Is The Regulation Framework a Barrier To The Success Of New Businesses In Cameroon?
Under its framework of the Cameroon Business Forum (CBF) over the past 10 years, Cameroon has undertaken several reforms to improve its business environment and to attract investors. However, there are many bottlenecks to enhancing the business environment in Cameroon to promote business creation. While efforts are made to ease starting a business in Cameroon, there remains a fundamental question about the profitability and survival of these businesses.
Certifications and standardization norms which are among some of the regulatory policies needed in every formal economy for the protection of consumers, seem to affect the profitability and survival of new businesses in Cameroon. Many business owners report being handicapped by the standards imposed on them. The survival and profitability of businesses in Cameroon are plagued by the requirement to obtain an authorization or homologation before any innovations and marketing which is a form of closure of the market and public space.
For example, a young entrepreneur who invents a simple oximeter to allow patients to measure their blood pressure independently must submit his product to the authorization of the Ministry in charge of public health. To transform seasonal fruit into organic fruit juice, you must undergo a series of costly certifications. Also, the Tanty brand, one of the few growing companies in the food industry, had preferred to close its peanut oil production line rather than invest in standardization.
Therefore, the regulation framework seems to be a discouraging factor to entrepreneurs in Cameroon, considering it is extremely difficult for some to meet up with these standards or certifications in terms of cost. This situation could also partially explain why 80% of businesses die before 5 years in the country.
To contribute to the improvement of Cameroon’s ranking of the Doing Business Index (DBI), the Nkafu Policy Institute of the Denis & Lenora Foretia Foundation is organizing a public debate on March, 11th 2021, on the theme ‘‘Is the regulation framework a barrier to the success of new businesses in Cameroon?’’.
Objectives and key issues
The main objective of this Nkafu Public Debates is to provide a platform for Cameroonian and African high-level experts the opportunity to objectively address the conditions required to succeed in investment in Cameroon. This debate will explore the necessity and role of regulatory norms on the success of new businesses in Cameroon. The main question to be answered is, “Should the government relax regulatory norms to facilitate the profitability and growth of new businesses in Cameroon?’’
Indeed, some experts think that standardization norms and certification of products are difficult and expensive to get, while others believe that businesses are reluctant to fulfil these necessary conditions.
Specifically, this Nkafu Public Debates will provide an opportunity to:
- Examine Cameroon’s past performance in the Doing Business Index;
- Critically assess the current legislation as regards business creation in the country;
- Understand the benefits and challenges of standardization norms and certification of products;
- Identify and propose policy recommendations to ease business creation in the country as well as the profitability and the survival of these businesses.
Proposed topics/guiding questions for discussion and format
In keeping with the overall theme of ‘‘Is the regulation framework a barrier to the success of new businesses in Cameroon?’’ and the debate objectives, the following topics/issues and guiding questions are suggested for further exploration:
- Cameroon’s past performance in the Doing Business Index. The ‘‘Starting a Business Indicator’’ of the Doing Business Index by the World Bank measures ‘‘the number of procedures, time, cost, and paid-in minimum capital requirement for a small-to-medium-size limited liability company to start up and formally operate in each economy’s largest business city.’’ In Cameroon, the largest business city is Douala in the Littoral region. According to the Doing Business Index by the World Bank, Cameroon was ranked 104 across 190 economies in 2020. In other words, the country is among the worst countries in the world where starting up a business is easy for entrepreneurs. Such a trend is also observed from 2007 to 2020. What can explain Cameroon’s poor performance in the DBI? Has the country taken measures to improve its ranking? What are the repercussions of such actions?
- Legislation as regards business creation in Cameroon. The majority of entrepreneurs in Cameroon prefer a sole proprietorship rather than a Limited Liability Company (LLC) because of its simplicity in terms of documents required and the low cost. Statistics from IFC and OHADA (2018) show that, in Cameroon, the number of newly registered sole proprietorships is fast-growing (from 10,613 in 2015 to 12,373 in 2016) while the number of newly created LLCs is low in comparison (from 2,526 in 2015 to 2,565 in 2016). Is the legal framework conducive for business creation in Cameroon? Are procedures to open a business in Cameroon simple, straightforward, and affordable? Are companies subjected to any regulatory and fiscal repression?
- Standardization norms and certification of products. It appears very difficult for young companies to meet international norms from the European Union or other trade regions. Indeed, the majority do not have the financial capacities to meet those very high standards. This situation is exacerbated by the fact that 80% of companies die before 5 years. Do norms for the local market exist in Cameroon? Are companies forced/obliged to comply with international norms? Are the authorities envisaging a gradual progression in terms of norms compliance?
Regarding the format, Nkafu Public Debates represent a platform par excellence for non-politicized debates based on evidence, facts, and statistics. The objective of these debates is to allow Cameroonian and African high-level experts to objectively address a set of issues related to our country’s economic development. The format of the 90-minutes debate is as follows:
- The debate panel will constitute two experts arguing FOR and two AGAINST the proposition. The moderator will spend 5 minutes on opening comments and inform the audience of the ground rules. He/she will then invite debaters to the stage. Each debater will be allotted 3 minutes for Opening Remarks. The next 30 minutes will be moderated back and forth, with each team having 3 minutes to respond. Twenty (20) minutes will be dedicated to audience questions and, each debater will have 2 minutes for Closing Remarks.
- The entire debate will be videotaped and streamed live online through the Denis & Lenora Foretia Foundation social media platforms. During the debate, the expectation is that panelists defend their points of view based on facts, statistics, and experience. There will be no PowerPoint presentation. Also, panelists are expected to give interviews to the media after the debate and share in refreshments.
Expected outputs and outcomes
The outputs expected from this debate comprise the following:
- Reports of the debate (by the invited media and the organizer)
- Debate Highlights (via the Denis & Lenora Foretia Foundation Newsletter)
- One op-ed on the nexus regulation framework and success of new businesses in Cameroon
The first Nkafu Public Debates should generate the following outcomes:
- Cameroon’s past performance in the DBI examined and the measures taken to improve on this ranking explained with their impact;
- Assessment of the legislation as regards business creation effected with explanations on the procedures, cost, and time provided;
- Benefits and challenges of standardization norms and certification of products in Cameroon and their impact on new ventures understood;
- Reforms to ease business creation in the country as well as the profitability and the survival of businesses are identified.
Venue and date
The first edition of the Nkafu Public Debates is scheduled for 27th April 2021 at the Denis & Lenora Foretia Foundation Headquarters in Simbock, Yaoundé-Cameroon.
This debate will provide a forum for at least 50 participants from various fields of expertise and allow them to build new relationships and strengthen existing ones. Participants include government officials, speakers, entrepreneurs, humanitarian organizations, non-governmental organizations, academics and researchers, students, the general public, and civil society actors, to name a few. It is a unique occasion to better inform on the reforms needed for an emerging Cameroon by 2035. Also, this event will create a platform for professional development and career advice.