One of the most frequently cited constraints to commercializing environmental goods is a lack of financial services such as loans or credit. Credit is simply unavailable in many rural settings, handicapping the ability of the poor to use their environmental assets. By one estimate, 500 million economically active poor families have no access to credit or other financial services. Without access to credit, the poor must rely on their own savings to capitalize their enterprises, but these are frequently inadequate to fully exploit their economic opportunities (Marshall et al. 2003:135; IFAD 2004:9).
Considerable strides have been made in recent years in providing new credit channels for the poor, from informal savings clubs to more formal Grameen-type microfinance banks. These have dispelled the myth that the poor are not creditworthy or are unable to save (Morduch and Haley 2002:2-3). But the dimensions of the credit problem require continued progress in extending microfinance to diverse rural communities. One promising strategy involves taking advantage of the fact that the poor have already formed thousands of self-help groups and saving clubs to address their own finance needs. Linking these groups with traditional banks would allow the banks to extend their services to a ready-made clientele with a history of enterprise and saving. In turn, these small groups of poor households would then become connected to the larger financial market and could draw on its business expertise (IFAD 2004:15).
Other more traditional strategies will be needed as well if credit availability is to rise substantially. These include strength-ening rural banks, both private and community owned; reforming agricultural development banks so that they become major microfinance providers; and helping current microfinance providers to create networks and take advantage of supporting services such as credit rating and refinancing (IFAD 2004:12-14).
