Identifying the Importance of Group Organisation for Financing Women Entrepreneurs in Rural Areas:  A case study of the Mokolo Women and Family Promotion Centre in Cameroon

Abstract

One of the main challenges for women entrepreneurs in rural areas is the lack of appropriate financing structures to support their access to finance. This raises the question of whether it is possible to develop appropriate financing strategies for women entrepreneurs in rural areas.

The objective of this paper is to examine the loan repayment behaviour of women in rural areas. The aim is to contribute to the determination of a good financial support strategy to improve female entrepreneurship in rural areas. The methodology used was based on the analysis of the behaviour of 130 women and 23 women’s groups who received microloans from the financing programme of the Centre for the Promotion of Women and the Family in Mokolo, set up in a microfinance institution.

The analysis shows that the repayment rate of women’s groups is higher than that of other groups in terms of loan amounts. Thus, there is a group effect that improves the repayment capacity of women. Furthermore, for individual loans, the higher the amount, the higher the default rate. To facilitate access to financial support for women in rural areas, programmes must consider the specific needs of women and their organisation. Indeed, to enable these women to achieve economies of scale and for financial institutions to benefit from self-control, the ideal would be to support women in rural areas by grouping them together.

Introduction

Through the creation of a ministerial department in charge of the status of women, the State of Cameroon has place importance on the place given to the female gender. In 2003, this ministry conducted a study which revealed that Cameroonian women play a crucial role in the development of economic activities (ILO, 2003).  They constitute a dynamic basis for the development of Small and Medium Enterprises (SMEs). Moreover, in an uncertain economic context where companies can no longer guarantee such strong professional stability, women must rely more on themselves to build their careers. One might assume that logically, Cameroonian women would appreciate entrepreneurship even more, since it would allow them to reconcile their professional and personal lives. Thus, the choice of an entrepreneurial career should be part of a woman’s dynamic career path. Moreover, according to the International Labour Office, entrepreneurship allows income generation and is a strategy to increase the sources of income for women in rural areas. Above all, entrepreneurship can legitimise rural women’s control over resources. Indeed, women’s entrepreneurship in rural areas is important, as it empowers women economically to invest more in food, health care for their families and education for their children. It represents an under-exploited potential. Thus, women’s entrepreneurship must be a central concern of the government (ILO, 2010).

Supporting entrepreneurs is one of the most important strategies for growth and employment. This leads us to say that entrepreneurship should be analysed from the angle of the behavioural factors that influence the individual’s choice to enter the entrepreneurial career. It is also important to integrate into the analysis the conflicting role that can arise from the entrepreneurial adventure. Indeed, the roles of the entrepreneur include that of owner-manager, husband or wife, father or mother, manager, employer, etc. Therefore, the socialisation (education, support programme) of the entrepreneur is an essential instrument to promote the entrepreneurial spirit. However, it should be noted that there is a great disparity in the encouragement and support policies implemented in most countries (Bel, 2009).

However, in Cameroon, it was established in a survey by the Ministry of Women’s Affairs in 2003 that women entrepreneurs face several constraints of various kinds, including an environment that contributes very little to the development of entrepreneurship. Difficulties in accessing finance is the major obstacles that entrepreneurs face daily (Ramboarison-Lalao, 2015). Some research shows that 25% of the difficulties encountered by informal sector entrepreneurs concern access to finance. The same is true for those who want to start a business. Moreover, this difficulty is more pronounced in rural areas where women have little access to financial products and services, due to a lack of suitable products, a lack of information, and because their needs are not well understood and they do not have security (Kede Ndouna and Tsafack Nanfosso, 2017). The other element that accentuates the difficulties of access to finance for women entrepreneurs is the mode of financing. To this end, we ask the question: Does the provision of loans to women’s groups support entrepreneurship in rural areas? Making the best investment decisions and choosing the best financing options are essential assets for entrepreneurs. One of the ways to support them in their search for appropriate financing is to have a better understanding of the problems they face daily. Hence the need for a dynamic programme to promote entrepreneurship among rural women in Cameroon. Certainly, the funding programme set up by the Ministry in charge of the status of women fits into this framework.

1. The formal and informal sector duality

 In most developing countries, there are two sectors of activity to which profiles of women entrepreneurs correspond. This typological duality means that there is not a typical profile of the woman entrepreneur in Cameroon as compared to other African countries. The activities in which women entrepreneurs in Cameroon are engaged in make it possible to distinguish the formal sector from the informal sector. According to Kede Ndouna and Tsafack Nanfosso (2017), entrepreneurial dynamics in the informal sector in Cameroon show a preponderance of small individual or family businesses. The informal economy has no legal registration, no regular workforce with rights and freedom of association, and no adequate working capital to support social protection and health benefits for employees. These characteristics of the informal economy   hinder rural women from engaging in more risk-taking activities with high returns. This prevents them from developing their capacities (ILO, 2010). However, some of the advantages of small businesses in rural areas cannot be ignored.

For women in rural areas, small businesses have several advantages such as flexible working hours. In addition, workstation is either at home or nearby and there are no barriers to entry into markets. For this reason, women’s businesses are often concentrated in the sale of handicrafts, agricultural products, fishery, and livestock products, food processing, selling goods and services for local markets. Thus, it is important for women entrepreneurs in rural areas to meet the challenges of accessing new and lucrative markets and expand their activities. To do this, they need to start by organising themselves by means of cooperative or common interest group.

The cooperative is an important form of association for women entrepreneurs in rural areas. Such cooperatives by adopting gender sensitive practices can be empowering by increasing women’s involvement and representation in decision-making. Indeed, most small businesses, especially those run by women, are under-represented in business owners’ organisations. Women therefore lack a voice and representation to better advocate for their needs. Additionally, cooperative provides women with a business network and improves their access to markets and services, thus facilitating economies of scale. Thus, it can be assumed that women’s ability to meet their commitments is enhanced when they belong to a group.

Usually, the segmentation of the formal and informal sectors is often correlated with social differences and education levels. Thus, we can end up with two categories of women entrepreneurs corresponding to the duality that exists between urban and rural areas. Consequently, according to Ramboarison-Lalao (2015), one can have urban ‘modern businesswomen’ with Western education on the one hand and rural women entrepreneurs on the other.

• Analysis of entrepreneurial opportunities for women in the rural and urban areas

If entrepreneurship can be assimilated to the creation of a business to seize opportunities in a market (Kede Ndouna and Tsafack Nanfosso, 2017), then any woman who seeks personal fulfilment, financial autonomy, and control of her life by carrying out certain activities can be considered as a woman entrepreneur. Therefore, a woman entrepreneur can be seen as an actress or founder of a business in the formal or informal sector.

Female entrepreneurship is influenced by several factors which include social norms and attitudes that affect women’s choices and opportunities. As a matter of fact, in some societies, women’s entrepreneurship is not accepted. Hence, some of the obstacles that women face in creating, consolidating, and developing their businesses may be linked to negative attitudes in their societies. Consequently, it has been indicated that women start entrepreneurship when they are older, divorced or when they have become heads of households (ILO, 2010). Women who engage in business with their spouses do not identify themselves as business owners. They do not always share decision-making power, but they often invest a lot of time. This limitation can hinder the expansion of entrepreneurship, especially in rural areas. Ramboarison-Lalao asserts that Western-educated women are most often engaged in high value-added activities that are often in the formal sector. These women entrepreneurs have generally freed themselves from male domination to gain legitimacy and recognition in the socio-economic world. Thus, the capacity of women to undertake entrepreneurial activities in rural areas may be limited by illiteracy, low educational levels, lack of training, insufficient mastery, and experience of business management (Ramboarison-Lalao, 2015).

Women’s entrepreneurship in rural areas is mostly concentrated in menial activities, of low productivity, low output and operating in the informal economy. Indeed, in rural areas, there are few options available in terms of the choice of livelihood. This forces women to often engage in informal economic activities, which has low productivity, low output activities and provide little or no social protection. In addition, it is difficult for them to separate business tasks from household tasks. Evidently, women in rural areas most often run their own businesses, yet their entrepreneurial potential remains largely unrecognised and untapped. Women entrepreneurs in rural areas often face discriminatory family and inheritance practices. Sometimes, even in situations of equity, women do not assert their rights for fear of a negative reaction within their family or community.

In addition to these constraints, women in rural areas face other difficulties. For instance, rural areas are characterised by low population density which lack business development services. Where such services exist, women may not be able to access them easily, due to low levels of literacy and education, lack of time, costs, and mobility problems. There is also a need to match these services to women’s specific needs. As a result, women in rural areas rely heavily on their friends and families for business. To stimulate women’s entrepreneurship in rural areas, policies, services, and business environments that create favourable and gender-sensitive conditions are needed. The establishment of the Centre for the Promotion of Women and the Family in Mokolo in the Far North region of Cameroon can be seen as a willingness on the part of the government to contribute to the development of women in this area. However, it is necessary to adopt an adequate strategy for the centre to be effective and efficient in realising its purpose.

• Analysis of whether individual loans or loans to women’s groups is the right alternative for financing women’s entrepreneurship in rural Cameroon

One of the main constraints for entrepreneurs in rural areas in Cameroon is the lack of appropriate financing structures that can facilitate access to cheaper financial help with less restrictive conditions. In addition, the concentration of financial institutions in the big cities and the lack of information can be considered as factors hindering access to financing channels. One of the recommendations of a study carried out in 2003 by the Ministry in charge of the status of women was the creation of specialised financing organisations. This study shows that to compensate for the absence of structures financing business creation, it is necessary to create cells within existing financing structures to finance businesses being created, and also to make women aware of the need to seek advice in order to produce bankable projects. This is why the Centre for the Promotion of Women and the Family in Mokolo, in collaboration with a microfinance institution, has set up a women’s financing programme and a women’s project group.

To assess the impact of the women’s financing programme and women’s project group programme on entrepreneurship, we can focus on one of the following areas. The impact of the credit on the launch or development of an entrepreneurial activity by the women beneficiaries can be studied. In this case, the study should be experimental with a target population that receives funding to start an income-generating activity. The funding distributed can be evaluated after a period. In addition, the repayment of the loan can be examined to assess the management capacity of the borrowers. Thus, one can look at the approach used by the financing programme on the increase in size, longevity and/or turnover of the borrower’s business. Within this axis, one can also analyse the effect of the use of financial services on the exit of women borrowers from the informal sector to the formal sector by means of upgrading their entrepreneurship venture. In this case, it will be necessary to ask women in the informal sector what is most likely to help them exit the informal sector, or to identify enterprises that have made the transition from the informal to the formal sector to help them identify the factors that have facilitated this transition. The usefulness of the programme can also be assessed through the repayment capacity of the borrowers. Indeed, it is assumed that those who have repaid are those whose financial capacity has been improved by the completion of their projects. The limitation of this axis is that there is no assurance that the repayment comes from the declared activity. However, it has an advantage in terms of understanding the behaviour of women borrowers. Thus, we can assess the repayment capacities of women when they have group or individual financing.

Within the framework of this study, we will evaluate the capacities of women or women’s groups in the loans repayment of the financing programme set up by the Centre for the Promotion of Women and the Family of Mokolo after the completion of their projects. Indeed, over the period from 2007 to 2012, i.e., five (05) years, the Ministry for the Promotion of Women and the Family and the microfinance institution have supported one hundred and fifty-three (153) women and women’s groups, i.e., one hundred and thirty (130) women and twenty-three (23) women’s groups. The amount of the loans varies between 50,000 FCFA and 500,000 FCFA.

The descriptive statistics for this programme are summarised in Table 1 below.

Table 1: Descriptive statistics

Source: data from the microfinance institution and the CPWF of Mokolo

An analysis of these statistics shows that out of 130 women who have been individually accompanied, approximately 35.4% are defaulters. The percentage of defaulting women’s groups is 30.4%. At this level, we can see that the difference in terms of repayment rates is 5%. However, we can deduce that the loan to a group is more likely to be repaid. Furthermore, we can see that for individual loans, the default rate is low for small amounts (16.7% for loans of less than 100,000 FCFA). Evidently, the higher the amount, the higher the default rate for women (38.5% default rate for loans between 100,000 and 200,000 FCFA and 66.7% for loans over 200,000 FCFA). There is therefore a positive correlation between the amount of the loan and the individual repayment capacity of women in rural areas.

It is notable in Table 1 that loan amounts of less than 200,000 FCFA, has default rate of 25% for women’s groups. This rate also increases with the amounts as in the previous case (21.4% for loan amounts between 200,000 FCFA and 300,000 FCFA, 33.3% for loan amounts between 300,000 FCFA and 400,000 FCFA and 100% for loans over 400,000 FCFA). Compared to the individual repayment rates per interval, it appears that women’s groups repayment is better. Thus, it can be assumed that there is a group effect in improving the repayment capacity of women entrepreneurs.

Conclusion

Given that access to finance is a limitation for rural women’s entrepreneurship, and since financial institutions are concerned about loan repayment, integrated measures are needed to ensure that rural women entrepreneurs can realise their full potential. To make this a reality, the programmes, and services that the authorities are willing to take must consider the specific needs of women, the dominance of the informal sector and the organisation of these women. Development requires access to financial services for households and enterprises that are adapted to their needs (Claessens et al., 2009). Indeed, the activities funded in the Mokolo Women’s and Family Promotion Centre programme were diverse in nature. The women in this area operate in several agricultural and non-agricultural sectors and have a range of individual and cooperative projects. It would be ideal to support these women in rural areas by encouraging them to organise themselves into groups which will enable them to achieve economies of scale and advantageous for financial institutions to implement self-monitoring. As far as financial institutions are concerned, they should offer accessible financing that corresponds to women’s needs and be flexible in terms of deadlines. Other support services should promote women’s grouping to improve women’s access to finance. The experience of linking rural and urban women entrepreneurs for experience sharing and market connectivity can also be tried.

References

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