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The subject of this research investigation is Effective Administration of Credit in Cooperative Enterprises. A case study of Ugwuaji, FMSC Cooperative in Enugu South Local government Area.  The study is descriptive and information, this description analysis were based on answers to the research question which direct the major activities of this research investigation.  Data has been collected through interviews, and the use of questionnaire to obtain the key information within the cooperative.  Secondary materials, such as textbooks, journals, newspapers etc were also study to enable the researcher obtain some relevant information.  From the analysis the findings include; inadequate finance, most of the cooperative are multipurpose, loan and credit default by members, misappropriation of loan and credit facilities by members, low literacy rate of members.  Recommendation were made; they include; Adult education and enlightenment programs should be embark on; cooperative should increase their minimum share capital; the size of loan and credit administered to cooperative should be increased.







Cover Page                                                                       i

Title page                                                                         ii

Approval page                                                                  iii

Dedication                                                                       iv

Acknowledgement                                                            v

Abstract                                                                           vi

Table of Contents                                                             viii

Table of Figure                                                                 ix

List of Table                                                                     x



  • Background of the study 1
  • Statement of the Problem 6
  • Objective of the study 8
  • Significance of the study 10
  • Research Questions 11
  • Statement of Hypotheses 12
  • Scope and Limitation of the Study 14
  • Definition of Terms 15



Review of related literature

2.0   Review of Related Literature                                     18




  • Method and Sources of Data 58
  • Research Population        59
  • Sampling Method                 59
  • Description of the Research Instrument 60
  • Determination of Sample size 60
  • Method of Data Analysis 62



Presentation, analysis, and interpretation

4.0   Presentation, Analysis, and Interpretation        65

4.1   Data Presentation                                                     65

4.2   Percentage Analysis                                          68

4.3   Test of Hypotheses                                                   86


5.1   Summary of Findings                                               94

  • Conclusion 97
  • Recommendations 98








  • Background of the Study

Agriculture credit in Nigeria dates back to the 1930’s but organized credit to farmers did not start until 1972 when the Nigerian Agricultural and cooperative Bank (NACB) was established.       The awareness of the serious decline in agricultural production was probably. Partly responsible for the establishment of the bank. The Nigeria agricultural and co-operative bank (NACB) is not only financial institution which provides agricultural credit. Prior to the establishment of (NACB) Agricultural Credit schemes were operated by some agencies such as the ministry of agriculture, supervise credit scheme, agricultural credit co-operations, cooperative thrift and loan schemes, farmers multi-purpose co-operative societies . Most of these institutions were not effective sources for strictly agricultural credit.  There was a lot of evidence that creditors borrowed money for agricultural purpose 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 requirement a situation that compelled a significant proportion of the farmers to seek for other sources of credit.

According to Idachaba Cardeeso (1987:18), a research carried out showed that 58% of farming and friends, 24% from merchants and only 5% from institutional sources.  However while family and friends charged little or no interest, private money lenders charged exorbitant interest.  Organized credit facilities for Nigeria’s rural farming population would reduce the dependence on sources other than the formal financial houses.   It is against this background that the researchers are to investigate on how credit will effectively be administered in co-operative enterprises.  This will enable us to identify the major problems to ensure continued existence of developing cooperatives.

1.2   Statement of the Problem

Co-operative societies all over the world are perceived as important instrument of socio-economic transformation and development. co-operatives have played some significant roles in the nation’s economic development plan and programme.  Co-operative societies through various self financed projects have raised the standard of living of their numerous members as well as other Nigerians.

In the distant past, no significant effort was made by the past  governments, both colonial and indigenous ones to incorporate co-operatives in the national development plan.  In the various  rolling plan and development programmes no special attention was paid or given to the role co-operatives played in Agricultural development and rural transformation.

This situation calls for many when it is visible clear that most Nigerians are farmers living in the rural communities with little or no attention from government, Osuntagun (1979:81).  These farmers in search of self-help achieved solace from various multi-purpose cooperatives societies to enjoy some credit, loan and other services from their societies which on their own could not be made available. Farmers are not the only beneficiaries of co-operative but other people operating in other sectors of the economy like traders, artisans and fishermen.

In recent time, credit co-operative abound in both the rural and urban areas of our nation.  They are predominant in establishment, especially government owned parastatals where they usually take the form of thrift and credit societies.

Co-operatives apart from giving their members credit and loan facilities for various income generating activities, they make sure that the loan given to them are well utilized and also  ensure that their beneficiaries would not default during repayment.

Despite the efforts of  co-operatives in credit and loan administration, there are still problems associated with this  aspect of co-operative function.  There problems can be partly attributed to lack of adequate co-operative officials elected to handle the affairs of co-operative officials (that is the co-operative inspector head officers) this has given rise to misappropriate and misapplication of credit and loan facilities by beneficiaries.

This situation calls for concern but it is only when a problem is perceived that people are inspired to search for its solutions.  The problems which this study is set to tackle is how to solve various problems with loan and credit administration as they affect co-operative societies.


  • Objectives of the Study

General objective

The main or general objectives of the study are to identify how loan and credit facilities are administered in cooperative business enterprises.

Specific objectives are:

  1. To determine or identify the procedures for application of loan and credit facilities in cooperative societies.
  2. To determine various sources through which co-operative societies raised money for loan and credit facilities.
  3. To identify the types of loan and credit administration in co-operative societies.
  4. To identify the problems associated with loan and credit administration in co-operation societies and.
  5. To make recommendations based on the findings.


1.4   Significance of the Study

The study is carried out in partial fulfillment of the requirement for the award of Bachelor of Science Degree ( in co-operatives and Rural Development. This study will also serve as literature for further studies especially for students of cooperative and rural development and other related studies. This research work is again directed at co operatives societies that constitute an important toll in the nations  socio-economic development.  If co-operative societies are aware of the important role they played in agricultural development as well as rural transformation they will intensify their efforts toward creating awareness about their existence in the society.  This is very important at this period of national economic depression when cooperatives have some role in national economic reconstruction programmes.

This study will help cooperative societies realized the fact that they have some roles to play in the present national economic reconstruction and restriction programme. To the entire academic community as well as the national development planners, this study will help them appreciate the important roles co-operatives have played in the nation current economic reconstruction and restate programme.  This will also motivate to incorporate co-operatives in the various economic development programme, of the nation. By so doing, the benefits of cooperative to every aspect of the economic will become more visible.

This study will also be relevant to loan committee managers in their decision making, as it concerns credit in turn of proper assessment of loan; applications, proper supervisor of credit and evaluation of project proposals.

Again, this study will help the management to see the need to employ professional staff to facilitate the operative of cooperative societies.  This study also aim at understanding the various ways through which loan and credit facilities are administered in cooperative societies and well as other important issues related to loan and credit administration with the view to provide some important role in improving the already existing methods of loan and credit administration in cooperative societies.

1.5   Research Questions

  1. How will the procedures for application of loan and credit be determined or identified in the cooperative societies?
  2. How can the fund of credit cooperative be sourced?
  3. What are the ways of identifying the types of loan and credit administrative in cooperative societies?
  4. How effective is credit administered to cooperative business enterprises in Enugu South Local Government?
  5. What problems are encountered in the administration of credit and loan in co-operative business enterprise.
  6. What can be done to ensure effective administration of credit and loan in cooperative business enterprises.

1.6   Scope of the Study

This study is restricted to Ugwuaji farmers multi-purpose co-operatives societies with respect to sources of fund available to co-operatives for disbursement procedures and application as well as supervision of loan and credit utilipursed by cooperatives.

It also looked into role played by government co-operative officials or officers in loan and credit administration in co-operative societies.

1.7   Limitations of the Study

There were certain constrain encountered by the researchers during the course of this study and there are enumerated below:

  • Finance: The high cost of completing the study is one of the limiting factors, for instance the cost of transportation to and form the area of study, procedures of distributing questionnaire and the cost of putting together the data collected for the study were also high.
  • Another factor is inadequate literature: The research encountered the problem of having access to published materials related to the subjective, being discussed by the study.
  • The conservated attitude of some of the respondents during interview equally constituted another problems to the study.
  • Time: The researchers finds it difficult to combined the researching work with academic work such as assignment, lecturers etc with the limited given to complete the study or project.
  • The above listed constraints did not render the study smoothly and faster as it supposed to be.


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