Examination on the Role of Cooperative Thrift and Credit Societies in Agricultural Financing
Chapter One
OBJECTIVES OF THE STUDY
- It helps to determine the role of co-operative thrift and credit societies in agricultural financing.
- To find out how they are functioning.
- To find out the nature of the society.
- To make recommendation of how to carry with the activities of the society.
5. It determine whether the society could still be in operation. - To promote a sustainable self-help financial solution for members that effectively improves their living condition.
- To promoting saving with members.
- Extending loans to members at reasonable interest rates.
- Providing/organizing training to members on how to run the association effectively.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
Introduction
Agriculture constitutes a very vital position in the overall development of any nation (Amit et al., 2014). It is one of the most potentially viable sectors of the Nigerian economy particularly in terms of its contribution to the nation’s gross domestic product (GDP) and export revenue earnings. In spite of Nigeria’s rich agricultural resource endowment, there has been a gradual decline in the contribution of agriculture which accounted for 70-75% of the total exports. The advanced technological changes in the agricultural sector necessitated the requirement of more working capital. Hence, the poor peasants in Nigeria are in search of timely credit. Co-operative societies were established on the principle of co-operation and to serve the poor peasants. The main function of these cooperative societies is to relieve the poor farmers from the clutches of the money lenders. Credit is an important input which ensures adequate working capital as well as infrastructural development (Iheanacho and Ahaotu, 2017). Adequate and timely credit provision significantly increases agricultural output which leads to an increase in the economic development of the cultivators and people attached to cultivation. Moreover, agricultural credit serves as an instrument for stimulating increase in output, income and employment (Deshmukh, 2005; Chidambaram, 2005). The emphasis on agricultural credit continued to be on progressive institutionalization for providing timely and adequate credit to farmers for increasing agricultural output and productivity. It also aims at better access to institutional credit for small and marginal farmers and other weaken sections to enable them to adopt modern technology and improved agricultural practices. Agricultural credit has been distributed through a multi-staged network consisting of Commercial Banks, Regional Rural Banks and Credit Co-operatives. Co-operative Movement in Nigeria was started primarily for dealing with the problem of rural credit. Credit Co-operatives play an important role in the Nigerian financial system especially at the village level. These are one of the important components of multi-agency system which plays a vital role in the development of the nation (Chaudhari, 2005). The objective was to establish Agricultural Co-operative Credit Societies “to encourage, thrift, self-help and cooperation among agriculturists, artisans and persons of limited means”. The following are the objectives of credit co-operatives: i) To ensure timely and increased flow of credit to the farming sector ii) To reduce and gradually eliminate the money lenders iii) To reduce regional disparities throughout the country iv) To provide longer credit support to various rural development programmes v) To provide cheap credit with or without any security. Co-operative Banks are organized and managed on the principle of cooperation, self-help and mutual- help and function with the rule of “one member, one vote”, function on “no profit, no loss” basis. Co-operation as principle does not pursue the goal of profit maximization. As agriculture forms the backbone of the Nigerian economy, The Government of Nigeria recognized the importance of free flow of credit to agriculture and allied sectors. Olabis (1972) stated that for agricultural development, credit is an important input which ensures adequate working capital as well as infrastructural development. Oyaide (1981) concluded in their reports that majority of land holdings were deeply and inextricably in debt. Kanthimathinathan (2004) emphasized the importance of credit and observed that credit provision was the first and foremost input to be increased, which enabled the farmers to buy more labour saving equipment, better seeds and fertilizers. Pathania and Verma (1987) recommended adequate supply of farm credit in order to increase the farm productivity.
Rural Finance
Rural finance is the provision of sustainable financial services in rural areas such that the services support different levels of income of rural dwellers (Richter, 2011). The providers of rural financial services can be formal, semiformal or informal but their services should be able to support rural dwellers’ income such that they are not technically excluded from patronising the formal financial providers in these areas because of low education and financial illiteracy among rural dwellers. Access to finance in rural areas creates opportunity for rural dwellers to increase their productivity and income through purchase of goods and services (Henry and Schimmel, 2011) with possibility of reduction in poverty and improvement in standard of living. According to Richter (2011), rural areas are highly underserved by formal financial services providers because they either avoid such areas or fail to offer relevant sustainable financial services to the rural people. The reluctance of banks to participate in rural finance and also lend to rural people aggravated the lack of access to financial services to rural enterprises (Lohlein and Wehrheim, 2003) which may hamper economic improvement of rural dwellers. Henry and Schimmel (2011) posit that formal financial providers neglect the rural areas because they find it too costly to operate in such areas and therefore anticipate low level of economic return in form of profit for the financial institution. The government is therefore expected to reduce distortion caused by formal financial institutions in rural finance. The rural areas are the largest unserved market for financial inclusion (Richter, 2011) and as such, there is the need to examine the role of cooperative in rural finance where majority lack access to formal financial providers, because financial inclusion of rural people may unlock the great economic opportunity that is available in rural areas. Due to the lack of formal financial providers in rural areas, semi-formal and informal financial providers such as cooperatives, rotational savings association, self-help group and money lenders are major providers of financial services to rural areas. The informal rural finance providers are the unregistered financial providers that operate outside the banking sectors because they are mostly unregulated (Oloyede, 2008). Cooperative societies as part of the rural finance providers “is a cost-effective model for providing financial services to those segments of the population that have little or no access to other formal financial services” (Sharma et al., 2005:
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the role of cooperative thrift and credit societies in Agricultural financing. Enugu state form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the role of cooperative thrift and credit societies in Agricultural financing. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the role of cooperative thrift and credit societies in Agricultural financing
Summary
This study was on the role of cooperative thrift and credit societies in Agricultural financing. Nine objectives were raised which included: It helps to determine the role of co-operative thrift and credit societies in agricultural financing, to find out how they are functioning, to find out the nature of the society, to make recommendation of how to carry with the activities of the society, to determine whether the society could still be in operation, to promote a sustainable self-help financial solution for members that effectively improves their living condition, to promoting saving with members, extending loans to members at reasonable interest rates and Providing/organizing training to members on how to run the association effectively. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Enugu state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, the role of cooperative thrift and credit societies in agricultural financing is crucial for the development of agriculture in many economies. By providing affordable and accessible financial services to farmers, cooperative societies have enabled smallholder farmers to access capital and finance their agricultural activities. This has led to increased productivity, enhanced livelihoods, and improved food security.
Moreover, the cooperative model has proven to be an effective approach for mobilizing savings and pooling resources from members to finance agricultural activities. This has helped to reduce the burden on traditional financial institutions, which are often reluctant to lend to smallholder farmers due to their perceived high risk.
However, there are still some challenges that need to be addressed in order to fully harness the potential of cooperative thrift and credit societies in agricultural financing. These include issues related to governance, transparency, and financial management. Nevertheless, with the right policies, regulations, and support from the government and other stakeholders, cooperative societies can play a significant role in promoting sustainable agricultural development and inclusive economic growth.
Recommendation
Based on the examination of the role of cooperative thrift and credit societies in agricultural financing, the following are some recommendations that can be considered:
- Increase awareness and education: There is a need to increase awareness and educate farmers on the benefits of joining cooperative thrift and credit societies. This will encourage more smallholder farmers to participate and benefit from the services provided by these societies.
- Strengthen governance and transparency: Cooperative societies should have strong governance structures and be transparent in their operations. This will help to build trust among members and stakeholders and ensure that the societies are accountable and sustainable.
- Improve financial management: Cooperative societies should have robust financial management systems in place to ensure that funds are properly managed and utilized for the benefit of members. This will help to mitigate the risks associated with financial mismanagement and ensure that the societies remain financially stable.
- Promote collaboration: There is a need for collaboration between cooperative societies, government, financial institutions, and other stakeholders to promote sustainable agricultural development. This will help to leverage resources and expertise to support the growth and development of cooperative societies and the agricultural sector.
References
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