THE EFFECTS OF CREDIT ADMINISTRATION AND CONTROL ON THE DEVELOPMENT OF COOPERATIVE SOCIETIES

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                

i.            To find out the role of credit  administration and control in  improving cooperative societies

ii.          To determine the extent to which cooperative societies recover loan disbursement to members.

iii.        To find out problems associated with credit administration and control.

iv.         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.

i.            what  role does credit administration and control play in improving cooperative societies?

ii.          To what  extent do cooperative societies recover loans disbursement to  members?

iii.        What are the problem of cooperative societies in connection with credit administration and  control?                                 

iv.         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.

i.            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.

ii.          Cooperation: the association of  two or more people who voluntarily come  together in order to achieve  target objectives.

iii.        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.

iv.         Control: the process of ensuring that actual activities conform to planning activities.

v.           Policy: A standing plan that establishes general guidelines for decision making.

vi.         Credit administration: Activities that are   done in order to plan, organize, extend and recover loan extended to members of the cooperative societies.