“Economists flaunt the private sector, in every development strategy, as the engine of growth, the catalyst for creating employment and wealth for impoverished communities in Cameroon and Africa. The logic is based on the premise that, if government provides a sustainable macroeconomic environment, a consistent policy framework, privatises every thing, liberalise everything including markets, prices, interest rates and the moral code, then private businessmen and enterprises will respond in kind and create growth that will make redundant all the poverty reduction strategies.” The Entrepreneur News Online’s Bright Lokenge puts the question to Dr Ernest Molua, Does the Cameroon private sector give credence to this assertion? Is there a bourgeoning private sector in Cameroon? Dr Ernest Molua is a Senior Lecturer and Researcher at the Department of Economics and Management of the University of Buea in Cameroon. He is a community organiser who gives regular public discourses on the virtues and culture of entrepreneurship. We met him in his posh private offices in Clerks Quarters Buea..
Entrepreneur News Online: Your community organisation just finished its Business Week 2008, what was the rationale for this event?
Dr Ernest Molua: The Entrepreneur Business Week (EBW) we recently organised was the first of its kind in Cameroon. It was an idea borne in our boardroom on the need for means and ways to energise the business climate in Cameroon. We had a series of seminars, training workshops, trade fairs, art and craft exhibitions, entertainment and entrepreneur awards. In a nutshell, the EBW celebrates and honours the entrepreneurial spirit, the successes and accomplishments of Cameroon’s best and brightest business leaders.
Entrepreneur News Online: Why is this important for a country as Cameroon?
Dr Ernest Molua: Because successful businesses are driven by competition and innovation we brought together more than 200 entrepreneurs. These entrepreneurs are important because they drive growth, generate new ideas, create breakthroughs and bring to the world something that did not exist before. In the 21st century, as business becomes more global and more competitive, our economy will rely more and more on the entrepreneurial philosophy and on entrepreneurial practices. It is important that we support, encourage and help entrepreneurial enterprises. It is essential that our business and community environment fosters entrepreneurial activity, and recognises it for the vital process it is.
Entrepreneur News Online: Do entrepreneurs contribute to meaningful economic growth?
Dr Ernest Molua:Remember that entrepreneurs make the world go around. They play a key role in creating economic growth, and in developing new ideas that lead to more exciting changes in their business, in other's businesses, and in the business world around them. They create jobs, pay taxes, offer meaningful services and much needed goods in the community in which they operate. They are the engine for private sector development in Cameroon.
Entrepreneur News Online: Given the current global financial crisis and the interventions of governments worldwide, is there still a place for the private sector in national development?
Dr Ernest Molua: Yes, there is a place for the private sector. Government cannot replace private business as an efficient and productive market agent. The global economic hardship and meltdown in financial centres may just imply governments were not fulfilling their regulatory and supervisory roles. For Cameroon and Africa, in addition to the complacency of government, a plethora of other factors combine to stall economic progress. A closer scrutiny of the private sector in Cameroon reveals that it does need major and urgent overhaul. The private sector has a unique input to make, for it ought to be the main engine of Cameroon’s economy.
Entrepreneur News Online: Is there a bourgeoning private sector in Cameroon?
Dr Ernest Molua: The private sector in Cameroon appears to the untrained eye to be a still birth. Though the sector is fragmented and operates largely informally with unregistered backyard activities or formally registered small groups of lone-rangers and sole proprietors in pursuit of subsidies and rents from political cronies, some portions are doing extremely well. That is why we are aggressive in the field holding seminars, organising business weeks and giving talks on the virtues and craft of entrepreneurship. This is done in the hope that some business persons will wake up to the need for clarity of strategy and determined performance.
Entrepreneur News Online: Does the politics of Cameroon allow for a vibrant private sector?
Dr Ernest Molua: While acknowledging that Cameroon's private sector is faced with a notoriously cumbersome regulatory framework, in which even the investment approval process (though appearing open on paper) is convoluted and lacking transparency, Cameroonians need to amass the determination and foresight required to drive forward a business locomotive. Recall that we are coming from a historic background in which politicians and the civil service have emphasised political survival for the last forty eight years. Private wealth creation has been frowned upon as a threat to the survival of the political elite, especially for businesses that are not in support of the ruling political party. But, these are constraints which creative entrepreneurs and businesses must overcome.
Entrepreneur News Online: Are you insinuating that despite the public sector bureaucracy, the private sector has lacked the initiative to strategise and scale through such perceived constraints?
Dr Ernest Molua:One of the biggest challenges facing the sector is the lack of innovative and visionary leadership. Many are steeped in traditional management approaches that are millstones around their organisation’s necks. Even the few successful businesses are nothing else but one-man talking drums that disappear with the death of the founder. While these businesses create jobs and pay taxes, the challenge we face is that we have scores of businesspersons and proprietors without formal business training simply because the dogma and paradigm since independence have been to educate clerks and administrative assistants from our universities and yes-masters in the civil service. We must not lose sight on the need to empower business owners with modern management methods. There is also an urgent need for incentives to attract the sharpest and brightest minds to private sector organisations to grease their performance.
Entrepreneur News Online: But the political bureaucracy is enormous and stifles business?
Dr Ernest Molua: Not necessarily. These are challenges encountered by businesses the world over. There is no country in the world that you will wakeup early in the morning and by noon time, you harvest your vision from a tree. If Chinese entrepreneurs can ignore the huge communist party bureaucracy, both Koreans have history of military dictatorships, so to is Chile, Argentina and a host Latin American states, but they have been able to build vibrant private sectors. Being able to overcome regulations separates successful business persons from others. And those who have been able to overcome such difficulties have used what I refer to as the master mind approach in which they employ superior brains to overcome difficulties and take full advantage of the opportunities the economy offers. In sum, Cameroon's private sector needs high-quality human resources and managerial capabilities. However, this does not take away the need to ease the bureaucracy that characterises government's regulation of the private sector.
Entrepreneur News Online: Business persons always complain of lack of credit. Where should they get their finances from?
Dr Ernest Molua: This is strange because Cameroon’s banks at the moment are awash with liquidity, despite the financial crises in London, New York, Tokyo, Johannesburg and other major business centres of the universe. The draw back in Cameroon is the perceived risks in lending by banks associated with loan recovery. Loan recovery in Cameroon is very difficult. The culture of repaying debts seem alien to our people. Look at what happens when we lend money to our friends and family: the fellow comes weeping, you borrow him money but on repaying you will find yourselves at the police station or in courts. And the judiciary process takes years. So, loan recovery is costly for financial houses. In addition, most businesspersons shy from using consultants to put together a convincing loan application. More than 98% of our businesses do not even have business plans. This is too high and it is explained by the fact that business initiative and training has been pushed to the backbench by educators. Young Cameroonians are carried away by the civil service mentality and the easy way out of being employed by someone. The recent reports from the Buea Police Credit Union and the Post and Telecommunication Credit Union in the small town of Buea shows that they have mobilised a combine savings of 2.5 billion Francs CFA. These are money houses that make money by lending money. But very few persons show up to borrow money, and those who apply for loans do not attempt to address the loan lending requirements no matter how modest they are. When you combine this opportunity in liquidity together with the possibilities offered by the stock market in Douala, you see that there are lots of unexploited potentials in the country.
Entrepreneur News Online: You mentioned the Stock Market, does the Douala Stock Exchange (DSX) have an important role to play in promoting private sector development in Cameroon?
Dr Ernest Molua: The establishment of the DSX is a welcome move. The DSX has the potential to promote the movement of capital across Cameroon and foreign markets; increase investment opportunities; encourage optimum financing for Cameroonian firms; and increase the attractiveness of Cameroon as a country for investment, both by regional and non-regional investors. Firms and Corporations, listed at the DSX, directed by incompetent managers (appointed merely out of political affiliation and cronyism) will be exposed to be nothing else but inefficient loss making businesses providing jobs and luxuriant livelihood to nepotic managers and their families and friends. The DSX provides a medium to gauge the efficiency and profitability of Cameroon businesses having publicly quoted shares.
Entrepreneur News Online: But few Cameroonian businesses are aware of the DSX, why?
Dr Ernest Molua: The DSX requires transparency and high standards. This scares away most of our businesses managed by survivalists, untrained managers and proprietors who fear the public buying stocks and sharing in the management of their meetings through opinions and views expressed in general assemblies. To excel and command a high share value, enterprises listed at the DSX will be required to hire the best and brightest minds for their labour force, to spur performance and productivity, rather than recruit mediocre family members and friends who quietly watch the enterprise sink into an abyss of catastrophic failure.
Entrepreneur News Online: But the stock market must go hand in hand with a veritable banking sector?
Dr Ernest Molua: The commercial banks in Cameroon are well capitalised. However, they are not innovative enough to provide varied products to the public and business community. They simply hold tight to their pots of money and play safe. The financial market plays a lead role in the new global economy. Any country wishing to be part of this economy must have a solid and credible financial sector, capable of tapping savings and offering businesses the possibility of diversifying their portfolios. To flourish, therefore, the private sector of Cameroon needs to be supported by a sound banking and financial sector within a liberalized institutional context. As it stands, there is need to break the ice between our banks and the business sector, and ingenious banking products and creative services will do the trick. © The Entrepreneur Newspaper 2008. All Rights Reserved