ABSTRACT

This study had as objective to find out the role of Small and Medium size Enterprises in poverty alleviation in some Small and Medium size Enterprises in Bamenda. The role of small and medium enterprises (SMEs) on the alleviation of poverty has been frequently mentioned by a large number of NGOs, international organizations and business groups. A sample study was conducted from some Small and Medium size Enterprises in Bamenda. The study adopted a descriptive survey design. A questionnaire survey study was used to carry out the research work. Primary data was collected using questionnaires where all the issues on the questionnaire were addressed. Descriptive statistics were used to analyze data. Furthermore, interpretations were made based on the results presented on tables, chats and figures. For findings, a total of 57 participants were enrolled in the research. In the analysis, the study examined the challenges, the contributions and the role of the government. These Small and Medium size Enterprises mostly partnership and sole proprietor  face challenges of lack of capital wherein they get to the credit unions and banks for source of income. Motivations of Small and Medium size Enterprises are mostly due to economic independency; that is, the fight to sustain yourself when you are alone and afterwards the need to take care of the family. Small and Medium size Enterprises get social support both from friends and family which includes financial and material. They equally pay taxes and receive support from the government. In view, there is a stable, positive relationship between Small and Medium size Enterprises and poverty alleviation. As recommendations, the government should subsidies the tax and encourage the growth of Small and Medium size Enterprises which plays a vital role in poverty alleviation in Bamenda. 

Key words: SMEs, Poverty Alleviation, Government contributions, Bamenda.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The role of small and medium enterprises (SMEs) on the alleviation of poverty has been frequently mentioned by a large number of NGOs, international organizations and business groups. In this period of globalization, through world trade it is well recognized that private sector development has an important role to play in poverty alleviation. One of the United Nation’s Sustainable Development Goals(SDGs) is No Poverty by the year 2030 – stating the role of the private sector is important for providing opportunities for the poor. Moreover, business groups and NGOs have identified the firms which employ inclusive business strategies alleviate poverty through generating job opportunities and income for groups with low or no market opportunities. Although the private sector does its part in alleviating poverty, many individuals in middle and low income countries work for small and medium enterprises. SMEs contribute to poverty alleviation by providing opportunities for employment, boosting innovation, generating significant amount of domestic and export earnings, and increasing the overall welfare of the economy. The importance of factors leading to the success of SMEs remain just as important as the presence of these SMEs. Majority of studies and research look at SMEs as a strong driver of poverty alleviation by how much it generates employment and its effect on raising average wages. In terms of developing countries, SMEs remain important as they account for 90% of all the firms outside the agricultural sector. Among least developed, developing, and countries, SMEs in developing countries contribute the most to national GDP having a combined formal sector and informal sector value of nearly 70% contribution to GDP (Edinburgh Group, 2012).

The SMEs in Cameroon and in other countries create job opportunities among the low skilled people and therefore hold the key to employment creation and income generation. In the mid-1970s SMEs were engaged in cooperative activities especially for women groups (Ogundele, 2012). In 1984 the business started to build its root after the announcement of Free Trade (Trade Liberalization policy) and this was the initiation for small Scale Enterprises. Various investments have been approved and a large number of Small Scale Enterprise (SMEs), commercial farming and even manufacturing firms were established by natives and foreigners (Sule, 2014).

 The small and medium enterprises (SMEs) are supervised by various ministries in depending on its nature of operation. Those ministries are: Ministry of Trade, Industry and marketing, Ministry of community, woman and children, Ministry of Labour, Economic empowerment and cooperatives and Cameroon chamber of commerce and industries. SMEs activities are in the form of batik making, antiques, handcraft works, medicine soap making, oil milling and other tourism articles involved in trades which include purchasing and sales of goods and agricultures. Long chains of this type of business are located at many places all around the country. Most of them are owned by individual and other by family or groups. These enterprises create many job opportunities to the people of Cameroon especially the youth from different gender. The main objective of small enterprises is profit making and enabling people to improve their income through this kind of business (Anyanwu, 2004).

The Cameroon government remained occupied to fostering growth and development of the SMEs sector in its efforts to recognize its (SMEs’) contribution in the region. This initiative was thus demonstrated by setting up some agencies that could assist, including National Directorate of Employment (NDE), NAPEP (National Poverty Eradication Program), etc. This has also been suggested as concerning SME as a significant contribution to the economy of the country, the policies and strategies for promoting the creation of SME have been established fundamentally in most policy development plans to promote growth in the sector, a strong effort towards establishment has been shown ten years ago. In Cameroon, the top ten problem areas for SMEs in decreasing intensity range include management, access to financing, infrastructure, policy of government inconsistency and bureaucracy, environmental factors, multiple taxes and levies, access to new advancement, unfavorable competition, marketing issues and the lack of local raw materials. Thus, administrative issues constitute the biggest issue facing SMEs in Cameroon while the least issue is the limited or scarce resources locally. There is tremendous potential and ability for SMEs in Cameroon to recover and play the important role of the engine of growth, development and industrialization, wealth creation, poverty alleviation or reduction, and job creation. Realizing this involves a particular change from paying a particular activities to a practical progressive approach and the government’ s pragmatic emphasis on this all-important economic sector addressing the defined issues. Although, there is need for change of habit and attitude for SMEs themselves regarding the growth of entrepreneurship, governments (Federal, State and Local) need to embark SMEs for full impact in policy implementation and formulation. In addition to emphasizing scientific, practical, and technical educational system at all levels of our studies, there is also a desperate need to incorporate vocational programmes in our colleges and universities especially entrepreneurial studies.

Like other developed and emerging countries, Cameroon SMEs have not overcome the militant constraints faced by SMEs. Virtually, if not all, the majority of countries support their SMEs given the important roles they have played in economic growth and development. The Structural Adjustment Program (SAP) has helped to broaden the SME sector simply because large scale companies cannot easily adjust to the SAP’ s newly adopted policies, as SMEs, small and medium-sized companies continue to carry out the large-scale activities and fill the produced gap in industrial consumer goods (Olorunshola, 2013). Therefore, the presence of a large gap in the industrial development cycle in Cameroon many years ago has been the lack of robust and virile SMEs subsector, which is exacerbated by financial constraints represented by high loan levels, huge amount requirements of loan and weak or no viable entrepreneurial skills. Besides, insufficient collateral by SMEs operators integrate some of the SME’ s disadvantages in Cameroon, low facility for SMEs, the rigidity of banks to transfer, or extend the credit span available to them.

Having seen these constraints and to provide them with the requisite solutions and to reap the potential benefits in the economy of SMEs small and medium-sized enterprises, the government remained committed to ensuring that its efforts are geared towards growth and development with respect to SMEs (Kayanula, 2014). Consequently, the need for this research work is very important. The majority of enterprises fall within this category. SMEs accounts for over 70 percent of employment in Cameroon, with the potential of employing more and also has a large potential of reducing poverty in our economy (Sule, 2014; Otokiti 2002). 

• Problem Statement

Generally, the Small and Medium Enterprises (SMEs) has become very popular entity in many countries including Cameroon due to their important role they play in terms of reducing unemployment rate among people. The government of Cameroon has undertaken various measures and programs to establish and sustain the SMEs in order to contribute towards poverty reduction. This action has caused many people to formulate and engage in SMEs. Despite a rapid increase to the establishment of SME‟s in Cameroon, most of them are performing below its expected potential of reducing poverty due to many reasons.  Therefore, it is not clear whether the undertaken measures to strengthen SMEs have significant contributions in reducing poverty or not. It has been reported by most papers that many people especially in the rural areas live below the basic needs poverty line as compared with the urban areas. This study examined the roles of SMEs in poverty alleviation including its relationship between the role, contribution and challenges faced SME‟s in alleviating poverty in Bamenda, Cameroon.

• Research Questions
  • Major research Question

 The main research question of this study is; What is the role of Small and Medium Size Enterprises in poverty alleviation

• Specific Research Questions

The study was guided by the following specific questions :-

1. What are the constraints for SMEs growth in Bamenda?
2. What are some of the contributions of SMEs to alleviate poverty?
3. How does the government support the growth of SMEs?

• Research Objective
  • Major Objective

The main objective of the study is to identify and understand  the role of Small and Medium Enterprises on poverty alleviation. 

• Specific Objectives

The study was guided by the following specific objectives:-

1. To identify the constraints for SME growth in Bamenda
2. To assess the contribution of SMEs to alleviate poverty.
3. To find out how the government support SMEs