INTRODUCTION
Small and medium-sized enterprises (SMEs) are the backbone of the Cameroonian economy, accounting for over 90 percent of all businesses and over 70 percent of the employment force. However, SMEs in Cameroon face several challenges, including access to finance, markets, and skills training. These challenges hinder growth and the ability to contribute to economic development. According to the World Bank 2022 report on the state of SMEs in Cameroon and a Dalberg report of 2011 on the impact of government support programs on SMEs in Cameroon, the government of Cameroon has many support programs put in place to ensure the growth and sustainability of SMEs. But the question lies with the effectiveness and good coordination of these programs. These initiatives haven’t worked as well as they could have. It is important therefore to examine the extent to which government support programs improve entrepreneurship in Cameroon. This study looks at how the government would promote small and medium-sized enterprises (SMEs) in Cameroon and how that could help the nation’s entrepreneurial growth. This article conducts a comprehensive examination of government support programs for SMEs, encompassing a comparative analysis of global initiatives, a situational analysis of current programs, an evaluation of their effectiveness, an exploration of successful programs in Cameroon, and strategic policy recommendations.
A Comparative Analysis of Global Government Support Programs.
In a comparative analysis of global government support programs, notable success stories emerge from countries like Singapore, Hong Kong, Uganda, and Morocco. Singapore’s comprehensive initiatives, encompassing loans, tax breaks, mentorship programs, and extensive market access, have contributed to a sustained annual growth rate of 6 percent in SMEs over the past decade. Hong Kong, a global financial hub, attributes its flourishing SME sector to strategic support mechanisms, resulting in a remarkable 7 percent annual increase in SME turnover. In Uganda, the focus on entrepreneurship and agribusiness, coupled with government-backed initiatives like loans and tax breaks, has led to a commendable 10 percent annual growth in SMEs, particularly in the agriculture sector. Meanwhile, Morocco’s success in boosting SMEs lies in sector-specific programs, with an impressive 8 percent annual growth in industries such as textiles, automotive, and renewable energy. The statistical evidence of sustained SME growth in these countries serves as a compelling blueprint for Cameroon, suggesting that adopting similar multifaceted strategies, tailored to its unique context, could foster increased job creation, economic stability, and sector-specific resilience. Through the establishment of a pro-SMEs environment, promotion of innovation, facilitation of capital acquisition, establishment of links with overseas markets, financing of sector-specific initiatives, and provision of comprehensive support services, Cameroon can leverage the knowledge base of these other countries to accelerate the growth of SMEs and economic development.
Situational Analysis of Government Support Program
The future of government support for SMEs in Cameroon is uncertain. There are various thoughts around the question of supporting SMEs. Some contend that the government need to assist SMEs more, while others advocate for the government to adopt a more detached stance. Those who argue that the government should do more to support SMEs point to the fact that SMEs are the backbone of the Cameroonian economy and that they need support in order to grow and be competitive both in the national and international market. SMEs play an important role in the economy, and they can create jobs and boost economic growth. Support from the government can assist SMEs in overcoming some obstacles, like difficult and time-consuming administrative processes and limited access to markets and financing. They contend that through easing access to capital, markets, and skill development opportunities, the government may contribute to the provision of this support.
On the other hand, there is a claim that excessive government backing to SMEs will result in moral hazard because companies may become less risk-averse and incur more debt as a result of the assurance that the government will support them in the event of their failure. In a situation where the Government supports the market by giving SMEs an unfair competitive edge over larger enterprises, raising consumer prices, and reducing competition, leading to the wasted use of resources, increasing public debt, and market distortion.
To determine what challenges SMEs are facing and how effective the current government support programs have been, we need to take a closer look at them and what steps might be taken to make things better. The Agency for the Promotion of Small and Medium-Sized Enterprises was established to strengthen the managerial capabilities of SMEs in Cameroon. The Ministry of Agriculture and Rural Development runs the Program for the Improvement of the Competitiveness of Family Agricultural Farms (ACEFA), which offers farmers resources, training, and mentorship to expand their businesses. Other support programs include the Young Entrepreneurs Mentor-ship Program of the National Employment Fund, which is designed to encourage youths to pursue entrepreneurship. The main recipients of this program are Common Initiative Groups; cooperatives that grow cocoa and coffee; and unions that work in rural areas in the livestock and fisheries industries. Additionally, Cameroon’s Minister of Finance established the State Guarantee Fund on July 17, 2023, outlining the requirements for approving and carrying out the state guarantee for public institutions. as well as private and public businesses, for domestic loans during the 2023 fiscal year.
Assessing the Effectiveness of Government Support Programs for SMEs in Cameroon
Government support initiatives are confronted with many of difficulties such as.
Corruption and Mismanagement which can divert resources away from intended beneficiaries and lead to the implementation of poor-quality projects. In 2020, an investigation by the World Bank found that over half of the SMEs that had applied for government support programs in Cameroon had paid bribes to officials. Also, the National Youth Credit Program (CNYJ) that was launched in 2007 to provide low-interest loans to young entrepreneurs was plagued by corruption and mismanagement, and many young people who received loans were unable to repay them.
Lack of coordination between government agencies. Government support programs for SMEs are often implemented by different ministries and agencies. However, if there is no correlated coordination between these ministries and agencies there is high risk of replicating efforts and resources that are already being implemented by other agencies. Banks and other financial institutions can lend more money to SMEs thanks to government initiatives like the State Guarantee Fund (SGF), which provides assurances. However, the SGF is implemented by the Ministry of Finance, while the majority of SMEs in Cameroon are served by the Ministry of Small and Medium-Sized Enterprises (MINPMEESA). The inability of the two ministries to coordinate has made it challenging for numerous SMEs to apply for the SGF.
On the other hand, despite the challenges that support programs to SMEs face, some of these programs happen to have been very successful.
Successful Government Support Programs to SMEs in Cameroon
These support programs have been able to assist SMEs transition from the informal to the formal sector, SMEs have been able have access to finance for their businesses, business owners have been able to improve on their managerial skills. For example, the SGF provides guarantees to banks and other financial institutions, which enables them to lend more money to SMEs. The SGF has been successful in helping to increase access to finance for SMEs, according to the Ministry of Small and Medium-Sized Enterprises, as of 2020, the SGF has supported over 1,000 SMEs with a total guarantee amount of XAF 47 billion.
Also, the Bank for SME established by the government to specifically cater to the financing needs of SMEs provides loans, equity investments, and other financial services to support SMEs at different stages of their development. Sources from the above mentioned bank shows that it has disbursed loans worth XAF 65 billion ($118 million) to more than 500 SMEs since its inception. This dedicated institution plays a crucial role in addressing the unique financing challenges faced by SMEs.
In fighting food crisis and improving the quality of SMEs in the agricultural sector, the state through the Ndop Farmers’ Cooperative which is a farmer-led cooperative that was established with the support of the PNDP produces and markets a variety of agricultural products, including coffee, cocoa, and bananas. The PNDP has helped the cooperative to improve its production and marketing practices, and the cooperative has now become one of the most successful farmer-led cooperatives in Cameroon.
Policy Recommendation
Cameroon is poised to enhance its economic landscape by adopting comprehensive support initiatives inspired by successful models in Singapore, Hong Kong, Uganda, and Morocco. Emulating Singapore’s multifaceted strategy, encompassing loans, tax breaks, mentorship, and market access, offers Cameroon the opportunity to create a conducive environment for SMEs, potentially resulting in a 6 percent annual growth rate, positively impacting GDP. Drawing inspiration from Hong Kong’s financial hub success, Cameroon can leverage strategic mechanisms, leading to a remarkable 7% annual increase in SME turnover, contributing to job creation and economic stability. Additionally, by focusing on sector-specific approaches proven effective in Uganda (10% annual growth, particularly in agriculture) and Morocco (8% growth in textiles, automotive, and renewable energy), Cameroon can bolster sector-specific resilience and overall economic stability. Recognizing the statistical evidence of sustained SME growth in these countries, Cameroon’s success lies in tailoring strategies to its unique context, fostering job creation, economic stability, and gender-specific initiatives for women’s empowerment. Implementation of these recommendations positions Cameroon for sustained and inclusive development.
Conclusion
In summary, SMEs are essential to Cameroon’s economic viability, yet they face challenges like restricted access to capital and a narrow market reach. Governmental activities are hindered in their effectiveness by issues like corruption. Positive results have been obtained from several projects, but improved interagency collaboration is still required. Tailored strategies that draw inspiration from successful models in Uganda and Singapore can bolster the expansion of SMEs. It is imperative to tackle the current roadblocks and improve cooperation. SMEs may increase sectoral resilience and economic stability through strategic policy changes, which will promote prosperity all around. The path of SME development in Cameroon depends on passing laws that support the spirit of entrepreneurship and innovation, guaranteeing both sustained economic growth and social inclusion in the fabric of the country. SMEs have the capacity to dramatically impact the socioeconomic landscape of the country, generate employment opportunities, and drive sustainable growth when given the right policies and support.
Desmond Kum
Meh Desmond Kum is a business development and economic Inclusion expert. He currently serves as a Small Business and Entrepreneurship Assistant at the Denis and Lenora Foretia Foundation. He is equally the programs Coordinator of Good Will Ambassadors of Hope and Program and Grant Writing Coordinator of AMA for Hope Foundation.
