Project Materials

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

Chapter one

INTRODUCTION

1.1 Background of the Study

This study focusses on the effects of credit administration and control on the growth of cooperative societies. Credit administration and management are effective tools for promoting quick development in the cooperative sector.

It can be considered the essence of financial instruction in an economy, therefore developing and implementing sound and strong credit policies and controls is one of the most important tasks of an organization’s management.

One of the most important functions of a credit cooperative is to provide loans to members and ensure that the loans are repaid; thus, it is critical to design policies that ensure the security of loans made to members.

Due to a lack of credit administration and management, credit facilities made available are distributed among members of cooperative societies and are regarded as gifts rather than loans to be paid back within a set period of time, leaving cooperatives economically crippled.

The execution of credit administration and control is a fundamental prerequisite for the society to realise its goals, serve its members efficiently, and, most importantly, secure the safety of money for the society’s continuity and development.

According to Iyowu (1985), an articulate credit management policy aims to balance both profit and liquidity. It expects to determine who must be awarded credit, how much credit should be granted, for how long, and how to ensure successful recovery. The achievement of efficient credit administration and control requires elements of subjective management.

This study will look at the role of credit administration and control, loan distribution and recovery, and how credit administration and control may be used to help cooperative organisations grow.

1.2 Statement of The Problem

The basic goal of a cooperative organisation is to improve the economic and social standing of its members by providing credit to them. It might be either a short or long-term loan.

It is critical that credit utilisation be productive, allowing the borrower to earn enough to repay the principal and interest while also generating a profit from the endeavour.

Cooperative societies are not having a significant impact on growth and development despite some level of credit administration and control.

Problems arise when there are no checks and balances, posing a threat to their continued existence and, as a result, they will not have achieved the objectives for which they were originally established.

Due to this and other shortcomings, such as a lack of experts to handle the society’s finances, mismanagement of funds by officials, and poor record keeping, most members do not receive their contributions on time, resulting in loss of confidence, withdrawal of members, and, as a result, loss of contribution to the society.

Furthermore, in most cases, members’ savings are embezzled or misappropriated. As a result of dishonest financial management, societies do not survive long.

One of the aims and objectives of most cooperative societies is to provide members with easy access to credit facilities. However, this cannot be realised if the credit given to members is not efficiently and effectively administered to ensure productive utilisation and the members’ ability to repay loans. This can assure the cooperative society’s continuous survival.

Against this context, this study will investigate the consequences of credit administration and control in the study locations.

1.3 Objectives of the Study

The aims of this investigation are as follows:

i. Investigate the role of credit administration and control in enhancing cooperative societies.

ii. Determine the extent to which cooperative societies recoup loan payments to members.

iii. To identify difficulties with credit administration and control.

iv. To recognise issues and present alternative remedies.

1.4 Significance of the Study

This research aims to provide cooperative societies with a better understanding of the role credit administration and control play in cooperative development.

The research will also aid in strengthening relevant measures from cooperative societies which can improve the loan policies and securities and in extension increase credit cooperation.

To government, it may also aid in increasing appropriate step from the government to promote and support prospects of cooperative societies in the rural and urban areas as it will instil hope in the minds of the members and future members.

Scholars, researchers, and new students will profit from this research because it will act as a reference for them.

1.5 Research questions.

The research questions listed below will lead this investigation.

i. How can credit administration and control contribute to the improvement of cooperative societies?

ii. To what extent do cooperative societies recoup debts made to members?

iii. What are the problems that cooperative organisations face in terms of credit administration and control?

iv. What options are available to ensure the success of credit administration and control in the development of cooperative societies?

1.6 Scope of the Study

The research aims to investigate the effects of credit administration and control on the development of cooperative societies, with a focus on Arewa multipurpose cooperative society and National Board for Technical Education investment and credit cooperative society Kaduna.

1.7 Definition of Terms.

All of the terminology listed below will have the same operational meaning as used in this project study.

i. Cooperative society: According to the ICA, a cooperative society is an independent group of people who freely work together to achieve their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled company.

ii. Cooperation: the association of two or more persons who willingly come together in order to attain goal objectives.

iii. Credit: loans of money or equipment made to members to be used for productive purposes with the promise to repay the same amount plus interest at a future date.

iv. Control: the process of ensuring that actual actions align with planned activities.

v. Policy: A written strategy that offers broad guidelines for decision-making.

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