INTRODUCTION
BACKGROUND OF STUDY
Agricultural credit in Nigeria dates back to the 1930s. But organized credit to farmers, but it did not start until 1772 when Nigerian agriculture and co-operative bank (N.A.C.B) was established. The awareness of the serous
decline in agricultural production was partly responsible for the establishment of the bank. The N.A.C.B was not the only financial institution, which provides agricultural credit. Prior to establishment of N.A.C.B, agricultural credit scheme was operated by some agencies such as the ministry of agriculture supervised scheme, agricultural credit co-operation, co-operative thrift and loam schemes, farmers multi-purpose co-operative societies. Most of the institution was not effective sources for strictly agricultural credit. There were a lot of evidences that creditors borrowed for agriculture but diverted it for another ventures. Again credits were only extended to only favorites 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 source credits. According to Ichadaba quoted from Cardoso, (1987.18) a survey carried out showed that 58% of farming related borrowing was from family and fiends, 24% from private money lenders, 15% from merchant, and only 3% is from institution for agriculture. However, while family and friends charges little or no interest, privet lenders charges exorbitant interest. Organized credit facility for Nigerian rural farming population will reduce the dependence on source other than the formal financial houses. It is against this background that the researcher is to investigate how credit will be effectively administered in co-operative enterprises. This will enable us the identify the major problems associated with credit administration and seek solution to those problem to ensure continued existence of the co-operatives.
LITERATURE REVIEW
THE NATURE OF CO-OPERATIVES
Co-operative ahs been giving a number of definition but the definition, which is not in use, is that adopted by the international alliance (I.C.A.) as quoted in the review of international co-operatives (R.I.C). a co-operative is an autonomous association of person united voluntarily to meet there common economic, social needs and cultural through a jointly owned and democratically controlled enterprise. This description of a co-operative is intended as a minimal statement. It is not intended ad divination of a perfect co-operative. The definition is broad in scope recognizing that members of different kinds of co-operatives will be involve differently and members must has some freedom to organize their affairs. It is hope that this definition will be useful in drafting legislation educating members, informing the public and preparing textbook. This definition emphasizes the following characteristic of co-operative
a. The co-operative is autonomous and it independent of government and private firm as possible.
b. It an association of persons. This means that co-operative are free to define person in any legal way it chose to do so. Many primary co-operative around the world chose only to admit individual human being. Many other primary co-operative admit legal persons, which in many jurisdiction include companies extending to them it right as any other member.
c. The persons are united voluntarily. Membership in a co-operative should not be compulsory. Membership should be free within the purpose and resources of the co-operative to joins or to live
d. Members of a co-operative meet there common economic and social need emphasizes that co-operative are organize for the members. Member’s need may divers, they may be social as well as purely economic but whatever they are, they still remain the central for which the co-operative exist.
e. The co-operative is jointly owned and is democratically controlled enterprise. This phrase emphasize that co-operatives genuinely distribute ownership members and they do so on a democratic basis. These two important characteristics are particularly important in differentiating co-operatives from other king of organization especially capital controlled firm or government owned organizations. The second part of the definition reads” co-operatives are join together locally, regionally, nationally, international, federationaly, alliance or other joint undertaking so that they can meet the members need most effectively” this part of definition informs and remind members, government official and the general public that co-operatives are not juts local institution. Also invariably, they are associated with other co-operative in joint endeavor. This is an important point when considering the co-operative legislation. The taxation of the co-operative and the possible future co-operative development.
This statement also means that local co-operatives have the responsibility to ensure that their members understand the nature and the importance of the wider relationship. It challenges the members to recognize\e the need to devote the same loyalty to the wider co-operative structure as they extend to their local co-operatives. These parts of definition specifically mention three characteristics in which the co-operatives work to together.
a. They are usually associated “ Locally, Regionally, Nationally, And Internationally”
b. The co-operatives are associated in federations, alliance and other joint undertaking. Historically when they have work together, co-operatives have preferred to form partly because federation are easily adapted to the system of democratically control. They have also recognized different kind of alliance and undertaking just initiation in the economic activity, educational programme, and government relations.
c. Co-operative work together so hat they can meet the members need most effectively. The phrase indicates that it is member’s need and not the need of the organization. The management or the elected leadership who should determine the nature of collaboration among co-operatives. Those needs should also be met “effectively” which implies efficiency and assumed good value source: I.C.A quoted in (R.I.C, 1994)
According to I10 quoted by Thimadu (1988:5) co-operatives means an association of persons who have voluntarily joined together to archive a common goal through a democratic controlled organization making equitable contributions to the capital required and accepting a fair share of the benefits and risk of the undertaking in which the members actively periapts. The definition also implies that equitable contribution should be a trademark of the co-operatives because there is the need for the members to contribute equally and avoid cheating so that is will answer the name co-operative.
Prof. Paul Lambert added that the co-operative society dose not only aim at furthering the interest of its members, it also aim at furthering there interest, but in only in so this is compatible with the general interest of the members of the co-operative should be protected.