Introduction
Poverty is one of the burning issues in the world because the extreme poverty level has remained excessively high (World Bank, 2016). Most recent estimates show that the majority of people of Sub-Saharan Africa are living under deplorable conditions. More than 389 million people in this region live in extreme poverty; among these, 8.76 million are from Cameroon. World Bank statistics indicate that about 38% of people in Cameroon still live under extreme poverty despite a 1.3% reduction in the overall poverty rate (World Bank, 2016). However, the World Bank was scheduled to achieve its first MDG target, to reduce the poverty rate by 50%, within 2015. Still, the target has been completed within 2010 even though extreme poverty remains substantially high. Many empirical studies have argued that microfinance was one of the primary reasons behind this remarkable progress in reducing poverty (Chua, Cohen, and Sebstad, 2011; Besley, 2008; Pretes, 2012).
The global acclamation of microfinance is due to its influential role in fighting poverty in many developing nations (Chua, Cohen, and Sebstad, 2011). Empirical studies have proclaimed that microfinance is a crucial driver towards achieving MDG and can provide practical and sustainable financial services to the poor without collateral (Pretes, 2012). Over the last 30 years, microfinance operations worldwide have shown poor people’s possible inclusion into mainstream financial services. Microfinance, no-a-days, is limited to providing financial access to the poor and training and providing a supportive environment to the poor for the best possible outcome (Pretes, 2012). The Grameen Bank is the role model in this direction as it facilitated the efficiency and sustainability of the sector by meeting its clients’ needs- the poor.
This study investigates microfinance programs and their role to alleviate poverty and ensure social welfare in Cameroon. The objectives to be achieved are:
- To understand microfinance program effectiveness in poverty reduction and ensuring social welfare of poor people of Cameroon.
- To examine the microfinance initiatives and dispersion of microcredits in rural Cameroon.
- To measure the extent to which microfinance operations helped improving social welfare and the standard of living of the poor people in Cameroon.
- To investigate the impact of microfinance operations on poverty reduction and social welfare in Cameroon.
- To recommend policies to the government and associated bodies for further improvement and effectiveness of microfinance operations in Cameroon.
Research questions of this study include:
- How effectively microfinance companies of Cameroon distributed and mobilised microcredits among the poor?
- What initiatives have microfinance companies of Cameroon taken to reduce poverty and ensure sustainable social welfare?
- What is the extent to which microfinance companies have brought down poverty in Cameroon?
- What impact do microfinance operations have on poverty reduction and social welfare in Cameroon?
- How have micro and small scale enterprises been aided by microfinance operations in Cameroon?
Literature Review
Microfinance is defined as the type of banking service provided to low-income or unemployed individuals who lack access to financial services (Yunus and Weber, 2007). The goal of microfinance is to provide financial access to low-income or unemployed people and let them be self-sufficient. Microfinance offers opportunities to its clients to have access to limited resources and promote participation in productive activities. However, in Cameroon, the microfinance market has experienced substantial double-digit growth in the last couple of years. The microfinance market participants of Cameroon (e.g. CAMCCUL, CCA, MC2 etc.) have aggressively expanded their operations through extensive market penetration. It is reported that microfinance operations in rural Cameroon helped reduce the poverty rate by as much as 2.57% in 2014 (CNS, 2016).
However, empirical investigations on microfinance also revealed that microfinance positively influences the overall social-economic conditions of poor people (Berger and Frame, 2013; Swain and Wallentin, 2014). Initially, developed countries like the USA and EU have shown little interest in microfinance as their perception was rather negative. When Bill Clinton was Governor of Arkansas in 1985, a Grameen-style program was initiated to create new economic opportunities for low-income people. The program has shown its potential through successfully creating higher economic opportunities for low-income people alongside growth in banking services (Berger and Frame, 2013). The same was replicated in European regions where microfinance helped creating more viable economic opportunities for low-income or unemployed people.
The empirical investigation of Carpenter (2013) indicated that small and medium enterprises had experienced significant growth through access to microfinance funds in Nigeria. In Bangladesh, microfinance programs helped 11.54% of poor people to come out of poverty (Hossain and Knight, 2014). Similarly, Agbobli, Kekar and Garba (2012) have analysed the issue of microfinance from a Sub-Saharan Africa perspective and finally concluded that microfinance helped poor people develop their socio-economic conditions compared to non-microfinance participants. Further investigation of Alnaa (2015) has shown that microfinance programs in Ghana positively contributed to the growth in rural development and entrepreneurship. The analysis of Lafourcade et al. (2015) also supported the argument that microfinance has a positive impact on the social welfare of poor people. However, these empirical studies demonstrate that microfinance has a role to play in ensuring the welfare of society and alleviating poverty.
Methodology in Brief
The study will be developed using a positivist philosophy that allows investigating evidence-based data through quantitative and allows qualitative analysis (Saunders, Lewis, and Thornhill, 2013). Furthermore, this study will adopt a deductive approach of research to collect observations and analyse compiled statements through tentative hypotheses (Black, 2012). This study will perform quantitative and qualitative data analysis as both primary and secondary data will be collected. However, this study will use a convenient random sampling strategy to select participants of this study. The expected sample size of this study will be approximately 900 microfinance participants in Cameroon. Primary data will be collected in two means; structured questionnaire and interview. Structured questionnaires will be distributed to the microfinance program participants to collect data while interview will be conducted on some of the participants to gather additional insights concerning microfinance operations in Cameroon. However, to analyse the collected data, this study will use statistical data analysis tools and methods. For example, frequency distribution, descriptive statistics, correlation matrix, variance analysis, and multiple regression will be performed in this study. The data will be analysed by using SPSS, and data will be presented in graphs, tables, and figures.
Reference
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