Enhancing Entrepreneurship Ecosystem in Rural Cameroon through Decentralization

By Laurent Brice Nsengue, Larissa Ntoubia

Introduction

According to World Bank figures, about 78% of the world’s poorest people live in rural areas and rely largely on agriculture. In terms of creating jobs, generating revenue, and retaining residents, the growth of entrepreneurship in rural regions offers a promising niche in the battle against poverty. Particular focus should be paid to rural entrepreneurship. Multi-level governance has given rise to a vast body of economic theory and empirical studies, where the benefits of decentralization were highlighted by the “first generation” economic theories of fiscal federalism, which emerged in the 1950s and 1960s. Additionally, the examples of different nations demonstrate how decentralization is implemented differently when new problems arise. Researchers and practitioners in the area are debating the impacts of the decentralization reform that has been implemented in several nations over the past several decades. One of the main topics of these discussions is how decentralization affects prosperity and economic progress. Across Africa and in Cameroon in particular, rural areas face significant challenges in fostering thriving business ecosystems despite their rich agricultural resources and cultural heritage. Cameroon’s rural areas are characterized by limited access to resources and infrastructure, which hinders business development, and economic opportunities for residents and hinders overall development (Enow, 2023). In Cameroon, under the aegis of the 2004 decentralization laws, numerous powers have been transferred to the Communes and Regions, in the fields of economic, health, social, educational, sporting and cultural development, with the main objective of promoting rapid rural development, this is embodied in Law No.2019/024 of 24 December 2019 bill to institute the general code of regional and local authorities in its Articles 9 to 12 as well as its Articles 57 to 60 provides decentralized local authorities with a good number of material and financial resources of their own for the management of regional and local interests. Decentralization, which is the transfer of power and resources from the central government to local authorities, offers a promising opportunity to empower rural communities, especially women and youth, and unlock their entrepreneurial potential. This paper aims to highlight the potential of decentralization to promote entrepreneurship in rural Cameroon. The paper is divided into two parts: the first explores the challenges of using decentralization to promote rural entrepreneurship in Cameroon, and the second outlines the opportunities that decentralization brings to entrepreneurship.

Challenges faced by local authorities in the decentralization process in Cameroon

Improving governance by shifting the center of decision-making from the central authorities to local authorities is still a major challenge in Cameroon thereby affecting entrepreneurship, economic and social development. The decentralization process in Cameroon faces several challenges at the local community level;

Firstly, lack of financial resources is a major challenge for local communities. Decentralization involves not only the transfer of powers but equally the transfer of resources to exert these powers. The central administration’s lack of political will to adequately transfer financial resources to local authorities hinders their ability to execute development projects and provide public services effectively. Following the creation of the regional councils, the government decided to allocate 20% of its annual budget (FCFA 9 billion) to the operation of these regional councils, but this has yet to be done. Equally, the principle of the unity of the treasury, which links the treasury of decentralized communities to that of the state, limits the financial freedom of action of these communities (Nguimfack & Tametong, 2021) thereby limiting the ability of these councils to carry out desired projects for the interest of local communities.

Secondly, local governments do not have the power to make and implement decisions, as they can only do so in consultation with and with the approval of the executive body appointed by the Head of State.  According again to Law No.2019/024 of 24 December 2019 bill to institute the general code of regional and local authorities, decentralization consists of the devolution of special powers by the State and appropriate resources to local authorities. Also, the 1996 Constitution explicitly provides that local council members must act within the scope of the authority given to them by the state.

Furthermore, the ambiguity of the legal framework poses a problem. The key provisions of the 1974 law governing central-local relations are ambiguous and incompatible with the concept of decentralization, providing an opening for the process to be distorted during implementation. The regulatory framework guiding the activities of regional councils is not yet finalized, creating uncertainty that exacerbates this challenge.

Moreover, local authorities often fail to prioritize collaboration with sub-actors of development, such as civil society organizations, traditional rulers, and community members. Insufficient engagement with communities and consideration of their needs can undermine the effectiveness of decentralization efforts.

The issues surrounding rural migration are especially severe in Cameroon since the phenomenon has just recently started in some of the most densely inhabited areas and is thus expected to grow shortly, posing a major threat to the nation’s development objectives. Rural entrepreneurship, which is typified by agricultural entrepreneurship, is not to be surpassed since rural migration is lowering the personnel required to grow it.

Finally, the country’s political and administrative institutions have historically been dominated by French-speaking Cameroonians, who are more familiar with the French administrative tradition emphasizing centralization. It should be noted that Cameroon’s two official languages are French and English, and that eight of Cameroon’s ten regions are predominantly French-speaking (representing 83% of the country’s population) and two are predominantly English-speaking (representing 17% of the country’s population). This can create challenges in implementing decentralization policies effectively.

The role of decentralization in promoting rural entrepreneurship  

Decentralization holds immense potential to address the specific needs of rural entrepreneurs. According once more to Law N° 2019/024 Of 2 4 Dec 2019, local authorities are legal entities under public law that have the power to manage regional and local interests and make decisions in areas within their jurisdiction. However, they also enjoy administrative and judicial autonomy. Article 11 gives local authorities the power to manage regional and legal interests using their budgets and resources. They therefore have the freedom to create and approve their budgets, to benefit from resources provided by the government and other public or private entities, and possibly to receive special financial and economic incentives which, depending on the situation, may be granted to certain areas by specific texts. As taxation was the main obstacle mentioned by economic operators in the National Statistics Institute (INS,2009) survey, with 53.5% of responses, decentralized local authorities can promote entrepreneurship by introducing tax incentives to create an environment conducive to its growth.

According to Article 3 of Law No. 2011/008 of May 06, 2011, on the orientation of land use planning and sustainable development in Cameroon, land use planning and sustainable development imply the application of physical planning to remedy natural disparities linked to development, aiming for a careful, balanced and as integrated as possible distribution of people, production activities, infrastructures and equipment throughout the national territory.. The national plan, regional plans, and local plans are the three spatial scales of strategic instruments for land use planning and sustainable development that are established by this law. Decentralized local administrations are therefore crucial to the development of Cameroon’s infrastructure, which is necessary to create an environment that supports the growth of business in the nation.

Conclusion  

Undoubtedly, decentralization frequently sparks contentious discussions between those who support it and those who oppose it, with the former highlighting its benefits and the latter pointing out its drawbacks. Thankfully, we have a plethora of knowledge on the consequences of decentralization thanks to decades of real-world experience. Since entrepreneurship continues to be the primary driver of economic inclusion for the most vulnerable segments of the Cameroonian population, namely women and young people, decentralized local authorities have several tools at their disposal to support entrepreneurship in the country. These tools include communal taxation and the development and improvement of infrastructures, which are indispensable for business development.

Recommendations

The Cameroonian government should provide sufficient funding to local authorities and subsidies for infrastructure development projects to meet these challenges and ensure that the decentralization process is successful in promoting rural entrepreneurship in Cameroon. Additionally, through local capacity-building initiatives, the government should facilitate the transfer of decision-making authority and competencies to local council members and finalize the regulatory framework governing local authorities. In the long run, this will allow decentralized local governments to have a fiscal policy that encourages the expansion and development of rural businesses. Additionally, it will support inclusive governance and representation at all governmental levels, as well as community involvement and cooperation with development subsectors. Cameroon can harness the potential of decentralization to encourage business and sustainable development by tackling these issues and strengthening local communities.