Effect Of Credit Administration And Control On The Development Of Cooperative Societies In Nigeria
Effect Of Credit Administration And Control On The Development Of Cooperative Societies In Nigeria
Chapter One
Introduction
1.1 Background of the Study
This research work focuses on the effects of credit administration and control on the development of cooperative society. Credit administration and control functions as a good instrument that brings about rapid development in the cooperative sector. It can be regarded as the essence of financial instruction in an economy, therefore the formulation and implementation of sound and solid credit polices and control are among the most crucial responsibilities of the management of an organization.
Among the most essential functions of credit cooperative is to provide loans to members and ensure the repayment of the loans given to them, it is therefore important to develop policies that will ensure the security of loans extended to members.
Due to lack of credit administration and control, credit facilities made available is spread among members of the cooperative societies and considered more of gift than loans to be paid within a specific period of time and therefore cooperatives find themselves cripple economically.
The implementation of credit administration and control is a necessary condition of the society so as to achieve its objectives, to serve the members in an efficient manner and more importantly ensure safety of funds for continuity and development of the society.
According to Iyowu (1985) an articulate credit management policy not only seeks to balance profit and liquidity. It expects to determine whom credit must be granted to how much to be granted, for how long and to ensure successful recovery. The achievement of an efficient credit administration and control entails an elements of a subjective management.
This research work will look at the role of credit administration and control, the disbursement of loans and its recovery credit administration and control and how it can be utilized for the development of the cooperative societies.
1.2 Statement of The Problem
The primary aim in a cooperative society is to improve the economic and social position of the members by extending credit facilities to them. It can either be short term or long term loans. It is important that credit usage be productive which will enable the borrower to earn enough to repay the principal and the interest and also realize a surplus from the undertaking.
Cooperative societies are not making significant impact in the growth and development despite some level of credit administration and control, problems are faced when there are no checks and balances and therefore posses danger to it’s continued existence and as such will not have achieved the objectives for which it was initially established.
Due to this shortcoming and more, like lack of experts to handle the finance of the society, mismanagement of funds by officials, poor record keeping which makes most members not to get their contributions as at when due, which has led to loss of confidence, withdrawal of the members and consequently loss of contribution to the societies.
Furthermore, in most cases, the members savings are embezzled or misappropriated. As a result societies do not live long due to dishonesty in handling funds.
Providing members with easy access to credit facilities being among the aims and objectives of most cooperative societies cannot be realized if such credit given to the members are not efficiently and effectively administered to ensure productive utilization and ability of the members to repay loans extended to them. This can guarantee continued existence of the cooperative society.
It is against this background that this study will venture into finding out the effects of credit administration and control in the study areas.
1.3 Objectives of the Study
The following are the objectives of this study
- To find out the role of credit administration and control in improving cooperative societies
- To determine the extent to which cooperative societies recover loan disbursement to members.
- To find out problems associated with credit administration and control.
- To identify problems and proffer possible solutions.
1.4 Significance of the Study
This study is designed to help cooperative societies have a better understanding of the role credit administration and control plays in the development of cooperative societies.
The research will also contribute in enhancing appropriate measures from cooperative societies which can improve the loan policies and securities and in extension encourage credit cooperation.
To government, it may also contribute in enhancing appropriate measure from the government to improve and encourage prospects of cooperative societies in the rural and urban areas as it will instil hope in the minds of the members and potential members.
Scholars, researchers and incoming student will also benefits from this research work as it will serve as reference to them.
1.5 Research Questions
The following research questions will guide this study.
- What role does credit administration and control play in improving cooperative societies?
- To what extent do cooperative societies recover loans disbursement to members?
- What are the problem of cooperative societies in connection with credit administration and control?
- What are the possible solutions to ensure the success of credit administration and control in the development of cooperative societies?
1.6 Scope of the Study
The scope of the research is aimed at examining the effects of credit administration and control on the development of cooperative societies with reference to Arewa multipurpose cooperative society and National Board for Technical Education investment and credit cooperative society Kaduna.
1.7 Definition Of Terms
All the terms below will reflect the operational meaning as used in this project study.
Cooperative Society:
According to ICA is defined as an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspiration through a jointly owned and democratically controlled enterprise.
Cooperation:
The association of two or more people who voluntarily come together in order to achieve target objectives.
Credit:
Loans of money or equipment extended to members to be used for productive purposes and with the agreement of repaying same amount with the accured interest at the future date.
Control:
The process of ensuring that actual activities conform to planning activities.
Policy:
A standing plan that establishes general guidelines for decision making.
Credit administration:
Activities that are done in order to plan, organize, extend and recover loan extended to members of the cooperative societies
Chapter Five
Summary, Conclusion and Recommendations
5.1 Introduction
This chapter presents the summary of the research work, conclusions drawn from the study and recommendations that could lead to effective implementation of credit administration and control towards the development of cooperative societies.
5.2 Summary
This study examining the effects of credit administration and control on the development of cooperative societies with reference to Arewa multipurpose cooperative society and National Board for technical education investment and credit cooperative Kaduna.
The research questions that guided the study were: what is the role of credit administration and control on the development of cooperative societies? To what extent do cooperative societies recover loans disbursement to members? What are the problems of cooperative societies in connection with credit administration and control? What are the possible solutions to ensure the success of credit administration and control in the development of cooperative societies.
A survey method was used for this study. the population consisted of the members of Arewa multipurpose cooperative society and National Board for technical Education investment and credit cooperative society. Out of a total population 278 members, a sample size of 160 was involved for the study. At the time of analysis only 125 questionnaires were available for analysis: A questionnaire developed by the researcher based on Likert 5 point scale was used for the study, frequency and percentage scores were used to analysis the data based on the research questions. Result show that credit administration and control if well utilized and managed in a cooperative society can bring about rapid development and expansion. That policies are put in to ensure the recovery of loans disbursement to members, lack of auditing, inspection and suspension of the cooperative society can bring about the down fall of the society. Also some of the problems faced with credit administration and control include, mismanagement of funds, lack of funds to enable the society achieve it objectives, members not fully engaged in the activities of the society and the books of account and financial statements are not open to members and the public. Finally some possible solutions profered to ensure the success of credit administration and control include loans extended to members to be closely suspended, external auditors should be engaged to audit books of accents and financial statement, workshops should be organized for members to enhance cooperative education and finally effective management of the society’s funds. It was based on the this that recommendation were made.
5.3 Conclusion
Based on the research findings, it is concluded that credit administration and control play a vital role in the development of cooperative societies. Through it’s implementation. It seeks to serve members in an efficient manner and more importantly to ensure safety of funds of the society for continuity and development. There are policies to ensure the recovery of loan disbursement to members which are observed by the credit committee and supervisory committee who then report to the management committee of the society.
Some of the problems which hinder the effective credit administration and control include mismanagement of funds, lack of funds, members unwillingly to participate in the activities of the society and secrecy regarding books of accounts and financial statement which impact negatively on the development of the society and also control measures such as inspection and supervision by cooperative officers, auditing of the accounts of the society are not adhered to strictly and finally there are possible solutions to ensure effective and efficient administration of credit in the society and control measures to be put in place by the credit committee and supervisory committee for the success and development of the cooperative satieties.
5.4 Recommendations
The following recommendations are made based on research findings so as to facilitate credit administration and control in societies.
- Polices which are development to guide society should not just be written on paper but should be adhered to strictly and made into practical and concrete here and now decisions established by management and aimed at achieving the purpose of the society.
- The government through the federal Director and state Directors of cooperatives must ensure that only cooperative officials with adequate knowledge and experience of cooperatives should be appointed to inspect and supervise cooperative societies, so that the officials of the society are able to do the job well and serve as caution to management from time to time.
- Societies that are registered solely to get loans can no longer operate when they can no longer obtain the loan. As such only viable societies should be allowed to be registered and benefit from government loan and grants and such societies should engage in profitable ventures and investments to enable them secure funds to carryout the projects and fully achieve their desired objectives.
- Cooperative education is another factor that cannot be overemphasized. Members at all levels of the cooperative society should have or be given cooperative education as requirement for joining the cooperative society so that they have a better understanding of what they are into and be actively involved. This can be achieved through workshop seminars, interactive session with cooperative experts etc.
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