INVESTIGATING THE ROLE OF MICROFINANCE INSTITUTION IN ENHANCING WOMEN ENTREPRENEURSHIP IN CAMEROON

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

It is widely acknowledged that women play a significant role in improving the livelihoods of their communities, this role has not been universally accepted, particularly in developing nations like Cameroon. This lack of acceptance is largely attributable to various factors such as cultural norms that discourage entrepreneurial women, widespread poverty, high levels of unemployment, and low household incomes (Akanji, 2018; Ekpel et al., 2020).

Additionally, arguments suggest that women are more environmentally conscious compared to men, as their activities prioritize efficient resource utilization and emphasize reuse. They often make more sustainable decisions for their households and businesses (Marlow, 2019). While both genders in Africa encounter challenges when establishing their own businesses, women typically face more formidable obstacles that are often harder to surmount. Similalry, many governments lack policies and legal frameworks to support female entrepreneurs, and in some nations, women have limited access to financial institutions/formal banking services, hindering their ability to secure loans or credit. 

Microfinance refers to the provision of comprehensive financial services such as micro-credit, micro-saving, or micro-insurance to impoverished individuals. The term "micro" denotes the small amounts typically involved in these transactions. Primarily targeting the economically disadvantaged, microfinance predominantly serves women. Essentially, it serves as a financial lifeline for entrepreneurs who lack access to traditional banking and related services. There are two primary methods of delivering financial services to such clients: individualized, relationship-based banking for small-scale entrepreneurs and businesses, and group-based models wherein multiple entrepreneurs join forces to apply for loans and other financial services. According to Khandker (2021), microfinance serves as an effective avenue for opening economic opportunities for the impoverished, enhancing resource accessibility, and bolstering their confidence and well-being. Conversely, Adelaja (2018) defines microfinance as the provision of very small, short-term loans without collateral, typically utilized by low-income individuals and households. This approach distinguishes microfinance as a developmental intervention capable of offering lasting benefits to the poor. Moreover, microfinance extends beyond mere monetary access, delving into how funds are utilized and invested by low-income individuals, as emphasized by Khandker (2021). 

In Cameroon, marginalized groups heavily rely on microfinance savings and credit services as their primary economic tool. However, the prevalent donor-driven model has resulted in a top-down approach, where consumers have limited involvement in product formulation, according to Malach (2019). Similarly, inheritance laws and cultural norms restrict women's economic opportunities (Roomi, M. A., Rehman, S., & Henry, C., 2018). Beyond that, many women lack adequate education or professional training, impeding their advancement. Moreover, limited technological literacy and difficulty accessing modern technology further constrain their potential. Cultural values also serve as a barrier to women's progress.  Consequently, this model fails to empower microfinance clients or alter power dynamics and gender ratios, as argued by Malach. To truly promote women's socio-economic empowerment, Malach (2019) asserts that policies and projects must incorporate strategies aimed at transforming the institutions and processes perpetuating women's subordination. Also, Khandker (2021) advocates for collateral-free microfinance, emphasizing doorstep service delivery, prioritizing women, and employing straightforward procedures. Therefore, a survey will be conducted in order to investigate the role of microfinance institution in enhancing women entrepreneurship in Cameroon.

1.2 Statement of the Problem

The recognition of the potential of MFIs to empower women economically, several critical issues persist, necessitating focused attention. While MFIs are touted as catalysts for women's entrepreneurship, there remains a disparity in access, particularly in rural and marginalized areas. Limited outreach of MFIs restricts the participation of women entrepreneurs, hindering their ability to leverage financial services for business growth. Similarly, women face specific barriers to financial inclusion, including limited collateral, inadequate financial literacy, and social norms that constrain their access to credit and other financial services. These barriers impede women entrepreneurs from fully benefiting from the support provided by MFIs. Also, the sustainability of women-led enterprises supported by MFIs is often uncertain. As challenges such as high repayment rates, inadequate business training, and insufficient post-loan support may undermine the long-term success and impact of women-owned businesses.

Furthermore, there is a concern that while MFIs aim to empower women economically, there may be instances of exploitation, such as high interest rates and coercive lending practices, which can exacerbate financial vulnerabilities and perpetuate cycles of poverty. On the other hand, many stakeholders, including governmental bodies, development organizations, and civil society, recognize that achieving inclusive development, sustainable wealth creation, and employment opportunities requires enabling women to participate in the small business sector. Research indicates that empowering women to stimulate economic growth and create employment opportunities leads to positive outcomes. This assistance allows women to generate income and accumulate assets, ultimately enhancing the country's human capital and fostering economic growth. Women tend to invest a significant portion of their earnings into business ventures, unlike men.

Additionally, the effectiveness of MFIs in fostering women entrepreneurship requires a gender-sensitive approach that addresses the unique needs and challenges faced by women entrepreneurs. Nevertheless, there is a lack of comprehensive strategies and policies within MFIs to promote gender equality and empower women economically. Thus, it is in the light of these that the study seeks to investigate the role of microfinance institution in enhancing women entrepreneurship in Cameroon.

1.3  Objectives of the Study

The main purpose of this study is to investigate the role of microfinance institution in enhancing women entrepreneurship in Cameroon.  Specifically, the study will;

Determine the extent microfinance institution provides access to financial resources for women entrepreneurship in Cameroon

Determine the extent to which access to credit facilities influence the growth of women owned entrepreneurship in  Cameroon

Determine the influence of micro savings on growth of women entrepreneurship.

Ascertain the impact of training and advisory services on growth of women entrepreneurship

 1.4 Research Questions

The following questions have been prepared for the study:

To what extent do microfinance institutions provide access to financial resources for women entrepreneurship in Cameroon?

How does access to credit facilities influence the growth of women-owned entrepreneurship in Cameroon?

What is the influence of micro savings on the growth of women entrepreneurship in Cameroon?

What is the impact of training and advisory services on the growth of women entrepreneurship in Cameroon?

1.5 Research Hypotheses

Ho: There is no significant on the role of microfinance institution in enhancing women entrepreneurship in Cameroon.

Ha: There is a significant impact on the role of microfinance institution in enhancing women entrepreneurship in Cameroon.

1.6 Significance of the Study

 The results of this study will help governments and microfinance institutions understand how to enhance their microfinance initiatives. However, the study was important for women entrepreneurs because it made them aware of the ways in which microfinance institutions can provide funds and credit facilities, which they can use to further their entrepreneurial endeavors, become more independent, and produce revenue for the advancement of their households and the economy as a whole. Also, government investors, and entrepreneurs will fill the study to be important since it will help them make wise judgments about how to support startups, small enterprises, and grabs a lot of businesses. 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 the role of microfinance institution in enhancing women entrepreneurship in Cameroon.

1.6 Scope of the study

The scope of this study is to investigate the role of microfinance institution in enhancing women entrepreneurship in Cameroon. Empirically, this study will determine the extent microfinance institution provides access to financial resources for women entrepreneurship in Cameroon, the extent to which access to credit facilities influence the growth of women owned entrepreneurship, the influence of micro savings on growth of women entrepreneurship and ascertain the impact of training and advisory services on growth of women entrepreneurship in Cameroon

Geographically, the study will be delimited to residents of Yaoundé, 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

Entrepreneurship: refers to the process of identifying, creating, and pursuing opportunities to generate value through innovative ideas, products, or services.

Microfinance: defined as the provision of financial services to impoverished or low-income clients, including consumers and entrepreneurs who would otherwise be underserved by traditional financial institutions (Ledgerwood, 2020)

Microfinance institution: (MFI) is an organization that provides financial services, such as loans, savings, and insurance, to low-income individuals or communities, often in developing countries.