Credit Management Techniques In Agricultural CoOperative Bank In Nigeria (A Case Study Of NACRDB,
Enugu)
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TABLE OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of contents
CHAPTER ONE:
Introduction
Background of the study
Statement of the problem
Objective of the study
Significance of the study
Scope and limitation
Definition of terms
Research question
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CHAPTER TWO:
Literature Review
The Nature of Credit Co-operative
Origin of Credit Co-operative
Types of credit co-operative
Co-operative Thrift & Credit Society (CTCS)
Overview of credit management techniques
Importance of credit management
Contribution of credit to economic development
The NACRDB as a source of finance for co-operative business
Mandate, Corporate objective and business philosophy of
NACRDB credit schemes
i.
Micro Enterprise Scheme
ii.
Macro Enterprise Scheme
NACRDB Interest rate regime
How to access NACRDB loans
NACRDB Ltd sources of fund
Contribution of other banks in agricultural financing
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References
CHAPTTER THREE:
Research Design and Methodology
Introduction
Area of study
Population of the study
Sample and sampling procedure
Method of data collection
Sources of data
CHAPTER FOUR:
Data presentation, analysis and interpretation
CHAPTER FIVE:
Summary, Recommendation and Conclusion
CHAPTER ONE
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1.0
INTRODUCTION
1.1
BACKGROUND OF THE STUDY:
The Nigeria Agricultural, Co-operative and Rural Development Bank
Limited is a development bank established in the year 2000 following the
merger of the defunct Nigeria Agricultural and Co-operative Bank Limited
(NACB) and former People’s Bank of Nigeria Limited (PBN) and the Risk
Assets of the Family Economics Advancement Programme (FEAP).
The
vision of the bank is “to be foremost people centred, self-sustaining
development finance institution for rural savings, mobilization and delivery of
micro and macro agricultural credit and micro credit to the poor”. The mission
is “providing affordable financial and advisory services to the farmers and nonfarmers enterprises of the national economy using well trained and highly
motivated staff, backed by appropriate technology, thereby fostering
accelerated agricultural and rural development. “Nigerian Agricultural, Cooperative and Rural Development Bank Ltd, is dedicated primarily to
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agricultural financing at both the micro and macro levels as well as micro
financing of small and medium scale enterprises.
The bank has a 3-tier administrative structure. The Head Office is in
Kaduna and there are six zonal offices located at Abuja, Kano, Bauchi, Enugu,
Port Harcourt and Ibadan. Under the Zonal Offices, there is a network of over
200 branches.
Enugu zonal office is responsible for monitoring and
supervision of the activities of the 26 branches in the South-East zone which
are distributed as follows:
ABIA
ANAMBRA
EBONYI
ENUGU
IMO
Umuahia
Awka
Abakaliki
Enugu
Owerri
Akoli Imenyi
Ihiala
Afikpo
Nsukka
Aboh Mbaise
Isuochi
Nteje
Akaeze
Oji River
Atta
Ohafia
Oko
Onicha
Mgbowo
Ideato
Ukwa
Onitsha
Uburu
Ukpo
Oguta
Orlu
The awareness of the serious decline in agricultural production
necessitated the establishment of the bank. The NACRDB is not the only
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financial institution which provides agricultural credit.
Prior to the
establishment of NACRDB, agricultural credit schemes was operated by some
agencies such as the Ministry of Agriculture, supervising credit scheme,
agricultural credit co-operative thrift and loan scheme, farmers multi-purpose
co-operative societies. Most of these institutions were not effective sources for
strictly agricultural credit.
There were a lot of evidence that creditors
borrowed money for agriculture but diverted it to other ventures. Again, credit
was often extended to only favourites and scarcely to genuine small scale
farmers. Besides, they could not meet the collateral and equity contribution
requirements, a situation that compelled a significant proportion of the farmers
to seek for other sources of credit.
According to Idachaba quoted from Cardoso, (1987:18) or research
carried out showed that 58% of farming related borrowing was from family and
friends, 224% from private money tenders, 15% from merchants and only 3%
from institutional sources.
However, while family and friends charged little or no interests, private
money tenders charged exorbitant interests organized credit facilities for
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Nigerian rural farming population would reduce the dependence on sources
other than the formal financial houses.
It is against this background that the researcher is to investigate how
credit will effectively administered in co-operative enterprises.
They will
enable us to identify the major problems associated with credit administration
in co-operative agricultural banks and seek solution to these problem to ensure
continued existence of developing co-operatives.
1.2
STATEMENT OF PROBLEM:
In this sector, co-operative banks mobilizes credit for their members
through the savings of members. It has been observed that they are inefficient
in mobilizing and utilization of credits. Many problems led to this ineffective
mobilization of credit. They are:
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Illiteracy and lack of awareness.
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High cost of credit delivery due to the fact that farmers are many and
are scattered.
-
Default in loan repayment.
-
Inadequate funds to lend to the numerous customers.
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Diversion of loans
-
Inefficient management of loan
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Faulty loan policy which may sometimes emphasize credit
worthiness of borrowers and not viability of projects.
-
Credit operations of meek money activities without proper
organization procedure and planned systematic arrangement.
-
Absence of regular monitoring and supervision of loans.
The above problems need to be solved for effective performance of co-
operatives.
1.3
OBJECTIVES OF THE STUDY:
The situation of co-operatives is nothing to write home about, if co-
operatives should continue at this rate, they will wind up. In view of the above,
solution have to be designed for these problems.
Therefore, the objective of the study is to find out the various societies
existing in the area under review.
To find out various problems being
encountered by these co-operatives which tend to hinder their effective and
efficient performance as agent of credit. Finally, to make recommendations
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and suggest probably solutions that will enable these societies overcome the
problems so as to function effectively.
1.4
SIGNIFICANCE OF THE STUDY:
The study will assist the loan committed managers in their decision
making, as it concerns credit policy and management of credit in form of
proper assessment of loan applications, proper supervision of credit and
evaluation of project proposals. It will help the management to see the need to
employ professional staff and lastly, the study or findings will be of
educational importance to the various universities, polytechnics and students of
co-operative departments in the various schools.
1.5
SCOPE AND LIMITATION:
The researcher limits this study to effective credit management in
Agricultural Co-operative Bank, Enugu South Local Government Area. The
researcher intended to find out the available sources of fund to co-operatives as
well as the financial problems of co-operatives. The researcher found out the
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process of credit administration and some factors militating against credit
management.
1.5.1 LIMITATIONS
In the course of accomplishing this study, the researcher was faced with
the following problems:
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FINANCE: There was no fund to facilitate on the issue of traveling
around for further research to the agricultural co-operative banks.
Besides, there was high cost of transportation. This resulted to a
barrier in research movement.
-
TIME: The researcher found it difficult to combine the research
work with academic work such as assignments, exams, etc due to
their constraints.
-
DIFFICULTIES IN COLLECTION OF DATA: The researcher
had limited access to official records and statistical data relevant to
this work.
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1.6
DEFINITION OF TERMS:
For clarity of purpose, limitation of confusion and any kind and the
proper understanding of this study, the following definition of terms is
necessary:
CREDIT: David W. Pearly defined credit as financing directly or indirectly,
the expenditure of other against future repayment. Such lending or financing is
direct when say, a bank extend an overdraft facility to a customer who then
uses it. It is indirect when a trader or producer supplies goods on credit.
Traditional savings and credit groups are one of the most common variants of
informal financial intermediaries in rural areas (Ijere 1991:23).
MANAGEMENT: administration or management is the art of attempting to
achieve stated objectives by directing human activities in the production of
goods and services. Management utilizes the land, factory, officers, machinery
and other facilities at the disposal of the enterprises in the most effective,
efficient and profitable manner. Bob Igwe (1993:39).
TECHNIQUE: Method of performing something.
ENTERPRISE: Enteprise is an economic system in which individuals are
free, singly, collectively.
To own capital and undertake economic activity
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within a frame work of social legislation designed to protect the interest of the
members (Hamson 1974:218).
1.7
RESEARCH QUESTION:
For the fact that credit is very important in every business activities,
therefore, the study is focused on finding relevant solutions to the following
research questions:
1.
How do you manage your agricultural credit techniques?
2.
What is the purpose of credit management in agricultural co-operative
bank in Enugu South?
3.
What problems are encountered in the administration of credit in
agricultural co-operative bank and what are the solutions to these
problems?
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