Introduction
In Africa, whatever the considered age group, there are more entrepreneurs in the early stages of entrepreneurship than anywhere else in the world (Global Entrepreneurship Monitor (gem) Report 2014). According to the gem survey (2014), 55.57 per cent of the population between 18–64 years expresses entrepreneurial intentions in Cameroon. Similarly, 37.4 per cent of the same age population is in the early course of their business activity. Between 2014 and 2015, total entrepreneurial activity has decreased in Cameroon (from 37.4 per cent to 25.4 per cent of all adults). Nonetheless, 61.1 per cent of the respondents think that entrepreneurship is a good career choice ( gem Report 2015). Furthermore, smes contribute to gross domestic product (gdp) at a level of 36 per cent.
According to the same surveys and to Okah Efogo and Timba (2015), more than 50 per cent of entrepreneurship activities are opportunity-driven. Moreover, financing problems are the second factor hindering entrepreneurship, behind technology transfer issues. Yet, most articles and books published on entrepreneurship focus mainly on developed countries. This study participates in bridging the gap. In this perspective, it has three purposes: namely, to identify the institutional and contextual factors that represent barriers and/or opportunities for entrepreneurship in theory; to assess their potential impact in the specific context of Cameroon; and to propose strategies to alleviate constraints based on the experience of some enterprises.
Specifically, this study is based on the case of three Cameroonian companies in the transport sector. To avoid negative publicity for these companies, we will call them company 1, company 2, and company 3. These companies have operated in Cameroon for 18 years, 17 years and 11 years, respectively. Their activities cover, respectively, the Centre, East, Littoral, North,
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South, South-West
The choice of this sector is based on several facts. Firstly, the report transtat (2014) from the Ministry of Transport states that this sector plays an important role and has had an increasing contribution to the gdp between 2009 and 2013 (33.33 per cent). But demographic growth and the resulting movements of populations from villages to towns or from one region to another, for economic purposes, induce the need for a better supply of transport services in terms of quantity and quality.
Secondly, between 2006 and 2016, 466 persons (357 for the French version and 109 for the English version, Cameroon is bilingual) expressed their opinion on the quality of transport in Cameroon through an online survey on the Cameroonian Ministry of Transport website (last accessed on 2 May 2016). More than 60 per cent of them declare that the quality of transport is poor. This perception is corroborated in the transtat report, which shows that most of the vehicles operating in Cameroon are ten to 20 years old (75 per cent of new registrations, 83.4 per cent of re-registrations; Ministry of Transport 2014: 58). Despite the age of the vehicles, the number of accidents has decreased. The National Statistical Institute reports an increase in transport prices of 14.2 per cent in July 2014.
Nevertheless, some enterprises offering transport services can be seen as success stories, given their long life span (more than 15 years). Therefore, a study on transport firms could help to shed light on barriers and opportunities relating to entrepreneurship in Cameroon, to understand the managerial choices of entrepreneurs, and to highlight the influence of culture through passengers’ behaviour.
Such a study is of both scientific and contextual interest. At the contextual level, the study highlights the institutional and cultural factors that influence the development of enterprises in Cameroon. The goal is to identify weaknesses in the system of entrepreneurship promotion and to propose solutions that would improve the creation and survival of enterprises given the fact that they are important tools against poverty through job creation. On the scientific plan, the case studies enrich the literature on entrepreneurship in Africa, especially regarding the impact of institutional and contextual factors.
The specifics of the Cameroonian business context are taken from a documentary analysis. The main documents are legal documents (laws and other legislation), periodic reports from national and international agencies
The remainder of this chapter is organised as follows: a brief introduction is followed by a look at the actual entrepreneurship context in Cameroon. We then underline the main opportunities and barriers and subsequently discuss the case of three transport companies. The chapter closes with a summary of our findings.
The results should reveal that if the regulatory changes have simplified creation of enterprises in the transport sector, it remains that other factors including road infrastructure, financial needs, and the behaviour of different actors linked to the Cameroonian culture are likely to hinder entrepreneurship growth and survival.
Global Environment of Entrepreneurship Development in Cameroon
This section begins with a brief review of the influence of institutions and context on the propensity to undertake and on the effects of entrepreneurship. This helps to identify the main institutional elements to evaluate the attractiveness of the Cameroonian context for entrepreneurship in general, and more specifically in the transport sector. Hence, the section ends with a description of the institutional context of entrepreneurship in Cameroon.
A Brief Theoretical Review on Institutions, Context, and Entrepreneurship
Since the work of Porter (1985), the environment of an enterprise has been identified as an important component of the performance of a company and specifically its competitiveness. This idea is also echoed by more recent authors (Niyonsaba 2013). With particular reference to the transport sector, Didier & Prud’homme (2007) note in their report that the activity is linked, among other things, to the physical, economic and institutional organization of the country. Economic theory of enterprise defines environment as all external forces that act and react in favour of or against the activity and health of a company. The usual taxonomy distinguishes three types of environments: the macro-environment, the meso-environment, and the microenvironment. A less common classification can be represented by the following figure (Figure 11.1):
The environment elements of enterprise may be constraints or opportunities that are binding influences on entrepreneurship. Concerning the sociocultural environment, it is closely linked to the context and refers to lifestyles, moral and aesthetic values, and others that affect customers’ economic needs and behaviour. The institutional environment is the framework that established all the rules to which the company must comply (tax regulations, commercial, social, etc.).
Theoretically, the beginnings of an institutional theory of entrepreneurship can be found in the work of Baumol (1990). He rejects the hypothesis that an invisible hand would ensure markets’ efficient functioning. He demonstrates that instruments leading to optimal entrepreneurship, i.e. innovative, sustainable, and productive entrepreneurship, are very concrete steps. Precisely, government actions should lead to an incentive-rich institutional environment. This task is realised through the establishment of rules of law, implementation of tax arrangements, and the like. Baumol adds that institutions are the best levers for entrepreneurship development because they can be profoundly and rapidly changed (Pacitto et al. 2014). If the allocative effect of institutions on entrepreneurial activities has been validated by empirical studies (see for example the work of Sobel, 2008), Williamson (2000) qualifies this theory by showing through a classification (Table 11.1) that institutions cannot be changed as quickly as suggested by Baumol (1990).
Following Williamson (2000), Hwang and Powell (2005) spell out the ways and means for changing institutions. They identify three institutional change
Casson (1991) has contributed to the institutional theory of entrepreneurship. He emphasises the important role of the entrepreneurial environment and especially the impact of family networks. In the same vein, Marchesnay and Julien (2011) point out that territorial specificities, quality of infrastructure, and quality of state intervention to mobilise resources and supplement them with appropriate support are important for entrepreneurship.
According to Boettke and Coyne (2009: 139), “institutions are the formal and informal rules governing human behavior (see North (1990, 1991) ). Examples of formal rules include codified legal and political structures, as well as written rules such as constitutions. […] Informal rules include culture, norms, conventions, and mores not backed by formal law, but by social custom” (Boettke and Coyne, 2009: 139).
They add, following Shirley (2005, 2008) who defined institutional theory of entrepreneurship as including culture, informal rules, and formal institutions. Moreover, for them, institutions represent the most important factor before entrepreneurial resources and technology. This statement proves true both in the Schumpeterian hypothesis of entrepreneurship as well as in the Kirznerian assumption of entrepreneurship (Kirzner 1999).
Empirically, Campbell (2007) says that the institutionalised environment is measured through the regulatory role played by the state, the role of
Finally, institutions, theoretically, have a role to play in entrepreneurship. They provide incentives for orientation of entrepreneurship towards innovative and productive activities instead of unproductive and evasive activities. Nevertheless, they can also hinder the emergence of a productive entrepreneurship, hence the importance to change them. However, government presence should be limited.
The next section builds on this literature and proposes a review of Cameroon’s institutional environment.
An Illustration of Theoretical Highlights in the Cameroonian Context
Two levels of analysis are implemented in this section. The first level concerns the entire entrepreneurial activity in Cameroon. The second level focuses exclusively on the transport sector.
a) Cameroon’s Entrepreneurial Institutional Context
In Cameroon, entrepreneurship is governed by a number of institutions and regulations. At the supranational level, there is a set of rules to ensure the harmonisation of business law in 17 African countries, including Cameroon (ohada). At the national level, the institutional context has been marked by dynamism since the late 1990s. Nevertheless, rankings of international organisations present a mixed figure of the Cameroonian business environment (GEM Report 2015; World Bank Group 2015).
Figures 11.2 and 11.3 illustrate the evaluation of Cameroon’s entrepreneurial context. Figure 11.2 suggests that efforts have been made in terms of electricity supply, construction permits, and starting a business (more than 50/100). Cameroon’s efforts are deemed insufficient in relation to, for example, access
Cameroonian business environment – gem
Source: Global Entrepreneurship Monitor (2016: 63)
Between 2000 and 2016, many regulatory texts were voted on, adopted, and promulgated, while others were repealed. Notably, in April 2002, the investment charter was enacted with orientations, among others, to promote “[…] entrepreneurship as a rating engine of Cameroon’s creative potential, a prerequisite for creating viable and competitive enterprises and a decisive factor for a lasting solution to unemployment and poverty”; 3 to facilitate and promote investment and exports in line with the entrepreneurial potential and “the establishment of attractive and incentives tax for investment, that would take into account, firstly, the specificity of the taxation of production equipment and, secondly, the requirements of competitiveness in exports”. This charter, revised in 2004 (Law n°2004-20, Ordinance n°09-001), repeals Ordinance n°90-001 of 29 January 1990 establishing the regime of the free zone in Cameroon, ratified by Act n°90-023 of 10 August 1990 and Ordinance n°90-007 of 8 November 1990 relating to the investment Code in Cameroon. It defines an investor (art. 3) as “[…] any moral or physic Cameroonian or foreign legal resident or non-resident, who acquires an asset for its activity in anticipation of a return.”
This charter clearly defines the state’s role (Ch. 3, Section 1, art. 8). Precisely, “State manages the nation, guarantees the right to justice and security to people and their property. […] The State enacts laws and regulations, provides oversight, facilitation and regulation of social and economic activities, development of basic infrastructure and information, training, safety, and the substitution for market failures.”
On 8 December 2004, the Ministry of Small and Medium Enterprises, Social Economy and Handicraft (minpmeesa) was established by Presidential Decree N°2004/320 organising the government, as amended by Decree n°2011/408 of 9 December 2011 and supplemented by Decree n°2013/169 of 27 May 2013. In 2010, Law n°2010/001 of 13 April 2010 on the promotion of small and medium enterprises in Cameroon was adopted. This Law has recently been amended and supplemented by Law n°2015/010 of 16 July 2015. This Law defines the concepts of very small business,
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small business,
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and medium business.
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It also
To the institutional apparel described above we add: the Law on the General Tax Code in Cameroon; the finance laws that have rendered obsolete some measures of the last investment code or have taken special measures to promote certain investments or reinvestments of companies; Law n°2010/020 (adopted December 21, 2010) on the organisation of leasing in Cameroon; the creation of an sme bank in June 2011; the creation of the award subcontracting and partnership following the Decree n°002/PM of 15 February 2012 on the promotion of subcontracting for partnership contracts and contracts negotiated under other investment incentives schemes; the Act establishing the Agency for Investment Promotion as executing agency of the government policy on investment promotion; Decree n°2013/092 of 3 April 2013 establishing the agency for the promotion of smes (apme) under the technical supervision of the Ministry of smes and the financial supervision of the Ministry of Finance; Law n°2013/004 of 18 April 2013 laying down the incentives for private investment in the Republic of Cameroon.
If entrepreneurship in the transport services sector must comply with this global institutional framework, the fact remains that there are specific laws and regulations for this particular sector.
b) Cameroon’s Entrepreneurial Institutional Context for the Transport Sector
In the transport services sector, different acts have the strength of law and fix the formal rules of the game. At the national level, there is Law n°2001/015 of 23 July 2001 to lay down conditions governing the activities of road carriers and transport agents. It repeals and replaces the Law n°90/030 of 10 august 1990 governing the same sector. There is also Decree n°2004/0607/PM of March 17 to lay down conditions for the practice of the professions of road carrier and road transporter and the Decree n°2015/4209/PM of November 24 laying down the procedures for the exercise of certain powers transferred by the State to municipalities or urban communities in the organisation and management of urban public transport. The Law n°2015/018 of 31 December 2015 on commercial activity in Cameroon, which repealed and replaced the Law of 1990 relating to the same matter, can be added to this legal framework.
At the sub-regional level, the ohada regulation (Council of Ministers of the Organisation for the Harmonisation of Business Law in Africa) and cemac are significant. Regarding ohada, the Uniform Act on General Commercial Law, which has been revised in 2010, and the Uniform Act relating to Commercial
With this clarification, it should be noted that, according to article 2 of the Cameroonian Law of 23 July 2001, a road carrier is any individual or corporate body involved in conveying persons or goods by road as a business, using one or more vehicles which he owns or hires. In accordance with the same article, the transport agent is any individual or corporate body who is engaged in an activity that contributes to transporting persons and goods. There are several activities in the field of transport agents, like the management of a road transport terminal, running of a loading and off-loading operation at a road transport terminal, moving and delivery of parcels, and the bunking and debunking of goods (more details in Decree n°2004/0607/PM of 17 March 2004; art.2).
The Law of 2001 also determines who has the right to exercise road transport activities and/or transport agent activities. Any individual or corporate body may exercise these activities, if s/he has the legal capacity to trade. Foreigners can also carry out that activity if, in their own country, Cameroonians can do the same (principle of reciprocity). Finally, the analysis of this subsection seems to support the idea that institutions can play an undeniable
Contextual Opportunities and Barriers in the Transport Sector
This section is based on the laws and regulations in force and aims to evaluate opportunities and barriers to entrepreneurship in the transport sector. It also refers to the results of interviews with three road carriers companies to illustrate some of the underlined points.
Contextual Opportunities
Opportunities offered by the Cameroonian context are primarily related to the dynamism of the legal and regulatory framework that shapes investment and promotion of smes. Indeed, smes are considered one of the engines of economic growth and increasing importance is given to them in sectoral development strategies. Since 2000, a number of texts have been accepted by Government to improve the investment climate in Cameroon and especially to promote the development and survival of smes. Those efforts are acknowledged by reports that evaluate the entrepreneurship environment in Cameroon ( gem 2015; World Bank Group 2015). Nonetheless, there is more to be done.
Another opportunity lies in the liberty of the exercise of commercial activities in Cameroon. Indeed, the Cameroonian constitution has placed no restrictions on the possibility of a person to engage in a commercial activity. If one refers to the old Law n°90/031 of 10 August 1990 on trading activity in Cameroon, it is clear from its provisions that any natural or corporate body may freely engage in business in Cameroon. In this sense, article 6 of that Act argued that “commercial enterprises duly established in Cameroon freely determine their political [sic] production, distribution and marketing, in compliance with laws and regulations.” Similarly, Article 12 of the Act adds that “the prices of goods and services are freely determined by competition on the market subject to restrictions […] hitting certain anti-competitive practices.” The Law of 1990, however, raised some restrictions regarding foreign persons and protection of consumers. In order to conduct business, foreigners must obtain a licence. As for consumers, they benefited from protection measures against professionals.
Law n°2015/018 of 31 December 2015 relating to trade activity in Cameroon repealed the 1990 Law. But this new law maintained the principle of freedom in the exercise of trade activities in Cameroon as well as restrictions on foreigners. It also strengthened consumer protection. It follows that access to a profession such as road carriers or transport agents is greatly facilitated by the rules. 7 Moreover, a road carrier or transport agent business is likely to generate a profit for whoever engages in it.
Another opportunity lies in the campaign of road renovation and road building. It should be noted that Cameroon is renovating its road network in order to overcome the lack of and poor condition of its roads. For this purpose, the government created the Road Funds, which role was initially designed to fund protection national road heritage programs, prevention programs, and safety and road maintenance programs. In 2004, a Law extended the terms of this facility to the field of financing the rehabilitation and remodeling of roads. The Road Fund derives its resources from, among others, road tolls and from other resources that collect and transfer funds under the responsibility of the Highway Revenue Enhancement Program (tolls, penalties and axle tax). To achieve its mission, it works in synergy with donors and the Ministry of Public Works. Following this collaboration, many achievements have been made in the road sector.
As an illustration, it appears from the results of the implementation of the 2014 budget of the Ministry of Public Works, that 249 km of roads have been rehabilitated in the national territory. 8 The same document shows that since January 2014, 114 km of new roads have been built. Moreover, several motorway construction projects were set up by the government, including the Yaounde-Douala and Yaounde-Nsimalen highways. The project of asphalting the Kumba-Mamfe road was established and asphalting roads that open up the Cameroon production basins and borders with neighbouring countries (corridors Douala-Bangui, Douala-Ndjamena, Bamenda-Enugu, Sangmélima-Djoum-Congo frontier) have been pursued.
Finally, institutional dynamism, freedom to engage in entrepreneurship, emergence of new roads, and rehabilitation of old ones should open up the market by creating a need to transport people and goods in new areas. This
Contextual Barriers in the Transport Sector
This sub-section presents the diverse institutional and contextual barriers to entrepreneurship in the transport sector.
a) Administrative Requirements for Road Carriers Activities
To pursue the occupation of road transport operator, an entrepreneur has to obtain a road carriers’ licence from the Transport Minister and a blue card. The road carriers’ licence is personal, so it cannot be lent, transferred, or rented. This means that, if the holder dies, any individual taking over the business must get his/her own licence. The blue card permits its holder to use a vehicle for business. This document can be demanded during roadside checks.
The road carriers’ licence contains important information. For example, the passenger transport licence specifies the areas and/or the routes in which transportation is authorised (art.7). According to the decree of 17 March 2004, there are two kinds of road carriers’ licences: ordinary licences and special licences. There are four categories of ordinary licences:
- → Category i: granted for urban and peri-urban transport services with a seating capacity of a maximum of ten seats, including the driver’s seat;
- → Category ii: granted for intercity passenger bus services with a seating capacity of a minimum of eleven seats;
- → Category iii: granted for freight transport services with a gross vehicle weight of more than 3.5 tons;
- → Category iv: granted for mixed transport services with a gross vehicle weight equal to or less than 3.5 tons.
There are three categories of special licences:
- → Category s1: granted for urban bus transport;
- → Category s2: granted for urban transport service by motor cycle taxi in peri-urban and rural areas;
- → Category s3: granted for funeral transport service.
In accordance with the provisions of articles 13 and 14 of Decree n° 2015/4209/PM of 24 November, the granting of category i ordinary licences,
The granting of a licence is subject to an application file. According to article 6 of a decree of 2004, the file must include:
- → A stamped application form, a sample of which shall be provided by the transport service;
- → A certified true copy of the identity card of the applicant or the manager of the corporate body;
- → A certificate of nationality for foreign persons (subject to the reciprocity principle);
- → An updated copy of articles of association, if the applicant is a corporate body;
- → A receipt attesting to payment of the fee corresponding to the category of the licence applied for.
The applicant must add proof of his/her technical and financial capacity. S/he must also show a certificate of non-conviction. The rates of fees applicable for the issue of road transport licences are determined by article 10 of the decree of 2004, following Table 11.3 below:
Before granting a licence, the administration will check on the applicant’s character and that s/he possesses the necessary technical and financial capacity. With regards to character, the administration will check the criminal record of the applicant. Examination is favourable when the applicant or the manager of the company has not been subject to a sentence banning him/her from practicing a public profession.
An individual fulfils the technical capacity requirement when s/he is the permanent manager of the transport activity in question and holds the necessary professional qualifications (art. 8 of decree of 2004). This file certifies that an applicant has knowledge in the field of management issues, road transport regulations, labour regulations, and road safety rules. If an applicant does not
In terms of financial capacity, an applicant must prove that s/he possesses vehicles or show proof that s/he owns equity capital and reserves amounting to 1.5 million fcfa for a license in category ii or 10 million fcfa for a licence in categories iii or S1. After the granting of the road carrier’s licence, the Transport Administration must register the document in its database.
Beyond the administrative documents required and proof of sufficient financial and technical resources, it should be noted that the decision to issue a licence is subjective, insofar as the competent authority evaluates the request based on transportation needs in the national territory. This is clear from article 8 of the 2001 Act and suggests that a licence may be refused if it is to allow somebody to carry out transport activities in a geographical area where there is no demand for such a service. It is therefore a way of directing road transport activities to areas that have insufficient transport services. Hence, there is more chance of getting a licence if an entrepreneur wants to organise transport in remote areas where road carriers are scarce.
b) Administrative Prerequisites for Transport Agent Activities
According to article 12 of the decree of 2004, road transport agent activity shall fall into two classes: transport agents for urban and intercity passengers and freight transport agents. In the first class are activities such as urban/intercity road passenger terminal or travel managers in urban and/or intercity transport terminals. In the second class are activities like road freight terminal managers, bulking agents, or movers.
Access to the business of transport agent is subjected to the issue of an authorisation by the Ministry of Transport. Subsequently, the authorisation is registered by the administration. It is important to note that authorisation is personal, so it cannot be transferred to another person. In addition, authorisation contains important information, such as the route or the zone where transportation is authorised. Any person who wants to become a road transport agent must submit a file comprising:
- → A stamped application;
- → A certified copy of the national identity card of the applicant or the manager if the applicant is a corporate body;
- → A certificate of nationality for foreigners;
- → A certificate of non-conviction (it is important to establish that the applicant is of good character);
- → A receipt attesting to the payment of the required fees.
The 2004 decree requires persons who want to manage road transport terminals to submit other documents; specifically:
- → A certified copy of an ownership certificate, a lease contract for the site or a management concession agreement;
- → A site development plan comprising a parking lot for vehicles waiting to be loaded, a boarding lobby, one or more counters, a travellers lounge, a rest room for drivers, administrative offices, public toilets, a fence, a security gate, and a water point.
The applicant must also submit certified copies of the vehicles licences and the public transport licence of vehicles that will be used in the terminal, if s/he wishes to operate in a private road terminal.
It is important to note that the issue of authorisation is subject to payment of fees, the rate of which is fixed by article 15 of the decree of 2004 (Table 11.4).
c) Other Constraints Linked to Transport Activities
Vehicles that are used in the transportation of goods or persons are subject to checks during the trip. In such a situation, the driver must present a number of administrative documents, including personal documents (driving licence) and the contract that the driver of the vehicle sets has, and documents related to transportation, including the consignment note in the case of freight transport and a road slip in the case of passenger transport. The consignment is a
The driver must also submit documents relating to the vehicle, including the blue card, the technical inspection, the licence, the insurance policy, and the vehicle registration. During his trips, the driver must observe traffic rules, including speed limits, limitations on cargo weight or the authorised number of persons transported by vehicle type. Similarly, s/he must fulfill certain expenses such as tolls, and fees charged for the consignment and for the road slip. The entrepreneur must ensure the maintenance of the vehicle, show adequate hygiene and sanitation, and adequate operational quality of the machine. Indeed, the 2001 Act requires vehicles used for the transport of persons or goods to meet certain minimum safety standards.
In this regard, the three companies we interviewed all indicated that they were generally asked for the national identity card of the driver and users, the driving licence of the driver, and the complete record of the vehicle. As for expenses related to vehicle maintenance, the transport companies assess the maintenance expenditure to be over 500,000 fcfa per month. Respondents also note that for each trip, with an average of 60 trips per month per vehicle, 9 we should add toll charges, fuel costs, driver and conveyor meal as well as “travelling expenses”. So, there is significant financial need for the survival of a transport company.
d) Sanctions Linked to Failure
Illegally carrying on the business of road carriers or transport agent is an offence against the Law of 2001. According to article 13 of this Law, illegal practices that can be punished are: engaging in the business of road carriers or transport agent without the prior granting of a licence or an authorisation; operating with a hired, lent, ceded or transferred licence or authorisation; using a private vehicle for the transportation of persons or goods for commercial purposes; and doing interurban or international transportation of goods or persons without mandatory consignment note or waybill. It is the responsibility of sworn officials of the service of the Transport Ministry to record the offences in a report.
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After this, the document is transferred to the legal department and the Ministry of Transport.
It is important to note that any persons illegally carrying on the business of road carriers or transport agent shall be punished with imprisonment of up to six months or with a fine of between 500,000 and 5 million fcfa, or both. In the case of a repeat offence, the penalties may be doubled. It should be noted that these penalties relate to individuals; the punishment of corporate bodies seems to have been overlooked in the Law of 2001.
In addition, any persons who violate the provisions of the Law of 2001 and its implementation instruments may be subject to an administrative punishment, such as the suspension of the use of a licence or authorisation for a period not exceeding one year. The administration can order the withdrawal of a licence or authorisation under certain conditions resulting from article 15 of the Law of 2001. This generally occurs when the court orders the liquidation of the holder or following repeat offending that has previously resulted in the temporary suspension of a licence.
e) Road Infrastructure
Road infrastructures also constitute a serious impediment to trade in long-distance transport operations. This has been confirmed by the interviewed companies who, in response to the question: according to you what is the impact of road quality on your activity? declare that the roads are bad and considerably reduce cars’ speed and the number of trips. Better quality roads affect destination choices positively. This is confirmed by the respondents who, answering the question: why do you choose those destinations? point out the quality of roads and the availability of customers.
According to the Fonds Routier (Road Fund) Report of 2014, the national road network in Cameroon covers about 121,424 km, of which 21,973 km constitute the priority network and nearly 100,241 km is a rural network. Regarding the characteristics of the road network, it emerges from the report that, in relation to the priority national network, 6,110 km of roads are paved and 15,863 km of roads are unpaved.
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80 per cent of traffic is on the priority network.
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The road network of Cameroon is insufficient; hence, the Growth and Employment Strategy Paper (gesp) calls for an increase in the extent of tarred roads in Cameroon to 8,500 km,
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to be among the objectives to be achieved by the government in 2020.
f) Corruption
Corruption can be defined as the misuse of a function. It is passive when someone is open to being bought through offers, promises, donations, presents or anything of value to perform or to abstain from an act. It is active when a person pays for the complacency of a professional. Several articles of the Cameroonian Penal Code set out the sanctions for such practices, such as Sections 134 and 161, which target official corruption, or Section 312, which relates to employee corruption.
Corruption is a constraint for road carriers. Concretely, corruption may be used by a road carrier to speed up administrative investigations into his/her case or to escape the effects of the Law, especially in relation to offences against laws and regulations. A report by the National Anti-Corruption Commission (nacc) on the fight against corruption in Cameroon, published in 2013, reveals the existence of corruption in the road transport sector. Indeed, it is clear from this report that road carriers engage in corruption when faced with a check by the authorities and they find themselves without the necessary documents (outdated technical visit, absence of driving licence, etc.). Besides the fact that this practice endangers the safety of conveyed persons or transported things, it also results in shortfalls for the state.
Another example of corruption was revealed following a mission conducted by the Monitoring and Evaluation Committee of the nacc in November 2013 at selected weighing stations. Here it was noted that protection of the road “is undermined by officials and other servants of weighing stations that have established a real fraud network involving a chain of stakeholders whose most prominent are: business leaders, smugglers, employees in these companies, the heads of weighing stations, operators of computers and the law enforcement forces weighing stations”. 14 As an illustration, it has been observed at Mandjou weighing station that the computer was manipulated to produce fraudulent outcomes. 15
To overcome these findings, the Road Fund noted in its report in 2014 that it was necessary to set up automated toll stations in 14 tolls positions with revenues less than the amount of traffic carried on the axes they cover (Table 11.5): 16
A final constraint is due to the combination of three elements, namely, fees to be paid to the administration, fuel prices, and the purchasing power of customers.
Regarding the first point, it should be noted that fees for transport services are, in principle, traded otc (“over-the-counter”). Very often, they are set unilaterally by the road carrier. Given this state of affairs, the Ministry of Trade, after negotiations with the transport unions, fixes a maximum tariff that the carrier must not exceed when setting its prices. This intervention is in the form of an Order. In 1990, for example, an order was issued to achieve this goal. Prices have been revised upwards by Order n°0006/MINCOMMERCE of 8 March 2005 harmonising urban transport fares for taxis and intercity buses and coaches throughout the country. Recently, this 2005 Order was revised, with a new Order of 9 July 2014, and the maximum price was increased. Generally, the maximum tariffs established by the Minister reflect the price of fuel (petrol, diesel). The higher tariffs adopted in 2014 were due to increased fuel prices.
Finally, it should be noted that the public transport prices must also consider the customer purchasing power. Indeed, customers choose the carrier
Lessons from Three Cameroonian Case Studies in the Transport Sector
This section intends presents respondents from three transport service firms active in Cameroon for more than ten years. All of the companies started with sme status, in accordance with the definition of minpmeesa presented above. Today, according to their own statements, they are big businesses and, in this section, they present their experiences with regard to perceptions of rules and laws, difficulties encountered, and proposed solutions.
Regarding the relationship of these companies with the law and rules, Company 1 (established in 2005), Company 2 (established in 1998) and Company 3 (established in 1999) have all declared that they have the necessary licence, they respect speed limits, and the number of people permitted in their cars. Respondents also proved their knowledge of required documents as well as penalties for non-submission of this paperwork. They do not complain about the formal institutional framework in the transport sector. This suggests that there have been concrete improvements that promote entrepreneurship in this sector.
The case studies corroborate the theoretical investigations regarding constraints. While the companies discussed the costs of entry into the market (more than 60 million fcfa, or €91,000 at the current exchange rate), the bad quality of roads, insufficient number of means of transportation, low access to finance, low profitability of the business (Company 2), competition from illegal road carriers (Company 1), harassment from authorities (Company 3) and the attitude of users were all mentioned. Yet, it seems that the abundance of taxes to be paid and harassment by the authorities are their major problems.
The main solutions proposed are increasing customers and reducing taxes. Regarding the increase in the number of customers, the companies intend to achieve this through a marketing strategy based on the loyalty of existing customers and seeking new customers through the acquisition of new rolling stock (Company 1), the choice of shorter travel destinations, the use of advertising and the choice of high-density travel destinations guaranteeing a significant
What, then, can we learn from these examples? Firstly, despite the constraints, a company can survive in this sector, and even grow and survive for more than ten years. Secondly, the regulatory and legal framework in this sector is dynamic enough to adapt to the new opportunities and constraints related to promoting smes. Thirdly, the rehabilitation of the road network and construction of new roads will open up new opportunities in this sector in Cameroon. Fourthly, innovation in services and the quality of these services are a corporate survival mechanism in this sector. Indeed, competition from other companies is a catalyst for companies to reinvent themselves and offer good quality services (departure on time, safety, reduced accidents, etc.).
Summary and Recommendations
The goal of this paper was to identify institutional and contextual weaknesses in the system of entrepreneurship promotion in Cameroon and to propose solutions that would improve the creation and survival of enterprises, given the fact that they are important tools against poverty through job creation. We focused specifically on the transport services sector and the results of interviews with three transport services companies.
Our analysis shows that the regulatory and legal framework for entrepreneurship in general and transport in particular is dynamic. Following the third process identified by Hwang and Powell (2005), this framework continuously changes to adapt to new entrepreneurial needs in Cameroon. We also find, in line with the literature, that the Cameroonian institutional framework could reallocate entrepreneurship towards areas in need of transport services. We also found that infrastructure rehabilitation and construction will create new opportunities in the road carrier sector and provide incentives to invest in this area of activities. Companies can indeed be innovative and propose good quality services to deal with competition from other companies. However, the companies working in this sector suggest that the problem of illegal road carriers, corruption, and the problem of numerous taxes should be urgently addressed.
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Broader definition: Adamawa, Extreme-North and North.
Cameroonian texts about laws and regulations can be found for instance in International Business Publications (Inc), Cameroon, Investment, Trade Laws and Regulations Handbook. Volume 1: Strategic Information and Regulations. This source provides annual updates.
A very small business is a business that employs less than five persons and whose annual turnover excluding vat does not exceed fifteen (15) million cfa francs.
A small business is a business that employs between six and 20 persons and whose annual turnover excluding vat exceeds fifteen (15) million cfa francs, and does not exceed 250 million cfa francs.
A medium business is an enterprise employing between 21 and one hundred persons and whose annual turnover excluding vat exceeds 100 million cfa francs and does not exceed one billion cfa francs.
There is a specific law for the protection of consumers, namely the Law n°2011/012 of 6 May 2011 relating to consumer protection in Cameroon. It repealed the Law of 1990 that existed on the matter.
Fonds Routier report (2014: 7).
It means, on average, two travels by bus a day for a month of 30 days in Company 1, three bus trips daily for Company 2 and one bus trip daily for Company 3.
However, the legal department and judicial police officers, with wide powers, can also do it.
Fonds Routier report (2014: 24).
Ibid.: 24.
Ibid.: 7. In 2000, the road network spanned 50,000 km, including 4048 km of paved road; 18,016 km of classified gravel road and 27,936 km of rural road (Ministry of Public Works, Road network in 2000/2001, Publication of the Directorate of Roads).
conac, Rapport sur l’état de la lutte contre la corruption au Cameroun (2013: 45).
Ibid.: 45.
The project is in progress. Cf. Fonds Routier Report (2014: 47).