AN ASSESSMENT ON THE PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM ENTERPRISES IN CAMEROON

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The global financial and economic crises in the late 1980s led to the privatization and restructuring of state-owned enterprises. This, coupled with the introduction of market forces, gave rise to new small businesses while causing a decline in outdated and inefficient ones. Additionally, a crucial goal for both politicians in developing nations and external aid providers was fostering the growth of the small and medium-sized enterprise (SME) sector (Hutchinson and Xavier, 2018). Until now, the definition of a small firm has been somewhat arbitrary, with various criteria such as size, number of employees, sales volume, asset size, type of customer, capital requirements, and market share used for classification (Danielle and Carson, 2020).  According to the most recent Cameroonian enterprise survey by the National Institute of Statistics (NIS) in 2019, approximately 98% of enterprises in the country fall under the category of small and medium-sized enterprises (SMEs). In Cameroon, poverty reduction is a primary focus of development policy, with the government specifically emphasizing the promotion of SMEs as a key agenda item, recognizing the sector's potential as a driver of economic growth.

Furthermore, Kenmegni (2019), asserts that the Cameroonian government initiated institutional reforms in December 2004, leading to the establishment of the Ministry of Small and Medium-Sized Enterprises, Social Economy, and Handicrafts. This ministry was tasked with formulating policies and programs to promote SMEs, including the creation of the SMEs promotion agency and the Cameroonian SMEs bank. According to the NIS (2019), SMEs in Cameroon account for 62% of permanent employees and contribute 31% to turnover before tax for all enterprises. Despite their potential to create jobs and foster development, SMEs face significant obstacles that hinder their growth and development. Therefore, a survey will be conducted on an assessment on the problems and prospects of Small and medium enterprises in Cameroon.

 1.2 Statement of the Problem

The capacity of SMEs to expand is closely linked to their capacity to provide employment and support development. However, because SMEs confront so many challenges, their ability to expand and develop is limited. According to the 2019 World Bank Enterprise Survey for Cameroon, 54.0% of SEs and 56.5% of MEs, respectively, cited a main barrier to their operation being the inability to obtain financing. Mandiefe, Baye, and Tieguhong (2018) discovered that lower production is a direct result of the greater financial limitations that Cameroonian SMEs experienced. Furthermore, the challenges faced by SMEs, such as limited capital, poor management and technical know-how, insufficient infrastructural development, operationally obstructive government laws, and so on. In the same manner, research has shown that the issue of tax expenditures has eaten away at SMEs' profits, which are essential to their continued existence and growth. Also, the size and nature of certain SMEs have led to a growth in their debt records, making it more difficult for them to comply with tax regulations. In addition, it is now clear that borrowing from banks and financial institutions has a high interest rate in Cameroon giving room for opportunities for growth, expansion into new markets, increased profitability, and other favorable outcomes.  It is in the light of these that the study seeks to assess on the problems and prospects of Small and medium enterprises in Cameroon

1.3  Objectives of the Study

The main purpose of this study is to assess on the problems and prospects of Small and medium enterprises in Cameroon. Specifically, the study will;

To assess the environmental factors affecting SMEs in Cameroon 

To investigate the managerial factors affecting SMEs in Cameroon 

To investigate the prospects of growth of SMEs in Cameroon.

 1.4 Research Questions

The following questions have been prepared for the study:

What are the environmental factors affecting SMEs in Cameroon?

What are investigate the managerial factors affecting SMEs in Cameroon?

What are the prospects of the growth of SMEs in Cameroon?

1.5  Significance of the Study

This study holds importance as it sheds light on how the problems faced by Small and medium enterprises in Cameroon can influence various aspects of business operations, sales, and customer relationships for Entrepreneurs. Moreover, it provides valuable insights for government and policymakers in Cameroon, aiding them in understanding the problems encountered by Small and medium enterprise and proffer platform for possible opportunities for growth. Additionally, this study will contribute to the formulation of supportive regulations and the development of infrastructure to facilitate the growth of SMEs. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to  an assessment on the problems and prospects of Small and medium enterprises in Cameroon.

1.6 Scope of the study

The scope of this study is boarded on  an assessment on the problems and prospects of Small and medium enterprises in Cameroon. Empirically, this study will  assess the environmental factors affecting SMEs in Cameroon, investigate the managerial factors affecting SMEs in Cameroon and investigate the prospects of growth of SMEs in Cameroon.

Geographically, the study will be delimited to SMEs business owners in Bamenda, Cameroon

1.7 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. 

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.8 Definition of Terms

SMEs:  refer to Small and Medium-sized Enterprises.

Problems: the challenges or difficulties that SMEs face in the course of their business operations.

Prospects: For SMEs, prospects includes opportunities for growth, expansion into new markets, increased profitability, and other favorable outcomes

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