EFFECTIVE ADMINISTRATION OF CREDITS IN CO-OPERATIVE CREDIT SOCIETIES IN ENUGU STATE. (A CASE STUDY OF SELECTED CREDIT CO-OPERATIVE SOCIETIES IN ENUGU NORTH L.G.A)

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. 

TABLE OF CONTENTS

Page(s)

Title page                                                                    i

Certification                                                                 ii

Dedication                                                                   iii

Acknowledgement                                                        iv

Abstract                                                                      v

Table of contents                                                          vi

CHAPTER ONE

1.0  Introduction                                                          1

1.1  Background of study                                             1

1. Statement of problem                                            3
   1. Objective of study                                                 4
   1. Research questions                                                5

1.5  Research Hypothesis                                              6    

1.6  Significance of the study                                        6

1.7  Scope of the study                                                7

1.8  Limitations of the study                                          7

1.9  Definition of terms                                                 9

CHAPTER TWO

2.0  Literature Review                                                  10

2.1  The nature of cooperatives                                     10

2.2  Credit Cooperative and their problems                    14

2.3  Source of Cooperative Finance                                17

2.3.1 Internal source                                                    19

2.3.2 External Source                                                   29

2.4  The process of credit administration                        35

2.5  The loan committee                                               39

2.6  Assessment of loan application                               40

2.7  Terms of credit                                                      43

2.8  Supervision of Credit                                             45

2.9  Loan recovery                                                       49

2.10 Credit cooperative in Enugu North LGA                   51

2.11 Factors militating against efficient credit

administration                                                       52

CHAPTER THREE 

3.0  Research Methodology and Research Design            55

3.1  Area of Study                                                       56  

• Population Studied                                                56
  • Sample size                                                          57  

3.4  Method of data collection                                       59

3.4  Method of data analysis                                                59

3.5  Source of data                                                      59

3.6  Method of data analysis                                                60

CHAPTER FOUR

4.0  Data Presentation, Analysis and Interpretation        63

4.1  Introduction                                                          63

4.2  Data Presentation                                                  63

4.3  Data Analysis                                                        63

4.4  Test of Hypothesis                                                 75  

CHAPTER FIVE

5.0  Summary, Recommendation and Conclusion            79

5.1  Summary                                                             79

5.2  Conclusion                                                            81  

5.3 Recommendation                                                    83

Bibliography                                                         85

Appendix                                                                     87

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.