Effective Administration Of Credit In Co-Operative Credit Enterprise (A Case Study Of Selected CoOperative Societies In Enugu North Lga)
Thus research is an attempt to bring to light the effectiveness of credit administration in co-operative credit societies in various co-operative societies based in Enugu South Local Government Area of Enugu State.
This research has five chapters with introduction. It tells abut the meaning of co-operative credit society, credit administration, the statement of problem, objectives of study, significance, scope and limitation as well as definition of some co-operative and general terms.
Chapter two, took a look at relevant literature review of authors about credit cooperative and credit administration, its weakness, effect of credit administration and its importance and well as problems associated with it;
Chapter three, talked about method use by the researcher in gathering information ie. the research questionnaires was carried out and investigation method. Chapter four, was about the presentation of data, the interpretation and analysis of the data obtained. It also talked about response of respondence.
Chapter five, conclusion, pinpoint, the major problems which inhabit the full success of credit administration and same suggestion solution which are necessary to convert some of these problems.
1.0 INTRODUCTION 1
1.1 Background of the Study 1
1.2 Statement of Problem 5
1.3 Objective of Study 6
1.4 Research Question 7
1.5 Significance of the Study 8
1.6 Scope and Limitations 9
1.7 Definition of Terms 10
2.0 LITERATURE REVIEW 14
2.1 The Nature of Co-operatives 14
2.2 Credit Co-operation and their Problem 20
2.3 Source of Co-operative Finance 24
2.3.1 Internal Source 26
2.3.2 External Source 30
2.4 The Process of Credit Administration 32
2.5 The Loan Committee 35
2.6 Assessment of Loan Application 37
2.7 Supervision of Credit 40
2.8 Loan Recovery 42
2.9 Credit Co-operative in Enugu South L.G.A. 44
2.9.1 Factors Militating Against Efficient
Credit Administration 44
3.0 RESEARCH METHODOLOGY AND
RESEARCH DESIGN 49
3.1 Area of Study 50
3.2 Population Studied 50
3.3 Sample Size and Sampling Technique 51
3.4 Method of Data Collection 52
3.5 Source of Data 52
3.6 Method of Data Analysis 53
4.0 DATA PRESENTATION, ANALYSIS
AND INTERPRETATION 55
4.1 Data Presentation 55
4.2 Data Analysis 60
4.3 Data interpretation 66
5.0 SUMMARY, RECOMMENDATION
AND CONCLUSION 69
5.1 Summary 69
5.2 Recommendation 72
5.3 Conclusion 75
BACKGROUND OF THE STUDY
Agricultural credit in Nigeria dates back to the 1930s but organized credit to farmers did not start until 1972 when the Nigeria Agricultural and co-operative Bank (NACB) was established.
The awareness of the serious decline in agricultural production was probable partly responsible for the establishment of the bank.
The NACB is not the only Financial Institute which provides agriculture credit. Prior to the establishment of NACB agricultural credit scheme, agricultural credit agencies such as the ministry of agriculture supervised, credit scheme, agricultural credit co-operation, co-operative thrift and loan schemes, farmers multi-purpose co-operative societies. Most of those institution were not effective sources for strictly agricultural credit. There was a lot of evidence that credit borrowed money for agricultural but diverted it to other ventures.
Again, credit was often extended to only favouries scarcely to genuine small scale farmers. Besides they could not meet the collateral all equity contribution requirement, a situation that compiled a significant proportion of the farmers to seek for other source of credit.
According to (Idachaba quoted from Cardoso (1987) a survey carried out showed that 58% of farming related borrowing was from farming and friend, 24% from private money leaders, 15% from r and only 3% from institutional sources.
However, while family and friends charged little or no interest. Organized credit facilities for Nigeria rural farming population. would reduce the dependence on sources other than the formal financial houses.
It is against this background that the researchers is to investigate how credit will be effectively administered in co-operative enterprise. This will enable us to identify the major problem associated with credit administration and seek solution to these problem to ensure continued existence of the co-operative.
Co-operative marketing division established in Bureau of Agricultural Economics, Department of Agriculture, by the Co-operative Marketing Act ($$ stat 802), July 2, 1926, to gather statistic, conduct studies, and provides advice on Transferred to the Independent Federal Farm Board, effective July 1, 1930, by the Independent Offices Appropriation Act (46 stat. 235), April 19, 1930.
Federal Farm Board superseded by the Independent Farm Credit administration, established, effective may 27, 1933, by EO 6084, March 27, 1933. Functions of Co-operative Marketing Division, FCA, 1933, Research, Service and educational section established in co-operative division by 1935, Redesignated Research, service and education subdivision, CD, 1937, made separate co-operative research and service division, 1938. FCA transferred to department of agriculture by Reorganization plan No. 1 of 1939, effective July 1, 1939.
Function of Co-operative Research and service division, FCA transferred to secretary of agriculture by action of the farm credit act of 1953 (67 stat. 390), August 6, 1953, which restored FCA to independent status. Functions vested in FCS, established in the Department of Agriculture by Secretary’s memorandum 1320, supplant 4, November 2, 1953.
1.2 STATEMENT OF PROBLEM
Co-operative society mobilized credit to their members through the savings of members.
It has been observed that they are ineffective mobilization of credit. They are:
Inadequate fund for loan purpose
Inefficient management of loan
Faculty loan policy which may sometimes emphasis credit worthiness of borrowers and not liability of projects
Credit operations are mere money activities without proper organization procedure and planed systematic arrangement.
Absence of regular monitoring and supervision of loans.
The above problems need to be solved for effective performance of co-operatives.
1.3 OBJECTIVE OF THE STUDY
The situation of co-operative is nothing to write home about, if co-operative should continue at this rate, they will wind up.
In view of the above, solution have to be designed for these problems:
Therefore, the objective of the study is to find out the various societies existing in the area under review.
To fund out various problems being encountered by these co-operative which lend to hinder their effective and efficient performance as agents of credit.
Finally to make recommendation and suggest probable solution that will enable these societies overcome these problem.
1.4 RESEARCH QUESTION
For the fact that credit is important in every business activity. Therefore, the study is focused on finding relevant solution to following research question.
What is the purpose of credit administration in co-operative societies in Enugu South LGA?
How effective is credit administration co-operative in Enugu South LGA?
What problem are encountered in the administration of credit co-operative societies
What are possible solutions to the co-operative societies problem?
1.5 SIGNIFICANCE OF THE STUDY
This study will assist the loan committed managers in their decision making as a concern credit policy and management of credit in form of proper assessment of loan application, proper supervision of credit and evaluation of project proposals. It will help the management to see the need to employ professional staff and lastly, this study or findings will be of educational importance to the various universities department in the various school.
1.6 SCOPE AND LIMITATION
The research will limit this study to effective administration of credit in co-operative enterprise in Enugu South Local Government Area.
The research intends to find out the available source of find to co-operative. The researcher will also find out the process of credit administration and some factors militating against credit administration.
In the course of accomplishing this study the researcher faced with the following problems.
Lack of data
1.7 DEFINITION OF TERMS
For clarity of purpose elimination of confusion of any kind and the proper understanding of this study. The following definition of terms are necessary.
Administration: Administration or management is the art of attempting to achieve stated objective by directing human activities in the production of goods and services.
Interest of individual (Hanson 1974:218)
Credit: Credit is financing directly or indirectly repayment, such lending or financing is direct when say, a bank extends an overdraft facility to a customer who then uses it. It is indirect when a trade (David W. Pearil).
Bob – Igwe C. C. (2005) Principle and Economics of Co-operative Enterprise Bob Bihon Bublishers Enugu.
Obodochi O. B. (2002) Cobwobs of Co-operative. Mary Dom Publishing Coy Enugu.
Onuoha Enyeribe (Dr) 2004) How to Organize a Viable Co-operative Society (ten step) John best publisher Enugu.
Amahalu A. C. (2005) Understanding Co-operative Reading in Field Administration Marketing Development Principles and Practices Enugu. Donel Printing and Publishing Co.
Berko S. Y. (2001) Self Organization Co-operatives and Rural Development Enugu Computer Edge Publisher.
Mbanefor C. A. C. (2003) Co-operative Operation and Administration Onitsha University Publishing Company.
Okonkwo J. N. P. (2001) Introduction to Co-operative Enugu Dulace Press LTD.