BRIDGING THE GAP: ASSESSING THE RELATIVE EFFICIENCY OF BANK AND MARKET FINANCE IN CAMEROON'S ECONOMIC LANDSCAPE

Abstract

In the pursuit of Cameroon's 2020 objectives outlined in the National Strategy (DSCE), a critical question arises: do banks and market finance in Cameroon complement or compete with each other? This query gains significance amid the challenges that led to the unmet targets of the DSCE. Despite a slight increase in average growth from 3% under the Poverty Reduction Strategy Paper (PRSP), the growth during the period 2010-2020 remains below the anticipated 5.5% growth rate set by the DSCE. The underperformance is often attributed to external factors such as the fall in oil prices and security shocks in several regions of the country. Contrary to these common attributions, this paper contends that the primary cause of Cameroon's suboptimal economic performance lies within the failures of its financial system. The ambitious objectives set forth in Cameroon's National Strategy (DSCE) for the year 2020 have encountered substantial challenges, prompting a critical examination of the dynamics between banks and market finance in the country. Despite concerted efforts, the average growth, which previously stood at 3% under the Poverty Reduction Strategy Paper (PRSP), marginally increased during the period of 2010-2020, failing to meet the DSCE's targeted growth rate of 5.5%. This discrepancy prompts a reevaluation of the perceived culprits, often ascribed to external factors like the impact of falling oil prices and security shocks affecting specific regions, including the far north, east, north-west, and south-west. However, this paper posits an alternative perspective by emphasizing the inadequacies within Cameroon's financial system as the principal driver behind its economic underperformance. Rather than attributing the missed targets solely to external shocks, the focus shifts to the internal mechanisms of the financial sector. The exploration delves into the interplay between banks and market finance, aiming to discernwhether they operate in tandem, reinforcing each other, or if there exists a competitive dynamic hindering the nation's economic growth. In the subsequent analysis, we scrutinize instances of financial system failures as key contributors to Cameroon's economic challenges. By addressing these internal deficiencies, this research seeks to provide a nuanced understanding of the factors impeding the realization of national economic goals. Ultimately, the findings aim to inform policy discussions and strategic initiatives, fostering a more robust financial system that can better support and propel Cameroon towards its economic objectives.