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.