Pity may represent little more than the impersonal concern which prompts the mailing of a check, but true sympathy is the personal concern which demands the giving of one’s soul. -Martin Luther King, Jr.

A nation’ s strength ultimately consists in what it can do on its own, and not in what it can borrow from others.   –Indira Gandhi

In many developing countries, the self-employed constitute over half of the work force. Starting and growing a small business can be incredibly risky financially and socially and capital is often very difficult to come by. However, when an economy is in a poor state, building or rebuilding from the bottom up is one of the best ways to ensure a stable future. Nations around the globe are realizing that this principle is essential to creating a sound infrastructure and lasting security and both private and governmental programs are stepping up to the plate.

Small businesses may mean economic growth in the long run, but when we’re talking about the poorest nations in the world, seed money is not so easy to come by, and when it is, it is often under dubious circumstances and comes with exorbitant interest rates. However, microloan (or microcredit) organizations provide a simple solution to this problem. Many men and women in poverty-stricken nations need only a couple hundred dollars to get their business up and running, an amount that would seem menial to most in the western world. Janeth Julius, a businesswoman in Tanzania, received a loan through Kiva of $275 to grow her retail business in the city of Arusha and now makes twice the per capita GDP of her country. Kiva loans are relatively short term, often paid back in full in year or so, encouraging financial partnerships that are characterized by dignity and respect as opposed to a benefactor type of relationship. Kiva is also unique in that it pairs a number of donors willing to invest small amounts of money with a single business owner, creating a more personal connection.

Many organizations such as the Microcredit Summit Campaign strive to reach and empower families, and especially the women of those families, to seed financial self-sufficiency in the next generations as well. Educated and successful women are more likely to take greater control of their own lives and have more say in family planning. Women also seem to interact more responsibly with others in their community as well when given more rights, opportunities and influence. A similar non-profit lending program, the Acumen Fund, advocates “dignity, not dependence…choice, not charity,” by providing larger, longer-term and more in-depth capital investments with the goal of maximizing social, rather than financial, returns.

Investment need not come only from the private sector, however, to support a growing venture. Government-funded programs are being set up in developing nations to provide a safer and more reliable lending resource for local economies. The IFC recently launched a new program dedicated to funding small and medium sized businesses in Central Africa, which also provides business development advice to assure sustainable growth in borrowing companies. With half of the $25 million in funds being provided by the IFC and being leveraged from private corporations by investment managers XSML and Cenainvest, the Central Africa Small and Medium Enterprise (SME) Fund will aim to be “important source of socially responsible financing for companies across central Africa and contribute to reducing poverty across the region,” says XSML managing partner, Jan Vos. By supporting loan-seekers with the expertise of locally-based fund managers and combining financing with business support services both before and after the loan process, this new generation of government endorsed investment program targets not just the financial but also the social issues at the root of economic deficiency.

In this age when it seems like everyone in the world is being affected by some degree of economic crisis, the opportunities for micro financing and investment in under-developed nations are becoming more and more favored over charity or aid that is simply one-directional. These types of financial partnerships are not only much more sustainable and long-lasting types of support, but they also foster a much healthier level of respect in the relationship between lender and borrower, both on an individual level and on an international level. It is this type of supportive yet balanced relationship that should be the goal for all types of global relations if we want to start closing the gap between the “developed” world and the “under-developed” world.