Objective –This article examines the effect of informal financing on the performance of Very Small and Small Enterprises (VSSEs) in Buea municipality, South West region Cameroon. Compared with past research, this work specifically aims: firstly to assess the effect of financing from informal money lenders on the performance of VSSEs. Secondly to evaluate the effect of financing from Rotating Savings and Credit Associations (ROSCAs) on the performance of VSSEs. And lastly to Investigate the effect of financing from family and friends on the performance of VSSEs. Methodology/Technique – This study adopts a descriptive research design and a stratified sampling strategy, with a sample size of 13 enterprises. Data were collected using questionnaires and analyzed with SPSS software through basic statistical tools such as frequencies and percentages. Findings – On one hand the findings reveal that, financing from ROSCAs and informal money lenders has a positive and significant effect on the performance of VSSEs. On the other hand, the findings show that financing from family and friends is not statistically significant. Meanwhile ROSCAs were found to be highly significant in improving performance. And despite the challenges in accessing funds from informal money lenders, their financing contributes positively to enterprise performance. Novelty/Recommendations – Compared with past research, this study emphasizes the role of informal financing sources in enhancing small enterprises performance. It recommends; Formalization and regulation of informal money lenders with clear guidelines on interest rates, repayment terms, and borrower protection. Another recommendation is strengthening the efficiency of ROSCAs through financial literacy, better record keeping and structured savings. And lastly by limiting reliance on family and friends financing to short-term or emergency support.
Valery et al. (2026) studied this question.