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Microeconomics Foundations of Entrepreneurial Performance in the Informal Sector: A Case Study of Cameroon

Kede Ndouna, Faustine and Tsafack Nanfosso, Roger (2017): Microeconomics Foundations of Entrepreneurial Performance in the Informal Sector: A Case Study of Cameroon.

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Abstract

This study aim is to identify, according to microeconomic approach, the determinants of the performance of individual entrepreneurs in the informal sector in Cameroon, through their units performance. Using the Second Survey in the Informal sector and Employment (SSIE) collected in 2010 in Cameroon, we made two regressions of a profit function of an entrepreneur with the method of multiple regressions after a statistic analysis of some characteristics that influence entrepreneur performance in the informal activities. After this analysis, some lessons emerge. First, there are significant gaps in the income generated by informal activities. Then, the impact of factors that can improve the performance of entrepreneurs varies widely depending on the measurement used to capture their performance (sales or income). Finally, individual factors such as education level, seniority, specific experience in entrepreneurship and the time spent on the job significantly increase the performance of informal entrepreneurs. Similarly, the factors of the firm (sector of activity, level of capital, number of permanent employees) exception due to the age of the firm, also significantly improve the performance of informal entrepreneurs better than the individual factors (27% against 15%). However, the main factor that reduce their performance are the economic environment (difficulties in accessing to infrastructure and finance). This could be explained by the fact that, operating in the informal sector, reduce access to financial services and public infrastructures. Several recommendations can be made in line with the improvement of informal entrepreneurship and access to financial services, in order to build strong entrepreneurship in developing countries.

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