Effective Administration Of Credit In Cooperative Enterprises (a Case Study Of Ugwuaji Fmsc Co-operative In Enugu South Local Government Area Of Enugu State)

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EFFECTIVE ADMINISTRATION OF CREDIT IN COOPERATIVE ENTERPRISES

 (A CASE STUDY OF UGWUAJI FMSC CO-OPERATIVE IN ENUGU SOUTH LOCAL GOVERNMENT AREA OF ENUGU STATE)

ABSTRACT

 

          This project is written to be useful to all who are interested in Co-operative Organizations, Management, students and the general public.

This is to reveal the process of effective Management of Credit in Co-operative society in Enugu South.  In this project, one finds out the means of which this co-operative organizations generate fund, for example, through loan contract.  More so, proper strictly and critical examination showed that co-operative could raise fund for their goal both by internal sources and external sources.

The Internal sources of fund generation include – share capital revolving and etc.  While external are loan from Agricultural and Co-operative Development Bank and other agricultural and co-operative development agencies. 

Failure militating against effective Management of Co-operative societies were revealed both economic, political, and cultural, religious factors.

Much recommendation on the way/ways of improving co-operative administration is critically highlighted, which could serve as machinery for any given effective guide towards releasing fulfilled objectives.

The methods used in collecting data for this project are through the statistical methods.

 

 

NAMES OF THE OFFICERS OF UGWUAJI FMSC LIMITED

 

1.       Ichie Peter Onukwue               -        Chairman

2.       Mrs. Patricia Nwobodo           -        Vice Chairman

3.       Christopher Ogbodo               -        Treasurer

4.       Mrs. A. U. Onukwue               -        Secretary General

5.       Mr. Grea Awinwers                 -        Assistant Secretary       

6.       Mrs. Nkechi Nwobodo            -        Financial Secretary

7.       Mr. Abel Chukwu                             -        Assistant Financial Secretary

8.       Mr. Samuel Nnaji                    -        Public Relations Officer

9.       Mr. Michael Ujam                             -        Provost

10.     Mrs. A. C. Ogbih                     -        Executive Officer

11.     Mr. Obed Nnamanu                -        Executive Officer

 

 

 

 

 

TABLE OF CONTENTS

 

Title page

Certification

Dedication

Acknowledgement

Abstract

List of names of officers of the co-operatives

Table of contents

 

CHAPTER  ONE

INTRODUCTION

1.1     Background of the Study

1.2     Statement of Problem

1.3     Objective of Study

1.4     Significance of the Study

1.5     Scope and Limitations

1.6     Definition of Terms

1.7     Research Questions

 

CHAPTER   TWO

LITERATURE REVIEW

2.1     The nature of Co-operatives

2.2     Credit Co-operatives and their problems

2.3     Sources of Co-operative Finance

2.3.1  Internal Sources

2.3.2  External Sources

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

2.9.1  Credit Co-operatives in Enugu South Local Government Area

2.9.2  Factors Militating Against Efficient Credit Administration

 

CHAPTER   THREE

RESEARCH METHODOLOGY AND RESEARCH DESIGN

3.1     Population Studied

3.2     Sample size and Sampling Techniques

3.3     Method of data Collection

3.4     Method of Data Analysis

3.5     Sources of Data

3.6     Method of Data Analysis

 

CHAPTER   FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1     Data Presentation

4.2     Data Analysis

4.3     Data Interpretation

 

CHAPTER   FIVE

SUMMARY, RECOMMENDATIONS AND CONCLUSIONS

5.1     Summary

5.2     Recommendations

5.3     Conclusions

 

          BIBLIOGRAPHY

          QUESTIONNAIRE

          APPENDIX

 

CHAPTER   ONE

 

INTRODUCTION

1.1     BACKGROUND OF STUDY

Agricultural Credit in Nigeria dates back to the 1030’s but organized Credit to farmers did not start until 1972 when the Nigerian Agricultural and Co-operative Bank (NACB) was established.

The awareness of the serious decline in Agricultural production was probably partly responsible for the establishment of the bank.  The Nigerian Agricultural and Co-operative Bank (NACB) is not the only financial institution, which provides Agricultural Credit.  Prior to the establishment of NACB, Agricultural Credit schemes were operated by some agencies such as the Ministry of Agricultures supervised Credit Scheme, Agricultural Credit Co-operations, Co-operative Thrift and Loan Schemes, Farmers’ Multi-purpose Co-operative 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 favourites 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.

from Cardoso, (1987, 18), a research carried out showed that 58% of farming related borrowings was from family and friends, 24% from private money tenders, 15% from merchants and only 8% from Institutional sources.

However, while family and friends charged little or no interest, private moneylenders charged exorbitant interest.  Organised 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 effectively administered in co-operative enterprises.  This will enable us to identify the major problems associated with credit administration and seek solution to these problems to ensure continued existence of developing co-operatives.

 

 

1.2     STATEMENT OF PROBLEM

In this sector, co-operative societies mobilize credit to their members through the saving, of members.

It has been observed that they are inefficient in mobilizing and utilization of credits.  Many problems lead to this ineffective mobilization of credit.  They are:

 

a.       Inadequate funds for loan purposes.

b.       Inefficient management of loan

c.       Faulty loan policy, which may sometimes emphasize credit worthiness of borrowers and not viability of projects.

d.       Credit operations are mart money activities without proper organisation procedure and planned systematic arrangement.

e.       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 STUDY

The situation of co-operatives is nothing to write home about, if co-operatives should continue at this rate, they will wind up, in view of the above, solutions has to be designed for these problems.

1.       Therefore, the objective of the study is to find out the various societies existing in the area under review.

2.       To find out various problems being encountered by these co-operatives which tend to hinder their effective and efficient performance as agents of credit.

3.       Finally, to make recommendations and suggest probably solutions that will enable these societies over-come the problems so as to function effectively.

 

1.4     SIGNIFICANCE OF THE STUDY

This study will assist the loan-committed managers in their decision making, as it concerns credit policy and management of credit in form of proper assessment of loan, applications, proper supervisor of credit, and evaluation of project proposals.

It will help the management to see the need to employ professional staffs and lastly, this study or findings will be of educational importance to the various universities, polytechnics and students of co-operative departments in the various schools.

 

1.5     SCOPE AND LIMITATIONS

The researcher will limit this study to effective administration of credit in co-operative enterprises in Enugu-South Local Government Area.

The researcher intends to find out the available sources of fund to co-operatives as well as the financial problems of co-operatives.  The researcher will also find out the process of credit administration and some factors militating against credit administration.

 

LIMITATIONS

In the course of accomplishing this study, the researcher was faced with the following problems:

 

 

1.       FINANCE

There was no fund to facilitate on the issue of traveling around for further research to the co-operative societies.

Besides, there was high cost of increment on fuel prices, which subjected scarcity of fuel and high rate of transportations.  This resulted a barrier in research movement.

 

2.       TIME

The researcher finds it difficult to combine the researching work with academic work such as assignments, etc. due to time constraints.

 

3.       DIFFICULTIES IN COLLECTION OF DATA

The researcher has limited access to official records and statistical data relevant to this work.

 

1.6     DEFINITION OF TERMS

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

CREDIT                       -        David W. Pearle defines credit as “Financing

directly or indirectly, the expenditure of other against future 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 trader or producer supplies goods on credit.

 

Traditional savings and credit group is one of the common variants of informal

financial intermediaries in rural areas.  (Ijere 1991).

 

MANAGEMENT                   :         Administration or management is the art

of attempting to achieve stated objectives by directing human activities in the production of goods and services.  Management utilizes the land, factory, offices, machinery and other facilities at the disposal of the enterprises in the most effective, efficient and profitable manner.  Bob-Igwe (1993:39).

 

ENTERPRISE              :         Enterprise is an economic system in which

individuals are free, singly or collectively to own capital and undertake economic activity within a framework of social legislation designed to protect the interest of individuals.  Hanson 1974: 218).

 

EFFECTIVE                :         Hornbby A. S. defines effective, in the Oxford

Advanced Learner’s Dictionary as having an effect, able to bring about the result intended powerful in effect i.e. efficient performance.

 

 

 

1.7     RESEARCH QUESTIONS

For the fact that credit is very important in every business activity, therefore, the study is focused on finding relevant solutions to the following research questions:

 

1.       What is the purpose of credit administration in co-operative societies in Enugu South Local Government Area?

 

2.       How effectively is credit administration to co-operative in Enugu South Local Government Area?

 

3.       What problems are encountered in the administration of credit in co-operative societies and what are the solutions to these problems?

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