The effect of E-commerce on the performance of Small and Medium Size Enterprises in Cameroon. The Case of Njieforbi company Ltd Buea
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In recent decades with the development of the internet, e-commerce has been recognized as an instrument for establishing business models. in applying e-commerce, the large firms generally face lower financial and infrastructural barriers while the small to medium enterprises face resource limitations, particularly the financial resources in applying this tool.
Hence, this study set out to assess the effect of E-commerce on the performance of Small and Medium Size Enterprises in the Cameroon case of Njieforbi Buea. The study adopted a descriptive research design with a sample of 20 employees, that is the management staff of Njieforbi enterprises Buea, through a Purposive sampling technique and stratified random sampling.
The study used a questionnaire for primary data collection. The result of the study revealed there is a positive influence of the use of computers on the product sales of the institution, in addition, it was found that that the cost of advertising is reduced when the institution uses commerce.
It was therefore concluded that that the more the customers are served using e-means it is more convenient for them to carry out transactions. The study recommends that Njieforbi company Ltd should Increase the training of employees on computer usage.
1.1 Background to the Study
E-commerce has witnessed a true revolution and it became an important way for an easy and quick trade. Its history can be traced back to 1991 when the first sales were possible to make via the Internet. In fact, in 2021 the retail e-commerce sales are going to be almost twice as big as it was in 2018 (2muchcoffee,2019).
By the late 1990s, a lot of organizations started to adopting some form of e-marketing such as the use of e-mail and e-payment. However, the use of e-marketing in the 1990s was mostly by a large organization, financial institutions and publishing houses. It was until early 2000 that small and medium scale enterprises started adopting e-marketing (Ibene & Obi, 2001).
In the 21st century, the world market has been supported by a market system that uses electronic infrastructure. By the end of 2007, e-commerce sales accounted for more than 3 per cent of total sales. In 2016 online shopping became one of the most popular online activities worldwide but it depends on the region, for instance, 19% of all retail sales in China occurred through the internet (2muchcoffee,2019).
Internet penetration rates in Africa remain low compared to other global regions, the main means of Internet connection in Africa is Mobile, as fixed connections make up less than 10% of the total Internet subscriptions in many countries throughout the continent, such as South Africa and Tunisia, there are more than 400 million internet users in Africa, which is the second-largest internet-user population on the planet, just after China.
And yet distribution for goods and services is challenging. And it’s notorious that in Africa, for consumers, it’s more difficult to find goods and it’s more difficult to shop. Because of mobile and because of the internet, consumers now have a way to access goods and services in a more efficient way.
The growth of Internet usage in Nigeria continues to increase, recording over 90% growth from 2000 to 2008 and up to 2016. While businesses in Nigeria are reported to have online access with opportunity for e-commerce activities, customers in the country however access business websites only to source information but make purchases the traditional way (Okeke, et al 2016).
This drastic evolution is only a result of the increase in the penetration (though still below African standards) of the internet in Cameroon. The number of internet users in Cameroon has evolved from 218 050 users in 2004 to 1,424,000 users in 2013 (World Bank,2013).
Thus, an evolution of 0,98 % to 6,4 % of the population who are internet users, however, it should be noted that the average in Africa is 18%. These e-commerce websites are generally developed by freelance developers, digital firms such as clinkast, or specialized internal personnel.
The number of actors in this promising sector is hard to define. The most popular, which happen to be marketplaces, are Kaymu, Cdiscount, Jumia, Cameroon-shopping, lazito, nodiscameroon, wandashops, C-dubon There is an endless number of criteria that could be used to compare these superheroes of Cameroonian e-commerce.
However, at this infant stage, the most interesting criteria are the structures of their websites and their operating modes. Africa’s e-marketing index report by the united nations conference on trade and development (UNCTAD) issued during the African e-commerce week held in Nairobi, Kenya last December 10-14, 2019 ranked Cameroon 10th in this domain.
In an attempt to promote e-commerce and e-business activities in Cameroon, some organizations (ASAFE, Cameroon Business Forum, and Africa Business Forum) have implemented certain training programs and conferences to educate local businesses on how to integrate e-commerce into their activities.
Another emerging trend that will increase e-commerce usage in Cameroon is the coming in of online payments systems. A couple of local and intentional companies are now providing online financial services to Cameroon. The local companies include Mobile Money Cameroon SA (www.mymoneysa.com), BICEC E-Pay Box (www.bicec.com), Afriland First Bank’s I-Card (www.afrilandfirstbank.com) while the international
companies include Virtual PayCash and BelCash .
In 2009, internet prices in Cameroon reduced by about 90% when the two telecom operators (MTN and Orange), the State telecom operator (CAMTEL) and new internet services provider (ISP) Ringo and about 20 other small ISPs started
offering internet services by use of wireless modems. Mindful of these drops in prices, Cameroon still has some of the highest internet rates when compared to other African countries with similar economic profiles like Senegal. The expected penetration rates in the telecoms sector in Cameroon for mobile, fixed/fixed-wireless and internet are 43%, 4% and 5% respectively (Formunyuy & Neneh,2011)
SMEs in Cameroon
Definition of SME in Cameroon
There is no universally accepted definition of Small and Medium Enterprises (SMEs). This is due to the fact there are a large number of micro, small and medium enterprises which differ in their sector of operation, activities and in the environment where they develop.
Most definitions of Small and Medium Enterprises (SME) include ranges of assets or turnover per year, and number of employees. Usually, the definition follows one or more of the following approaches: Criterion approach, Institutional approach and Typological approach.
In Cameroon the official definition of SME is based on the first two approaches identified earlier viz: the criterion and institution approach. Thus, in the country, there are four main definitions of SME. These definitions are given by the investment law, FOGAPE BEAC and the economic and social concern;
1) According to the investment code (“decree no 90/007 of the 08/11/1990”) an enterprise is considered as SME if:
- At least 35 per cent of its share (at least) is owned by Cameroonian(s).
- Investment is less than or equal to 1, 5 billion FCFA”.
2) According to FOGAPE (“decree no 84/510 of the 13 June 1984”) an enterprise is considered as SME if
- If 51 % of the capital turnover is owned by and the manager is/are Cameroonian(s)
- If the capital turnover is less than or equal to 1 billion FCFA per year.
- If the total investment is more than 500 million FCFA per year.
- If the short-term credit is less than 200 million FCFA.
3) According to BEAC (“decree no 71/MINFI/DCE/D of the 16/06/1989”), a SME is an enterprise where:
- The majority of the capital turnover owned by and the manager is Cameroonian.
- Own participation is less than 100 million FCAF
- The total credit is less than 100 million FCFA
4) The economic and social concern however gives a more explicit definition. According to the latter:
1) A small enterprise is an enterprise with
- The majority of the share is owned by a Cameroonian
- The majority of managers are Cameroonians
- Limited income
- Employing less than 10 persons
- The total investment is less than or equal to 20 million FCFA.
2) A medium enterprise is an enterprise with:
- A capital turnover is less than or equal to 1, 5 billion FCFA
- The number of employees is between 10 and 100
- Capital turnover is less than or equal to 1, 5 billion FCFA
- Own participation is less than or equal to 100 million FCFA
Nevertheless, the definition that this study will consider is the definition gives by economic and social concern.
1.2 Statement of the Problem
Several studies have examined the effect of E-commerce on the performance of Small and Medium Size Enterprises around the world. But there is a lack of studies regarding the effect of E-commerce on the performance of Small and Medium Size Enterprises in Cameroon, businesses are heavily relying on information technology to gain a competitive advantage and therefore, it is important to understand the factors that lead to e-commerce by academic researchers and business practitioner’s alike ways in adopting e-commerce to sustain and grow their business.
The challenges of e-commerce are countless especially in the less developed word which makes the activities of e-commerce to be very difficult. Also, the rate of e-commerce is still low in low in Cameroon comparing to other countries around the globe, thus, it was therefore against this background that the researcher was prompted to investigate and find out whether the low level of e-commerce adoption in Buea municipality is due to high cost associated with e-commerce activities or is it because there is still little knowledge of its importance to the business world by business owners and users.
This new way of doing business requires staff with expertise in new technologies and SMEs will not necessarily have dedicated IT staff to enable them to gain the necessary competitive advantage (Lawson et. al, 2003). Unlike large organizations, which may have specialized IT staff, SMEs may have difficulties first in meeting the initial costs and then the on-going expenses of maintaining the operation (Farmer, 1996).
Small organizations will not take up new technologies unless they perceive an advantage to do so, or an immediate disadvantage in not taking them up (Clarke, 1997). The alleged popularity of e-commerce is due to a multitude of perceived operational benefits it can bring to purchasing practices (Wagner et. Al, 2002).
1.3 Research Questions
What is the effect of E-commerce on the performance of Small and Medium Size Enterprises in the Cameroon case of Njieforbi company Ltd Buea?
1.3.2 specifics research questions
- What are the types of E-commerce’s adopted by Njieforbi company Ltd Buea?
- How does the cost associated with eCommerce affect the performance of Njieforbi company Ltd Buea?
- What are some of the problems Njieforbi company Ltd Buea face in adopting E-commerce?
1.3 Objective of the study
The main objective of this study has assessed the effect of E-commerce on the performance of Small and Medium Size Enterprises in the Cameroon case of Njieforbi company Ltd Buea.
1.3.2 Specific Objectives
- To examine the types of E-commerce’s adopted by Njieforbi company Ltd Buea.
- To access how cost associated with e-commerce affect the performance of Njieforbi company Ltd Buea.
- To examine problems Njieforbi company Ltd Buea face in adopting E-commerce