Achieving improved financing for low-income producers in developing countries: The first set of approaches

Abstract

Poor people commonly have limited access to financial services. More specifically, micro entrepreneurs and small-scale business enterprises in developing countries have difficulties in obtaining financial assistance from banks and other financial institutions. Infact, studies have shown that most small enterprises start their lives without any institutional help. The entrepreneur usually obtains the small amount of finance he needs from his own savings or from his family. However, small enterprises find it difficult to grow without the opportunity to borrow from lending institutions. This paper reviews the first set of approaches for achieving improved access to financing for low-income producers in developing countries. For the poor with relatively fewer assets, improved access to finance allows them to manage risk and smooth consumption; finance technological and capital improvements and thereby raise productivity; acquire working capital to obtain inputs in a timely way; and take advantage of market opportunities that contribute to growth.

KEY WORDS: Approaches, Improved Access, Finance, Low-Income, Producers.