EFFECTIVE ADMINISTRATION OF CREDITS IN CO-OPERATIVE CREDIT SOCIETIES IN ENUGU STATE

ABSTRACT

This research is an attempt to bring to light the effectiveness of credit administration in cooperative credit society in various cooperative societies based in Enugu North Local Government Area of Enugu State.

This research has five chapters with introduction. It tells about the meaning of cooperative credit society, credit administration, the statement of problem, objectives of study, significance, scope and limitations as well as definition of some cooperative and general terms.

Chapter two, took a look at related literature review of authors about credit cooperative and credit administration, its weakness, effect of credit administration and its importance as well as problems associated with it.

Chapter three, talked about method use by the researcher in gathering information i.e. The main 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 responses of respondent.

Chapter five, conclusion, pinpoints the major problem, which inhabit the full success of credit administration and same suggested solution which are necessary to convert some of these problem.

CHAPTER ONE

1.0 Introduction

1.1 Background of 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 Cooperative Bank (NACB) was established.

The awareness of the serious decline in agricultural production was probably partly responsible for the establishment of the bank.

The NACB is not the only financial institution which provides agricultural credit. Prior to the establishment of NACB, agricultural credit scheme was operated by some agencies such as the Ministry of Agriculture's Supervised Credit Scheme, Agricultural Credit Cooperative, cooperative thrift and loan scheme, farmer's multi-purpose cooperative societies. Most of these institutions were not effective sources for strictly agricultural credit. There was a lot of evidence that creditors borrowed money for agriculture but diverted it to other ventures.

Again, credit was often extended to only favorites and scarcely to genuine small —scale farmers. Besides they could not meet the collateral and equity contribution requirement, a situation that compelled a significant proportion of the farmers to seek for other sources of credit.

According to Dachaba quoted from Cardoso, (1987) a survey carried out should that 58% of farming related borrowing was from family and friends, 24% from private money lenders, 15% from merchants and only 3% from financial institutional sources. However, while family and friends charged little or no interest. Organized credit facilities for Nigeria's rural farming population would reduce the dependence on sources other than the formal financial houses.

It is against this background that the researcher is to investigate how credit will be effectively administered in cooperative enterprises. This will enable us to identify the major problem associated with credit administration and seek for solution to these problems to ensure continued existence of the cooperative.

1.2 Statement of Problem

Cooperative society mobilizes credit to their members through the savings of members. It has been observed that they are inefficient in mobilizing and utilization of credit. Many problem lead to this ineffective mobilization of credit. They are as follows:

Inadequate fund for loan purpose
Inefficient management of loan
Faulty loan policy which may sometimes emphasize on credit worthiness of borrowers and not viability of project.
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 cooperatives.

1.3 Objective of Study

The situation of cooperative is nothing to write home about, if cooperative 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 find out various problems being encountered by these cooperative which led to hindrance of their effective and efficient performance as agents of credit.
Finally, to make recommendation and suggest probable solution that will enable these societies overcome these problems.

1.4 Research Questions

What are the problems that are facing credit cooperatives societies in Enugu state.
How have these problem affected the Enugu state economy.
What are the possible solutions.
What are the strategic to be used to ensure the continuous exist of credit cooperative societies in Enugu state.

1.5 Statement of Hypothesis

H0: Effective Credit administration is not necessary in cooperative societies in Enugu North L.G.A.
HA: Effective Credit administration is necessary in cooperative societies in Enugu North L.G.A.
HO: Poor Funding do not constitute a major constraint to effective administration of credit in cooperative societies.
HA: Poor Funding constitute a major constraint to effective administration of credit in cooperative societies.
H0: Effective administrations of credit do not create positive impact on cooperative organization.
HA: Effective administration of credit create positive impact on cooperative organization.

1.6 Significance of the Study

This study will assist the loan committee managers in their decision making as a concern credit policy and management to 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, polytechnic and students of cooperative department in the various schools.

1.7 Scope of the Study

The scope of the study is restricted to selected cooperative societies in Enugu North cooperative.

1.8 Limitation of the Study

In the course of accomplishing this study, the researcher were faced with the following problems.

Finance:

Due to financial constraint as a result of the present economic conditions of the students in the country, the researcher was able to select those registered cooperative societies, simple random sampling is uses and types of societies used in this study included farmers multipurpose cooperatives society, consumer cooperatives and others; which were decentralized in Enugu state; these and more constitute a large sum of money both for transport and for stationeries.

Time:

The time given for the study was rather too short coupled with short semester period and the researcher being a full time or regular student had to read and take lectures in other courses during the period of this study. Moreover, a research of this type requires total concentration and effort to enable the researcher come up with a comprehensive result.

Lack of Data:

Due to finance and time constraints, the researcher limited his literature review to what was taught in the class and what was obtainable is some journals and textbooks, likewise seminar papers concerning cooperatives in Enugu State and other parts of the country.

Transportation:

The inadequate transport system in Enugu state as a result of that, the transportation fare is high, which made it extremely difficult for the researcher to visit all the cooperative societies in Enugu State.

1.7 Definition of Terms

For clarity of purpose, elimination of confusion of any kind and the proper understanding of this study. The following definitions of terms are necessary.

Administration:

Administration or management is the art of attempting to achieve staked objectives by directing human activities in the production of goods and services.

Enterprises:

This is an economic system in which individual are free, single or collectively, to own capital and undertake economic activity within a framework of social legislation designed to protect the interest of individual (Hanson 1974:218).

Credit:

Credit is financing directly or indirectly, the expenditure of other against future, repayment, such landing or financing is direct when say, a bank extends an overdraft facility to a customer who then uses it. It is indirect when a trader or producer supplies goods on credit (David, W. Pearil).

…

CHAPTER TWO

2.0 Literature Review

2.1 Introduction

The review of relevant literature is the main topic of this chapter. A literature review covers theoretical and methodological contributions to a certain issue in addition to the state of knowledge at the time of writing. It provides information about the state of the art in relation to the subject you are writing about. It examines the body of work on the chosen subject. The literature evaluation in this study comprises the …

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Preliminary Pages,
Chapter 1-5,
References and Appendix.

TABLE OF CONTENTS
PRELIMINARY PAGES

Title page
Approval page
Dedication
Acknowledgement
Table of Contents
Abstract

CHAPTER ONE

1.0 Introduction

1.1 Background of study

1.2 Statement of problem

1.3 Objective of study

1.4 Research questions

1.5 Research Hypothesis

1.6 Significance of the study

1.7 Scope of the study

1.8 Limitations of the study

1.9 Definition of terms

CHAPTER TWO

2.0 Literature Review

2.1 The nature of cooperatives

2.2 Credit Cooperative and their problems

2.3 Source of Cooperative Finance

2.3.1 Internal source

2.3.2 External Source

2.4 The process of credit administration

2.5 The loan committee

2.6 Assessment of loan application

2.7 Terms of credit

2.8 Supervision of Credit

2.9 Loan recovery

2.10 Credit cooperative in Enugu North LGA

2.11 Factors militating against efficient credit administration

CHAPTER THREE

3.0 Research Methodology and Research Design

3.1 Area of Study

3.2 Population Studied

3.3 Sample size

3.4 Method of data collection

3.4 Method of data analysis

3.5 Source of data

3.6 Method of data analysis

CHAPTER FOUR

4.0 Data Presentation, Analysis and Interpretation

4.1 Introduction

4.2 Data Presentation

4.3 Data Analysis

4.4 Test of Hypothesis

CHAPTER FIVE

5.0 Summary, Recommendation and Conclusion

5.1 Summary

5.2 Conclusion

5.3 Recommendation

BIBLIOGRAPHY

APPENDIX

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