CHALLENGES OF FINANCIAL MANAGEMENT PRACTICES AMONG BUSINESS ORGANIZATIONS IN CAMEROON

CHAPTER ONE

INTRODUCTION

Background of the study

Financial management is an essential component of company operations, since it involves the strategic coordination, arrangement, supervision, and regulation of financial activities inside an organisation with the aim of attaining its goals in a proficient and successful manner. Cameroon, a nation characterised by a varied economic environment including both small-scale businesses and big firms, encounters a multitude of complex and ever-changing issues in the realm of financial management practices (Adetola & Oluwatomiwo, 2016). Cameroon, situated in the region of Central Africa, has shown consistent economic expansion in recent decades, propelled by major industries like agriculture, mining, manufacturing, and services. Nevertheless, although these favourable patterns, enterprises in Cameroon face a multitude of obstacles in efficiently overseeing their financial affairs. Comprehending and tackling these obstacles are vital for the enduring expansion and advancement of enterprises in the nation. A major obstacle encountered by business organisations in Cameroon is the insufficient availability of financial resources. SMEs, which make up a substantial part of the business environment, frequently face difficulties in obtaining funding from banks and financial institutions due to strict lending requirements, exorbitant interest rates, and absence of collateral (Agnihotri, Dingus, Hu & Krush, 2016). Consequently, several enterprises have limitations in their liquidity, impeding their capacity to allocate resources towards expansion, pursue development prospects, and endure economic disruptions. 

Furthermore, the regulatory framework in Cameroon presents obstacles to the implementation of financial management strategies. Businesses face uncertainty and compliance challenges due to complex tax laws, bureaucratic processes, and uneven enforcement. This results in inefficiencies in financial reporting, tax planning, and risk management (Akanga, 2017). Furthermore, the presence of corruption and bribery continues to be widespread within the corporate landscape, hence intensifying the difficulties associated with maintaining financial openness and integrity. 

Moreover, the dearth of proficient financial experts amplifies the difficulties associated with financial management in Cameroon. Despite ongoing endeavours to enhance education and training in finance-related domains, a dearth of proficient accountants, financial analysts, and auditors persists, hence impeding their ability to effectively traverse complex financial landscapes and provide strategic counsel to enterprises. The presence of a skills gap poses a hindrance to the implementation of optimal strategies in financial management, hence compromising the overall financial well-being and operational effectiveness of firms (Akinbami, 2015). 

Given the aforementioned issues, it is important to do thorough research in order to identify, analyse, and tackle the barriers that economic management methods encounter inside corporate organisations in Cameroon. According to Asaduzzaman (2017), policymakers, regulators, business leaders, and other stakeholders can create a conducive environment for financial management excellence, encourage entrepreneurship and innovation, and facilitate sustainable economic growth and development in Cameroon by acquiring a deeper understanding of the underlying factors contributing to these challenges and formulating specific strategies and interventions.  This study seeks to investigate the difficulties faced by business organisations in Cameroon in managing their finances. The goal is to provide insights for policy reforms, enhance professional skills, and improve the financial resilience and competitiveness of businesses in different sectors. This study aims to provide insights into these crucial matters, with the intention of making a valuable contribution to the progress of knowledge and the improvement of financial management practices in the specific context of Cameroon. Therefore, the researcher sought to assess the challenges of financial management practices among business organizations in Cameroon.

1.2 Statement of the problem

Financial management plays a pivotal role in the functioning of businesses, exerting a significant impact on the long-term viability, expansion, and competitive advantage of organisations. Business organisations in Cameroon have a multitude of obstacles when it comes to efficiently managing their financial resources, which impedes their capacity to attain maximum performance and ensure sustained success in the long run. Although there have been attempts to improve financial management techniques, some problems still hinder the effective use of financial resources and the achievement of organisational objectives(Bagnoli & Giachetti, , 2015). The main aim of this research is to ascertain and examine the difficulties faced by corporate entities in Cameroon with regards to their financial management procedures. Numerous enterprises in Cameroon encounter challenges in formulating all-encompassing financial strategies that are in accordance with their strategic goals. The absence of efficient planning results in financial limitations, challenges in managing cash flow, and suboptimal resource allocation. The availability of cost-effective and appropriate finance alternatives continues to be a substantial challenge for enterprises in Cameroon. Organisations have challenges in acquiring the required cash to sustain their operations and investments due to factors such as elevated interest rates, rigorous lending standards, and restricted access to credit facilities (Bamrara, 2015). Likewise, the presence of inadequate financial control systems: Inadequate internal control procedures render firms vulnerable to a range of dangers, such as fraudulent activities, misallocation of cash, and financial inaccuracies. Financial inefficiencies are worsened and the integrity of financial reporting is compromised due to the lack of strong control mechanisms. The economy of Cameroon is vulnerable to swings in currency exchange rates and macroeconomic uncertainty, hence presenting substantial obstacles for firms in properly managing their financial resources. Financial risks and corporate operations may be disrupted by several factors such as volatile currency rates, inflationary pressures, and political upheaval. Furthermore, it is essential for corporate organisations to adhere to financial legislation and reporting requirements in order to maintain openness and accountability (Bamrara, 2015). Nevertheless, the intricate regulatory landscape in Cameroon may be a significant challenge, especially for small and medium-sized firms (SMEs), resulting in fines for non-compliance and legal complications. The limited financial knowledge and abilities shown by company owners and workers hinder the implementation of optimal financial management strategies. A lack of comprehension about financial ideas, strategies, and instruments impedes the decision-making processes and weakens the financial performance of the organisation. The financial management systems and technical infrastructure in Cameroon provide significant challenges for several enterprises, impeding their capacity to effectively use digital technologies for financial planning, analysis, and reporting. Lack of adequate investment in technology hampers the ability to achieve efficiency improvements and establish a competitive edge in the field of financial management(Bamrara, 2015). It is essential to acknowledge and tackle these difficulties in order to improve the financial management practices of corporate organisations in Cameroon, facilitate economic growth, and advance sustainable development. Hence, it is crucial to possess a thorough comprehension of these matters in order to develop efficient strategies and interventions that target the enhancement of financial management skills and the promotion of organisational success. Hence, the study assess the challenges of financial management practices among business organizations in Cameroon.

1.3 Objective of the study

The broad objective of the study is to assess the challenges of financial management practices among business organizations in Cameroon.. The specific objectives is as follows

Determine the extent financial management is adopted among businesses in Cameroon. 

Identify the financial management practices employed by businesses in Cameroon

Analyze the major challenges impeding the effective implementation of financial management practices among businesses in Cameroon.

Proffer strategies required to enhance financial management practices  among businesses in Cameroon.

1.4 Research Questions

The following questions have been prepared to guide the study

What is the extent financial management is adopted among businesses in Cameroon.?

What are the financial management practices employed by businesses in Cameroon?

What are the major challenges impeding the effective implementation of financial management practices among businesses in Cameroon?

What are the strategies required to enhance financial management practices  among businesses in Cameroon?

1.5 Significance of the study

The study will be significant to the following

Business organization: Financial mismanagement can lead to the downfall of businesses, affecting not only the organization itself but also its employees, suppliers, and the broader economy. By identifying and understanding the challenges faced by businesses in Cameroon, the study can help develop strategies to enhance financial sustainability and resilience, ultimately contributing to the longevity of businesses.

Policymakers: Findings from the study can inform policymakers and regulatory bodies about the specific financial management challenges prevalent in Cameroon. This can aid in the formulation of policies and regulations aimed at addressing these challenges, fostering a more conducive environment for business growth and stability.

Academic Research: The study can serve as a foundation for further academic research into the intricacies of financial management practices within the Cameroonian context. It can stimulate discussions, generate hypotheses, and inspire future studies aimed at deeper understanding and resolution of these challenges.

1.6 Scope of the study

The study focuses on assess the challenges of financial management practices among business organizations in Cameroon. Empirically, the study will determine the extent financial management is adopted among businesses in Cameroon, identify the financial management practices employed by businesses in Cameroon, analyze the major challenges impeding the effective implementation of financial management practices among businesses in Cameroon and proffer strategies required to enhance financial management practices  among businesses in Cameroon.

1.7 Limitation of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview), which is why the researcher resorted to a moderate choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.8 Definition of terms

Financial management: Financial management encompasses the strategic planning, organizing, directing, and controlling of financial resources within an organization to achieve its objectives efficiently and effectively. It involves making decisions about how to acquire, allocate, and utilize funds in ways that maximize value and minimize risk. 

Financial Management Practices: This refer to the strategies, processes, and procedures implemented by organizations to effectively manage their financial resources and achieve their financial goals. These practices encompass a wide range of activities aimed at optimizing the acquisition, allocation, and utilization of funds, as well as monitoring and controlling financial performance.