Abstract

The importance of small and medium-sized enterprises (SMEs) to the Cameroonian economy as well as other economies around the globe needs no further proof. Their contribution to GDP, employment, economic stability, and wealth distribution is considerable. However, their limited access to formal financing has been reported to constitute a significant limitation to their survival and growth. Given the documented reduced access of SMEs to financing from formal financial institutions due to information asymmetry, this study seeks to investigate if the cashflow visibility of SMEs is statistically meaningful to the willingness of banks and microfinance to provide loans to SMEs in Cameroon.  Primary data was collected from 232 bank and microfinance employees through a pretested questionnaire. The results from the ANOVA analysis revealed a statistically significant difference in the willingness of financial institutions to provide loans to SMEs whose cash flows are visible to financial institutions compared to those SMEs whose cash flow is not visible (or opaque) to the financial institution. It is thus recommended that SMEs in Cameroon ensure considerable cashflow visibility to financial institutions to enhance their chances of obtaining formal financing. In addition, measures could be taken for e-cash providers or mobile money services provided to share information with lending institutions to enhance the cash flow visibility of SMEs. 

Keywords

SMEs Cashflow visibility E-cash Mobile money Capital access Unbanked operations