Macro Micro-finance

The greatest problem for countries to trade their way out of poverty is lack of infrastructure, especially roads. Even if the government funded the big main roads throughout the country, and the government maintained them, what about the small roads connecting through to the villages? Well if we presume that these small roads are only used by the villagers themselves to transport goods out of the village, or into it, then the villagers could pay for and maintain the road. They have free labour to some extent (in the off-season) and only need the materials/expertise (though we are talking simple roads here).

If we believe that improved roads really will help the village trade and increase their income, why not lend them money to build the road and get them to pay it back over time; once their incomes go up. The loan would be guaranteed by the whole village as they all have a stake in it. This idea of collaborative, group-ownership, lending model might work. The returns might not be great; and the loan would have to be paid back over quite a long time, as the initial cost is quite high -but it could still be profitable, and the primary purpose is to utilise funding more effectively in ways to support development.

Now, once the road is built, villagers' incomes increase and so they can become traditional microfinance clients, and this can be much more profitable.