Loan Administration To Agricultural Co-Operative Societies By Nigeria Agricultural Co-Operative And Rural Development Bank In Enugu.
This research project is a very crucial study on the analysis of loan administration to agricultural co-operative society by Nigerian agricultural co-operative and rural development bank. The study is motivated by the necessity to establish the extent of agricultural co-operatives.
To solve the research problem, primary and secondary data was collected. The data were questionnaire and oral interview. The respondents comprised of personnel from the bank. In organizing and presenting data collected, tables, frequencies and percentages were used. Data analysis and interpretation gives the following findings.
– Criteria for granting loan to co-operative is that they should have an account holder have viable and bankable project and should be credit worthy.
– Collateral securities do no pose much problem to give facility to farmer.
– Insurance cover is necessary to cover some degree of risk involved in co-operative failure.
– The level of response towards loan facilities is very satisfactory.
– Loan management by co-operatives are very satisfactory.
Based on the findings the researcher recommends that banks should constitute a feasible alternative for providing financial assistance to support all effort for further development of co-operative sector. Banks should develop their farmers by allowing agricultural loan to cover all stages of agricultural production, consultation of agricultural specialist by farmer if need be lending should be basically for agricultural activities.
The conclusion of the study is the role NACRDB has played to enhance agricultural sector in Enugu and Nigeria in general. It has proved to be an important channel in providing financial services particularly credit to small farmers.
Banks are financial house with the authority to guide groups and individuals who could be having monetary transaction to do. The provision of sound financial regulations that make for economic well being is very essential and the assistance of financial house in building up a safe terrain of monetary reserves is very important. The well directed influence of vital banks on the larger society, as a whole is always something to admire every time. The need to have economic group well tested and approved of with the education of members of the society in forming a financial variable social ground belong in the part to the intelligent services rendered by banks.
In agricultural cooperation societies where individuals who hold agricultural stock could amount to a greater gain to the advancement of their individual well being and collective aspiration. Government has whole lot of work load to carryout financially or otherwise and so has not much moment to supervise minor economic units. She has to assign a duty to her agencies, these agencies as the dog in the wheal of the success of such co-operative societies and of the same time supply the necessary materials for the improvement and standard procedure. Special agro-allied banks have been set up under the auspices of the Apex bank to grant material aid to agro-stock holders. Example- Commercial Bank Limited Nigeria-agricultural co-operative and rural development bank.
These financial institutions have the authority to deal on multiple problems traumatizing agriculture. The bank of agriculture is becoming so highly modernized so that it will take a lot of money to produce food and cash crops in much profitable abundance. If it is with these in mind that government has arranged with her many agencies to bring some relief to aspiring agro stockholders.
Banks in any nation have the keynote to play on unfolding the financial success in the economy.
Agricultural co-operative society is a venture by some farmers who hold agricultural stock and are seeking to uplift their collective and individual agricultural standards. These standard range from planting tag techniques to seed procuring and from financial subsidization to produce display in proper places. Agricultural co-operatives provide useful services where none exist especially one that would be uneconomic for individual ownership. To induce excessive cost of middlemen help farmers get a fair share of national income, direct agriculture towards the goals of national economic planning and generally to improve the economic and social conditions of rural people. They seek for favourable trends such as loan, scheme, banking services and general market safety regulations. Ignorance of new method, benefits and possible support from responsible agencies have killed an idea to turn agriculture around for the better. Bank being organized financial units that can monitor research, cash flow and general economic trends happen to be a greater case to deal with farmers.
The ideal relationship between the financial institutions and farmers as individuals or as co-operatives could not be over emphasized. Individual farmers could find relative bank services fit for a great initiative transformation. Financial scheme that enable peasant transformation into giants in agriculture are abundant such as a loan in agricultural cooperative society where many individuals pull resources together. The level in individual maturity and productivity capacity could not be reckoned with.
Nigerian Agricultural Co-operative and Rural Development Bank (NACRDB) has been selected as a case organization. The Nigeria agricultural and co-operative bank is a specialized bank primary set up to enhance investment in agriculture. It was established in 1973 and was commissioned in 1975. it was later merged with people bank and the family economic advancement programme (FEAP) in 2002. It grants loan to small holders and large investment holders. Its major problem is inaccessibility of credit by small scale farmers, this problem is solved by putting emphasis on co-operative formation.
Its objective include efficient and effective credit administration with target beneficiaries being rural poor. The minimum percentage of interest rate emerges when loan is granted and 8% maximum loan amount are revised upward depending on timely repayment of previous loans and client investment.
The ability of the agricultural co-operative society to develop rapidly depends on the extent to which loan are being provided. These have been concentrated effort by government to enhance agricultural productivity in Nigeria. For instance the federal and state government have set up some agencies like Nigerian Agricultural Co-operative and Rural Development Bank, to help small stockholders by granting them loan to improve agricultural production.
But inspite of all the effort being made, farmers still experience low or decrease in production, due to the fact that farmers do not have collateral to offer. List of crop failure can be very high, interest charged an be too high for the returns economic activities, records are not properly kept for lack of insurance coverage.
What are the causes of this low productivity in agricultural co-operative. What can be done to remedy the situation to make recommendation as to how banks can increase it effectiveness towards agricultural production.
Co-operative development in Nigeria have so many problem like improper funding both within and outside the co-operative complex government stifling control leading to over dependence on government handout. Government in Nigeria do not give concession to specialized banks which will enable them to extend adequate funds to co-operative societies.
1.3 OBJECTIVES OF THE STUDY
The general purpose of this project is to undertake a study and analyze how loan are being granted/administered to agricultural co-operative societies.
With the recent drive for higher efficiency by the co-operative societies and consequent effort being put in by banks and government in strengthening the existing co-operative enterprises.
The study will address the following objectives:
- To determine the causes of low productivity in agricultural co-operatives
- To determine what can be done to enhance agricultural production.
- To appraise the contribution of banks to the profitability of agricultural development.
- To make recommendation as to how bank can increase its support in agricultural co-operative.
- To determine the level of involvement of co-operative as a business outfit and the overall management of their own co-operative enterprise.
- To explore other possible ways in which cooperative can be assisted or supported.
- To identify the problems that always confront co-operative societies which prevent them from meeting their financial obligations.
1.4 SIGNIFICANCE OF THE STUDY
This study is very timely, especially now that the entire societies hands are on deck to enhance the development and growth of Nigerian economy.
This study will help farmers to know immense benefit of banks in financing agriculture; in addition lack of credit is a major factor. For the lack of development of agro business, hence it is required to buy input and improved technology. It is expected that this findings will help us to know that credit is a major accelerator of development. If other essentials needed for development are available. Through this investigation, therefore both banks and co-operative will undertake their short coming and will subsequently adopt measure aimed at enhancing agricultural effectiveness and development.
It will also help government to adopt the right agro business credit policies to enhance credit effectiveness. This study will help us to know the constraints in credit availability to farmers.
This work also intends to provide an adequate information about the technicalities and strategies involved in improving co-operative business enterprise which can serve as a guide to those people who mighty wish to get involved in this type of business and those already in it.
- SCOPE AND LIMITATION OF THE STUDY
This research work will entail basic understanding about the contributions of banks to co-operative development. The research study is limited to the geographical and political boundaries of Nigeria in general and Enugu Metropolis in particular. It involves only Nigerian agricultural co-operative and rural development bank. Among other financial institutes, this study is to ascertain and analyze how loans are being administered to agricultural co-operative. How they have been able to facilitate the development of agricultural co-operative and to boast small stockholders and large –scale investors Nigeria agricultural co-operative and rural development bank (NACRDB) is being used as the case study.
This work also points out the relevance in a clear understanding of the meaning, need and essence of co-operative movement. It will concentrate on blending the importance of co-operative society.
1.6 LIMITATION OF THE STUDY
It would have been ideal to involve other financial institution but for constraints of time, finance and other material resources, which makes it difficult as regards these projects only Nigerian agricultural co-operative and rural development banks were studied.
In the course of accomplishing this study the researcher faced so many limitations.
Its certain that time waits for no man , the period at hand is not enough to gather data from paper analysis, other academic responsibility and curriculum activities, all these has been an obstacle to this study.
A good project needs current and relevant information and they are just available in a place. So, one need to search from one place to other which require a lot of money, due to financial handicap as a student one have to channel all resources to one base.
Lack of relevant literature is also one of the problems because there was not much information about the project work. Another problem is the attitude of the respondents especially when it comes to being questioned, orally, filling returning the questionnaire. All these slowed the general pace of the progress.
1.7 RESEARCH QUESTIONS
- Have banks been able to improve the efficiency of agricultural production in large scale?
- Does Nigerian government give concession to specialized banks which will enable them to extend adequate funds to co-operative societies?
- Have bank inputs been able to increase the volume of yield and manpower resources?
- Has it been able to increase the income of farmers?
- has it been able to make for easy access availability of credit to farmers?
1.8 DEFINITION OF TERMS
AGRICULTURE- Can be broadly defined as the art and science of production of plant and animals that are useful to man.
CO-OPERATIVE SOCIETY- Is an association f persons who have voluntarily joined together to achieve a common end through the formation of a democratically controlled business organization, making equitable contributions to the capital required and accepting a fair share of the risks and benefit of the undertaking in which the member actively participate.
GROUP LOAN/ CREDIT
Non individuals credit in which funds for productivity purpose are extended to group of farmers.
This implies the entire members pooling resources and land together for coo-operative farming.
RETURNS ;These are monetary value resulting from scale of output
BUDGETING ;Planning for future with respect to expenditure and income.