THE EFFECT OF CREDIT ADMINISTRATION AND CONTROL ON THE DEVELOPMENT OF COOPERATIVE SOCIETIES IN NIGERIA
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 the 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 accrued 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.