Alternative financing for informal sector microenterprises: an examination of explanatory factors

Abstract

In this article, the authors examine the importance of sociocultural and relational factors in accessing alternative finance for small businesses (VSEs) in the informal sector. The methodological approach adopted is as follows: the quantitative approach conducted with 690 promoters of VSEs in Cameroon, especially in the cities of Douala-Yaoundé-Bafoussam, we used the SPSS software version 20.0 or in turn we carried out PCAs for the reduction of our items and finally multiple regressions for the verification of our research hypotheses.as  well as mobilized theories  such as social capital, social embeddedness and hierarchical financing, corroborate  with the results of the study which  highlight the close relationship between informal and formal donors with  the owners of VSEs, which is based on relational proximity. This link favours financing methods such as mutual aid, donations, tontine and family support, characterized by greater tolerance towards repayment delays and increased solidarity. The social and cultural aspect of credit transactions is seen as beneficial, less costly and conducive to maintaining bonds of solidarity. In view of these results, the authors recommend that promoters-managers of MSMEs develop long-term close relationships with informal donors, establish a strong relational network and promote frequent exchanges of proactive information in order to facilitate access to informal financing and emphasize the value of intangible resources such as reputation, In short, this study highlights the importance of socio-cultural and  relational factors in the access to alternative financing of  VSEs, highlights the benefits of social ties and solidarity in these financial relationships, and offers practical recommendations to strengthen local relationships and facilitate access to alternative sources of financing   for VSEs.

Keywords: Sociocultural and relational factors, Alternative financing, VSEs, Cameroon.

Classification JEL : G41

Paper type: Empirical Research