Session 4

Technical and Environmental Efficiency of Informal SMEs in Agro-processing in Cameroon
Armand Totouom
University of Dschang, Cameroon

The overdependence of industry on fossil fuel/combustible for production makes it an im-portant factor of environmental degradation. The need to preserve the environment requires from firms, an efficient use of environmentally detrimental inputs in order to minimize their environmental consequences. This study analyzes the technical and environmental efficiency of Small and Medium-sized Enterprises (SMEs) in agro-processing in Cameroon. For empiri-cal analysis, the studies use the stochastic frontier approach as well as data collected from a sample of 334 SMEs. To measure environmental efficiency, environmental effect is modeled as an environmentally detrimental input given by combustible and fuel. Findings suggest a mean value of technical efficiency of 0.711 and a mean value of environmental efficiency of 0.1071. Even if the study does not bring evidence of a significant difference in technical effi-ciency scores between rural and urban SMEs, it suggests that rural SMEs are more environ-mentally efficient than urban SMEs. The Ordinary Least Square (OLS) regression conducted to examine the factors explaining environmental efficiency suggests a positive impact of lo-cation in a rural area on efficiencies and a negative impact of age and lack of equipment. Im-plications of the research findings for environmental policies are discussed in the paper.