III.2.2- Informal sector in Cameroon
The informal sector in Cameroon is expanding rapidly: it
contributes 39% to total employment. Without any doubt it has increased further
since; some even estimate that 85% of all those employed outside agriculture
are now working in the IS. While formal sector jobs have gone predominantly
(82%) to men, women work almost exclusively (95%) in the IS.
In Contrary to other countries where information on the
informal sector is hard to come by and often outdated, recent information is
available albeit referring only to informal employment in Yaoundé (see
Fluitman and Momo 2001). The survey provides interesting information on urban
IS enterprises in Cameroon in 12 selected trades32/ (including informal
internet cyber). It particularly studied the education and training background
of the IS producers interviewed.
The results of the survey indicate that the non-formal
institutions are still the resort of people who migrate from the rural areas:
over three-quarter of the entrepreneurs were not born in Yaoundé and
almost half of them grew up in farmers' homes. Interestingly, the younger IS
producers surveyed are not only more likely to be born in Yaoundé but
also in families of wage workers. The owners of IS enterprises, who in earlier
studies were found to be surpassed in education by their TAps and workers, to
have reached a higher educational level than those that work under them. Income
in the surveyed trades was low, with the net profit of owners of leather
workshops estimated to only US $43 per month. It was somewhat higher for
women's dressmakers, cyber cafes and restaurants, and highest in garages (mean
US $177, but half of them less than US $88).
III.3- Theoretical links between MFIs and informal
sector development
Accessing credit is considered to be an important factor in
increasing the development of SMEs. It is thought that credit augment income
levels, increases employment and thereby alleviate poverty. It is believed that
access to credit enables poor people to overcome their liquidity constraints
and undertake some investments such as the improvement of farm technology
inputs thereby leading to an increase in agricultural production (Hiedhues,
1995).
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Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
The main objective of microcredit according to Navajas et al,
(2000) is to improve the welfare of the poor as a result of better access to
small loans that are not offered by the formal financial institutions.
Diagne and Zeller (2001) argue that insufficient access to
credit by the poor just below or just above the poverty line may have negative
consequences for SMEs and overall welfare. Access to credit further increases
SME?s risk-bearing abilities; improve risk-copying strategies and enables
consumption smoothing overtime. With these arguments, microfinance is assumed
to improve the welfare of the poor.
It is argued that MFIs that are financially sustainable with
high outreach have a greater livelihood and also have a positive impact on SME
development because they guarantee sustainable access to credit by the poor
(Rhyne and Otero, 1992).
Buckley (1997) argue that, the indicators of success of
microcredit programs namely high repayment rate, outreach and financial
sustainability does not take into consideration what impact it has on micro
enterprise operations and only focusing on «microfinance evangelism».
Carrying out research in three countries; Kenya, Malawi and Ghana, Buckle
(1997) came to the conclusion that there was little evidence to suggest that
any significant and sustained impact of microfinance services on clients in
terms of SME development, increased income flows or level of employment. The
focus in this augment is that improvement to access to microfinance and market
for the poor people was not sufficient unless the change or improvement is
accompanied by changes in technology and or technique.
Zeller and Sharma (1998) argue that microfinance can aid in
the improvement or establishment of family enterprise, potentially making the
difference between alleviating poverty and economically secure life. On the
other hand, Burger (1989) indicates that microfinance tends to stabilise rather
than increase income and tends to preserve rather than to create jobs.
Facts by Coleman (1999) suggest that the village bank credit
did not have any significant and physical asset accumulation. The women ended
up in a vicious cycle of debt as they use the money from the village banks for
consumption purposes and were forced to borrow from money lenders at high
interest rate to repay the village bank loans so as to qualify for more loans.
The main observation from this study was that credit was not an effective tool
to help the poor out of poverty or enhance their economic condition. It also
concluded that the poor are too poor because of some other hindering factors
such as lack of access to markets, price stocks, unequal
33
Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
land distribution but not lack of access to credit. This view
was also shared by Adams and Von Pischke (1992).
A study of thirteen MFIs in seven countries carried out by
(Mosley and Hulme (1998) concludes that household income tends to increase at a
decreasing rate as the income and asset position of the debtors is improve.
Diagne and Zeller (2001) in their study in Malawi suggest that microfinance do
not have any significant effect in household income meaning no effect on SME
development. Investing in SME activities will have no effect in raising
household income because the infrastructure and market is not developed.
Some studies have also argued that using gender empowerment as
an impact indicator; microcredit has a negative impact (Goetz and Gupta, 1994;
Ackerly, 1995; Montgomery et al, 1996). Using a «managerial control»
index as an indicator of women empowerment, it came to conclusion that the
majority of women did not have control over loans taken by them when married.
Meanwhile, it was the women who were the main target of the credit program. The
management of the loans was made by the men hence not making the development
objective of lending to the women to be met (Goetz and Gupta, 1994). Evidence
from an accounting knowledge as an indicator of women empowerment concluded
that women are marginalized when it comes to access to credit (Ackerly,
1995).
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