CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Entrepreneurship has traditionally been defined as the process of designing, launching and running a new business, which typically begins as a small business, such as a start-up company, offering a product, process or service for sale or hire, and the people who do so are called ‘entrepreneurs (Casson.M, 2005). There are two terms as male entrepreneurship and female entrepreneurship and both entrepreneurs possess the characteristics required for effective performance as entrepreneurs (L.Sexton, 2008). Moreover he stated that negative attitudes toward women entrepreneurs are still exist and women entrepreneurs are less willing than male entrepreneurs to become involved in situations with uncertain outcomes (risk taking) and have less of the endurance or energy level needed to maintain a growth-oriented business. Empowerment of women entrepreneurship is supposed as an effective vehicle to uplift the socio economic welfare of women, their families, and the country as whole (Amarasiri, 2002). There is a great need for women entrepreneurs to get access to credit facilities and the policy makers should understand and develop successful strategies to address the issue (World Bank, 2008).

 Access to finance is a challenge common to all MSEs, the challenge for women business owners is compounded by the multifaceted gender related problems that inhibit their ability to access credit. To securing capital for starting business is one of the major obstacles of every entrepreneur particularly in the MSE sector but women entrepreneurs face additional constraints to secure financial resources (Wole, 2009). In Indonesian women entrepreneurs on the other hand, have difficulties in exporting their product overseas and in increasing the volume of production, both of which are of importance for their competition in the global market (Gordon, 2000).

Pandula (2011) looked at Sri Lanka and concluded that factors such as education, experience and type of businesses affected the accessibility of finance by women. It has been clearly indicated by Barwa (2003) on women entrepreneurs in Vietnam, that women face additional handicaps due to the prevailing social and cultural gender-based inequalities and biases. For instance, the barriers that women entrepreneurs face in accessing credit from formal institutions is magnified in view of their limited access to formal education, ownership of property, and social mobility. Other aspects of unequal access to opportunities and markets include business experiences, limited knowledge of marketing strategies, weak business associations, lack of networking facilities, and poor access to education and training programs.   In the finance industry where this study was undertaken, it is argued that there are a few things that arise making it hard for Women entrepreneur(s) to be able to have access to proper financing. These things are such as collateral constraint, inadequate business plan, state of the economy and bureaucratic procedures in applying for loans/finances.

Evidence of female entrepreneurs being less well financed than male counterparts comes from the Netherlands (Verheul and Thurik, 2001; Norway Alsos et al 2006, Italy Alesina et al(2008), the US Blanchflower 2008, Cavalluzzo and Wolken 2002 Women continue to face challenges in accessing debt finance. This has been shown to be more of a challenge for women who start or are involved in low growth businesses within industries, which are either small or stagnant.  In South Africa Black women entrepreneurs are denied access to affordable financial services (Brohman, 1996). The nature of the many challenges and obstacles facing women entrepreneurs suggest that their full economic potential is not actualized and women do not feature on the mainstream of the economic agenda.

In Mozambique, It is widely accepted that women have less access to financial services than men, particularly in Sub-Saharan Africa Aterido, et al ( 2013). Due to existence of gender gap in Sub-Saharan Africa, and conclude that the barriers for women are largely outside the financial sector. In Botswana, Empirical literature suggests that SMEs, especially those owned by women and youth, have constrained access to external finance from formal banks (Kapunda, Magembe and Shunda 2007; White and Kenyon 2001; Pissarides, Singer, and Svejnar 2003; Lin and Lin 2001). Collateral constraint and bureaucratic procedures being cited mostly as majors factors.  these constraints the attainment of funding from financial institutions (Kuzilwa J.A 2005). In a poor country like Tanzania, it is quite hard to find an average citizen owning valuable land or other property that can be used to secure loans; if they do own one, most average Tanzanians don’t find it a merit to have title deeds citing the difficulties of plot valuing and measuring as reasons for not seeking title deeds for their lands.

Business financing is a very important factor in growth and performance of businesses,Shepherd, et al (2007) noted that one of the most difficult problems in the new ventures and especially, the small businesses is obtaining financing. For the women entrepreneur available financing needs to be considered from the perspective of debts versus equity and using external versus external funds. The concern of this study was to study factors influencing accessibility of external finance by women entrepreneurs. Debt is one of the most popular forms of financing for entrepreneurs particularly at start-up. Riding and Swift (1990). Women, however have found accessing debt finance a challenge (Buttner and Rosen 1992), for reasons stemming from unequal treatment by debt providers (Belcourt et al. 1991; Goeffe & Scase 1983; Hisrich & Brush 1984), lack of experience indealing with lending institutions, inability to accumulate relevant experience and insufficient credit history and rating. Access to finance and financial resources have been found to be a challenge in the developing countries reviewed for this paper.

According to World Bank (2011), Middle East and North Africa (MENA) women business owners have access to financial institutions, yet they are not accessing formal finance itself. This is a significant and profitable opportunity for lending institutions. Access to finance varies greatly between countries and ranges from about 5 percent of the adult population in Papua New Guinea and Tanzania to 100 percent in the Netherlands (for a comprehensive list of estimated measures of access to finance across countries, Demirgüç-Kunt Beck, & Honohan, 2008, pp. 190–192. The external finances or credit facilities is the type of finance that is obtained from persons other than the actual owners of the company, that is creditors to the company, Manasseh (2004) also noted that, credit facilities can be in any of the following forms; loans debentures ,overdrafts, lease finance ,trade creditors, etc. Kuzilwa ( 2005).

Access to finance refers to the possibility that women or enterprises can access financial services, including credit, deposit, payment, insurance, and other risk management services (Demirgüç-Kunt, Beck, & Honohan, 2008). Researchers from various disciplines agree about the importance of small business to economic growth and personal wealth (e.g. Autio, 2005). The small business sector as a major source of employment and income is argued to be even more important to the economies in developing countries. In Africa, about 25 percent of the people employed outside agriculture depend on this sector for their livelihood; improving the conditions for small business is thus seen as a solution to unemployment and poverty alleviation (Mead & Liedholm, 1998). Self-employment and micro and small enterprise creation are routes that young people can actively explore to forge their futures.

Financial availability and accessibility is cited in many studies as being one of the major barriers and constraints to growth. In a study of NGOs and women small-scale entrepreneurs in the garment manufacturing sector of the textile industry in Nyeri and Nairobi by Macharia and Wanjiru (1998), the factors that inhibit credit availability to women include: lack of start-up (seed) capital; lack of awareness of existing credit schemes; high interest rates; lengthy and vigorous procedures for loan applications; and, lack of collateral security for finance. These factors have become a major barrier to the growth potential of businesses owned by women. Several studies around the world have been carried out which throw light on the financial factors affecting women entrepreneurs (Stevenson and Jarillo, 2003). Though the three major stages in the entrepreneurial process of creating, nurturing and nourishing are the same for men and women, there are however, in practice, problems affecting women who are of different dimensions and magnitudes, owing to social and cultural reasons.

In Sotik Subcounty, Kipsonoi ward in particular Women entrepreneurs face numerous problems accessing finance for starting business which include lack of collaterals, high interest rates, low literacy level and few number of lending institutions.

1.2 Statement of the Problem

since 2016, Cameroon has been face with different crises  such as terrorist group boko Aram in the north around lake Chad basin  and about 4years internal conflict  situation in North West and south west region of Cameroon, thousands of people has been displace most especially those in the rural areas, and outermost parts of town. The rise of insecurity in most of the farm outlets areas force thousands of women who were dependent on agriculture to abandoned their farms and seek for alternative means of surviving to carter for their family, children, aged parents and their male relatives. In a means to clear these odds, most women turn to settle down for small and medium size businesses. Some however engaged in learning skills such as hair dressings, tailoring, and décor among others.  However the greatest challenges face by most of these women is capital to start up, expand existing business, or transform their skills into entrepreneurship activities.  Women’s access to finance is a major constraint to start and expand businesses. Improving women’s direct access to credit leads to higher investments in human capital and have a stronger impact on a country’s economy in terms of health, education and long term implications for families and societies. When women do have access to credit it is often in small amounts, whether this suits their needs or not.

 Considering the various challenges and obstacles facing women particularly in Bamenda which include; capital inadequacy, unavailability of the required infrastructures, lack of collaterals, high interest rates, low literacy level, few number of lending institution to mention but few, someone may quickly conclude that women are usually discouraged from venturing into enterprise development (Hisrich and Brush, 1986). It is for this reason that this study is conducted in Bamenda II & III municipalities to find out the effect of financial accessibility on women entrepreneurship in Bamenda II & III municipality in Cameroon..

1.3 Research Questions

The study was guided by the following research questions;

1.3.1 Main Question

What are the factors influencing financial accessibility of small scale women entrepreneurs in Bamenda II and III municipality?

1.3.2 Specific Questions

1. How does level of literacy influences accessibility to finance by small scale women entrepreneurs in in Bamenda II & III Municipalities?
2. To what extend does demand for collateral influences accessibility to finance by small scale women entrepreneurs in Bamenda II & III Municipalities?   

• How does interest rate influence accessibility to finance by small scale women Entrepreneurs in Bamenda II & III Municipalities?

1.4 Objectives of the Study

The study was guided by the following objectives

1.4.1 Main Objective

To assess the factors influencing financial accessibility of women entrepreneurs in Bamenda II and III municipality

1.4.2 Specific Objectives

1. To evaluate how level of literacy influence accessibility to finance by small scale women entrepreneurs in Bamenda II & III Municipalities.
2. To assess the extent to which demand of collaterals influences accessibility to finance by small scale women entrepreneurs in Bamenda II & III Municipalities

• To assess how interest rates influence accessibility to finance by small scale women entrepreneurs in Bamenda II & III Municipalities.