National Micro, Small & Medium Sized Enterprise Development Strategy for Yemen – 2011-2021 January...

Part One – The Strategy Itself (DRAFT)

Private Sector Development Project (PSDP)Pool of Short-Term-Experts

PN 2007.2031.8, VN 81098513

Yemen

National Micro, Small & Medium Sized Enterprise Development Strategy for Yemen – 2011-2021

January 2011

Short term expert: Mike MannDr. Nasr Mahmood Alshihab

Maged Sultan

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Table of Contents

Table of Contents .................................................................................................................................. 2 The Rationale ......................................................................................................................................... 3 The Evolution of the MSME Strategy .............................................................................................. 3 Purpose of the MSME Strategy ......................................................................................................... 3 Methodology .......................................................................................................................................... 3 The Strategic Mission .......................................................................................................................... 5 Vision ........................................................................................................................................................ 5 Basic Principles ..................................................................................................................................... 5 The Strategy ........................................................................................................................................... 7 Component 1 – Development and Co-ordination of the Institutional Framework for Delivery of the MSME Strategy ......................................................................................................... 9 Component 2 – The Improvement of Financial Assistance to MSMEs .............................. 12 Component 3 – The Improvement of MSME Policy and Regulatory Reform .................. 18 Component 4 – Development of a Culture of Innovation and Entrepreneurship ......... 20 Component 5 – Development of Technical and Management Skills ................................. 22 Component 6 – Top Quality Business Support ......................................................................... 24 Component 7 – Start-up Support .................................................................................................. 34 Component 8 – Raising the Quality of Business Statistics .................................................... 41 Component 9 – Specific Sector Strategies .................................................................................. 43 Indicative Budget for Implementation of the MSME Strategy ............................................. 51 The Yemen Charter for Micro, Small and Medium Sized Ente rprises ............................... 53

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The RationaleThe Evolution of the MSME StrategyIn 1995, the Government of Yemen responded to an approach from the G8 group of countries offering development assistance by the preparation of a nationalsmall and microenterprise development strategy in readily implementable form.

In 2009, withthe support of GTZ, the Government of Yemen decided to update the original strategy, but at the same time, revised the SME definition (Small and Micro-enterprise) to that of Small and Medium. As a result, the emerging strategy became the MSME strategy and included small enterprises as well.

The 2009 strategy failed to gain consensus from the stakeholders, and in 2010, a further attempt to finalise the strategy was made with a strong focus on consensus.

Also, in 2010, with support from GTZ, the Ministry of Industry and Trade developed a concept for an Industrial Modernisation Programme, aimed at all industry in Yemen. Since support to large industry does not vary much from support to SMEs and also, since large enterprises constitute a very small percentage of total enterprises, the components of the Industrial Modernisation Programme have been incorporated into the MSME Strategy. Due to the fact that Yemen has relatively few large enterprises, the resulting strategy is effectively a “Private Sector Development Strategy”

Purpose of the MSME StrategyThe purpose of the MSME Strategy is first and foremost, communication. Previous efforts have suffered to an extent from “Paralysis by Analysis” and lack of consensus. For this reason, it has been decided that, although this strategy document is finalised, the strategy itself must be viewed as a dynamic living document in a constant state of updating, and refinement. For this reason, the strategy itself is a short functional document which is easily presented and communicated, and is drawn from the individual strategies of the individual stakeholders. The strategy is presented as a table where it is a simple matter to add an extra line if something should be added, and where a line can simply be removed in order to remove an element. In this way, we are not burdened by the need for perfection preventing the document from being completed.

Methodology

The Traditional ApproachThe usual approach to strategy development is depicted in the diagram on the following page, which describes a logical process of internal and external analysis leading to SWOT Analysis and an emerging strategy.

This process is the diligent process, which takes time and involves a significant level of stakeholder co-operation. All of the various stakeholders have developed their own strategies (or are in the process of developing their own strategies) so the traditional approach is deemed inappropriate as it would involve the repetition of the work of others

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and would also require all the existing strategies to be revised in the light of the findings. In the circumstances, stakeholder consensus would be unlikely to be reached.

Figure 1: Traditional Strategic Planning Approach

The Consensus ApproachThe “Consensus Approach” requires the simple summarising of the various strategies of the stakeholders into one all encompassing strategy and in the case of the MSME strategy, has involved a stakeholder group as is depicted by the following diagram:

Figure 2: Consensus Approach to Strategy Development

The emergent MSME Strategy is effectively a reclassification and merging of the individual strategies of the individual stakeholder institutions. At the time of writing, new strategies are being prepared (with the assistance of UNDP) for Tourism, Agriculture and also Fisheries and a new strategy is being prepared with the assistance of the World Bank

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for the Ministry of Technical, Vocational Education and Training, so these strategies have been incorporated in draft and are subject to revision.

It should be noted, that the use of the “Consensus Approach” does not mean that the “Traditional Approach” is abandoned. Indeed the traditional approach has been observed, drawing from the works of others as the Analysis Part of this document. However, the emerging recommendations have not been incorporated into the MSME strategy but remain as recommendations, which may be incorporated later.

For the sake of ease of communication, this document is kept minimal. Those who are interested in the analysis should consult the Analysis Document, which accompanies this strategy.

The Strategic MissionThe MSME Strategy seeks to transform the industry of Yemen from a resource based industry dominated by very small family businesses and focused on the domestic market, to a competitive industry associated with high value addition, solid export orientation and driven by modern enterprises.

VisionThe vision of Yemen’s MSME Strategy can be summarised as “Improving the Competitiveness of the MSME Sector” it is however derived from the strategic vision of Yemen from the Strategic Vision 2025 document

The Yemen’s Strategic Vision 2025 is:“The transformation of Yemen to the rank of countries with middle human development with a diversified economy and social, scientific, cultural and political progress.”

The aims of the Strategic Vision are1:1. To improve the level of human development2. To improve demographic and health conditions3. Eliminating illiteracy4. Increasing school enrolment5. Diversification of the sources of generating GDP6. Diversification of the economic base;7. Increasing Production and Exports8. Turning the Country towards the “New Economy”9. Improve Productivity and Competitiveness10. Development of a National System for Creativity;

Basic Principles

The approach observes the 5 basic principles of economic intervention, namely:

1. Non-distortion of the market: Interventions that provide a competitive advantage to individual businesses or that allow the agencies that are providing the assistance to compete unfairly against other providers on an on-going basis result in distorted markets.

1 Aims extracted from the Yemen Strategic Vision 20255

2. Demonstration effect: Where possible, interventions should show how they are likely to impact the Private Sector as a whole.

3. Sustainability: The goal of sustainability should be built into the design of all interventions.

4. Outreach: To maximise cost effectiveness, interventions should be designed so that significant numbers of each type of business are eligible. • Avoidance of bureaucratisation. Assistance should avoid making the agencies that provide assistance bureaucratic and so conflict with entrepreneurial culture.

5. Avoidance of Bureaucracy: To maximise economic impact, bureaucracy should not impose restrictions on the effectiveness and efficiency of the intervention.

Responsibility for Monitoring and Control of the MSME Strategy

The responsibility for development of the MSME sector is defined in Law No. 20 (2010) of the Republic of Yemen and places which places the burden of duty on the Ministry of Industry and Trade as follows:

a) Preparation of studies, plans and programs to develop small industries and handicrafts.

b) Encouraging the building up and the establishment of industrial cooperatives, craft and supervision of their activities and the provision of incentives and advantages to them and supervise their activities.

Article (14)

Forming of Committee from government agencies, institutions and specialized non-governmental organizations, working in the development of small industries projects, thecommittee shall be constituted by resolution issues from Council of Ministers powers of and define it and determine its functions.

Development of the MSME Sector is clearly the responsibility of many actors including line Ministries, Social Fund for Development and Agencies and NGOs, all of which influence the development of the sector in many ways. The role of MOIT is seen as the co-ordination of the various actors in order that a cohesive approach it taken to the task through stakeholder dialogue and active participation in the decision making process. The Ministry of Trade and Industry has a legal duty to implement this task in addition to its primary responsibility to support Industry and Trade.

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The StrategyThe emergent strategy consists of nine pillars or components, the first of which is the management of the strategy itself.

Figure 3: The Nine Pillars of the Emergent Strategy

Pillar 9 relates to support for the main sectors of the economy and all other pillars can be considered as crosscutting elements which all support the specific sectors.

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Figure 4: Overview of the MSME Strategy for Yemen (2011)

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Component 1 – Development and Co-ordination of the Institutional Framework for Delivery of the MSME Strategy

The main purpose of the MSME Strategy is communication and co-ordination to ensure that all stakeholders work together towards a common goal.

Previous approaches have been through committees which tended to debate each issue and which involved power struggles between the actors. The concept of a “Charter” is to assign responsibility for the various tasks and to secure that the responsible stakeholder for each task acknowledges and binds them to the responsibility.

Annex 1 – contains the actual text of the strategy to which the stakeholders have agreed.

Responsible StakeholderThe Ministry of Industry and Trade (MOIT)

In collaboration with the signatories to the MSME Charter

ObjectiveTo Ensure that all stakeholders work towards the common goal of MSME Development in a co-ordinated manner and with an integrated approach with each stakeholder responsible for specific elements of the strategy.

PurposeMSME Competitiveness

Expected Results1. A Yemen Charter for MSMEs whereby each Charter holder acknowledges responsibility for

components of the MSME Strategy.

2. Periodic reporting on performance of the implementation of the MSME Strategy

Activities• Establishment of the Yemen Charter for MSMEs;

• Organisation of meetings of Stakeholders and Gathering of Quarterly reports and consolidation of findings into overall report;

• Updating of MSME Strategy Document from contributions and individual strategies of Charter Holders

• Annual Monitoring and Update of MSME Strategy

TimetableThe Charter should be introduced during 2011 with continuous updating of the strategy and annual monitoring and reporting thereafter.

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BudgetA provisional budget of US$50,000 is required for support to establishing the Charter with an additional US$ required annually for monitoring, evaluation and update.

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Component 1 – Development and Co-ordination of the MSME Strategy

Objectively Verifiable Indicators Sources of Verification Conditions / Assumptions

OBJECTIVE2 To develop Competitiveness of MSMEs International Competitiveness of MSMEs Trade StatisticsPURPOSE1 To realise the contribution of the MSME Sector towards

the Yemen Vision 2020-25Reduced UnemploymentPoverty AlleviationEconomic DiversificationSocial stability

Economic StatisticsEmployment StatisticsTrade Statistics

Objectives of Strategy can be achieved2 To Realise the Vision of the MSME Sector towards the

Poverty Reduction StrategyEXPECTED RESULTS (The Vision)1 Stakeholders work in harmony to achieve agreed vision Yemen Charter for MSME Development

implemented, monitored and regularly updatedYemen Charter for Small Enterprises

Full Co-operation of MOIT

ACTIVITIES1 1 Establishment of Yemen Charter for MSMEs Charter document signed by institutional

stakeholders with agreement to respective rolesAnnual Evaluation Report

Stakeholders agree and sign up to charter

1 2 Sign up of Stakeholders to Charter1 3 Annual Monitoring & Evaluation ToR, contract and evaluation report1 4 Annual Update MSME Strategy realignment agreed

Indicative Budget for Component 1 Responsible Institution 2011 2012 2013 2014 2015 Total Basis of Estimate1 1 Establish the Yemen Charter for MSMEs

MOIT and all stakeholders

50,000 - - - - 50,000Consultants rough

estimate to be verified by further analysis

1 2 Stakeholders Sign up to Charter - - - - - -1 3 Annual Monitoring & Evaluation 50,000 50,000 50,000 50,000 50,000 250,0001 4 Annual Revision and Update 10,000 10,000 10,000 10,000 10,000 50,000

Total for Component 1 110,000 60,000 60,000 60,000 60,000 350,000

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Component 2 – The Improvement of Financial Assistance to MSMEs

ObjectiveTo improve “Access to Finance” of MSMEs on a nationwide basis

Purpose

Expected ResultsA sufficiency of funding available to support business propositions nationwide.

ActivitiesActivities are classified into two areas:

1. The development of Micro Finance (Principally delivered by SMED)

2. The expansion of Development Finance (Principally delivered by SEDF)

Sub-activities are as follows:

Development of Micro Finance• Delivery of Micro-Finance and Financial Support to Small and Micro Enterprises

o Building and strengthening of Micro-Finance Institutions (MFOs)

• Developing the Financial Base of MFIs

o Funding for eligible MFIs to support portfolio growth

o Provision of grants to MFIs for institution and capacity building

• Developing the Outreach of MFIs especially to rural areas

o Introduction of new MFI products

o Supporting market awareness for micro-finance services

• Development of New Entrants and Sector Innovations to close the demand gap and encourage competition

o Encouragement of local banks to enter the micro-finance market (downscaling)

o Encourage MFIs to service the missing middle (upscaling)

o Encourage the establishment of new MFIs through local and international players

• Introduction of new methods to deliver financial services on a large scale

o Integration with the rural outreach infrastructures of the General Postal Savings Authority

o Integration with the outreach infrastructure of the Social Welfare Fund

o Introduction of Mobile Banking

Expansion of Development Finance

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The main elements of the strategy for expansion of Development Finance are, according to SEDF, as follows:

• Delivery of 32,200 credits;

• Opening of 5 new branch offices;

o Training of Fund Employees;

o Development of New Products (Islamic Banking and Other Products);

o Marketing and Promotion;

o Study Tours (Visits to Arab and Other Similar Institutions);

o Conferences and Workshops (External and Internal

o IT Development

Timetable and BudgetTo be defined in the framework of the MSME Strategy in collaboration with SMED SEDF and SMEPS

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MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / AssumptionsOBJECTIVE

1 To improve Access to Finance for MSMEs on a Nationwide Basis

Strengthened MFIsDemand for finance reduced

Micro Finance& Development Finance Statistics

oFunds are set aside to implement strategy

PURPOSE1 To develop the competitiveness of MSMEs Reduced Unemployment

Poverty AlleviationEconomic DiversificationSocial stability


Objectives of Strategy can be achieved

EXPECTED RESULTS (The Vision)2 1 There is a sufficiency of funding

available to support sustainable business propositions nationwide

Fully developed and funded micro-finance infrastructure

Annual MSME Evaluation Report

2 2 Fully developed provision of finance for medium level business propositions

ACTIVITIES2 The Improvement of Financial Assistance to MSMEs2 1 Micro Finance and Financial Support to Small and Micro Enterprises2 1 1 Building and Strengthening of MFIs2 1 1 1 An Institutional Sustainability

Strategy for MFIsStrategy Document delivered and formally adopted

Strategy is published on SMED website

2 Implementation of Strategy Depends on indicators stated within strategy Strategy monitoring report3 Revised institutional framework

for merged and upgraded MFIs2 1 2 Developing the Financial Base of MFIs2 1 2 1 Provide funding for eligible MFIs

to support portfolio growth2 1 2 2 Grants to MFIs for Institution

and Capacity Building2 1 3 Developing the Outreach of MFIs especially to Rural Areas2 1 3 1 Introduction of new MFI

products2 1 3 2 Supporting market awareness

for micro-finance services2 1 4 New Entrants and Sector Innovations to close the demand gap and encourage competition2 1 4 1 Encouragement of local

commercial banks to enter the Number of commercial banks entering the market that were not previously there.

Monitoring report It is commercially viable for Commercial banks to

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MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / Assumptionsmicro-finance market (Downscaling)

enter market

2 1 4 2 Encourage MFIs to service the missing middle (Upscaling)

Amount to which MFIs raise maximum limit of loans issued

Monitoring report MFIs have sufficient funds to raise loan sizes

2 1 4 3 Encourage the establishment of new MFIs through local and international players

Amount of Increased number of MFIs operating in Yemen

Monitoring report It is commercially viable for new players to enter market.

2 1 5 Introduction of new methodologies to deliver financial services efficiently on large scale.2 1 5 1 Integration with the rural

outreach infrastructure of the General Postal Savings Authority

GPSA provides banking services to micro-finance customers

Monitoring report SMED reaches agreement with GPSA

2 1 5 2 Integration with the outreach infrastructure of the Social Welfare Fund (SWF)

SWF provides banking services to micro-finance customers

Monitoring report SMED reaches agreement with SWF

2 1 5 3 Introduction of Mobile Banking ?? ??2 2 Development Finance and Financial Support to Medium Sized Enterprises2 2 1 Delivery of 30,200 credits2 2 2 Opening of 5 new branches2 2 2 1 Training of Fund Employees2 2 2 2 Product Development Islamic and other products2 2 2 3 Marketing and Promotion2 2 2 4 Study Tours Visits to Arab and Other Similar Institutions2 2 2 5 Conferences and Workshops External and Local2 2 2 6 Development of MIS

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Indicative Budget and Timetable for Component 2

Responsible Institution 2011 2012 2013 2014 2015 Total Basis of Estimate

2 The Improvement of Financial Assistance to MSMEs2 1 Micro Finance and Financial Support to Small and Micro Enterprises2 1 1 Building and Strengthening of MFIs

2 1 1 1Institutional Sustainability Strategy for MFIs

SMED2 1 1 2 Implementation of Strategy

2 1 1 3Revised Institutional Framework for merged and upgraded MFIs

Total for Sub Component 2.1.12 1 2 Developing the Financial Base of MFIs

2 1 2 1Provide funding for eligible MFIs to support portfolio growth

SMED2 1 2 2

Grants to MFIs for Institution and Capacity Building

Total for Sub-Component 2.1.22 1 3 Developing the Outreach of MFIs especially to Rural Areas

2 1 3 1 Introduction of new MFI Products

SMED2 1 3 2Supporting market awareness for micro-finance services

Total for Sub-Component 2.1.32 1 4 New Entrants and Sector Innovations to close the Demand Gap and Encourage Competition

2 1 4 1

Encouragement of local commercial banks to enter the micro-finance market (Downscaling)

SMED

2 1 4 2 Encourage MFIs to service the missing middle (Upscaling)

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Responsible Institution 2011 2012 2013 2014 2015 Total Basis of Estimate

2 1 4 3 Encourage the establishment of new MFIs through local and international players

Total of Sub-Component 2.1.42 1 5 Introduction of new methodologies to deliver financial services efficiently on a large scale

2 1 5 1

Integration with the rural outreach infrastructure of the General Postal Savings Authority

SMED2 1 5 2

Integration with the Outreach Infrastructure of the Social Welfare Fund (SWF)

2 1 5 3 Introduction of mobile banking

Total of Sub-Component 2.1.5Total of Sub-Component 2.1

2 2 Development Finance and Financial Support to Medium Sized Enterprises30,000 credits

SEDEF

5,790,905 5,790,905 5,790,905 5,790,905 5,790,905 28,954,524 Figures extracted from SEDF Strategy, converted to US$ apportioned across the five years of the plan

5 new Branches 319,831 319,831 319,831 319,831 319,831 1,599,156

Total of Sub-Component 2.2 6,110,736 6,110,736 6,110,736 6,110,736 6,110,736 30,545,048

Total of Component 2

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Component 3 – The Improvement of MSME Policy and Regulatory Reform

ObjectiveTo identify and tackle regulatory and policy barriers to MSME development through policy and regulatory reform.

PurposeTo improve the environment for MSME development

Expected ResultsThe identification of barriers to MSME development at policy and regulatory level;

Policy and Regulatory Reform to address the identified barriers

ActivitiesActivities include the elaboration of impact assessment studies in various identified areas leading to recommendations for policy and regulatory reform.

Specific examples of reforms to reduce barriers to MSME development include:

• Removal of Import Duty on Industrial Inputs;

• Reduction of Transaction Costs on Trade

• Faster Licensing and Registration

TimetableOn-going throughout the life of the strategy

BudgetA provisional budget of US$200,000 has been allocated for technical assistance.

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MSME Strategy – Component 3 Objectively Verifiable Indicators Sources of Verification Conditions / AssumptionsOBJECTIVE1 To develop the Industrial and Commercial

Base of the CountryIncreased Business Birth RateEconomic Activity pushed to neglected areas

MSME StatisticsEmployment Statistics


oAll Institutional Stakeholders co-operate towards common goals

2 To develop the Competitiveness of MSMEs

International Competitiveness of MSMEs Trade Statistics

3 To build a culture of Innovation and Entrepreneurship

New products and export competitiveness of MSMEs

International partnerships and linkages

PURPOSE1 To realise the contribution of the MSME

Sector towards the Yemen Vision 2020-25Reduced UnemploymentPoverty AlleviationEconomic DiversificationSocial stability



2 To Realise the Vision of the MSME Sector towards the Poverty Reduction Strategy

EXPECTED RESULTS (The Vision)3 Yemen has a conducive business

environment for MSMEsLaws and policies upgraded to best international practice

WB Doing Business Report

ACTIVITIES3 Improvement of MSME Policy and Regulatory Reform4 1 Removal of Import Duty on Industrial

InputsDuty reduced or removed Monitoring Report

Viability of action can be justified4 2 Reduce transaction costs on trade Transaction Costs reduced

4 3 Faster Licensing and Registration Number of transactions and time involved


Responsible Institution

2011 2012 2013 2014 2015 Total Basis of Estimate

3 Improvement of MSME Policy and Legislative Reform3 1 Removal of Import Duty on

Industrial Inputs MOIT in Collaboratio

n with appropriate Ministries

200,000 200,000Estimate for preparation of Impact Assessment Studies.

3 2 Reduce transaction costs on trade 200,000 200,0003 3 Further Policy Initiatives to be

defined 200,000 200,000 200,000 600,000Estimate for further studies to be later defined

3 4 Faster Licensing and Registration -- - - - - - Supported by Netherlands CA

Total of Component 3 200,000 200,000 200,000 200,000 200,000 1,000,000

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Component 4 – Development of a Culture of Innovation and Entrepreneurship

Development of a culture of Innovation and Entrepreneurship is a specific goal of the Yemen 2025 Vision

ObjectiveTo develop a culture of Innovation and Entrepreneurship

PurposeTo increase the development and commercialisation of new innovative products with international market potential

Expected ResultsNew product development and commercialisation

Manufacture under licence arrangements with new products developed in other countries.

Activities1. A National Innovation Awards Programme

2. A Business Angels Programme

3. Developed linkages with international innovation and entrepreneurship networks leading to manufacture under licence agreements and joint ventures.


BudgetLarge companies and institutions should sponsor the innovation awards programme but a provisional budget of US$500,000 per year has been allocated for promotion and support.

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MSME Strategy – Component 4 Objectively Verifiable Indicators Sources of Verification Conditions / AssumptionsOBJECTIVE1 To develop a Culture of Innovation and

EntrepreneurshipNew productsNew International Linkages

Patent RegistrationManufacture under Licence Agreements






EXPECTED RESULTS (The Vision)4 Yemen has a conducive environment for

innovation and entrepreneurshipCreative Nation BrandingAnnual Innovation CompetitionDeveloped infrastructure for innovation supportInternational linkages for technology transfer


ACTIVITIES4 Developing a Culture of Innovation and Entrepreneurship4 1 National Innovation Award Programme National Innovation Awards Programme

IntroducedAnnual Ceremony Sponsorship from

Industry and Institutions4 2 Business Angels Programme Enterprise / Projects financed by Angels Monitoring Report4 3 International Linkages Networks Joined and cross fertilisation of new

product development




4 Developing a Culture of Innovation and Entrepreneurship4 1 National Innovation Award

Programme 300,000 300,000 300,000 300,000 300,000 1,500,000Core costs only – Sponsorship t be obtained from various sources4 2 Business Angels Programme 200,000 200,000 200,000 200,000 200,000 1,000,000

Total of Component 4 500,000 500,000 500,000 500,000 500,000 2,500,000

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Component 5 – Development of Technical and Management Skills

Objective• To develop technical skills

• To develop Managerial and Entrepreneurial Skills

PurposeImproved Competitiveness of the MSME Sector

Expected Results1. Upgraded technical skills

2. Upgraded Entrepreneurial Skills

3. Development of a cadre of well qualified business service providers and advisers

ActivitiesTechnical skills training to MSMEs delivered through the Business Upgrading Programme

Entrepreneurship Training delivered through the Business Upgrading Programme and also by specific training initiatives delivered through the Chamber of Industry and Commerce, SMEPS and other training agencies

Upgrading of Business Service Providers by the Business Upgrading Programme and through specific initiatives delivered by SMEPS


BudgetThe budget is to be elaborated after the delivery of the strategy currently being prepared by the Ministry of Technical and Vocational Training with support from the World Bank as we as contributions from other stakeholders.

Note:A strategy for Technical, Vocational Education and Training is currently being prepared by the Ministry for Technical, Vocational Education and Training, supported by the World Bank. It is proposed that Component 5 is finalised in concert with this strategy and if possible, the Work Bank Technical Assistance Team may be encouraged to deliver output summarised in the format of the MSME Strategy.

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MSME Strategy = Component 5 Objectively Verifiable Indicators Sources of Verification Conditions / AssumptionsOBJECTIVE1 To develop technical skills Technical and Vocational Training Training Statistics2 To develop entrepreneurial skills Entrepreneurship TrainingPURPOSE1 To realise the contribution of the MSME





EXPECTED RESULTS (The Vision)5 Yemen entrepreneurs have access to

education for the development of technical and management skills

Vocational Training Delivered to established businesses through Upgrading ProgrammeTraining delivered in entrepreneurship skillsTraining in advisory skills delivered to Business Service Providers to develop local consultancy capacity

Business Upgrading ReportsTraining RecordsReduced dependency on international consultants

ACTIVITIES5 Development of Technical and Management Skills5 1 Delivery of Vocational Training Training Delivered through the BUG programme BUG Programme reports5 2 Delivery of Entrepreneurship Training Monitoring Report5 3 Developing the Capacity of Business

Service ProvidersDevelopment of Premier Adviser Curriculum Monitoring ReportDelivery of consultancy skills training to business service providers and consultants

Monitoring Report




5 1 Delivery of Vocational Training MoTVET

- - - - - - Budget included in Business Upgrading Programme

5 2 Delivery of Entrepreneurship Training

CIC / SMEPS Budget to be defined as a result of the TVET Strategy which is

currently being prepared by the Ministry of Technical, Vocational and Educational Training assisted by the World Bank

5 3 Developing the Capacity of Business Service Providers SMEPS


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Component 6 – Top Quality Business SupportComponent 6 (Top Quality Business Support) consists of two sub-components:

• Business Upgrading Programme (Under the supervision of MOIT)

• Specific Support to Small and Micro Enterprises (Under the control of SMEPS)

ObjectiveTo improve the competitiveness of MSMEs

Purpose• Economic Diversification

• Job Creation

• Economic Growth

Expected ResultsThe Expected Results from Component 6 are as follows:

• At least 150 strategic Business Reviews / ToRs will be developed for manufacturing businesses and business service providers over a 3 year period;

• At least 100 businesses or clusters will be upgraded over a three year period Targets to reviewed after 3 years);

Activities

Business Upgrading ProgrammeThe following graphic outlines the concept of the proposed Business Upgrading Programme:

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The effectiveness of the Business Upgrading Process depends on scale, and it is proposed that the Business Upgrading Programme is open to all manufacturing businesses (including large enterprises), but this will be prioritised into:

• Identified Clusters;

• Emerging Sectors;

• Traditional Sectors;

In addition, the programme should be available to institutions which are partners in the delivery of the programme, including: Training providers, the vocational training network; Chambers of Commerce and Business Support Associations; Standards and Metrology Centres and Testing Stations and business incubators. These will all be supported through the programme to ensure quality of delivery of services.

Furthermore, it is proposed that the programme should be available to State Owned Enterprise, which have strong privatisation potential or where a division of the SOE has potential for spinout to the private sector.

The Programme Management should develop selection criteria and agree these criteria with a steering committee and selection should be made in a transparent manner according to the budget available and an agreed scoring system.

Cost sharingIt is proposed that companies are encouraged to participate in the business-upgrading programme by providing stage 1 free of charge. At the end of stage 1, the company will have the choice whether or not to move to stage 2. If the company chose to move to Stage 2, then it is proposed that the company pay a portion of the cost of delivery. It is proposed that this level of cost sharing is set at 10% for the first 4 months to encourage early participation. After the first 4 months, then the cost share can be increased to 30% (although this can be modified in accordance with demand) The cost sharing contribution should be passed to a special fund which is made available to the business incubators to build a cash balance to assist with sustainability after the technical assistance is withdrawn.

Stage 1 – Strategic Business Review, Needs Analysis and Terms of ReferenceDuring Stage 1 – the beneficiary company will receive a short consultancy assignment consisting of 10 man-days to review the needs of the business for upgrading and at the same time, to develop a strategic business review. Furthermore, the main problems facing the business will be identified and placed within a central database, which can be used to analyse policy issues.

It is proposed that Stage 1 is provided as a free service to companies, business support providers or clusters of small companies. The output in the form of a strategic business review should be a high quality deliverable, which clearly demonstrates the value of business upgrading in order that the beneficiary will be prepared to make a contribution to costs incurred in Stage 2.

The Strategic Business Review will analyse the mission and vision for the business. It will analyse external and internal factors affecting the business and will identify a range of strategic options facing the business and make recommendations accordingly. This will be a tool that the business can use profitably whether or not the business decides to proceed to stage 2.

The Terms of Reference delivered within stage one will specify the upgrading activities to be carried out during stage two. It will consist of up to 60 days of training or consultancy

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depending on the nature of the problems and the potential for development of the company.

Stage 2 – Business UpgradingBusiness upgrading activity to be delivered during Stage 2 will depend on the needs identified during Stage 1.It can be specific training or consultancy services and may be a single topic or a combination of various types of support such as:

• Marketingo New product developmento Packaging designo Development of a Marketing Strategyo Development of

International linkages

o Pricing Strategyo Introduction of

Customer Relations Management Systems

• Accounting & Financeo Introducing or upgrading of computerised accountso Capital Budgetingo Cost accounting systemso Economic Order Quantity review

• Productiono Lean Manufacturingo GMB Audit and Accreditationo Quality Standards Audit and Support o Introduction of Enterprise Resource Management (ERP) Systems o Inventory Management Systemso Vocational Training

• Human Resource Managemento Job Descriptions and Job Specificationso Procedures Manuals

At the same time, specific training can be proposed as part of the Business Upgrading Process and may take the form of specific workshops for company staff. Workshops may be:• Developing a Marketing Plan• Developing an Export Strategy;• PESTEL2 Workshop (Reacting to changes in the business environment)• Technology and Innovation Management Workshop• Product Development Workshop• Generic Training

In addition to the Business Upgrading Programme, the project will run training courses, which are open to management and staff of beneficiary companies. These are of a more

2 PESTEL = Political; Economic; Social; Technical; Environmental; Legal

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general nature and will be for members of several companies at once. Training subject might include:

• Project Management;• Understanding accounts;• Developing a marketing plan• Presentation skills• Strategic Planning• Pricing theory• Cluster Development

A provision will be made whereby the MOIT can organise to participate in international exhibitions on behalf of groups of Yemen businesses.

Stage 3 – Monitoring and EvaluationStage 3 consists of a final review of the work carried out and its impact on the company. If the benefit is deemed to be substantial, then a second round of business upgrading may be proposed.

Assumptions and Risks

Risk Mitigation1. There is a risk that the demand for

business upgrading is less than anticipated and that the project resources cannot be efficiently consumed.

The expected results are that 150 businesses will receive strategic business reviews and that at least 100 businesses will receive business-upgrading services. The risk that 100 suitable manufacturing businesses can not be identified is to be considered, however, the available industrial statistics (Annex 7) show that there are 390 very large businesses and 1,103 medium manufacturing enterprises in Yemen. By location, 91 very large enterprises are within the capital secretariat and 324 medium enterprises are in the capital secretariat. It is therefore likely that 100 suitable enterprises can be identified without going further than the Capital Secretariat. Extending the service to the target areas where incubators are located leads to a larger pool of potential clients. In addition, the 100 businesses to be supported include business service providers such as vocational training centres etc. so there is an even greater pool of enterprises to chose from. This leads to the next possible risk as identified in Risk no. 2

2. There is a risk that the demand for support from business service providers and businesses within the capital city are so great that the service does not extend to the remote locations and that the goal of economic diversification is lost

Any contractor implementing this project should be obliged to set targets for geographic spread ensuring outreach to other cities.

3 There is a risk that the businesses supported do not wish to/ or are unable

Any cost sharing element of payment for fees must be based and adjusted in respect of

27

to pay any cost sharing element of consultancy or training fees and as a result, services are given for free and are not valued. This also effects sustainability

services demanded. Providing the Strategic Business Review free of charge will give an opportunity to demonstrate the added value that the programme will bring to companies and should encourage them to cost share. It is strongly recommended that some element of cost share is introduced and that any contribution is set aside as a sustainability fund to support incubators.

TimetableThe indicative timetable for implementation of Business Upgrading is as follows:

Establish criteria for participationEstablish / agree cost sharing contributionIdentify Support institutionsDevelop contracts template for beneficiariesDevelop template for Strategic Business ReviewDevelop Template for Terms of ReferenceDevelop Monitoring / Evaluation CriteriaDevelop Initial List of Target BeneficiariesDevelop Publicity MaterialsTraining of local staff in consultancy skillsBusiness Upgrading Programme LaunchStage 1 - EvaluationsStage 2 - DeliveryStage 3 DeliveryEvaluation ReportingEvaluation of Programme and continuation proposals

Year 3Description

678910111213141516

Months

Component 2 - Business Upgrading Programme

5

1234

Year 1 Year 2

Figure 5: Indicative Timetable for Component 2

(Programme to be re-evaluated after 3 years)

BudgetIn order to achieve the expected results, the following resource allocation is needed:

• One International long term Business Upgrading Expert to manage the process for the 3-year duration of the project.

• Two Local Long Term Experts to carry out Strategic Business Reviews and to draft ToRs for Business Upgrading;

• 1,074 man days of International Short Term Experts to deliver business upgrading and training

• 3,222 man days of local short term experts to deliver business upgrading

• 2 – vehicles will be required• 2 – drivers will be required• 1 administrator will be required

Incidental expenditure budget for study tours / conferences / public awareness and seminars of 50,000 will be needed.These figures are based on the following assumptions:

• The project will last for 3 years• There are 220 working days per year

28

• 10 man days are required for each Strategic Business Review, Environment Survey and ToR

• 40 days total have been allocated for each business upgrading project;The budget for Business Upgrading has been estimated at €2,173,040 over a 3 year period and has been extended proportionately over the five year period of the MSME Strategy.

29

MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / AssumptionsOBJECTIVE1 To develop the Industrial and Commercial















EXPECTED RESULTS (The Vision)6 1 Business upgrading is delivered to

established businessesBusiness upgrading provided to 2,000 established businesses as well as clusters, and business service providers

Industrial Modernisation Reports and MSME charter Evaluation

6 2 A network of business incubators provides start up support

New incubators in Sana’a, Aden. Taiz, Al Hodeidah and Al Mukalla

6 3 Specific clustering initiatives develop competitiveness of key sectors

Specific co-operative initiatives for agriculture, fisheries and other sectors in accordance with specific sector strategies

7 1 An e-government business registration system is functioning efficiently

Electronic Company registration database is complete and functioning

7 2 Comprehensive and accurate statistics provide an effective tool for economic decision making

Industrial Statistics database is complete and functioning

ACTIVITIES6 Top Quality Business Support6 1 Business Upgrading for existing manufacturing businesses6 1 1 Business Upgrading Programme

Operating ProceduresIdentified criteria for support Business Upgrading Programme

Manual of Procedures and Annexes

Industrial Modernisation Programme implemented

Established / Agreed Cost sharing parametersIdentified Support InstitutionsDeveloped Contract for BeneficiariesDeveloped Template for Strategic Business Review

30

MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / AssumptionsDeveloped Template for ToRDeveloped Monitoring/ Evaluation Procedures

6 1 2 Recruitment of Beneficiary Enterprises for Business Upgrading Programme

Initial list of beneficiary companies Business Upgrading Programme LaunchDeveloped Publicity Materials

Training delivered to local consultants in consultancy skillsLaunch of Business Upgrading Programme

6 1 3 Business Upgrading Cycle 180 Strategic Business Reviews Delivered Technical Assistance Output Reports

Cost Sharing System established180 ToRs delivered for Business Upgrading

Business upgrading delivered to 110 enterprises, clusters or Business Support Providers

6 2 Support to Small and Micro Enterprises6 2 1 Capacity Building of SMEPS SMEPS Monitoring and Advice

SMEPS FundingTechnical Assistance to SMEPSDonor Funding for SMEPS

6 2 2 Reduction of the demand for Business Development Services for micro enterprises and rural areas

Delivery of BDS for Micro EnterprisesProvision of BDS in Rural Areas

6 2 3 Develop Capacity of MFIs and BDS to co-ordinate activities

Training of MFIs in business facilitationEncourage MFIs to refer clients to BDS providers

6 2 4 Capacity Building of Yemen Microfinance Network

Monitoring of MFNTechnical Assistance to MFN

6 2 5 Institutional Support to the Micro Finance Institutions

Proper Regulation of MFIs is introduced Specific MFI Regulation drafted and adopted

Supervision for MFIs is introduced MFI Regulation implementedCredit Bureau established All FIs information networkedAwareness programme for SMEsPolicy Dialogue platform for Access to finance

6 2 6 MESO Level Institutions facilitate MFI Operations

Qualification for External auditorsQualification of IT Specialists for delivery of

31

MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / Assumptionsfinancial information, loan tracking and HR computerised systemsYMN supported to establish a training institute Curriculum developed

Trainers recruitedFacilities operational

Facilities provided within incubators

6 2 7 Dissemination of information to ensure transparency

Technical assistance to YMN to create reporting systemDelivery of regular updates and periodic news on the micro-finance industry




6 Top Quality Business Support6 1 Business Upgrading for Existing Manufacturing Businesses6 1 1 Technical Assistance towards the

establishment of Incubator Operating Procedures MOIT

408,886 408,886Budget assessment taken from the Design of the Industrial Modernisation Programme which allowed €2,173,040 over 3 years. This has been converted to USD and apportioned across sub-components as well as being extended to the 5 years of the plan

6 1 2 Delivery of Business Upgrading Services 578,398 725,000 725,000 725,000 725,000 578,398

Total of Sub-Component 6.1 725,000 725,000 725,000 987,234 987,234 987,234 987,2346 2 Support to Small and Micro Enterprises6 2 1 Capacity Building for SMEPS6 2 1 1 SMEPS Monitoring and Advice Budget provision to be provided by SMEPS

6 2 1 2 SMEPS Funding6 2 1 3 Technical Assistance for

SMEPS6 2 1 4 Donor Funding for SMEPS

Total for Sub-Component 6.2.16 2 2 Reduction of the Demand for Business Development Services and BDS to Co-ordinate Activities6 2 2 1 Delivery of BDS for Micro

EnterprisesBudget provision to be provided by SMED and SMEPS6 2 2 2 Provision of BDS in Rural

AreasTotal for Sub-Component 6.2.2

6 2 3 Develop Capacity of MFIs and BDS to Co-ordinate Activities

32




6 2 3 1 Training of MFIs in Business Facilitation

6 2 3 2 Encourage MFIs to refer clients to BDS Providers

Total for Sub-Component 6.2.36 2 4 Capacity Building for Yemen Micro-finance Network6 2 4 1 Monitoring of MFN6 2 4 2 T A to MFN

Total for Sub-Component 6.2.46 2 5 Institutional Support to the Micro-Finance Institutions6 2 5 1 Proper Regulation of MFIs

Introduced6 2 5 2 Supervision of MFIs introduced6 2 5 3 Credit Bureau Established6 2 5 4 MSME Awareness Programme6 2 5 5 Policy Dialogue Platform for

Access to FinanceTotal for Sub-Component 6.2.5

6 2 6 Meso Level Institutions Facilitate MFI Operations6 2 6 1 Qualification for External

Auditors6 2 6 2 Qualification of IT Specialists6 2 6 3 YMN Supported to establish

training instituteTotal for Sub-Component 6.2.6

6 2 7 Dissemination of Information to Ensure Transparency6 2 7 1 TA to YMN to create reporting

system6 2 7 2 Regular updates and periodic

news on the micro-finance industryTotal of sub-Component 6.2.7


33

Component 7 – Start-up SupportComponent 7 (Start up Support) will be a joint initiative between the Ministry of Technical and Vocational Training and the Ministry of Industry and Trade, whereby the MTVET will provide premises for the incubators, and the MOIT will co-ordinate technical assistance in concert with the Business Upgrading Programme described under Component 6.

ObjectiveTo provide start up support to MSMEs through a network of business incubators

PurposeTo raise the birth rate of

Expected ResultsIt is expected that five sustainable business incubators will be created in the following locations:

1.Sana’a2.Taiz (also servicing IBB)3.Al – Hodeida4.Hadramout5.Aden

ActivitiesResource Allocation

34

• An International Expert has been allocated as the Team Leader of the Incubator Component to manage the overall process;

• A Local Long term Expert has been allocated for each planned incubator and it is expected that these experts will be retained as managers of the incubators after the project is complete;

• An administrator is required for each incubator and it is expected that the administrator will remain as an employee of the incubator after the project is complete;

• A driver is required for each incubator and it is expected that the driver would be retained after the project is complete;

• A vehicle is required for each incubator and the vehicle should be contributed to the property of the incubator at the end of the project

• An allowance for equipment has been made of €150,000 towards equipment for the incubators

Timetable

Develop Initial List of Target BeneficiariesDevelop Publicity MaterialsTraining of local staff in consultancy skillsBusiness Upgrading Programme LaunchStage 1 - EvaluationsStage 2 - DeliveryStage 3 DeliveryEvaluation ReportingEvaluation of Programme and continuation proposals

Staffing / Organisation of Sana's IncubatorDevelopment of tenant criteriaEstablishment of Incubator ServicesProcurement / Installation of EquipmentCall for Incubator tennantsInitial screening of Incubator TenantsIncubator LaunchOn-going recruitment of tenantsOn-going support to tenantsIdentification / Feasibility of Incubator No. 2Identification / Feasibility of Incubator No. 3Identification / Feasibility of Incubator No. 4Identification / Feasibility of Incubator No. 5Procurement / Instalation for Incubators 2,3,4,5Staff recruitment for Incubators 2,3,4,5Staff training for Incubators 2,3,4,5Call for tennants of Incubators 2,3,4,5Launch of Incubators 2,3,4,5On-going support / recruitment / Management 2,3,4,5Incubator Project ReportingProposal for further funding if necessary

Inception Phase ActivityImplementation PhaseClose Down PhaseDeadline

2021

Description

141516171819

8910111213

234567

1

8910111213141516

Year 1

Component 3 - Network of Business Incubators

Month

Timetable and budget to be reviewed after three years

35

Indicative Budget for Supporting a Network of Business Incubators

Provisional Budget for Supporting a Network of Business IncubatorsItem Rate Qty. Cost

FeesInternational Long Term Experts

KE3International Incubator Expert 800 660 528,000

International Non-key ExpertsLocal Long Term Experts Local Incubator Expert 1 90 660 59,400

Local Incubator Experts 2,3,4,5 80

2,376 190,080

Senior Local Short Term Experts Junior Local Experts

TOTAL FEES 777,480

Per Diem Local Per Diem 124 80 9,920

Total Per Diem 9,920

Flights International Flights 9 800 7,200 Local Flights 124 150 18,600

Total Flights 25,800

Administration

Administrator 30 2,41

2 72,360

Driver 30 3,16

8 95,040 Total Administration Costs 167,400

Equipment Vehicles 20,000 5 100,000

Computers, Copiers and Printers 30,000 5 150,000

Total Equipment 250,000

Incidental Expenditure Study Tours

Conferences and Meetings

Public Awareness Lump Sum 100,000 Total Budget 1,330,600

Expenditure Verification & Audit 10,000 GRAND TOTAL 1,340,600

36

Assumptions Used in the preparation of the Incubator Programme

Assumptions Used in Preparation of BudgetProject Duration

3 Years - Expected period of programme

220 Working days per year per personTeam Leader - Key Expert 1

1 Full time Incubator Expert for duration of the project800 Euro Per Day - International Expert Cost

3 International Flights a year for Team Leader800 Average Flight Cost from Europe

Living allowance included in feesLocal Main Incubator Expert

1 Local Incubator Expert for Duration of the Project90 Euro Per Day - Local Incubator Team Leader

27 Months support to Incubators 2,3,4 and 5594 Days support for each of Incubators 2,3,4 and 5

2376 Days support for Incubators 2,3,4 and 580 Euro Per day for Incubator Experts

Team Leader and Local Team Leader carry out Monitoring and Evaluations40 Nights away from Sana'a each

124 Per night away from home base124 Local Flights

150 Cost of Local FlightSupport Staff

1 Driver for 24 months - 4 drivers for 27 months1 Administrator for 36 months - 4 Administrator for 37 months

30 Daily Rate for Driver30 Daily Rate for Administrator

Equipment

1 Vehicle per Incubator20,000 Cost per vehicle

30,000 Cost of equipment per IncubatorIncidental Expenditure

100,000 Lump SumExpenditure Verification

10,000 Lump Sum

37

MSME Strategy – Component 7 Objectively Verifiable Indicators Sources of Verification Conditions / AssumptionsOBJECTIVE1 To develop the Industrial and Commercial















EXPECTED RESULTS (The Vision)6 2 A network of business incubators

provides start up supportNew incubators in Sana’a, Aden. Taiz, Al Hodeidah and Al Mukalla

ACTIVITIES7 2 Start up Support7 Establishment of a Network of Sustainable Business Incubators

7 1 1 Pilot Incubator in Sana’a

Staffing / Organisation of Sana’a Incubator

Incubator Fully Operational

Development of Tenant CriteriaEstablishment of Incubator ServicesProcurement of equipmentCall for Incubator TenantsInitial screening of incubator tenantsIncubator LaunchOn-going Recruitment of tenants

7 1 2 4 new incubators On-going support of tenantsIdentification / Feasibility of Incubator No. 2

Incubators Operational7 1 3 Incubator NetworkIdentification / Feasibility of Incubator No. 3Identification / Feasibility of Incubator No. 4Identification / Feasibility of Incubator No. 5

38

Indicative Budget and Timetable for Implementation of Component 7



7 Start up Support7 1 Establishment of a Network of Sustainable Business Incubators

7 1 1 Establishment of Pilot Incubator in Sana’a

MoTVET

609,059 609,059MoTVET will provide the premises. The budget provision is taken from the design on the Industrial Modernisation Programme (€1,340,000 for 3 years converted to USD) and represents funding needed for technical assistance and equipment. Incubators should be self-sufficient after 3 years, but budget provision for supporting sustainability and expanding the network.273,000273,000

7 1 2 Establishment of 4 new Incubators 609,059

609,059609,059

7 1 3 Development of Incubator Network 273,000 273,000 1,155,059

Total of Sub-Component 7.1.3 500,000 500,000 340,000 609,059 609,059 609,059

Total of Component 7 500,000 500,000 340,000 609,059 609,059 609,059

40

Component 8 – Raising the Quality of Business Statistics

ObjectiveTo develop an accurate and comprehensive statistical basis for economic policy and strategic decision making

Expected ResultsAn efficient and effective company registration system

A comprehensive, efficient, effective and current database of MSMEs

ActivitiesDevelopment of Company Registration Basis (Currently in the process of implementation by the Ministry of Industry and Trade in collaboration with the Netherlands Co-operation Office)

Expansion of the Company Registration Database into an all-encompassing database of MSME statistics

TimetableCompletion by 2013 with on-going maintenance

BudgetNetherlands Co-operation is financing the Company registration system

A provisional budget of US$600,000 per year has been allocated for implementation of the MSME database.

41
















EXPECTED RESULTS (The Vision)7 2 Comprehensive and accurate statistics

provide an effective tool for economic decision making


ACTIVITIES8 Raising the Quality of Business Statistics

8 1 Implementation of electronic business registration database

Company Registration Database fully functioning

Output Reports

8 2 Implementation of Industrial database System capable of delivering robust business statistics




8 Raising the Quality of Business Statistics8 1 Business Registration

Database MOIT- - - - - -

Already Funded by Netherlands Co-operation

8 2 Industrial Database 600,000 600,000 600,000 - - 1,800,000 Estimate from IMP Project Design includes MOIT Cap Bld

Total of Component 8 600,000 600,000 600,000 - - 1,800,000

42

Component 9 – Specific Sector StrategiesAll the foregoing strategy components can be viewed as crosscutting components in support of the Key Sectors. In this way, the 9 pillars of the MSME strategy can be viewed as follows:

Note: In the above diagrams, the term “Manufacturing” has been used for convenience. More accurately, it describes all the sectors, including trade and services, which are not tourism, fisheries or agriculture.

Fisheries SectorThe Ministry of Fisheries is currently being assisted by UNDP to prepare a strategy for the achievement of their goals. This will be a 15-year strategy divided into three stages. It will be implemented through its authority institutions and branches in coastal governates along with local councils, NGOs (Fishery co-operatives union and fisheries co-operative organisations)

The goals have been introduced to the logical framework of the MSME strategy, but it is not possible to identify at this stage in detail, the actual activities that will be carried out towards achievement of these goals. The activities introduced to the logical framework table may be improved in detail and developed as part of the strategy development process.

The following diagram depicts the main goals of the Ministry of Agriculture with regard to the development of the sector:

43

Agricultural SectorThe Ministry of Agriculture is currently being assisted by UNDP to prepare a strategy for the achievement of their goals as stated within the fourth five year plan (2011 to 2015). The goals have been introduced to the logical framework of the MSME strategy, but it is not possible to identify at this stage in detail, the actual activities that will be carried out towards achievement of these goals. The activities introduced to the logical framework table may be improved in detail and developed as part of the strategy development process.

The following diagram depicts the main goals of the Ministry of Agriculture with regard to the development of the sector:

Tourism Sector

The Ministry of Tourism is currently being assisted by UNDP to prepare a strategy for the achievement of their goals as stated within the fourth five year plan (2011 to 2015). The goals have been introduced to the logical framework of the MSME strategy, but it is not possible to identify at this stage in detail, the actual activities that will be carried out towards achievement of these goals. The activities introduced to the logical framework table may be improved in detail and developed as part of the strategy development process.

The following diagram depicts the main goals of the Ministry of Tourism with regard to the development of the sector:

44

It can be noted that there is a great deal of focus on the development of handicrafts, which can be combined with the Business Upgrading Component and the Innovation and Entrepreneurship Component as well as drawing assistance from micro-credit and SMEPS SME Promotion.

Industry Sector (i.e. Remaining Industry and Service)

For the sake of simplicity, all business which does not fall under the headings of: Agriculture; Fisheries or Tourism has been classified as the Industry Sector (i.e. the Remainder).

In general, all the crosscutting activity described in Components 2 to 8 support the Industry Sector, however, some additional activity can be identified such as:

• Leather Sector Study;

• Implementation of the recommendations of the Leather Sector Study;

• Identification of other key sectors and appropriate individual sector studies (Such as Minerals and Textiles; Marine Industry; Chemicals and Bio-technology);

• Development of Industrial Parts and Industrial Workspace

45
















EXPECTED RESULTS (The Vision)1 All Stakeholders work in harmony to

achieve an agreed visionYemen Charter for MSME Development implemented, monitored and regularly updated

Yemen Charter for Small Enterprises

Full Co-operation of MOIT

2 1 There is a sufficiency of funding available to support sustainable business propositions nationwide

Fully developed and funded micro-finance infrastructure


2 2 Fully developed provision of finance for medium level business propositions

3 Yemen has a conducive business environment for MSMEs

Laws and policies upgraded to best international practice

WB Doing Business Report

4 Yemen has a conducive environment for innovation and entrepreneurship

Creative Nation BrandingAnnual Innovation CompetitionDeveloped infrastructure for innovation supportInternational linkages for technology transfer


5 Yemen entrepreneurs have access to education for the development of technical and management skills

Vocational Training Delivered to established businesses through Upgrading ProgrammeTraining delivered in entrepreneurship skillsTraining in advisory skills delivered to Business Service Providers to develop local consultancy capacity

Business Upgrading ReportsTraining RecordsReduced dependency on international consultants

6 1 Business upgrading is delivered to established businesses

Business upgrading provided to 2,000 established businesses as well as clusters, and business service providers

Industrial Modernisation Reports and MSME charter Evaluation

6 2 A network of business incubators provides start up support

New incubators in Sana’a, Aden. Taiz, Al Hodeidah and Al Mukalla

46

MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / Assumptions6 3 Specific clustering initiatives develop

competitiveness of key sectorsSpecific co-operative initiatives for agriculture, fisheries and other sectors in accordance with specific sector strategies

7 1 An e-government business registration system is functioning efficiently

Electronic Company registration database is complete and functioning

7 2 Comprehensive and accurate statistics provide an effective tool for economic decision making


ACTIVITIES9 Sector Specific Activities9 1 Industry Sector9 1 1 Individual Sector Strategies Strategies adopted and incorporated into MSME Strategy Document9 1 1 1 Leather Sector Strategy9 1 2 Cluster Development9 1 2 1 Development of a Textile Cluster9 1 2 2 Development of Minerals Cluster

9 1 2 3 Development of Food Industry Cluster

9 1 2 4 Development of Marine Industry Cluster

9 1 2 5 Development of Chemical and Bio-Tech Cluster

9 1 3 Development of Industrial Work-space9 2 Fisheries Sector9 2 1 Fish Processing9 2 2 1 Canning9 2 2 2 Smoking9 2 2 3 Salting

Drying

9 2 3 Fish Based Food Manufacture & Restaurants

9 2 4 Boat Maintenance and Equipment Supplies

9 2 5 Sea Antiques and Heritage9 3 Agricultural Sector

9 3 1 Increase agricultural production

47

MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / Assumptions

9 3 1 1 Expand Wheat Cultivation Self sufficiency of wheat production improvedGrain imports reduced

9 3 1 2 Livestock production improved

No. of head of cattle increased by 5.7% annuallyRed meat production increased by 5% per yearPoultry production increased by 8% per yearFeed production increased

9 3 1 3 Increased role of women in rural areas

Increased number of women benefitting from agricultural support programme

9 3 1 4 Cultivation of cash crops

Coffee production increased by 4.2% per yearSesame Production increased by 4.1%Cotton production increased by 1.7%Tobacco production increased by 2%

9 3 2 Poverty Alleviation in Rural Community

9 3 2 Improved conditions and efficiency of rain-fed crop production Grain production increased by 4.4% annually

9 3 3 Environmental and Natural Resource Sustainability through community participation

9 3 3 1 Raise efficiency of water use

Increase area covered by modern irrigation systems

Increased proportion of ample water supplyPiped irrigation systemsModern irrigation to farmer pressure

9 3 3 2 Development of valleys, barriers and small dams 5,950 dams, water barriers and caravan

9 3 3 3 Research Programmes Increased productivity of the research unit

9 3 3 4 Promote and Develop the Co-operative Movement

Increased support for the co-operative movement

9 3 3 5Encouragement of farmers to diversify away from production of Qat

Reduced proportion of cultivated Qat compared to staple crops

9 4 Tourism Sector9 4 1 Tourism Related Handicrafts9 4 1 1 Tourism Industrial Survey Input to tourism products database Database Operational9 4 1 2 Tourism Products Database On-line catalogue

9 4 1 3 Tourism Products Marketing Study Marketing study Study

9 4 1 4 Establishment of Sales Centres Operational sales centres Stores Operational

48

MSME Strategy Objectively Verifiable Indicators Sources of Verification Conditions / Assumptions9 4 1 5 Reduction of Handicraft Imports Import restrictions Trade statistics9 4 1 6 Craft Awards Programme Awards Programme launched

New tourist products9 4 1 7 Design Upgrade for small tourist crafts Improved tourist products

9 4 1 8 Study for Quality Training Centre Report and Action Plan Output Report9 4 2 International Outreach

9 4 2 1 Participation in National and International Tourism Exhibitions

9 4 3 Credits to tourism products producers

49

Indicative Budget for Implementation of the MSME Strategy

Component Responsible Institution 2011 2012 2013 2014 2015 Total Basis of Estimate

9 Sector Specific Activities9 1 Industry Sector9 1 1 Sub-Sector Strategies

MoIT

9 1 2 1 Ind Strategy - - - - - Financed by the Government of Malaysia

9 1 2 2 Leather Strategy - - - - - - Financed by GTZ

9 1 2 3 Further Strategies 150,000 150,000 150,000 150,000 150,000 750,000 Allowance for Strategy Dev.

9 1 3 Sector Strategy Implementation

700,000 700,000 700,000 700,000 700,000 3,500,000 Allowance for Strategy Implementation against specific ToRs

9 1 3 7 Industrial Workspace 500,000 500,000 500,000 500,000 500,000 2,500,000 Private sector Partnership

Total of Sub-component 9.1 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 6,760,000

9 2 Fishing Sector - Budget to be refined in accordance with strategies planned or under development – Specifically UNDP Fisheries Sector Strategy9 2 1 Sector Strategy

MoF

- - - - - Financed by UNDP

9 2 1 Fishery Sector Studies 500,000 500,000 500,000 500,000 500,000 2,500,000 Say 5 studies per year

9 2 2 Implementation of Sub-sector Strategies

2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 10,000,000 Budget depends on studies developed

Total of Sub-Component 9.2 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 12,500,0009 3 Agricultural Sector – There is a new Agriculture Strategy in Progress – Table to be developed in accordance with this9 3 1 Increase Agricultural Production MoA 43,940,000 43,940,000 43,940,000 43,940,000 43,940,000 219,700,000

Taken from Budget of Ministry of Agriculture – Total figures apportioned across years

9 3 1 1 Expand Wheat Cultivation 6,400,000 6,400,000 6,400,000 6,400,000 6,400,000 32,000,0009 3 1 2 Improved Livestock

production 35,000,000 35,000,000 35,000,000 35,000,000 35,000,000 170,000,000

9 3 1 3 Increased role of women in rural areas 300,000 300,000 300,000 300,000 300,000 1,600,000

9 3 1 Cultivation of cash crops 2,240,000 2,240,000 2,240,000 2,240,000 2,240,000 11,200,0009 3 2 Poverty Alleviation in Rural

Community 46,800,000 46,800,000 46,800,000 46,800,000 46,800,000 234,000,000Taken from Budget of Ministry of Agriculture– Total figures apportioned across years

9 3 2 1 Improved conditions and efficiency of rain-fed crop production

46.800,000 46,800,000 46,800,000 46,800,000 46,800,000 234,000,000

9 3 3 Environmental and Natural 37,800,000 37,800,000 37,800,000 37,800,000 37,800,000 189,000,000

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Component Responsible Institution 2011 2012 2013 2014 2015 Total Basis of Estimate

Resource Sustainability through community

participation9 3 3 1 Raise efficiency of water use

MoA

8,600,000 8,500,000 8,500,000 8,500,000 8,500,000 43,000,000

Taken from Budget of Ministry of Agriculture– Total figures apportioned

across years

9 3 3 2 Development of valleys, barriers and small dams 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 100,000,000

9 3 3 3 Research Programmes 7,800,000 7,800,000 7,800,000 7,800,000 7,800,000 39,000,0009 3 3 4 Promote and Develop the

Co-operative Movement1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 7,000,0009 3 3 5 Encouragement of farmers to

diversify away from production of Qat

Total of Sub-Component 9.3 128,540,000 128,540,000 128,540,000 128,540,000 128,540,000 642,700,0009 4 Tourism Sector - There is a new Tourism Strategy in progress. Table will be developed in accordance with this9 4 1 Tourism Related Handicrafts

MOT

With Tourism Council and Customs Authority, MOPIC and local Banks

9 4 1 1 Tourism Industrial Survey 2,325,581 2,325,581

Provisional Budget taken from figures provided by the Ministry of Agriculture

9 4 1 2 Tourism Products Database 7,442 7,442

9 4 1 3 Tourism Products Marketing Study

4,615 4,615

9 4 1 4 Establishment of Sales Centres

9 4 1 5 Reduction of Handicraft Imports

9 4 1 6 Craft Awards Programme9 4 1 7 Design Upgrade for small

tourist crafts9 4 1 8 Study for Quality Training

Centre13,954 13,954

9 4 2 International Outreach9 4 2 1 Participation in National and

International Tourism Exhibitions

Budget to be set after Tourism Strategy is complete

9 4 3 Credits to ProducersTotal of Sub-Component 9.4 2,337,638 13,954 2,351,592

52

The Yemen Charter for Micro, Small and Medium Sized EnterprisesAn Agreement between:Charter Holder Specific Area of Responsibility:Ministry of Planning and International Co-operation

Strategy Oversight

The Ministry of Industry and Trade Co-ordination and Monitoring of the MSME Charter

SMED Development of the Micro-Finance SectorSMEPS Development and Promotion of Small and

Micro EnterprisesSEDF Expansion of Development FinanceMinistry of Agriculture Development of MSMEs in the Agricultural

SectorMinistry of Technical and Vocational Training Development of Technical and Vocational

SkillsMinistry of Fisheries Development of MSMEs in the Fisheries

SectorMinistry of Tourism Development of MSMEs in the Tourism

SectorHereinafter known as the “Charter holders”We, the Undersigned hereby acknowledge our responsibility for development of the MSME Sector and pledge to uphold the aims of the Yemen Charter for Micro, Small and Medium Sized Enterprises, and to implement the MSME Strategy to the best of our ability.

Specifically, the Charter holders agree to:1.Jointly adopt the MSME Strategy for Yemen as the guiding document for co-ordination

of MSME Development;

2. Acknowledge our responsibility for delivery of specific designated components and elements of the Strategy and agree to monitor performance and to report on progress towards the goals of the strategy in n our respective areas;

3.Contribute to the reporting and updating mechanism for the strategy and to maintain it as a live and dynamic up to date concept;

4.Provide reporting on performance in a transparent and co-operative manner;

5.Give equal opportunity for implementation of program projects and activities with fair share of the value of work;

6.Deliver a high level of efficiency and make decisions with fairness and impartiality

7.Provide each other with access to management information systems;

8.Support other Charter-Holders in the delivery of other components and elements where appropriate;

9. Co-ordinate all activities with other charter holders to develop synergy between the efforts of all charter holders;

10. Promote the MSME Charter and the MSME Strategy to a wider stakeholder group in order to ensure a common nationwide approach to MSME Development

Signed:

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