Blended Finance: A Tool for Inciting Commercial Financial Institutions to Provide Financing for Machinery Acquisition for SMEs in Cameroon

As is the case of most economies around the world, the relevance of SMEs to the well-being of the Cameroonian economy is quite significant as they contribute meaningfully to employment creation, GDP as well as poverty alleviation. However, this category of businesses in Cameroon tends to implement very low levels of automation due to the lack of financing for equipment /machinery acquisition. This inevitably leads to high production costs and the inability to scale up production as multiple tasks are carried out manually. Certain opportunities cannot even be exploited as SMEs tend to congregate in sectors that are labor-intensive while avoiding technology and machinery-intensive sectors. Despite this situation, the OECD developed the blended finance tool which involves the usage of non-business funds such as developmental/ philanthropic funds to mobilize and orientate private capital towards sectors that will otherwise be neglected. It was therefore the purpose of this study to investigate if this tool can have a statistically significant impact on the willingness of financial institutions to finance machinery/ equipment acquisition in SMEs in Cameroon. Data collected from 232 bank and microfinance employees across Cameroon using a pretested questionnaire was analyzed using the One-way ANOVA analysis in SPSS. The results revealed a statistically significant impact of blended finance on the willingness of financial institutions to finance machinery/equipment acquisition in SMEs in Cameroon. It is therefore recommended that the governments as well as NGOs interested in SMEs make use of this tool to incite financial institutions to provide financing for this category of businesses.