Borrower’s perception on the profitability of solidarity microcredits from microfinance sector: an experience based on Cameroonian women’s groups microentrepreneurs

Abstract

Purpose The present study examines the perception of women microentrepreneur borrowers of the profitability of solidarity microcredit on their income-generating activities in Cameroon and the factors that can influence it. Design/methodology/approach The analysis employed in this study is content analysis based on semi-directive interviews with the 20 presidents of women’s microentrepreneur groups and a multinomial logit model based on data collected from 1,805 female microentrepreneurs. Findings The primary findings delineate three distinct levels of profitability: profitability in the absence of constraints, profitability under constrained conditions, and profitability that is non-existent. A range of factors have been identified as contributors to the profitability of solidarity microcredit. These include the size of the loan, autonomy, the level of interest rates, monitoring and support for borrowers, know-how via educational level, capacity building through decision-making and the power to act. Moreover, econometric analysis demonstrates that profitability is influenced by a variety of factors, including loan size, level of education, autonomy and commercial activity. However, it is imperative to examine more closely the deleterious repercussions of monitoring microfinance institutions, since previous work has established the primordial importance of monitoring and support in the field of microfinance. Practical implications The study posits an augmentation in the provision of solidarity loans, whilst concomitantly calling upon microfinance institutions to place greater emphasis on factors such as the sector of activity, decision-making power and monitoring of borrowers. Originality/value The particularity of this study lies in the fact that it examines the perception that borrowers of solidarity microcredit have of their profitability and not that of the lender.