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CHAPTER ONE
INTRODUCTION
BACKGROUND OF STUDY
Agricultural credit in Nigeria dates back to the 1930s. But organized credit to farmers, but it did not start until 1772 when Nigerian agriculture and co-operative bank (N.A.C.B) was established. The awareness of the serous decline in agricultural production was partly responsible for the establishment of the bank. The N.A.C.B was not the only financial institution, which provides agricultural credit.
Prior to establishment of N.A.C.B, agricultural credit scheme was operated by some agencies such as the ministry of agriculture supervised scheme, agricultural credit co-operation, co-operative thrift and loam schemes, farmers multi-purpose co-operative societies. Most of the institution was not effective sources for strictly agricultural credit. There were a lot of evidences that creditors borrowed for agriculture but diverted it for another ventures. Again credits were only 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 source credits.
According to Ichadaba quoted from Cardoso, (1987.18) a survey carried out showed that 58% of farming related borrowing was from family and fiends, 24% from private money lenders, 15% from merchant, and only 3% is from institution for agriculture. However, while family and friends charges little or no interest, privet lenders charges exorbitant interest. Organized credit facility for Nigerian rural farming population will reduce the dependence on source other than the formal financial houses. It is against this background that the researcher is to investigate how credit will be effectively administered in co-operative enterprises. This will enable us the identify the major problems associated with credit administration and seek solution to those problem to ensure continued existence of the co-operatives.
STATEMENT OF PROBLEM
Co-operative society mobilizes credit to their members through the saving of the members. It has been observe that they are inefficient in mobilizing and utilization of credit. Many problem lead to their ineffective mobilization of credit, they are;
Inadequate fund for bank purpose
Inefficient management of loan
Faulty loan policy, which may sometime emphasize credit worthiness of borrowers and not the viability of project.
Credit co-operation are mere money activities without proper organization procedure and planned systematic arrangement.
Absence of regular maintaining and supervision of loan. The above problem needs to be solved for the effective performance of co-operatives
OBJECTIVE OF THE STUDY
The situation of co-operatives is noting to write home about. If the co-operative should continue at this rate, they will wind up. In view of the above, solution have to be design for this 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 this co-operative which stand to hinder their effective and efficient performance as agent of credit. Finally to make recommendation and suggest probable solution that will enable this society overcome the problem so as to function very well.
SIGNIFICANCE OF THE STUDY
This study will assist the loan committee managers in there decision making as it concern credit policy and management of 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 student of co-operative development in the various schools.
SCOPE AND LIMITATION
The researcher will limit this study to effective administration of credit in co-operative enterprises in Enugu L.G.A. the researcher intends to find out the available sources of fund to co-operative as well as the financial problem of co-operatives. The researcher will also find out the problem of credit administration and some factors militating against credit administration.
LIMITATIONS
In the course of accomplishing this study, the resea4rher were faced with the following problems.
Finance: there was no fund to travel from one co-operative society to another, there was fuel scarcity and transport was very high, this will hinder the researchers movement.
Time: the researcher will find it difficult to combine the researching work with the academic assignment due to time constraint.
Lack of data: the researcher has limited Asses to official records and statistical records relevant to this study.
DEFINITION OF TERMS
For clarity o purpose, elimination of confusion of any kind and proper understanding of this study, the following definition of term is necessary.
1. 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 a bank extends an overdraft facility to costumers who use it. It is indirect when a trader or producer supplies goods on credit.
2. Management: administration or management is the act of attempting to archive a stated objective by directing human activities in the production of goods and services. Management unitizes the land, factory, office, machinery and other facilities at the disposal of the enterprise in most effective, efficient manner. Bob-Igwe (1993:39).
3. Enterprises: enterprise is an economic system is which individuals are free singly or collectively to own capital and undertake economic activities within a framework of social legislation design to protect the interest of individual Hanson (1974:218)
4. Effective: Hornby A.S. define effective in the oxford advance learners dictionary as having an effect able to bring about a result intended powerful in effect and that is efficient performance.
RESEARCH QUESTIONS
For the fact that credit is very important in any business activity, therefore the study is focused on finding relevant solution to the following research questions:
1. What is the purpose of credit administration in the co-operative society of Enugu south L.G.A?
2. How effective is credit administration to co-operative in Enugu south L.G.A?
3. What problem is encountered in the administration of credit in co-operative and what is the solution to this problem?
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