Enhancing the Role of Microfinance Banks for Sustainable Impact in Yemen

Yemen’s microfinance sector is undergoing a radical transformation. Despite initial success in empowering small businesses, the ongoing conflict has exposed deep vulnerabilities. Competition between the fractured central banks has driven a surge in microfinance bank (MFB) licenses. While this promises to expand financial inclusion, it raises serious concerns about long-term sustainability and financial stability. To ensure a sustainable future for the sector, a collaborative effort is needed from the CBY, MFBs, and international donors. This RYE Policy Brief brings forward practical recommendations to this effect.