[dint]

This is a long-contested debate in the field of international development. The model you propose is called microfinance, and has been attempted for decades. Here's a summary of the issue: https://blog.givewell.org/2013/01/04/cash-transfers-vs-micro...

In short:

- Microfinance programs that grant small, low-interest loans aren't sustainable. Administering those programs (especially in developing countries) carries massive overhead that isn't offset by revenue from interest.

- Furthermore, there isn't strong evidence that low-interest loans actually improve their recipients' well-being on net (considering the harm that indebtedness can cause).

- Evidence (from randomly-controlled trials) shows that direct cash transfers are effective in improving recipients' well-being on a number of metrics, and that recipients do not spend them on "sin goods" like alcohol or tobacco[0].

[0] https://www.princeton.edu/haushofer/publications/Haushofer_S...