2nd Main Committee (Economic and Financial)
Venezuela
Divine Savior Holy Angels
Kathryn Buggs
Micro Finance and the Developing World
Microfinance is a key tool for poverty reduction in developing countries, as it provides vital
financial services to the poorest populations in a society and makes it possible for low-income
individuals to embark on the journey toward financial independence. The services which
microfinance institutions (MFIs) provide, from credit and loans to savings accounts and
insurance, promote smart money management and encourage the development of microenterprises capable of invigorating struggling communities.
Venezuela has made an effort to develop an infrastructure for successful microfinance through
its extension of loans and credit to the sizable refugee population within Venezuela’s borders.
According to the UNHCR, El Banco del Pueblo Soberano, Venezuela’s main public MFI, “aims
to help refugees…get back on their feet, promoting integration, and local development” through
attempts to “foster solidarity, tolerance and coexistence values”1. The program has been
extremely successful, with high return rates and improvements within refugee communities.
Keeping in mind the proven benefits of microfinance and the results of its extension of
microcredit to refugees, Venezuela is relatively open to the possibility of increased MFI
development in the future. However, since most of the banks in the country are nationalized and
the honorable President Hugo Chavez has decided to enact “21st Century Socialism” through
promotion of state-owned business and banking2, the potential for microfinance within
Venezuela must be in line with such nationalist and socialist ideals. MFIs must not infringe
upon the government’s control over banking, and the number of MFIs and banks likely will not
increase due to the government’s freeze on new bank licensing.
Venezuela is eager to examine further research into the success and impact of microfinance in
developing nations, particularly in regards to microfinance’s ability to improve Venezuela’s
financial status. That is not to say, however, that Venezuela automatically supports any and all
microfinance development and, in fact, Venezuela wishes to approach the subject cautiously so
as to maintain stability within its socialist programs and prevent the oversaturation and hypercompetitive marketplace that often accompany overly lenient microfinance lending practices.
1
"Banco del Pueblo Soberano’s micro-finance programme." . UNHCR, n.d. Web. 28 Feb 2012.
<http://www.unhcr.org/4ad7331d9.html>.
2
Forero, Juan. "Chavez Restyles Venezuela With '21st Century Socialism'." nytimes.com. The
New York Times, 30 O. Web. 28 Feb 2012.
<http://www.nytimes.com/2005/10/30/international/americas/30venezuela.html>.