By Truthout at 11:38 AM 5/31/2020 (PDT)
The UNCTAD is currently developing a plan to aid post-war economies around the globe. They hope to alleviate the global recession caused by COVID-19. One central point of their plan is developing a relief fund using 0.01% of the member nations’ GDP. At this time, 25% of the fund’s money will go to aiding refugees and internally displaced people, and the remaining 75% will go to microfinancing small businesses in post- war-economies.
Microfinance is a fantastic idea to help rebuild postwar economies. For those who don’t know, microfinance loans are very small loans given to small businesses in developing nations to help them grow. A country’s economy is boosted when small business is booming, making microfinance a very successful method for rebuilding economies.
Microfinance is successful at helping post-war economies rebuild, as seen by nations in the Balkans, where microfinance institutions (MFIs) are able to lend to smaller businesses and those unqualified for more formal, large scale loans, like people in the agricultural sector. Microfinance loans enable every type of person to see some kind of economic gain even if they aren’t established enough for traditional loans from larger banks.
The UNCTAD is planning to give these loans directly to small businesses rather than funneling it through the governments of post-war countries, which will prevent countries from potentially abusing the loan money or creating discriminatory loan policies. Additionally, some countries might be unable to fund governmental microfinance institutions.
Microfinance is one of the best ways to rebuild suffering economies, and the UNCTAD resolution is on the right track to creating real change in post-war economies.
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