For Your Information: Improving Self-Sustainable Economies through Loans (UNDP Topic A)

YMUN Korea 6:40 AM ,

Here's an article on UNDP's Topic A: Improving Self-Sustainable Economies through Loans



Foreign aid, be it financial or developmental, has been the prevalent solution for rich nations when they support poorer nations. However, foreign aid tends to make the poorer countries too reliant on their richer counterparts, and many of them do not develop self-sustainable economies. In addition, there is rampant corruption and inefficiency in the handling of foreign aid. Hence, it is far from being a developmental tool and has barely helped increase the per capita growth in the receiving countries. An alternative that started recently was the use of micro-financing to improve economies and make them self-sustainable.

Micro-finance is a financial service whereby small loans are lent to individuals who live in poverty to have a chance to improve their livelihoods by starting small enterprises. Micro-financing is currently practiced in over 100 countries, serving more than 92 million individuals. 

For example, there is an organization in India called SHARE that helps rural women in India whose per capita income is less than US$8 a month. The organization lends each woman between US$50 to US$100 to fund small enterprises proposed by their clients.  For example, a woman was able to open a clothing store that became profitable within 6 months, allowing her to provide for her family sufficiently. Numerous people have benefitted from micro financing, not only in India, but also all over the world. Of SHARE’S 197,000 clients, 38% not no longer living under the poverty line, showing that micro-finance will lead to a reduction in poverty, thereby helping to achieve the Millennium Development Goals.

Another example of micro-finance is in Brazil where the Bolsa Familia Program, a social welfare program that is supported by the World Bank, was created to by ex-president Lula to focus on improving the social situation of the poor in the country. Bolsa Familia is now a decade old and is the world’s largest conditional cash transferring program. This program helps families who are living under USD$63, providing vaccinations for the whole family and funding of education for the family’s children.


In short, as Confucius says “Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime.” Just like teaching a man how to fish, micro financing is a method that helps the poor in the long term. This is because it is sustainable and it empowers the poor to get out of the poverty cycle by providing them the necessary tools.

by Jenny Park

Photos courtesy of http://blogs.thenews.com.pk/blogs/2012/11/the-case-for-micro-financing/
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