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5 Challenges That Cameroonian Start-Ups Face in Business

5 Challenges That Cameroonian Start-Ups Face in Business

In the world of business, beginnings are never easy, however, Cameroon presents some unique challenges to new businesses due to the uniqueness of the country’s emerging markets. Cameroon is one of the most diverse countries in the world, a country that has a rich and diverse culture made up of a mix of about 250 indigenous populations and just as many languages and customs. Cameroon’s market-based, diversified economy features oil and gas, timber, aluminum, agriculture, mining and the service sector.

Current projections forecast the population in Cameroon to be 25,958,184 in 2020, 32,979,644 in 2030, 41,020,839 by 2040, and it will likely surpass 50 million by 2050.

These statistics prove that the demand for employment and a steady source of income will also experience a dramatic exponential increase. With these facts in mind, it is important—now more than ever—to examine the entrepreneurship ecosystem around the country to highlight and mitigate the challenges inhibiting growth and development.

Over the past five years, I have worked with several startups in Cameroon. Being a web developer and CEO of Netkipedia has given me first-hand access to many startups right from when they’re just ideas to implementation.  I have seen first-hand some of the major challenges that start-ups face in Cameroon. They include:

1.   Start-up Capital

Perhaps the most obvious of all the challenges, most start-ups in Cameroon have difficulties in raising capital. Entrepreneurs and small business owners cannot easily access finance to expand their business, and they are usually faced with problems of collateral, high-interest rates, extra bank charges, inability to evaluate financial proposals, limited financial knowledge, making it difficult for small businesses to access finance. To address the inability of entrepreneurs to get start-up capital from banks in Cameroon due to collateral requirements, banks across the country need to work with entrepreneurs to help them prepare viable business proposals in accordance with their lending rules. Over the five years, I have seen that many banks are responding to this challenge and setting up SME help desks and developing relevant products for the emerging Cameroonian entrepreneurs. Government agencies are also beginning to engage to provide credit support to help de-risk bank lending, reducing the need for collateral as well as the cost of borrowing.

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Organisations like Google, The Tony Elumelu Foundation and Seedstars World (to name a few) are also playing an active role in providing funding for these green entrepreneurs but this challenge is still very far from being resolved.

2.   Infrastructure

While the funding challenges are slowly being mitigated, Cameroon still has a very huge gap to fill in terms of infrastructure. For a business to thrive successfully, basic needs like good roads, a proper transportation system, internet services and constant power, need to be provided by the government.

Unfortunately, for many towns in Cameroon, these factors are still unresolved and they affect a business’ ability to deliver quality goods and services in a timely manner. Some start-ups have been able to surmount some of these challenges by investing in back-up generators and subscribing to internet services providers.

Nonetheless, many start-ups cannot afford to make these investments and the ones that can, would be able to make more profitable investments if these issues are resolved.

3.   Government Policies/Enabling Environment

As with most areas of life, everything rises and falls with leadership. In Cameroon, there are numerous government policies and regulations that make entrepreneurial activities difficult depending on the sector. It is the duty of political leaders and policymakers to constantly review their business policies across all sectors to create an enabling environment for businesses to thrive.

Unfortunately, the current Cameroonian leadership is doing little or nothing to help the situation.  These are basic enabling requirements which the Cameroonian government can easily address.

Operating costs is a major hurdle for Cameroonian start-ups from high cost of power to being able to obtain the necessary machinery, equipment, technology, or raw material needed to operate their business. The government can do much to enable Cameroonian start-ups from long term lease agreements on land and equipment. Other major policy areas that need to be addressed in Cameroon to enable start-ups to thrive include Intellectual property rights, support with legal disputes, incentivised tax laws and access to funding.

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4.   Competition

One of the biggest challenges that start-ups face in Cameroon is competition, particularly in sectors already dominated by a brand or a number of brands. Usually, customers prefer to relate with companies that already have a reputation of trust in any given sector. Although this can be a major stumbling block, it is not one that is insurmountable. The solution is for the start-up to ensure that within their sector, their business idea is unique, creative and consistent.

Trust in business is earned over an extended period of time and cannot be bought. It is important for start-ups to patiently and earnestly build their customer base with goods and services that are unique to them.

5.   Market Access – Intra Africa Trade

Intra Africa Trade (which can also be referred to as cross border trade) tends to be very challenging, slow, expensive and generally inefficient. This is mostly due to local laws and regulations within various African countries that govern cross border payments and domestic banking systems. Generally, the lack of a universally acceptable regulatory system within the continent inhibits the fluidity of conducting business transactions.

Fortunately, these conditions have slowly begun to change as governments and transnational payment bodies are creating standardized data formats to aid seamless transactions.

Currently being driven by the President of Rwanda, Paul Kagame, and signed by 44 African states; the goal of this agreement is to create a single continental market for goods and services, with free movement of business persons and investments with the purpose of accelerating intra-African trade.

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Conclusively, none of the challenges facing Cameroonian start-ups and green entrepreneurs face are insurmountable. However, government bodies, policymakers, investors, and all other key players in the entrepreneurship ecosystem need to realize that the responsibility of developing the Cameroonian economy is a collective one and we all must play our roles.

 

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