The Effect of the Use of Solidarity Financing on Entrepreneurial Activities in the North West and South West Regions of Cameroon

Abstract

This study was focused on investigating the effect of solidarity financing on entrepreneurial activities in the North West and South West regions of Cameroon. The mission of solidarity finance is to use non-conventional financial tools to achieve sustainable and equitable development beside social integration. Its implications are seen in entrepreneurial performance measured by increase business revenue, profit, sales and societal contribution. The paper examines if entrepreneurs who adopt solidarity financing performed better than those who do not use it in the Northwest and Southwest regions of Cameroon. To achieve the objectives of the study, data was collected through survey questionnaire from a sample of 330 respondents and was analyzed using two stage Heckman selection model in order to correct the selection bias and yield unbiased estimates. The results showed that socio-economic factors of accessibility, cultural ties, marital status, age, residence, qualification, development perception services had positive and statistically significant effects on entrepreneurial performance. The coefficient of the inverse Mills ratio from Heckman result was statistically significant at 5%. These results provide evidence that the unobserved factors which lead to an increased probability of usage of solidarity financing have a positive impact on entrepreneurial growth. The government should therefore design policies for the formalization of the solidarity financing market.