Yemen to use LGMIS to disburse funds from donors

The Ministry of Finance has approved an electronic disbursement system that will be dedicated to disburse funds from loans and grants allocated by international donors.

The new system, fully developed by a Yemeni team, is called Loans and Grants Management Information System (LGMIS).

Yemen suffers the lack of capacity to absorb donors’ fund allocated for development projects in the London Donor Conference held in 2006 and other commitments in the following years.

According to the Central Bank of Yemen, the Yemeni authorities have addressed concerns raised by international donors over the slow disbursement of international aid by creating an electronic database for aid disbursement.

‘’Donors always complain about this issue and the USAID’s Enhancing Government Effectiveness (EGE) Project in Yemen, carries the solution represented by LGMIS, which is introduced by Management Systems International (MSI), a Washington-based consultancy firm’’, the CBY said in a press release.

The Ministry of Finance expects the system to be rolled out by the end of April.

The new system will link financing received by the Ministry of Finance to the central bank which will then distribute the funds to the intended recipients.

Initially rolled out for projects in the education and agriculture and health fields, it is estimated that the electronic transfers will reduce processing time to between five and eight days from an average of 35 days under the current manual transfer process.

The new process will also enhance record keeping for auditing purposes.

Endemic corruption has plagued Yemen's attempts to attract international aid and investment, needed urgently to diversify its economy away from dependence on dwindling oil revenue.

As international donors have met recently to discuss boosting aid to the impoverished nation, they have frequently raised concern over Yemen's capacity to absorb higher aid flows.

During a recent Friends of Yemen meeting donors raised concerns over why much of the US$5.7 billion pledged during a 2006 London donor conference has not been spent.

Although creating an electronic trail for aid payments will help improve the capacity of Yemeni authorities to stamp out corruption, a leap forward should not be expected in the near term as the political will to do so is still largely lacking.