CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The relevance and significance of entrepreneurship in promoting economic growth and development cannot be overemphasized. Weeks and Seiler (2001) noted that entrepreneurship has been a growing field for research in the world, especially in developed countries. Similarly, Mitra and Sagagi (2013) argued that for sustainable economic growth and development to take place in developing countries of Africa there is need to develop the entrepreneurial mindset of the poor geared towards opportunity search and exploitation. However, most of the knowledge on entrepreneurial activity especially in developing countries is based mostly on studies about men entrepreneurs with little or no attention to their women counterparts (Brush & Bird, 2002; and Brush, 1986).

Women entrepreneurs around the world are making a difference. They contribute numerous ideas, a great deal of energy and capital resources to their communities, generate jobs as well as create additional work for suppliers and other spin-off business linkages (Common wealth secretariat, 2002). Women have been disadvantaged while competing with men in terms of pay, due to their lifestyle requiring them to have babies, nurse them and still work for promotion (Daily nation, 2012). Female entrepreneurs on average make less than their male counterparts, while value added per worker is lower in firms managed by women than those managed by men- in Europe, Asia, Latin America and sub-Saharan Africa (Sunday, 2012).

Furthermore, Beatrice (2012) argued that several authors considered that it is inadequate to use the results of men entrepreneurs’ studies for the cases of women entrepreneurs because, even if men and women entrepreneurial attitudes are influenced by dimensions of the same variables, these factors do not influence both genders in the same or with the same intensity (Carter & Cannon, 1992; and Arenius & Longowitz, 2005). In addition to the above, most of the studies and knowledge on entrepreneurial activity in general, and especially on women, mainly come from developed countries, while in developing countries little is known about women and their enterprises. Supporting women entrepreneurs remains a vital issue and one of the ways is to ensure their access to finance and use of high quality formal financial services. Key challenges faced by countries in achieving financial access for women include a lack of data and a lack of capacity. The availability of gender disaggregated data is still limited, despite such important new surveys conducted by the World Bank Group’s Global Findex, the Gender Entrepreneurship Markets (GEM) program, and Women, Business and the Law. Improved gender disaggregated data, with stronger quantity and quality, will strengthen the business and policy case for financial inclusion for women entrepreneurs (The World Bank, 2013).

Increasingly, women entrepreneurship is seen as a live wire for social and economic transformation of the society due to the critical role they play both within the realms of households and within the community. In an attempt to highlight the importance of women entrepreneurship to the society, (Lokhande 2003) posited that up to fifty percent of all small and medium scale women own enterprises (SMEs) in all countries. Similarly, a report by the International Labour Organization (ILO, 2003) confirmed that 128 women entrepreneurs have created 983 jobs in Tanzania, of which 752 are full-time paid jobs (an average of 5.9 per enterprise)., thus, clearly indicating the crucial importance of women potentials in value addition and wealth creation if properly utilized.

Available evidence shows that women disproportionately face financial access barriers that prevent them from improving their lives. Despite of series of efforts by all stakeholders in that direction, much is still desired if any meaningful progress need to be achieved. That is why in recent times, the World Bank Group, Central Bank of Nigeria and other financial institutions, other key players across the globe are working seriously hard to promote financial inclusion of women to help them achieve gender equity and poverty reduction and promote their participation in entrepreneurship activities world wide.

Access to credit can open up economic opportunities for women and bank accounts can be a gateway to the use of additional financial services. However, women entrepreneurs and employers face significantly greater challenges than men in gaining access to financial services (World Bank, 2013). The Global Findex, a comprehensive database measuring how people save, borrow, and manage risk in 148 countries, reveals that women are less likely than men to have formal bank accounts. In developing economies, women are 20 percent less likely than men to have an account at a formal financial institution and 17 percent less likely to have borrowed formally in the past year. Even if they can gain access to a loan, women often lack access to other financial services such as savings, digital payment methods, and insurance which are critical for successful financial inclusion. Restrictions on opening a bank account such as requirements for a male family member’s permission restrict women’s access to accounts. Lack of financial education can also limit women from gaining access to and benefitting from financial services. In addition, many women may have access to financial services by name only.

For instance, study in Pakistan and in many parts of North Africa showed that although accounts might be opened in the name of a woman, the decision-making authority around the use of those funds lies with a male relative. The World Bank’s Gender at Work report (2014) asserts that on virtually every global measure, women are more economically excluded than men.

Women are now becoming a growing force within various sectors of the economy. Reports around the world show women’s compelling contribution to business and economic activities in their countries (Welter et al., 2006; Carter et al., 2007) as shown above. In addition, many women have taken up business ownership and are exploiting entrepreneurial opportunities as a means of generating income and overcoming the harsh reality and discriminatory practices inherent in the corporate sphere. This is because entrepreneurship provides women with unique solutions in overcoming poverty and balancing work and family commitments (Woldie&Adersua, 2004; Kirk &Belovics, 2006). Women’s entrepreneurial activities do not only empowers them as economic agents but also enables them to contribute more to the overall development of their nations. In transition environments, women’s contribution is said to span across various economic spheres, extending to the wider process of social transformation (Welter et. al., 2006).

In 2001, the United Nations Industrial Development Organization (UNIDO) reported that there is a wider social impact of female entrepreneurial activity not only to the women themselves but also to the wider environment where they operate. Women are also reported to be in charge of majority of a activities in Africa. Women own and operate around one-third of all businesses in the formal sector, and they represent the majority of businesses in the informal sector (Bardasi et al., 2007 and Aderemi et al., 2008).

According to a report by the World Bank (2013), women make up 40 per cent of the world’s work force. Many of the sectors that are critical for economic growth in some of the poorest countries rely heavily on women. Small and medium-sized enterprises (SMEs) with female ownership represent 30 percent to 37 percent of all SMEs (8 million to 10 million women-owned firms) in emerging markets. These businesses collectively have unmet financial needs of between US$260 billion and US$320 billion a year. This is identified as their biggest barrier to growth and development. This is same barrier is grossly faced in Cameroon especially with women living in rural part of Cameroon.

1.2 Statement of the Problem

We are living in a social system in which males hold primary power and authority. In the majority of the homes, men are getting special privilege and control of the property and hence most of the women entrepreneurs have difficulties in accessing the finance due to the need for collaterals. Although women constitute about 52 percent of the total Cameroon population, a majority of them have been excluded from the formal financial services for example, few have bank accounts, can access loans, money transfer services, etc. The rural women are more disadvantaged than their urban counterparts. The majority of Cameroonians will not be able to give a title deed or car log book especially to women. Women entrepreneurs often lack information about how to get a loan, lack the necessary collateral to obtain one and /or face discriminatory laws or practices related to finance and credit (Common wealth secretariat, 2002).

 Most women in Cameroon are not allowed to open a bank account or own a land without her husband’s or father permission. Although inheritance laws were revised with the succession Act of 1981, women have rarely inherited land and other property in their own right. This means that they lack title deeds, which are still the most commonly, used form of security for borrowing money. Formal financial support is seen to be too expensive for many women entrepreneurs and hence they treat this as a last resort. (Mwobobia 2012, Stevenson and St-Onge, 2005).  Hence, the major goal remains how to make financial services more accessible to women to enable their participation in entrepreneurship activities. Lack of financial access for women has a lot of consequences to the home and the economy as a whole such as; low family income since the burden on income remains on the man, neglect of women potentials, low contribution of women to Gross National product of a country and thus low economic growth and a high level of intimate partner violent against women at home. Because of this overwhelming differences and the consequences between male and female entrepreneur in accessing finance for their entrepreneurial activities, it has prompted this work to analyze the effect of access to finance for women on the level of female entrepreneurship development in Cameroon.

1.3 Research Questions

1.3.1 Main Research Question

 The main research question for this work is; what is the effect of women accessibility to finance on female entrepreneurship development in Cameroon?

1.3.2 Specific Research Questions

The main research question will be examine under the following specific research questions;

1. What is the effect of women access to finance from banks and Micro finance institutions on female entrepreneurship development in Cameroon?
2. How does ownership of a saving account by women affect female entrepreneurship development in Cameroon?
3. Does financial support to women by family members, friends and other local financial groups affect female entrepreneurship development in Cameroon?

1.4 Research Objectives

1.4.1 Main Research Objectives

The main research objective of this work is to investigate the effect of accessibility to finance by women on female entrepreneurship development in Cameroon.

1.4.2 Specific Research Objectives 

Specifically to;

1. Measure the effect of women access to finance from banks and micro finance institution on female entrepreneurship development in Cameroon.
2. Estimate the effect of ownership of a saving account by women affect female entrepreneurship development in Cameroon.
3. Access the effect of financial support to women by family members, friends and other local financial groups affect female entrepreneurship development in Cameroon.