AN INVESTIGATION ON THE IMPACT AND ROLE OF ENTREPRENEURSHIP ON THE ECONOMIC GROWTH OF CAMEROON

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Early entrepreneurship began with trade by barter even before the advent of money. The role of entrepreneurship in the growth and development of Cameroon cannot be overlooked, and as a result of the consistent rise in the level of unemployment and the upward increase in the level of poverty in Cameroon. Similarly, it has become crucial for Cameroonians to quit searching for white-collar jobs that are not available and start creating employment for themselves. In addition, the forces of entrepreneurship are strong in Cameroon because most people see entrepreneurial activities as essential due to the poor economic situation. 

Conceptually, the term entrepreneurship refers to the process of identifying, creating, and pursuing opportunities to develop new businesses or initiatives. According to Ire (2019), it involves taking risks, innovating, and organizing resources effectively to bring about change and create value in the economy. On the other hand, the current Cameroonian economy is largely dominated by the petroleum and cocoa industry. While labor force is radically growing, as is the unemployment rate currently at 20%, with millions of workers underemployed. Despite Cameroon being endowed with the largest domestic market in Africa, a wide range of natural resources coupled with a diversely skilled labor pool. Given these economic realities, the country must constantly create new jobs and diversify the industrial and commercial sector to take advantage of human and natural resources.

Nevertheless, the activities of entrepreneurs have been found to be capable of making an impact on the economy of a nation and the quality of life of the people through economic growth, employment generation, and empowerment of the disadvantaged segment of the population, which includes women and the poor. Small and Medium Enterprises (SMEs) are perceived as a pride of basically every country or state. Because of SMEs’ significant roles in the development and growth of various economies, they have appropriately been termed as the engine of growth and catalysts for socio-economic transformation of any country. SMEs are perceived as a real instrument for the achievement of national economic objectives of employment generation and poverty reduction at low investment cost. Other central benefits of vibrant SMEs are access to infrastructural facilities, the stimulation of economic activities such as providers of various items and distributive trades for items produced and needed by the SMEs, stemming from rural-urban migration, enhancement of the standard of living of the employees of the SMEs and their dependents as well as those who are directly or indirectly associated with them.

Various governments of the nation have begun to find solutions on how to involve the private sector in the developmental process of their country’s economy which is one of the responses to the challenges of development of entrepreneurship in developing countries. 

The essential of entrepreneurship for productivity was originally credited to Alfred Marshall in 1990. In his famous book; Practice Principle of Economics, Marshall ascertained that there are four factors of production; Land, Labor Capital, and organization. These factors are properly utilized by an entrepreneur. Thus entrepreneur creates new commodities or improves the plan of producing an old commodity. (Marshall, 2019). Therefore, early entrepreneurs were characterized with production and manufacturing. In a situation like this, the entrepreneurs often start with small capital.  Therefore, a survey will be conducted in order to investigate on the impact and role of entrepreneurship on the economic growth of Cameroon.

1.2 Statement of the Problem

Africa, a continent with a substantial population, sees approximately 7 to 10 million young individuals entering the labor force annually (World Bank: Africa Development Indicators, 2018). In Cameroon, like in other African nations, there is a pressing need to address unemployment by exploring avenues for job creation. As a practical means of addressing this problem, entrepreneurial activities have emerged, emphasizing the need to promote entrepreneurial growth in the nation. Furthermore, the Cameroonian government has faced challenges in the market due to fluctuations in international prices of key agricultural products such as oil, cocoa, and coffee. Consequently, public enterprises, primarily agro-industries, were privatized. This economic downturn led to a surge in unemployment, prompting many individuals to engage in survival economic activities to sustain themselves. Beyond that, the period witnessed the burgeoning of the private sector nationwide. In response, the Cameroon government implemented various reforms aimed at stimulating private investment. The introduction of the Investment Code in 2002 outlined the characteristics of investments and investors, offering fiscal incentives to private investments based on specific categories of firms. Subsequent reforms, including the establishment of the Enterprise Registration Center (a one-stop shop) in 2010, streamlined the official procedures for entrepreneurs to obtain legal status and licenses. However, in order to enhance dialogue between public and private sectors, the government established the Cameroon Business Forum in 2010. Additionally, in 2013, initiatives such as the creation of the Small and Medium-sized Enterprise (SME) Bank, the National Agency for SME Promotion, and the Agricultural Bank were implemented to bolster economic activities. Addiionally, the significance of entrepreneurship in economic development has been extensively explored by esteemed scholars and researchers (Valliere & Peterson, 2019; Ferreira, Fayolle, Fernandes & Raposo, 2017). Despite the acknowledged challenges and risks associated with entrepreneurship, governments are increasingly implementing incentives and support initiatives to incentivize and inspire individuals to pursue entrepreneurial ventures (Stephan, Uhlaner, & Stride, 2018). Thus, it is in the light of these that the study seeks to investigate on the impact and role of entrepreneurship on the economic growth of Cameroon.

1.3  Objectives of the Study

The main purpose of this study is to investigate on the impact and role of entrepreneurship on the economic growth of Cameroon. Specifically, the study will;

Determine whether there is a significant relationship between entrepreneurship and economic development

Ascertain the economic contribution of entrepreneurship in Cameroon

Identify the issues militating against entrepreneurship development in Cameroon.

Proffer possible strategies necessary to promote entrepreneurship development in Cameroon.

1.4 Research Questions

The following questions have been prepared for the study:

Is there a significant relationship between entrepreneurship and economic development?

What is the economic contribution of entrepreneurship in Cameroon?

What are the issues hindering entrepreneurship development in Cameroon?

What strategies can be implemented to promote entrepreneurship development in Cameroon?

1.5 Research Hypotheses

H0: There is no significant on the impact and role of entrepreneurship on the economic growth of Cameroon.

Ha: There is a significant on the impact and role of entrepreneurship on the economic growth of Cameroon.

1.6 Significance of the Study

Understanding the role of entrepreneurship in economic growth is crucial for policymakers and government officials as they formulate strategies and policies to foster a conducive environment for entrepreneurship. This includes creating supportive regulations, providing incentives, and investing in infrastructure and education to nurture entrepreneurial activities. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to an investigation on the impact and role of entrepreneurship on the economic growth of Cameroon.

1.6 Scope of the study

The scope of this study is boarded on an investigation on the impact and role of entrepreneurship on the economic growth of Cameroon. Empirically, this study will determine whether there is a significant relationship between entrepreneurship and economic development, ascertain the economic contribution of entrepreneurship in Cameroon, identify the issues militating against entrepreneurship development in Cameroon and proffer possible strategies necessary to promote entrepreneurship development in Cameroon.

Geographically, the study will be delimited to business owners in Yaoundé, Cameroon.

1.7 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. 

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.8 Definition of Terms

Entrepreneurship: refers to the process of identifying, creating, and pursuing opportunities to generate value through innovative ideas, products, or services.

Economic development:  the sustained increase in the standard of living, well-being, and overall prosperity of a region or country. It involves various factors such as growth in GDP (Gross Domestic Product), improvement in infrastructure, reduction in poverty, expansion of employment opportunities, and enhancement of social and economic indicators (European Commission, 2018).

Small and Medium-sized Enterprises: SMEs are businesses that fall within a certain size range, typically defined by criteria such as the number of employees, annual revenue, or total assets.