Cooperative And Agricultural Financing (A Case Study Of Abia State)

Project and Seminar Material for Cooperative Economics and Management (CEM)

Cooperative And Agricultural Financing (A Case Study Of Abia State)


Abstract


This study is an analysis of cooperative and agricultural financing in Ikwuano local government area of Abia State. The objectives were to ascertain the capital reserve of cooperative societies and to determine the sources of finance for cooperative society in the area. To determine the extent to which cooperative societies have improved farmers access to financial capital in the study area.

Three communities were randomly selected and five (5) cooperative society were equally selected and data were solicited with the use of structured questionnaires. Also data were collected on such variables as socio-economic characteristics and management practices. Data were analysed using simple descriptive statistics such as chi-square and survey method were adopted, all geared towards gathering information as regards to how cooperative and agricultural financing are being done in those areas.

Also, in every organization be it profit oriented or non- profit oriented organization, finance is the life wire of such organization. Likewise, in every sector of the economy like agriculture and cooperative society as for the purpose of this research work, finance is very essential. In the course of this research work, we will identify and highlight various ways and methods in which this society is being financed.

The system of going for long and short term borrowing has gone a long way in helping the cooperative and agricultural movement in that area, often times, the government through the ministry of Agriculture and ministry of cooperative in collaboration with chambers of commerce and industry do give their maximum assistance for the development and growth of the society.

In the same vain, lack of adequate financial assistance can lead to big problems and constraints and as a matter of which poor service to its society and the public at large.


Table Of Contents


Preliminary Page(s)

  • Cover page
  • Title page
  • Certification
  • Dedication
  • Acknowledgements
  • Abstract
  • Table of contents

Chapter One

1.0 Introduction

  • 1.1 General Overview of the study
  • 1.2 Statement of the problem
  • 1.3 Objective of the study
  • 1.4 Scope of the study
  • 1.5 Test of Hypothesis /Questions
  • 1.6 Significance of the study
  • 1.7 Limitations of the study
  • 1.8 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 History of cooperatives
  • 2.2 Formation of Cooperatives
  • 2.3 Goals of cooperatives
  • 2.4 Types of cooperatives
  • 2.5 Importance of cooperative financing
  • 2.6 Benefits of cooperative and agricultural financing
  • 2.7 Sources of funds in cooperatives

Chapter Three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Sampling design
  • 3.4 Method of data collection
  • 3.5 Procedure for processing data

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Presentation of data
  • 4.2 Analysis of data
  • 4.3 Test of hypothesis

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendations
  • Bibliography
  • Appendix

Chapter One


1.0 Introduction

1.1 General Overview Of The Study

Agriculture is the oldest industry known to mankind and it is the source of our food and raw material for many industry (Lot, 1985), infact, it can be justifiably referred to as the worlds primary industry (Lot, 1985). At more than 25 years after the country’s political independence, it is a paradox that Nigeria agriculture still manifests the typical symptoms of a peasant agriculture, the farms are small averaging less than five (5) hectares of land and accounting for over 90 percent of the total production, the farming population is itself rapidly going down, with attendant deterioration in the vigour and stability of the human labour, the primary production suffers from irreversible rural and urban migration which contributed to the depopulation of the country side thereby making labour more scare and thus more expensive, the livestock industry is dominated by nomadic herdsmen while the fishing sectors is essentially artisans, the forestry resources which are the bounties of nature suffer from massive exploitations without regeneration (Ijere et al., 1988).

The result of that is low productivity and slow rate of growth which is between (1980-1985) has been put at one percent per annum. For an economy which is heavily skewed inferior of primary production, this growth rate will hardly be seen as impressive. The cause of this is stagnation in the agricultural sectors which is so numerous and varied as they are complex. It has been argued that the oil “syndrome” has undermined the performance of the agricultural sector by accelerating the shift of labour, capital managerial talent to other industries (Ijere et al., 1998). Also the past urban basis for public policies enhanced the productivity of investment in non-agricultural commodities to the detriment of investment in the agricultural sector (Ijere et al., 1998).


1.2 Statement Of The Problem

The problem associated to cooperative and agricultural financing has caused a lot of harm than good in the industry and commercial sector. The major ones are the inadequate funds to execute a project in the rural areas. As a matter a fact farmers who live virtually below the subsistence level and have no real connections with the people that matter in the community or society have no tangible assets to bank or government grants. Presently the locations of commercial banks are almost confirmed to the urban areas. Being profit oriented, those commercial banks tend to favour their concentration on their branches alone which is the urban areas where business is booming (Ijere, 1985).
A pertinent question to ask then is at a micro level, are the rural areas’ industrialists and farmers doomed to external acute shortage of funds.


1.3 Objectives Of The Study

The overall objective of this study is to analyse the role of a cooperative and agricultural financing in Abia State. The specific objectives include:

  1. To identify the socio-economic characteristics of cooperatives in the studies.
  2. To determine the sources of financing of cooperative societies in the study area.
  3. To identify factors that influence the capital reserves of cooperative societies.
  4. To determine the extent to which cooperative societies have improved their farmer’s access to financial capital.
  5. To make policy recommendations based on the findings of the study.

1.4 Scope Of The Study

Nigerian agriculture is a developing agriculture characterized by low level of private investment and changing technology. Agricultural development is a process involving the adoption by farmers of new and better agricultural practices leading to increased productivity and overall welfare of the economy.

Credit mobilization in Nigeria, as in many developing countries is predicated on many interrelated factors, chief of which are the economic situation of the country, the organizational structure of public and private credit institutions and availability of investment opportunities (Ijere, 1985).

The study will serve as an eye opener to the farmers about the important roles of cooperative societies and to encourage them to participate in cooperative activities.


1.5 Test Of Hypothesis / Questions

The followings are hypothesis to be tested:

  1. Ho: Cooperative and agricultural financing have not contributed to the growth of the economy.
    Hi: Cooperative and agricultural financing have contributed to the growth of the economy.
  2. Ho: the amount of fund available to cooperative is negatively related to their membership strength.
    Hi: the amount of fund available to cooperative is positively related to their membership strength.

1.6 Significance Of The Study

Nigerian agriculture is a developing agriculture characterized by low level of private investment and changing technology. Agricultural development is a process involving the adoption by farmers of new and better agricultural practices leading to the increase in productivity and overall welfare of the economy (Agu, 1998).

Credit mobilization in Nigeria as in many developing countries is predicated on many interrelated factors chief of which are the economic situation of the country the organizational structure of public and private credit institutions and availability of investment opportunities (Ijere, 1985). The study will serve as an eye opener to the farmers about the important roles of cooperative societies and thus encourage them to participate in cooperative affairs.


1.7 Limitations Of The Study

This has given rise to a strong industry and commercial sector which is in highly hooked to the whimsy caprices of international economic manipulation, and offering such high wages which can not be offered in any farm enterprise (Ijere et al 1998). Added to this is the high-income expectation in the urban areas which has greatly enhanced the rural and urban migration especially among the young and able bodied, leaving only the aged men and women to adone the rural village. A further cause of stagnation in the cooperative and agriculture is the low level of mechanization of farming practices with the prevalent use of hoes and cutlasses and the limited use of facilitating inputs (fertilizers) as well as low level of post harvest technology (Ijere and Ajakaiye et al 1998).

These together with a failure to ensure stable remuneration prices and marketing channels result in chronic low income and small holding operated largely for family sustenance with very little market participation (Ajakaiye 1998). Therefore, caught up in this various circle of low productivity, small holdings and low income, farmers have very limited capacity for capital accumulation on which the development of their low resources based on the need to create a credit system capable of financing of cooperative and agricultural becomes germane to a discussion on agricultural development programme.


1.8 Definitions Of The Terms

At this point an attempt will be made to give the definitions of cooperative and agricultural financing.
Cooperative according to international labour organization they defined cooperative as an association of people who have voluntarily joined together their resources to achieve a common end through the formation of a democratically controlled business organization, making equitable contributions to the capital required and accepting a fair share of the risk and benefit of the undertaking in which the members actively participated. (ILO, 1966).

Also, according to International Cooperative Alliance 1995, they defined cooperative as an autonomous association of persons united voluntarily to meet their common economic, social, cultural needs and aspirations through a jointly owned and democratically controlled enterprised.

Agriculture can be define as that branch of rural economy that is engaged in the production of farm products through the use of, water, land, forest and other related farm resources.

Finance can be defined as the management of the flows of money through an organization.

Also finance can be defined as a way by which an organization raises money for the day-to-day running of a business.


Chapter Five


5.0 Summary, Conclusion And Recommendations.

5.1 Introduction

This is usually the final things in a research work. It should include the summary of the finding. The findings must be complete and presented in a way that they could lead the reader naturally to conclusion. The recommendation generally provide an opportunity for the researcher to discuss possible remedies for the problem which were raised in his investigations.


5.2 Summary Of Findings

This study investigated the cooperative and agricultural financing in Ikwuano Local Government Area of Abia State. Structured questionnaire were used as a major research instrument.

A list of cooperative societies in the local government area were obtained from the cooperative office in the local government area. The list formed the societies sampling size/ frame.

From the list random sample of 15 cooperative societies were taken. Four respondents interviewed from each society bring the sapling size of respondent o 60. data were analyzed using chi- square.

The major findings were that about 100 cooperative societies and agriculture have been enjoying help from government. The study also reveal that mot of the cooperative societies has access to financial capital, through their cooperatives.

Analysis of one survey had shown that all the cooperatives societies raise their capital internally through entrance fees, dues and levies while about 100 % also raise their capital through governmental grant /loans.

Result revealed hat 10% of the cooperative societies were leally registered. Majority of the cooperative societies falls within the age range of 13-19 years. Suggesting that cooperative society in Ikwuano local government area was in active stage.

The study also revealed that most the cooperative societies had a considerably high membership size through this more funds are been generated.


5.3 Conclusion

The study of cooperative and agricultural financing is gaining their financial help their financial help through entrance fees, dues, levies and more also through governmental help/ granted and loans.

The young cooperative societies should realize that working together will go along way to sustain them because it is said that together is power. So also, the young cooperative societies that intend to come up should cooperate with one another in order to attract governmental help to their society.

Finally, cooperative societies and agriculture need financing in order to acquire necessary farming implement that will befit the economy and humanity at large.


5.4 Recommendations

By making recommendations, it is strongly hoped that recommendation as contained in this chapter will be seriously looked into by officers in charge.

In the finding it was observed that cooperative societies raised funds through entrance fees contributed by the members as and dues and levies paid by members as well. They should harmonize them in a proper way by making their society to grow and by establishing tangible things in order to attract government to themselves.


Cooperative And Agricultural Financing (A Case Study Of Abia State)


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