Full Project – AN EXAMINATION OF THE ROLE OF CO-OPERATIVE THRIFT AND CREDIT SOCIETIES IN AGRICULTURAL FINANCING
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CHAPTER ONE
INTRODUCTION
- Background to the Study
The thrift and Credit cooperative has been formed with intention of improving the standard of living. The thrift and credit society started in Germany under the leadership of Fredrick Ra’ffeisen in the year 1818 who is now regarded as the father of modern cooperative thrift and credit society.
Co-operative Thrift and Credit Societies (CTCS) have played a significant role in agricultural financing in Nigeria. These societies are member-owned and operated, providing a platform for individuals to pool resources and provide credit facilities to members, particularly those involved in agricultural activities (Adeyemo & Bamire, 2005). The CTCS model has been instrumental in providing financial support to farmers who often face challenges accessing traditional banking services due to their rural locations and the perceived high risk associated with agricultural activities (Okojie, 2012).
The impact of CTCS on agricultural financing in Nigeria cannot be overstated. According to a study by Onugu (2005), CTCS have significantly increased the availability of credit to farmers, thereby enhancing their capacity to invest in agricultural inputs and technologies. This has led to increased productivity and income among farmers, contributing to poverty reduction and food security in rural areas. Furthermore, CTCS have also fostered a culture of savings among farmers, which serves as a buffer against agricultural risks and uncertainties (Onugu, 2005).
However, the role of CTCS in agricultural financing in Nigeria is not without challenges. A study by Oke, Adeyemo, and Agbonlahor (2007) highlighted issues such as inadequate capital base, poor management, and lack of access to external funds as some of the challenges facing CTCS. These challenges often limit the capacity of these societies to meet the credit needs of their members, particularly during peak agricultural seasons when the demand for credit is high.
Despite these challenges, CTCS continue to play a crucial role in agricultural financing in Nigeria. Various government policies and initiatives have been implemented to strengthen these societies and enhance their capacity to provide credit to farmers. For instance, the Central Bank of Nigeria (CBN) has implemented policies aimed at improving the regulatory framework for CTCS and providing them with access to the Micro, Small and Medium Enterprises Development Fund (MSMEDF) (CBN, 2013).
The role of CTCS in agricultural financing in Nigeria is also being enhanced by technological advancements. The adoption of mobile banking and other digital technologies by these societies has improved their operational efficiency and expanded their reach to more farmers (Okojie, 2012). This has not only increased the availability of credit to farmers but also reduced the cost of accessing these credit facilities.
Germany has always been referred to as the cradle of credit cooperative. At that time, the economic condition of Germany was so deplorable and the peasantry and artisans fiet crushed under the heavy weight of indebtedness. Famine was a common phenomenon used as order of the day. The Jews ruled over the market and the poor labourers and farmers had no way out, except to buy articles of their need from them and sales their product to them. The merchants were money lenders changing very high rate of interest for the credit they gave and offered ridiculously prices for the produce they purchased. With the hopeless life of the peasantry, Raiffeisen emerged to help them out of their indebtedness and poverty years, therefore thought out plan for cooperative societies.
Before the advert of modern cooperative society the thrift and credit society serve at urban area, the traditional mutual system is been called and addressed by different name by various communities who practice it inform of traditional form of saving.
The Hausa call it “Adashe” “Bashi” in Nupe “Asusu in Ogogo etoto in Ibibio etc.” The traditional systems of cooperative leaders of the society are elected purely on the agreement of the members, while in modern cooperative.
Cooperative at large, the management committees are elected democratically, and any person contesting for any post must have the question of some vital requirement such as payment of entrance fees, share deposit etc and the member must be voted for any post in the society.
Cooperative thrift and credit society are mainly found among the urban areas, low-income earners, government employees etc. and a good number splitter around is the urban area as well.
Thrift and credit cooperative society like other sphere of life has it own problems. It is generally believed that any organization irrespective of its size has problems, if not identified and corrective measures applied is bound to hit the rock,. Cooperative thrift and credit is not left out this philosophy identifying and laying these problems is the primary aim of the write up of this project.
The project is aim at highlighting the obstacle responsible for the show growth of organization, it is also an attempt to highlight the aim and objectives of the organization, it is living up to expectation?
The problems are being highlighted analyzed and possible steps to be taken to alleviate the problems.
1.1.1. Historical Background of The Area
Modern cooperative thrift and credit has been in existence in early 20’s 2004 to be precisely in orphanage mother multi purpose society. Before then, it was traditionally practiced, low-income earner, petty traders peasant farmers etc. contribute money weekly or monthly, they rotates one after the other which serves as urban development area for its members, and then people have difficulties to secure loan for its members from any financial institution due to the fact that mostly are low income earners, urban areas etc where they have no collateral for security while they normally requested before giving people loan.
But with the establishment of orphanage mother multipurpose in that area, which was established to help people of limited means, which find it difficult to save and secure loan to better their socio economic, encourage, saving and also provide other services to the communities at reasonable rate of interest through application of self help and mutual help which is one of the guiding idea of cooperative.
But most of the people stated with drawing their membership, because they assumed that they only want to dupe and run away with the little money learned due to the fact that the time of establishment there was no emphasis on expansion and diversification of cooperatives thrift and credit in their development plan and there was nobody to educated and enlighten the people about, their aim and objective. So people where complaining that they cannot meet up their needs as a result of non provision of loan for as a whole, lack of proper book keeping and auditing which is due to unskilled personnel, lack of adequate capital and lastly there is also dishonesty and competition among committee members and government which lead to the collapsed of the thrift and credit society.
- Statement Of The Study
Cooperative thrift and credit ensure rapid socio – economic development of urban areas and the community at large
But due to the fact that there wasn’t any serious emphasis on expansion and diversification of cooperative movement in their development plan. Therefore it resulted to low participation of people in cooperative society.
Secondly, it also seems there wasn’t serious encouragement from government to ensure that the people were enlighten and educated in other to joint the cooperative society.
1.3 Objective of the Study
The following are the objective of the study.
1) To find out the impact of cooperative thrift and credit towards transformation and development of urban area:
2) In order to know and identify the problem associated with cooperative thrift and credit societies.
3) To suggest ways and means through which cooperative thrift and credit movement can be restructure, so as to give maximum benefit to its members.
- esearch Question
To carry out this research the following question are put forward to guide the study:
1) What are the impacts of cooperative thrift and credit has toward the transformation and development of urban area?
2) How can the cooperative thrift and credit be restructured so as to give the societies at large, maximum benefit?
3) What are the problems facing cooperatives thrift and credit societies in the urban areas.
1.5 Research Hypothesis
The hypothetical statement of the study is buttressed below:
Ho: Cooperative thrift and credit has no significant impact on transformation and development of urban area
H1: Cooperative thrift and credit has significant impact on transformation and development of urban area
1.6. Significance of the Study
This study is significant in the sense through this study the orphanage will be able to know the way to improve their community they will also know the importance of becoming a member of cooperative society, it will enhance a better well being of them and their family.
To the policy makers, this study will encourage members to save; objective of the cooperatives should be thrift, saving definitively increases the poll for further lending, loans must be given for.
To management the nature as credit management makes this types of cooperatives one of the most cumbersome. Every credit cooperative must have at least the following offices and positions to make for an effective credit control.
1.7 Scope of the Study
The study examines an Examination of the Role Of Co-Operative Thrift and Credit Societies In Agricultural Financing.
1.8 Operational Definition of Terminologies
Cooperatives: Can be defined as the autonomous association of person united voluntary to meet their economic social and cultural needs and aspiration through jointly owned democratically controlled enterprises.
Cooperative thrift and Credit: Are specialist cooperative that provide loan to its members and other credit facilities with low interest rate and also encourage saving among members.
Members: Are owners of registered society who has the right and privileged as registered members of cooperative thrift and credit
Fredrick Raiffeisen: The name of a German who came out with the idea of modern cooperation thrift and credit society in Germany in 19thcentury, he is regarded as the father of modern cooperative thrift and credit society.
Modern Cooperative: This means the present cooperative movement which is formatly recognized in a more clearly ways and have the legal backing up the cooperative law, and the individual society by law which makes it look more admirable than the traditional cooperative.
Adashe, Dashi, Asusu and Etoto: The local term used in referring to cooperative thrift and credit among the Hausa’s Nupe, Igbo’s, and Yoruba.
Management: Committee are democratically elected officials of a registered cooperative society and they are responsible for running day to day activities of the society. So in most cases success and failure of the society is hinged on them.
Share: Amount of the money to be contributed by all members of a cooperatives society for the sake of the society business activities in some instance. The society sales each share at the sum of one Naira and every members is expected to buy not more than 25 share in the society.
Deposit: Is the total amount of saving collected from the members of the society and sometime from non-member of the society, which is to be deposited in the banks.
Government Cooperative Staff: They are government agents who link the government and the cooperative society in the urban area. These staffs are empowered to inspect the society books of account and give the society members a sound cooperative education.
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Full Project – AN EXAMINATION OF THE ROLE OF CO-OPERATIVE THRIFT AND CREDIT SOCIETIES IN AGRICULTURAL FINANCING