Resource information
Enterprises use credit to acquire
productivity-enhancing assets. Rural enterprises in
developing economies, however, often lack access to the
credit they need. Key reasons for this lack of access
include the low level and scattered nature of economic
activity in rural areas, the enterprises' lack of
collateral, inadequate capacity among the country's
lenders to lend in rural areas, and legal and policy
environments that discourage lending to rural enterprises.
Traditionally, leasing has served as an alternative to
credit for urban enterprises, but generally it has not been
a feasible option for rural enterprises. This paper argues
that rural leasing can be viable and highlights the key
factors to facilitate successful rural leasing, including
the advantages of leasing, an enabling environment, and
institutional support. The paper concludes that leasing is
a viable tool to finance rural assets.
