Formality and Innovation in French-Speaking Sub-Saharan African SME: Cases of Cameroon and Senegal

Abstract

Despite the importance of public policies in favor of the formalization of enterprises in French-speaking Sub-Saharan Africa, the productive fabric remains marked by a strong predominance of informal enterprises whose weight tends to limit the propensity of enterprises to innovate. In this context, becoming formal for an enterprise can improve the innovation capacity of enterprises. This article aims to analyze the role of formality on product, process, organizational and commercial innovations in Cameroon and Senegal. The results obtained using a sample of 1369 firms from data collected by the International Development Research Centre (IDRC) and logistic regression show that formal firms have a better innovation capacity. But the role of formality on innovation tends to be less important for Cameroonian firms. These results show that the Cameroonian authorities must intensify measures in favor of the formalization of enterprises to boost the potential for innovation within enterprises.