A CRITICAL ANALYSIS OF FINANCIAL CHALLENGES AND ADAPTIVE SURVIVAL STRATEGIES AMONG SMALL-SCALE ENTERPRISES IN DOUALA, CAMEROON

CHAPTER ONE INTRODUCTION 1.1 Background of the Study Small-scale enterprises (SSEs) are widely acknowledged as essential drivers of economic development, playing a pivotal role in employment creation, income generation, poverty reduction, and the promotion of entrepreneurial innovation (Ayyagari et al., 2021). In Cameroon, entrepreneurs and managers of small businesses have made considerable contributions to the national economy (National Institute of Statistics, 2018). As reported in 2018, Cameroon was home to approximately 93,217 small enterprises, representing 99.2% of all registered businesses (National Institute of Statistics, 2018). These enterprises not only dominate the business landscape numerically but also significantly impact the country’s economy by contributing 62% to employment and 31% to the gross domestic product (GDP) (Piabuo, Baye, & Tieguhong, 2018). Despite their critical role, small-scale enterprises in Cameroon face numerous financial challenges, which have led to far-reaching consequences. The widespread failure of these enterprises has exacerbated the national unemployment rate, pushing it to 40%, while the poverty rate has reached 48% (KPMG, 2019). Financial difficulties remain among the most commonly reported barriers for SSEs (Beck et al., 2008; Karim et al., 2022). These difficulties range from limited access to capital and inadequate financial management practices to inefficient financial planning. In many cases, small enterprises struggle to secure financing from formal institutions due to high perceived risks or insufficient collateral (Beck et al., 2018). Moreover, inadequate budgeting practices, poor financial reporting, and ineffective cash flow management further hinder these businesses from accessing credit and making informed financial decisions (Karim et al., 2022). The implications of these financial constraints can be severe, often leading to business failure and closure (Ayyagari et al., 2021). Such outcomes not only disrupt the livelihoods of business owners and employees but also impact the broader economy through job losses and decreased productivity. Therefore, it becomes essential for policymakers, academics, and development practitioners to understand the financial constraints facing SSEs and to identify the survival mechanisms they adopt to remain viable in challenging environments. Although various studies have examined financial obstacles and coping mechanisms within small businesses, there remains a need for deeper exploration into specific financial issues experienced across diverse socioeconomic contexts and how different survival strategies are implemented by entrepreneurs (Beck et al., 2018; Karim et al., 2022). This study, therefore, seeks to investigate the financial problems and survival strategies of small-scale enterprises in Douala, Cameroon, with the aim of contributing to a more contextualized understanding of the challenges and opportunities that define the SSE sector in this region. 1.2 Statement of the Problem Small-scale enterprises account for a substantial share of business operations worldwide and are instrumental in driving GDP growth and employment creation (Beck et al., 2020). Particularly in developing economies, these enterprises serve as the mainstay for a significant proportion of the population (Becherer & Helms, 2018). They also contribute to fostering innovation and promoting economic diversification, which enhances overall resilience in national economies. However, despite their socio-economic importance, small-scale enterprises are often confronted with a variety of financial challenges that undermine their growth potential and threaten their long-term sustainability. These include limited access to credit, high interest rates, poor cash flow management, and a general lack of financial literacy among entrepreneurs (Ayyagari et al., 2021). Moreover, broader macroeconomic issues such as inflation, market instability, and restrictive regulatory frameworks often exacerbate these financial difficulties. These financial pressures can lead to stagnation, reduced operational efficiency, and in many cases, the eventual closure of businesses. Entrepreneurs may be compelled to resort to measures such as reduced investment in technological upgrades or deferral of essential payments, which only serve to weaken their competitive position and business continuity (Beck et al., 2020). In navigating such challenges, SSEs often employ a variety of adaptive strategies, including cost minimization through bootstrapping, diversification of income streams, forging strategic alliances, and leveraging digital technologies (Ayyagari et al., 2021). Additionally, many entrepreneurs explore alternative financing sources such as peer-to-peer lending and microfinance to address funding gaps left by formal financial institutions. Despite these efforts, financial sustainability remains elusive for many SSEs, particularly in environments marked by economic volatility and institutional weaknesses. However, the resilience and adaptability demonstrated by small business owners in the face of these constraints highlight the importance of exploring their experiences in greater depth. In light of these considerations, this study aims to examine the financial challenges and survival strategies adopted by small-scale enterprises in Douala, Cameroon. 1.3  Objectives of the Study The main purpose of this study is to Analyze Financial Challenges and Adaptive Survival Strategies Among Small-Scale Enterprises in Douala, Cameroon. Specifically, the study will; i.Ascertain the financial related challenges affecting the survival of SMEs in Douala, Cameroon ii.Determine the impact of inadequate financing on the survival of SMEs in Douala, Cameroon iii.Ascertain the survival strategies required to sustain and boost the survival of SMEs in Douala, Cameroon  1.4 Research Questions The following questions have been prepared for the study: i.What are the financial-related challenges currently affecting the survival of SMEs in Douala, Cameroon?  ii.How does inadequate financing impact the survival of SMEs in Douala, Cameroon?  iii.What survival strategies are necessary to sustain and boost the survival of SMEs in Douala, Cameroon? 1.5 Research hypotheses H0: Small scale enterprises in Douala, Cameroon do not face financial problems in their survival strategies Ha:Small scale enterprises in Douala, Cameroon do face financial problems in their survival strategies 1.6 Significance of the Study This research is significant as it explores how the challenges experienced by entrepreneurs in Cameroon can impact different facets of business activities, including operations, sales, and customer relations. Furthermore, it offers valuable perspectives for governmental authorities and policymakers in Cameroon, assisting them in comprehending the hurdles faced by entrepreneurs and identifying potential avenues for advancement. Moreover, this study will play a role in shaping supportive policies and enhancing infrastructure to foster the expansion of entrepreneurship. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to financial problems and survival strategies of small scale enterprises in Douala, Cameroon. 1.7 Scope of the study The scope of this study is to Analyze Financial Challenges and Adaptive Survival Strategies Among Small-Scale Enterprises in Douala, Cameroon. Empirically, this study will ascertain the financial related challenges affecting the survival of SSEs, determine the impact of inadequate financing on the survival of SSEs and ascertain the survival strategies required to sustain and boost the survival of SSEs in Douala, Cameroon Geographically, the study will be delimited to owners and staff of Claudice Business Services LTD in Douala, Cameroon. 1.8 Limitation of the study In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.  More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.  1.9 Definition of Terms Entrepreneurship: refers to the process of identifying, creating, and pursuing opportunities to generate value through innovative ideas, products, or services. Small Scale Enterprises: SSEs are businesses that fall within a certain size range, typically defined by criteria such as the number of employees, annual revenue, or total assets. Problems: the challenges or difficulties that SMEs face in the course of their business operations. Strategies: the plans or actions designed to achieve a specific goal or objectives.