Government Compliance with Public Procurement Policy and Performance of Construction Enterprises in Cameroon: A Micro Panel Modelling Approach

This paper aimed to investigate the implication of government compliance with public procurement policy for the performance of enterprises operating in the construction sector in Cameroon. To achieve its objectives, the paper made use of a micro panel collected with the help of structured questionnaires. The Pooled OLS and the random versus fixed effects models were used for the analyses. Findings revealed that the contract winning rate of construction enterprises increases monotonically over the period under study. While the performance of construction enterprises stagnated over the period 2013-2016, it only witnessed a drop in 2017 and 2018. The pooled OLS and the Random effect regression results revealed that government compliance with payment duration of construction enterprises’ bills positively and significantly affects the performance of construction enterprises in Cameroon. Based on these findings, the study recommends that the government could consider redressing the policies on the regular and prompt payment of enterprises’ bills within the timeline specified in the contracts to enable them meet up with their financial requirements, thereby contributing to their overall performance.


Introduction
The construction enterprises are widely seen as the main drivers of development and a vital solution for inadequate infrastructure widely recognized to be holding back economic growth in most of developing countries (Shadmanov, 2015). To this effect, the governments are perceived as a key policy makers in the development of infrastructures as their compliance with the duration of payment of enterprises' bills largely determines the performance of construction enterprises in the domain of infrastructural development, especially in emerging economies (Srinivasarao, 2013). This is particularly the case of Africa where the desire for increase in infrastructure is widely felt and the construction enterprises' activities contribute in improving the overall performances of construction industries across Sub Saharan African countries in general, and the CEMAC countries in particular (Anugwo et al., 2017). Al-Rahmani (1988) and Braddon (2012) believe that for Third World countries to gain economic independence there is a vital role to be played by productive investment in public infrastructure. In developing countries, public infrastructure stimulates economic dynamics, and through its diverse activities it promotes economic growth (Rojas-Ramirez & Molina-Vargas, 2018). Therefore, if more and higher quality of infrastructure is available, then productivity will be higher and the average production costs will drop (Aschauer, 1990). However, the absence of infrastructure constitutes an obstacle to the implementation of development policies as well as the achievement of higher levels of sustainable growth (World Bank, 1994). Having an enabling and thriving infrastructure in any nation is a key driver of its economic vibrancy. Infrastructure spending, therefore, creates jobs in the construction industry and increases productivity by enabling businesses to operate more efficiently. schools, housing and other forms of building and construction edifices, to any emerging country.
Khan's findings corroborated with the results of Dakhil (2013) which revealed a strong evidence that this sector played a significant role in providing infrastructure and input to economic growth in Libya especially following a widespread destruction of infrastructure in the post Muammar Gadhafi period in early 2010. The empirical evidence from these developing countries conform with the results from Durdyev and Syuhaida (2012) study which showed that construction promoted economic growth and development, generated considerable output and further contributed to the increase in labour employment of Turkmenistani.
Researching on the difficulties and challenges of construction enterprises in the developing countries with lessons drawn mostly from experiences of some countries with comparable levels of development, Ofori (2000) noted that in the area of infrastructure, construction enterprises should be well-poised to benefit from globalization rather than being victims of it. Ofori further argued that these enterprises should consider the pertinence of local culture when executing their activities which is likely to enhance their efforts towards improving on their performances. To strengthen the idea of the relevance of local or country specific conditions in the performances and categorization of construction enterprises, Akinmurele and Odey (2017), working on the empirical data from construction industries in Nigeria, acknowledge that the construction market is animated by foreign and indigenous firms.
According to Ibrahim et al. (2014), 95% of all construction enterprises operating in Nigeria are indigenous while the remaining 5% are foreign in origin. Between 2010 and 2013, the volume of construction contracts in Nigeria awarded to foreign construction firms is significantly greater than that awarded to their indigenous counterparts (Tunji-Olayeni, 2015). Akinmurele and Odey questioned the rationale behind the secondary role played by indigenous construction enterprises by own government whereas they are expected to play a leading role in providing jobs for the fast growing work force and further championing the Nigerian development drive.
The major question here is whether these construction outfits, playing such an important role in the economy, are having business their own way. In an attempt to find possible answers to this payments. Evidence of these obstacles to the growth of African small and medium enterprises was highlighted by Ubani et al. (2010), in the Nigerian construction industry which they agree is said to be "sleeping" because of their inabilities to deliver construction services effectively and efficiently. Further, they present a handful of shortcomings such as clients and customers' dissatisfaction, project time and cost overruns, low quality and shoddy outputs, project conflict between the contractors and claims arising from variations in contract sum. All these they blame on the construction enterprises' inability to manage projects properly. However, a careful cross-review of the literature highlights important challenges like slow payments of contractors' bills and poor management and mastery of documentation by construction enterprises during the bidding, award and execution phases of construction jobs.
These concerns have received very little research attention so far. Specifically, and taking the case of Cameroon, slow payment of bills of construction enterprises by Government has been a major preoccupation. Based on the reviewed literature and to the best of our knowledge, no research has attempted to assess the implication of government compliance with the public contracts code for performance of construction enterprises in Cameroon. Thus, the effect of Government compliance with the public procurement policy on performance of construction enterprises in Cameroon remains an empirical question.

Sources of Data
The data used for the study is a micro panel. The data was collected with the help of a structured questionnaire from construction enterprises in Cameroon with head offices in the Centre, Littoral, North West, South West, South and West Regions of Cameroon. The data was collected over the period 2013-2018. The sampling technique used in this study did not follow the conventional method of selecting a sample from a population. In effect, information from key contracts services like Public Contracts Regulatory Board, Ministry of Public Contracts, Ministry of Public Works and Ministry of Urban Development and Housing, revealed that the number of medium-and large-sized construction enterprises with identifiable addresses and still active in construction business in Cameroon in the past 10 years for example, stands at about 140. This figure is taken as the sample. And given that these researchers could reach out to almost all of the 140 construction enterprises. The technique used in collecting the data was an interview using structured French and English versions of questionnaire serving as a guide. Prior to the interactive discussions during the interview sessions, appointments were taken with the promoters of these enterprises to agree on the venue and time, as well as allow them to be psychologically prepared. Therefore, the sample size of 140 medium and large construction enterprises is used in this study. This sample size approximates the sample of 150 contractors that Ibrahim (2014)  area. Six enumerators, all holders of undergraduate degrees, were engaged for the face-to-face interviews with the selected construction enterprises.

Model Specification
The basic functional model for this study captures the relationships between government compliance with public construction procurement policy and enterprise performance over time, given as follows: The performance of construction enterprises can be modelled as a function of government compliance with procurement policy and other control variables. The model takes the following form: Where: PCE it denotes the performance of construction enterprise, i, the year, t;GC it represents government compliance with public procurement policy; X kit stands for vector of other variables expected to influence performance of construction enterprises,α 0 is the intercept, α 1 gives the magnitude of the effect of government compliance on the performance of construction enterprise, i denotes an enterprise, and t represents the year.

Government Compliance with the Procurement Policy (GC)
This is strictly captured in terms of compliance with payment duration from the Government side, won within the year and is presented as the sum of amounts of all contracts (n) won: Volume of contracts won (VCW) = ∑( 1 + 2 + 3 + 4 + . . . + ) iii) Projected Annual Profit Margin (APM) declared.
These performance indicators were used to construct a performance index using the Principal Component Analysis (PCA)

Constructing the Performance Index Using Principal Component Analysis
It is generally agreed that the use of a composite indicator of performance allows to summarize in single value information about one or more dimensions of performance. The aggregation is done through a functional form. The most widely used functional form in the construction of composite indicators is as follows: Where w j denotes the weight associated with each indicator of performance; a j represents an indicator of performance.
Therefore, to construct the composite index of performance using the Principal Component Analysis (PCA), the weights are derived from the first "principal component" which is a linear combination that accounts for the highest variance in the distribution. Each indicator of performance , can be written as a linear combination of J components or factors, as follows: 1 = 11 1 + 12 2 + ⋯ 1 (6) 2 = 21 1 + 22 2 + ⋯ 2 (7) Published by SCHOLINK INC.
Where; A 1 , A 2 ,…….., A J are unobserved components that are uncorrelated with each other.
The solution will be of the following form: Given that the data is collected on 104 enterprises over 6 years, that is, from 2013-2018, the data is micropanel in nature. This is a dataset in which the behaviour of entities is observed over time. These entities, in the context of this study, are construction enterprises.
After constructing the Performance index using the PCA, we normalize the index to lie between 0 and 1 in order to ease interpretation. The objectives of normalizing the index are to eliminate redundant data and also ensure data dependencies make sense (Mark, 1996).
To normalise the performance index, we employ the Min-Max Normalization approach as used by Nardo et al. (2005). An index is thus constructed for Government compliance using the different dimensions of government compliance and the Principal Component Analysis (PCA).

Estimation Technique
After the pooled OLS estimation we employ the Fixed Effect (FE) and Random Effect (RE) models for robostness check. FE explores the relationship between predictor and outcome variables within an entity (construction enterprise).
The fixed effect (FE) model is specified as: It should be noted that, � , The fixed-effects model controls for all time-invariant differences between the individuals, so the estimated coefficients of the fixed-effects models cannot be biased because of omitted time-invariant characteristics.
The key insight is that if the unobserved variables do not change over time, then any changes in the dependent variable must be due to influences other than these fixed characteristics.
The random effects model is: Where; = between enterprise error, and = within enterprise error.  Notes. It is possible to have a contract winning rate of above 100 as indicated by the max value of 550 since some enterprises can be awarded contracts through direct award whereas they never tendered for.         The introduction of the year dummies helps to capture the intertemporal changes in performance. Regarding the level of education of the promoter, findings show that the educational level of the promoter is not an important variable in predicting the performance of the construction enterprise.

Effect of Government Compliance on Enterprise Performance: Regression Results
Equally, results indicate that being a male promoter, reduces the performance of the enterprises. This finding depicts some gender disparities in terms of performance. Specifically, the performance of construction enterprises with female promoters is 0.022 points higher than the performance of construction enterprises with male promoters.
Since the study is based on the panel analysis, we implemented the fixed effect and random effect for robustness check. The Fixed effect and Random effect models are presented in the appendix. These models qualitatively confirms the pooled regression results.

Conclusion and Policy Recommendations
This study aimed to investigate the effect of government compliance with public procurement policy on the performance of the construction enterprises in Cameroon. Specifically, the study seeks first, to As a policy implication of this study, the government of Cameroon should consider redressing policies on the regular and prompt payment of enterprises' bills within the timeline specified in the contracts to enable these enterprises meet up with their financial requirements. Policy makers involved in the payment of enterprises' bills should consider reinforcing the payment of interest on delayed payment of bills in order to compensate enterprises for opportunity cost of late payment.