CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Small Businesses have become the significant clout of sustained, instantaneous and bracing growth of Cameroon’s economy. Moreover, they performed an unparalleled role in advancing the country’s economic growth, and serve as a breeding ground for entrepreneurs and a provider of solutions to problems of unemployment. Different authors have given different definitions to this category of business. Some policy makers look at Small and Meduim Size Enterprises (SMEs) from the use of capital assets, legal status, method of production etc. while researchers tend to compare skill labor and turnover. The definition of firms by size varies among researchers. Some attempt to use the capital assets while others use skill of labor and turnover level. According to the resident representative of the World Bank Group in Cameroon, SMEs are commonly defined as registered businesses with less than 250employees that contribute heavily to employment and GDP, and grow in ways associated to the formalization of an economy[1].

Definitions vary across industries and also across countries. The National Institute of statistics considers firms with fewer than 10 employees as small-scale enterprises and their counterparts with more than 10 employees as medium and large-sized enterprises. The official definition of SMEs/SMIs in Cameroon is derived from Law 2010/001of April 13, 2010 on the promotion of Small and Medium-sized Enterprises (SMEs). According to this law, the Small and Meduim Size category encompasses enterprises with a permanent staff of between 21 and 100 employees and whose annual turnover net of taxes is between 100 million and one billion CFA francs. According to statistics provided by the National Statistics Institute (INS), today, this category of enterprises accounts for over 90% of Cameroon’s national economic fabric, with a share in the Gross Domestic Product estimated at 34 percent.  particularly, Very Small enterprises that employ five persons at The most and whose annual turnover net of taxes is below 15 million CFA francs in Cameroon were estimated to reach, 65,986 (74.9%) the total number of small enterprise with a permanent staff complement of between 6 and 20 persons and with an annual turnover net of taxes of between 15 and 100 million CFA francs was estimated at 16,937 (19%) Medium enterprises that employ at least 21 and no more than 100 persons and whose annual turnover net of taxes is between 100 million and 1 billion CFA francs figured 4,499 (5.1%)[2]

Small Businesses in Cameroon are characterized by: Small scales business which serves a much smaller area than co-operations they serve single communalities such as a convenience store in a rural town. If the company grows beyond its small scale, then it will no longer have the same position as a small business. Generally; the managers are also the owners. This means that the manager/ owner can run the business as he pleases. Discipline as the control factor in this case may sometimes be missing. This lack of proper managerial discipline leads to business failures or discontinuity.  Most SMEs like the Documentation For instance are family owned with their management structure based on family lineage, tribal, cultural or other social relations. These entities are void of a corporate culture and have well-established support that seeks to preserve the cult-like status around their founders. To control their absolute decision-making powers against public capital is something they find difficult. The area of operation is mainly local employees and owners all like in one home community. Small business revenues are usually lower as compared to those of companies that operate on a larger scale. This is because most operators of such business often own and provide their own equipment and facilities which in addition to other factors only keep cost lower than some other business.

However, human capacity has become a critical index of competition in the world of business to the extent that the development of such capacities through training has become top priority in designing the strategic plan of business organisations (Tim & Brinkerhoff, 2008). The above assertion seems more important for Small and Medium Scale Enterprises (SMEs) in Cameroon and other developing nations as they brace up ever increasing challenges of advancement in technology, deregulation, and globalization. In order to ensure that SMEs in Cameroon grow, develop, and remain globally competitive, they must train, develop and maintain their human capital in line with changing trends in technology and market economics. It seems a common practice among Small businesses in Cameroon, to see training as a one-time activity, necessary only for new employees. This is a mistake given that on-the-job training, sponsorship to seminars and workshops, as well as participation in trade fairs and exhibitions for serving employees helps them adjust to rapidly changing job requirements and market conditions (Industrial Training Fund, 2006).

However, other reasons for increased emphasis on the need for increased human capacity development for SMEs include: firstly, creating a pool of readily available and adequate replacements for employees who may leave or move up in the organisation from internal sources. Secondly, enhancing the SMEs’ ability to adopt and use advances in technology and market opportunities because of a sufficiently knowledgeable workforce. Thirdly, building a more efficient, effective, and highly motivated team which enhances the SMEs’ competitive position and improves the employee morale and lastly, ensuring adequate human resources for expansion into new programs. Thus, Thaker (2008) summarized the above benefits into increased productivity, reduced employee turnover, increased efficiency resulting in financial gains, and decreased need for supervision. The central objective of this paper is to test the validity of the hypothesis, which suggests that human capital possessed by documentation business in Bambili North west region of Cameroon does not have a significant role to play in the growth in their business growth.

Not every small business eventually grows to the size of large cooperation’s and eventually multinationals. Some businesses are ideally suited to operate on a small scale for years, often serving a local community and generating just enough profit to take care of company owners. Such business examples are Documentation Businesses in Cameroon in University environment. In the context of the case study, documentations are small businesses that provide clerical services to customers by use of computerized devices. They often offer clerical services such as: photocopy, spiral binding, scanning, typing and printing, and designing of peoples’ document for economic gains. Their targeted customers are a community at large and most especially: Students, educators, the administration and parents. They have the mission to serve the community and to gain the large size of the market in these particular area there by aiming at performance growth and ready for expansion opportunities. These Documentations are many around the University of Bamenda as they have their main targeted customers to be the students of the University of Bamenda as well as the lectures so; this documentation industry in Bambili is highly competitive as every documentation enterprise fights to perform better than the other in its the industry.

Even though Documentations in Bambili are small scale and mostly sole proprietorship, they need qualified workers who can perform effectively and efficiently. They employ less than 10 employees, and get family member assistance which form the human resource of the business, because of the nature of the business operation, the business cannot be successfully run solely. There is need for staffing and managing employees’ abilities effectively so as to manage labour turnover which is prevalence in this Documentation Service businesses in Bambili. Documentation Work involves information management technology so it needs well trained and talented and experienced workers who are stable and known by their customers for their expertise. There  a high labour turnover observed in this Industry for the past years till current date making the businesses so unstable that they turn focus more  to focus more on service price reduction to attract the targeted market which affects the profitability and business growth negative as this prices struggles so hard to cover cost of operation. The human ability to perform effectively and efficiently in business is the human capital which is necessary to be possessed by both the employers and the employee.

1.2 Statement of the Problem

Cameroon’s vision is to become an emerging economy by 2035. Thus, the country has
taken major reforms to boost the growth and development of SMEs, like the introduction
of Small Business law in 2010―that was revised in 2015 and a further revision in 2017, a well-established Ministry for Small and Medium Size Enterprises, Social Economy and Handicrafts (MINPMEESA) which was set-up in December 2004, and a state-owned and managed commercial bank to finance the needs of small businesses. SMEs currently contribute only 36% of Cameroon’s GDP, though they have a potential to contribute more. Despite their huge contribution to economic growth and development, they are faced with survivability problems as the rate of business failure is very high among SMEs.

Documentations in Bambili are small businesses that help to reduce unemployment, idleness and also facilitate educational processes for the University of Bamenda which is one of the State Universities and the community at large in the processing of school, civil and personal documents but facing challenges to grow. As they are out to serve the community, they also have to grow in income so as to contribute to the countries National income.  They are in a highly competitive industry since they are many around the University of Bamenda and increasing in numbers yearly. Last year 2020/2021 academic year, they were about 60 documentations in Bambili but this year, they have increases approximately by 10 and some have closed dowm.  Due to the fight for the market by each Documentation business, they for the past years have focused more on price competition where they have less stable prices as each reduces prices of the services in other to attract many customers.

 This price competition has a negative impact on the growth of the business as the business continues to break even and encounter losses due to the high cost of operating the business. The more the business owns the market the higher the cost of maintenance of technological assets since machines are overused. The higher the cost of employment since many workers will be needed to satisfy this large market. When this workers over work themselves, they will need some health maintenance which increases the cost. Because machines are overworked they get bad, and waste more materials like ink and papers in producing poor quality documents that customers turn to reject. They consume a lot fuel given the high level of electrical power outage in Bambili for the past 3 years. So, when this documentation businesses ignore other factors that can increase their various comparative and competitive advantage, they turn to strive for survival but not growth as the cost of running the business sometimes are higher than the revenues. Since they use foreign technological assets, they turn to look for additional capital out of the business to import these machines there by promoting the foreign businesses but turning around on the same business spot.

One of the key resources to achieving the survivability of SMEs is investing in human resource, as human capital has been found in literature to highly correlate to business success and firm performance. Education, training and work experience impart knowledge and skills; and improve employees‟ productivity which eventually increases organisational performance. However, as other researches have focus more on education, on the job training, work experience and health and safety of workers in small and medium size enterprises in the macro economy of countries like Nigeria, Cameroon and Kenya. But no research has been found by this researcher to study at a micro level the highly competitive industry of the clerical service (Documentations) providing businesses around the Universities in Cameroon especially around the University of Bamenda Cameroon. With this Gap in Research and Awareness of Documentation Owner in Bambili, This research work seeks  study the role plaid by human capital such as passion and talent, educational attainment, on the job training, and work experience in the growth of the small businesses when price competition is less focused on taking a cross sectional study of Documentations in Bambili in the North West Region of Cameroon.

1.3 Research Questions

1.3.1 The Main Research Question

• What is the effect of human capital on the growth of Documentation Businesses in Bambili North West Region of Cameroon?

1.3.2        The Specific Research Questions

• What is the effect of on-the-job training on the growth of Documentation Businesses in Bambili North West Region of Cameroon?
• How does talent affect the growth of Documentation businesses in Bambili North West Region of Cameroon?
• What effect does work experience have on the growth of Documentation Businesses in Bambili North West Region of Cameroon?

1.4 Research Objectives

1.4.1 Main Research Objective

• The main objective of the research is to examine effect of human capital on the growth of Documentation businesses in Bambili North West Region of Cameroon.

1.4.2        Specific Objectives

• To evaluate the evaluate of on-the-job training on the growth of Documentation Businesses in Bambili North West Region of Cameroon
• To determine how talent affects the growth of Documentation Businesses in Bambili North West Region of Cameroon
• To assess the effect of work experience on the growth of Documentation Businesses in Bambili. North West Region of Cameroon

[1] State Of Small Business In Cameroon SMALL BUSINESS REPORT June 2019

[2] (ECCAS Regional Summit, 2015)