Efficiency of Agro-processing SMEs in Cameroon AFRICAN ECONOMIC CONFERENCE 2016 Abuja, Nigeria, December 5-7, 2016 Efficiency of Agro-processing SMEs in Cameroon Presented by: TOTOUOM Armand, Ph.D University of Dschang-Cameroon MBOUTCHOUANG Vincent, Ph.D University of Yaoundé II, Cameroon

Introduction Objectives Method Data Main results Recommendations OUTLINE Introduction Objectives Method Data Main results Recommendations

INTRODUCTION (1) Persistence of food insecurity in Cameroon: 9.6% in rural areas and 6.7% in urban areas (WFP, 2011) Beyond the low productivity of farmers, post-harvest losses (about 25% of total production) as one of the main cause of food insecurity The development of food crops agro-processing as one of the solution to reduce post-harvest losses. Low level of food crops agro-processing in Cameroon. Industrial processing in the country is only limited to some few crops and the processing of local products remains at a small scale and often informal (FAO and BAD, 2011). The need to considered the sustainable growth of existing agro-processing firms the growth in number of agro-processing firms should be promoted. Unfortunately, little is known about the quality of that sustainable growth in terms of firms’ performance.

INTRODUCTION (2) Evolution of the literature on firms’ efficiency : from the traditional technical efficiency to environmental efficiency (Reinhard et al., 1999) Increasing number of studies examining environmental efficiency of DMUs (Reinhard et al., 1999; Graham, 2004; Zhang and Xue, 2005; Vaninsky, 2008; Kamande, 2010; Yagi et al., 2015; Zhou et al., 2015; Sowunmi et al., 2016; etc.). Shortcomings observed in the literature: Lack of studies on agro-processing SMEs Lack of comparative analysis between urban and rural SMEs in other to investigate any efficiency difference between the two groups

INTRODUCTION (3) What is the level of the technical efficiency of SMEs in agro-processing in Cameroon? What is the level of environmental efficiency of these SMEs? Are there differences in technical and environmental performance between rural and urban SMEs? What are the key factors explaining environmental efficiency scores?

OBJECTIVES General objective: The objective of this study is to analyze the technical and environmental efficiency of SMEs in agro-processing in Cameroon. Specifically objectives: measure the level of technical efficiency of SMEs in agro-processing SMEs; assess the level of environmental efficiency of these SMEs; examine the existence of differences in technical and environmental performances between rural and urban SMEs determine the key factors affecting the environmental efficiency of the SMEs

METHOD (1) ANALYTICAL FRAMEWORK The study will use the approach of Reinhard et al. (1999): Estimation of the Technical Efficiency Parametric approach (Aigner et al., 1977; Meeusen and Van den Broeck, 1977; and Battese and Corra, 1977) Adoption of the translog functional form for the stochastic production frontier. General form : (1) - output-oriented technical efficiency measure is given by: (2)

METHOD (2) Estimation of the Environmental Efficiency Translog functional form for the stochastic production frontier given in equation (1) following the framework developed by Reinhard et al. (1999) is: (3) From the above equation, the logarithm of the output of an environmentally efficient firm using and is obtained by settling and by replacing by to obtain:

METHOD (3)  

SPECIFICATION OF THE EMPIRICAL MODEL METHOD (4) SPECIFICATION OF THE EMPIRICAL MODEL First stage model: Second stage model:

DATA (1) Data source : 2nd National Survey on Employment and Informal Sector 4538 non-agricultural informal production units (IPUs) surveyed 757 IUPs in agro-processing in Cameroon are concerned in this study. They represented 55.7% of the industrial sector and 19% of the total sample (INS, 2011).

DATA (2) Descriptive statistics on the variables:

RESULTS (1) Results of translog stochastic frontier estimation:

RESULTS (2) Descriptive statistics on technical efficiency Result of the t-test result (null hypothesis of no significant mean difference in efficiency scores between rural and urban SMES): t=0.2589; p>10%

RESULTS (3) Figure 2: Technical efficiency histogram

RESULTS (4) Descriptive statistics on environmental efficiency Result of the t-test result (null hypothesis of no significant mean difference in efficiency scores between rural and urban SMES): t= -4.3781 significant p<0.01

RESULTS (5) Distribution of Environmental efficiency score according to SMEs location

RESULTS (6) Determinants of environmental efficiency

Recommendations Creation of an environment that should increase the use of cleaner sources of energy (like electricity) that offers to SMEs some environmental and financial gain Provide incentives to encourage SMEs to adopt clean production technologies by rewarding those that endeavor to adopt clean production technologies. Put in place measures to facilitate the acquisition by SMEs, of sufficient and modern equipment/machine they needs for their activities. Paid attention to the development of agro-processing SMEs in rural areas

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