan to expand his growing pharmaceutical and medical supplies company, he did not even consider going to a formal commercial bank for a loan. “We worked with informal money transfers and exchange companies, because we had lost our trust in the banks,” explains Mr. Al Yafaai.

Abdo Al Aziz Al Yafaai began his career as a cybersecurity expert, but with the disruptions caused by the conflict in Yemen he had to find a new way to make a living. Tapping into his network of former colleagues and contacts, Mr. Al Yafaai discovered that Yemen had a large unmet demand for medicine and medical supplies. In 2018, he secured a contract to be the Yemeni distributor for a large pharmaceutical company based in Dubai and launched his fledgling enterprise, Afaq Gate Import Pharmaceutical and Medical Supplies. The company started in Aden, and within a year had opened two new branches in Ta’izz and Hadramout. However, he struggled to find the financing he needed to expand further. 

Mr. Al Yafaai’s faith in the banking system had been shaken by negative experiences following the outbreak of war in Yemen, when it was difficult to withdraw or borrow funds from banks due to a lack of liquidity. As a result, he relied on informal companies to deposit, transfer, or borrow money – recognizing that the services were “unprofessional” as he describes them, and risky. “They had no guarantees from the Central Bank, but I felt it was my only option,” says Mr. Al Yafaai.

With support from the USAID Economic Recovery and Livelihoods Program, Mr. Al Yafaai reconnected with Yemen’s formal banking system. He built a relationship with a Yemeni bank that is delivering access to larger, more secure loans, allowing him to expand his company, increase his credibility and enter into new franchise agreements. His company has been able to diversify its supplier base, increase sales by 26 percent, and create eight new jobs.

In addition to supporting local businesses, USAID is also strengthening the banking system by bolstering the role of and rebuilding public confidence in the Central Bank of Yemen.   New policies and practices are tightening bank reporting and financial performance requirements and accountability across the financial sector. 

With support from USAID, the Central Bank is reforming its bank supervision and risk management regulations and operations. It has expanded and restructured its Banking Supervision Department and established a new surveillance team that conducts intensive on-site inspections of commercial financial institutions.  The teams offer on-the-job training to raise commercial banking internal supervision capacity and help improve IT risk management. 

Working with USAID technical experts, the Central Bank has created a Financial Intelligence Unit focused on reducing money laundering risks by combatting infiltration of money obtained through illegal activities (e.g., drug trafficking, terrorism) and enhancing the banking sector’s ability to abide by strict international anti-money laundering standards. USAID helped facilitate a Memorandum of Understanding between the Financial Intelligence Unit and its counterparts in the region to strengthen intelligence-sharing and collaboration. It also helped the Central Bank adopt regulatory amendments that dramatically strengthened anti-money laundering controls.

Financial institutions are the backbone of the economy. By focusing on the restoration of safety and trust in Yemen’s banking system, USAID is helping the Central Bank attract more domestic and international financial transactions that can encourage entrepreneurship, channel savings into investments, facilitate commerce, and stimulate job growth. By encouraging customers to rejoin the formal financial system, USAID and the Central Bank are striving to give Yemenis a vested interest in their country’s future, and in the development of a stronger, more stable society.

USAID’s Economic Recovery and Livelihoods program (ERLP) addresses critical economic stabilization challenges in Yemen. At the macroeconomic level, it works with public and private institutions to restore economic stability, enhance fiscal management, and increase international trade flows. At the microeconomic level, ERLP strengthens private sector performance and competitiveness—creating jobs, raising incomes, and improving livelihoods.


Last updated: November 18, 2021

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