ABSTRACT

This work sought to assess the role MFIs play on the entrepreneurial growth of small and medium sized enterprises in the South West Region of Cameroon. In order to satisfy the specific objectives of the study which were to look at the role MFIs play on the financial and non-financial entrepreneurial growth of Small and Medium Sized Enterprises in the South West Region of Cameroon.

Qualitative data was collected through the primary source principally through the administration of questionnaires to workers of small and medium sized enterprise. The data were analyzed using the regression analyses of ordinal least square technique. The results found out that microfinance services affect the financial entrepreneurial growth of Small and Medium sized enterprises positively and significantly.

Furthermore, microfinance services affect the non-financial entrepreneurial growth of Small and Medium sized enterprises positively and significantly. Therefore, for any policy taken by the company to improve on the entrepreneurial growth of Small and Medium Sized enterprises, they must take into account the aspect of the microfinance services MFIs do offer to Small and Medium sized enterprises.

 Keywords: Microfinance service, entrepreneurial growth.

CHAPTER ONE
INTRODUCTION

1.1Background of the Study

Access to finance and credit plays a significant role in sustaining livelihoods and developing micro enterprises. Inaccessibility of such credit continuous to hinder this development. The formal financial institution views these enterprises (small and medium size enterprises) as risky and unprofitable and is, therefore, hesitant to provide such credit to them (Sanya & Polly, 2017). The fundamental roles of micro finance banks are that of the provision of financial intermediation. Thus, is the transfer of capital or liquidity from those who are in surplus to those in deficit (Ekpete & Iwedi, 2017). Micro finance banks plays important role in the economic growth and development of any government because of their potential in poverty reduction (Adama, Duru & Diyoke, 2017).

Globally, small and medium size enterprises are known for their leading role in promoting grassroots economic and equitable sustainable development (Wairimu & Mwilaria, 2017). Micro finance institution and banks have been use as a tool to provide support and micro credit to small businesses (AL-Absi, 2016). Spinelli and Adam (2012) observed that, most of the big businesses established are assume to have been started as a small business. Micro finance is widely recognize as a crucial tool for poverty alleviation and socio-economic wellbeing (Sultakeev, Karymshakov, & Sulaimanove, 2015)

Small and medium size enterprises play a significant role in stabilizing and in the development of emerging economies. Access to financial services is important to their growth and performance. According to, Abu, & Ezike, (2012), the experience of many countries indicate that entrepreneurship which manifest in the form of small and medium size enterprises can meaningfully contribute to the attainment of countries economic development objectives.

The objectives include; employment generation, income real distribution, output expansion, promotion of indigenous entrepreneurship and technology, production of intermediate good to strengthen inter and intra industrial linkages. Small businesses find it difficult to meet the collateral requirement of deposit banks compare to large companies.

Therefore, micro finance institutions as the name implies, are bankers and lenders who provide micro finance services such as deposit, loans, payment services, money transfer and insurance. Thus, the role of microfinance in economic development is that it serves the need of economically marginalized population.  In short, its purpose is to finance the livelihood, health care, housing improvements, small business creation and other needs in underserved populations.

The collapse of many commercial banks in the 1970s economic crises, triggered Muhammed Yunus a Bangladeshi economist who developed microfinance, he was known as ‘’the banker to the poor’’. In 1976, Yunus established Grameen bank in Bangladesh, which provided ‘’microcredit’’, literally, the extension of loans to impoverished borrowers before that, banks had generally concentrated only on lending to middle- and upper-income clients, as well as the very rich, of course.

Yunis’ idea of microcredit cut on quickly. It was so popular that it leads to similar microfinance institutions springing up all over the world, eventually evolving into what today is known as microfinance. Microfinance has gained a universal consensus as an effective tool for alleviating poverty and wellbeing improvement. In Cameroon, Small and medium size enterprises make up to 35% of the country’s GDP and according to Mr. Laurent Serge Etoundi Ngoa, during an interview declared, ‘’if small and medium size enterprises, were to contribute only 50% of the total GDP, we would already be an emergent economy’’. In this regard, we shall examine how microfinance institutions through the provision of their financial and nonfinancial services to small and medium size enterprises, alleviate overall poverty, promoting a safe and sound economy.

1.2 Statement of Problem