University of Pretoria Research Calls for Legal Reforms to Improve Small and Medium Size Enterprises Access to Trade Finance in Cameroon

PRETORIA, South Africa, A new Master of Laws (LL.M) mini-dissertation, titled “A LEGAL ANALYSIS OF OHADA BANK GUARANTEES AND THEIR IMPACT ON ACCESS TO TRADE FINANCE BY SMALL AND MEDIUM ENTERPRISES IN CAMEROON”, authored by EKOLE BAZIL NAJEMBE and submitted to the University of Pretoria’s Faculty of Law has highlighted significant legal and institutional barriers limiting the ability of Small and Medium-sized Enterprises (SMEs) in Cameroon to access trade finance under the Organisation for the Harmonisation of Business Laws in Africa (OHADA) legal framework.

The research, conducted by Ekole Bazil Najembe under the supervision of Dr. Dorcas K. Basimanyane, provides a comprehensive legal analysis of OHADA bank guarantees and evaluates their effectiveness in improving access to finance for SMEs engaged in domestic and cross-border trade.

The dissertation argues that while the OHADA Uniform Act Organising Securities establishes a harmonised legal framework for secured transactions, including demand guarantees, many Cameroonian SMEs remain unable to benefit from these legal instruments due to restrictive legal provisions, inconsistent implementation by financial institutions, and limited awareness among business owners.

SMEs Drive Cameroon’s Economy but Continue to Face Financing Constraints

According to the study, SMEs represent approximately 99.8 percent of businesses in Cameroon, contribute about 45 percent of the country’s Gross Domestic Product (GDP), and employ nearly 60 percent of the national workforce. Despite their economic significance, access to formal finance remains one of the greatest challenges confronting the sector.

The dissertation notes that more than 61 percent of Cameroonian SMEs remain unbanked or underserved by formal financial institutions, while the country’s SME financing gap is estimated at over 1.6 trillion CFA francs (approximately USD 2.8 billion).

These financing constraints limit business expansion, innovation, competitiveness, and the ability of SMEs to participate effectively in regional markets under the African Continental Free Trade Area (AfCFTA).

OHADA Bank Guarantees Offer Untapped Opportunities

The research explains that demand guarantees under the OHADA Uniform Act were introduced to strengthen creditor confidence while facilitating commercial transactions.

Unlike traditional collateral arrangements, demand guarantees provide an independent obligation that enables financial institutions to manage lending risks more effectively.

However, the dissertation finds that these legal instruments remain significantly underutilised in Cameroon.

Among the principal reasons identified are:

• Restrictive legal provisions governing the issuance of guarantees.
• Divergent interpretations of OHADA rules by commercial banks.
• Bureaucratic implementation challenges.
• Limited financial literacy and legal awareness among SMEs.
• Continued reliance by banks on conventional collateral requirements.

Legal Framework Requires Modernisation

One of the dissertation’s key findings is that certain provisions of the OHADA Uniform Act may inadvertently restrict SME financing.

The research specifically examines Article 40 of the revised Uniform Act, which prohibits natural persons from issuing demand guarantees.

According to the study, this restriction prevents many SME owners and directors from using personal guarantees to secure financing, unlike practices accepted in jurisdictions such as England and France.

The dissertation argues that revisiting these legal restrictions could significantly enhance access to trade finance while maintaining appropriate safeguards for creditors.

Institutional Challenges Undermine Effectiveness

Beyond legislative issues, the study highlights institutional shortcomings affecting implementation.

Commercial banks often adopt inconsistent approaches when assessing OHADA-compliant guarantees, creating uncertainty for borrowers.

Differences in internal policies, risk assessment procedures, and operational practices discourage SMEs from relying on demand guarantees as viable financing instruments.

The research also identifies insufficient collaboration between financial institutions and SMEs as a major obstacle to expanding the use of trade finance mechanisms.

Strengthening Regional Trade Under AfCFTA

The dissertation emphasises that improving the effectiveness of OHADA bank guarantees could support broader regional economic integration under the AfCFTA.

Greater access to trade finance would enable Cameroonian SMEs to expand production, participate in regional value chains, increase exports, and improve competitiveness across African markets.

The study also recognises the complementary role played by institutions such as the African Export-Import Bank (Afreximbank) through guarantee facilities that reduce commercial and political risks associated with cross-border trade.

Recommendations for Reform

The research proposes several legal and policy reforms aimed at strengthening the effectiveness of OHADA bank guarantees, including:

• Reviewing restrictive provisions within the OHADA Uniform Act.
• Harmonising the interpretation and implementation of guarantee provisions across financial institutions.
• Enhancing legal certainty for lenders and borrowers.
• Expanding financial literacy programmes targeting SMEs.
• Promoting stronger collaboration between banks, policymakers, and SME support institutions.
• Aligning OHADA guarantee practices with international trade finance standards.

Contribution to African Trade Law

The dissertation contributes to ongoing academic and policy discussions on business law harmonisation in Africa by examining the relationship between legal certainty, secured transactions, and SME financing.

It concludes that legal reform alone will not be sufficient unless accompanied by institutional improvements, greater awareness among entrepreneurs, and stronger cooperation between regulators and financial institutions.

By addressing both legal and practical barriers, the study argues that OHADA bank guarantees can become a more effective instrument for expanding access to trade finance and supporting sustainable economic development in Cameroon and across the OHADA region.

Keywords: OHADA Bank Guarantees, Cameroon SMEs, Trade Finance, University of Pretoria, LL.M Dissertation, OHADA Uniform Act, Demand Guarantees, AfCFTA, SME Financing, Business Law in Africa, Secured Transactions, Access to Finance, International Trade Law, Cameroon Economy, African Trade.

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