Microfinance and Financing of Agricultural Entrepreneurship: An Opportunity for Venture Capital in Africa

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Microfinance and Financing of Agricultural Entrepreneurship: An Opportunity for Venture Capital in Africa

ABSTRACT: This study is part of the debate on the MFIs financing adequacy of agricultural entrepreneur. It aims to highlight the determinants of the self-exclusion of agricultural entrepreneurs to funding through MFIs. Because, if some agricultural entrepreneurs apply and obtain credit from MFIs, many of them do not borrow from MFIs despite their extreme lack of funds. Based on insights of Attali and Yann (2007), this study also assesses these entrepreneurs’ propensity to adhere to venture capital financing. The study is based on data collected in Cameroon from March to April 2017 on a sample of 150 agricultural entrepreneurs. Econometric estimates reveal, in accordance with Hugon’s homo-africanus theory (1993) that: first, membership of tontines, bankruptcies of MFIs and the lack of material guarantees contribute significantly to the self exclusion of agricultural entrepreneurs from borrowing to MFIs. Second, the analysis reveals a strong propensity of agricultural entrepreneur’s adhesion to venture capital financing. These results indicate that MIFs must try for self appropriation of venture capital because, it can be used either as a complement or as an alternative to rural credit for agriculture. Moreover, venture capital is acknowledged as a palliative to two main problems deal with ordinary loans in African context: the lack of material guarantees and information asymmetry. KEYWORDS -Agricultural entrepreneur, microfinance, venture capital, MFIs JEL:G15, G23, L26, O16, O35

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