NAMA : NINDIA RIANASARI
KELAS : 2EA14
NPM : 15211181
International Journal of Cooperative
Socio-economic determinants of cooperative societies’ access to the
services of the Nigerian Agricultural Cooperative and Rural Development Bank
Festus Agbo and Sand Chidebelu
Abstracts
This Journal assesses
the extent to which cooperative societies had access to the special
intervention fund administered by the Nigerian Agricultural Cooperative
And Rural Development Bank (NACRDB) Ltd. The study was carried out between
March and September, 2005, on six randomly selected states, one from each of
the six geopolitical zones into which Nigeria has been divided. States sampled
included Enugu (South-East). Rivers (South-South), Ondo (South West), Benue
(North Central), Bauchi (North East) and Kano (North West). Sixty cooperative
societies were also randomly selected for the study from each state covered;
thirty of them with access and thirty without access to the intervention fund,
on the whole 360 cooperative societies were studied. Statistical tools used for
data analysis included percentage, means and range. Levene’s test for equality
of means was used to determine if the means of the two categories of
cooperatives (those with access and those without) were statistically
different. Likert scale rating was used to determine cooperative societies’
perception of the effects of agency operational guidelines on access. The
Levene’s test for equality of means showed that the difference between the
means of the two categories of cooperative societies were statistically
significant at 5% probability level. Likert scale rating confirmed that the
operational guidelines of NACRDB such as minimum credit requirement, type of
crop grown, approved loan size, and insurance cover affected access to the
intervention fund. It was recommended that promoters of cooperative societies
should pay adequate attention to the socioeconomic characteristics of the
cooperative societies so promoted and the credit guidelines of the NACRDB Ltd.
Introduction
The introduction of
modern cooperative business into Nigeria dates back to the year 1935 following
the acceptance, by the Colonial Administration, of Mr. C.F. Strickland’s Report
on the prospects of cooperatives in Nigeria. After seventy-four years of
operation, the cooperative movement in Nigeria can boast of a membership of
more than five million persons distributed in more than thirty-six thousand
cooperative societies (FMA&RD, 2002). Unfortunately, cooperative businesses
in Nigeria are still contending with problems that have hampered their
development. One such problem is the lack of access to investment credit.
The government has
intervened several times to inject credit into the cooperative sub-sector of
the economy. One intervention was the change, in 1976, of the Nigerian
Agricultural Bank Ltd to Nigerian Agricultural and Cooperative Bank Ltd so as
to give special attention to cooperative activities (CBN Annual Report, 1976;
Ukpanya, 1997). Furthermore, in the year 2000, the government renamed the
Nigerian Agricultural And Cooperative Bank (NACB) Ltd to become the Nigerian
Agricultural Cooperative And Rural Development Bank (NACRDB) Ltd to reflect the
rural nature of cooperative activities in Nigeria (FGN Budget, 2000). In the
year 2005 the Federal Government domiciled the sum of N50 billion
with the NACRDB Ltd to lend to cooperatives and other farmer organizations at
concessionary interest rates. A recent study of the patterns of
disbursement of the N50 billion intervention fund showed that more
than 75% of the fund went to private farmers and other farmers’ organizations
that are not cooperative societies (Onyeagocha, 2008).
Some factors have been
responsible for the poor access of cooperative societies to the intervention
fund domiciled with the NACRDB Ltd. Socio-economic characteristics of
cooperative societies have been singled out as the major constraints to
cooperative societies’ access to services of agencies established to help them
in Nigeria (Ijere, 1977; Okafor, 1979). Such socio-economic characteristics
include membership size, the cooperative’s asset base and membership
participation. As part of the conclusions from his study of the use of women
cooperative societies for transfer of cassava technologies Agbo (2000),
emphasized that the socio-economic characteristics of cooperatives that hinder
cooperatives access to development resources include the sex of cooperative
members, the age of the cooperative society, and the distance the cooperative
society has to cover to get to the location of the services provider. Botomley
(1989) adds to the list of such socio-economic characteristics to include the
type of cooperative, the sector of the economy where cooperative intervention
is implemented, the levels of functional and cooperative education possessed by
cooperative members, as well as the quality of cooperative management
available. In his own study, Ambruster (2001) isolated, among others, the
system of delivery of the services needed by cooperatives, the process used to
determine the sector that needs intervention, and the mode of selection of
beneficiaries as the most critical factors affecting cooperatives’ access to
development resources.
To provide empirical
evidence on what has actually been responsible for the poor access to N50
billion credit mediated by the NACRDB Ltd., this study became necessary.
Moreover, since NACRDB Ltd still remained the most important government owned
development finance institution through which official financial services were
provided to farmers’ cooperative societies, organizers of cooperative societies
could also draw lessons from the result of the study to improve upon those
socio-economic characteristics that have hindered access to the services of
NACRDB Ltd.
Objectives of
the study
The broad objective of
this study was to identify the factors that determined cooperative societies’
access to the N50 billion intervention fund administered by NACRDB
Ltd.
The specific
objectives included:
- · to identify the socio-economic characteristics of cooperative societies that applied for loans from the intervention fund;
- · to determine if these socio-economic characteristics affected the cooperative societies’ access to the intervention fund;
- · to determine how the cooperative societies perceived the operational guidelines of NACRDB Ltd., under the intervention fund;
- · to use the result of the study to make recommendations as to how to improve the access of cooperative societies to the services of NACRDB Ltd.
Materials and
methods
This study covered the
activities of NACRDB Ltd (under the intervention programme). Nigeria is
composed of 36 States and the Federal Capital Territory, Abuja. For
administrative convenience the component states are divided into six zones,
namely, the Southeast zone (5 states), the South – South zone (6 states), the
Southwest zone (6 states), the Northeast zone (6 states), the Northwest zone (7
states), and the North Central zone (6 states). The Federal Capital Territory
is within the North Central zone.
Sample selection was
carried out in stages. In stage I, one state was randomly selected from each
zone giving a total of 6 states. In stage II, the list of cooperative societies
that applied for credit facilities under the intervention scheme from various
branches of the NACRDB Ltd in each of the six selected states was obtained.
From this list, thirty cooperative societies whose applications succeeded were
randomly selected in each state. Furthermore, another set of thirty cooperative
societies whose applications failed was also randomly selected. This gave a
total of 180 cooperative societies (30×6) that obtained credit from the bank
and another set of 180 cooperative societies that failed to obtain loan from
the bank.
Structured
questionnaires were used to obtain information on the 360 cooperative societies
studied. The structured questionnaires sought to obtain information on
socio-economic characteristics of the cooperative societies including age of
cooperatives, membership size, gender of members, educational attainment of members,
size of shareholding, size of asset holding, credit history and others. Trained
research assistants were used to collect data.
10Data were collected
from the NACRDB Ltd headquarters in Kaduna, its branches in the states sampled
as well as from the cooperative societies selected for the study.
Results and
discussion
Socioeconomic
characteristics of cooperative societies
The socioeconomic
characteristics studied included age of cooperative society, membership size,
gender of members, number of years of schooling of members, asset holding of
the cooperative societies, shareholding of the cooperative societies, size of
liability of the societies and distance of societies to the nearest branch of
NACRDB Ltd.
Table 1: Statistical description of the socioeconomic
characteristics of the cooperative societies under study
Source : Computed from
field data, 2005
Table 1 above presents
the statistical description of the socioeconomic characteristics of the
cooperative societies under study. The mean value for age of cooperative
societies with access (10) was lower than that of those without access which
was 12. The implication of this was that cooperative societies with access in
the survey were younger. Cooperative societies with access had higher mean
value of 31 for membership size than those without access with mean value of
23. Both cooperative societies with access and those without access had higher
male members than female members as both had mean values for male membership of
24 and 23 respectively as against mean values for female membership of 19 and
21 respectively.
Members of cooperative
societies with access spent more years in school with a mean score of 13 year
as against a mean score of 11 years for cooperative societies without access.
In the areas of shareholding, asset holding, size of liability the cooperative
societies with access scored higher mean values. For distance to the nearest
branch of NACRDB cooperative societies with access scored lower mean value of
47km as against 62km for cooperative societies without access.
Generally speaking
cooperative societies with access were relatively younger, had higher
membership size with more educated membership. The study also showed that
cooperatives that accessed intervention fund had higher share values, more
assets and more liabilities, they were also found to be located closer to
NACRDB Ltd.
The reason for a lower
age value may be that cooperative societies were registered in response to
particular NACRDB credit schemes. Baring other influences it was expected that
older cooperative societies with track records of performance would have had
more access. Membership size is a sign of strength and probably offers a
greater chance of mobilizing more share capital. Cooperative societies with
higher membership size stand better chances of enjoying economies of scale.
This might have improved the chances of the cooperative societies under survey
to access the credit services of the bank.
The size of liability
of a cooperative society is an index of the society’s credit history.
Cooperative societies that have borrowed in the past with a good repayment
record stand better chances of borrowing again. This could be the case of the
cooperative societies with access in the study.
Distance to the NACRDB
has some socioeconomic implications. For instance, distance affects the cost of
transportation to the agency. It may also have implication for the awareness of
the existence and services of the agency. It is very likely that groups located
nearer to the agency may be more aware of the services of the agency. This
might have counted in favour of the cooperative societies that had access.
Higher educational
attainment may also favour higher awareness of government programmes and how to
access such programmes. The implication is that cooperative societies with more
enlightened members stood better chances of accessing NACRDB programmes.
To ascertain if there
were significant differences between the mean values for cooperative societies
with access and those without, the Levene’s test for equality of means was
carried out. The result of the test is shown in table 2 below.
Table 2: Levene’s test for equality of means of
socioeconomic characteristics of cooperative societies with access to services
of NACRDB and those without
* = Significant at 0.05 probability level
AGCOOP = Age of cooperative, Memsize = Membership size
MEMGENDER = Gender of members, ASSHOLD = Cooperative
societies level of asset holding, EDULEVEL = Educational level of members and
DISAGENCY = Distance from NACRDB Ltd.
Results from Levene’s
test for equality of means (table 2) indicated that the differences between the
means of seven socioeconomic characteristics listed were statistically
significant at 0.05 probability level. The mean differences, except for age and
distance from the agency, were all positively signed indicating larger values
for cooperative societies with access to the services of NACRDB Ltd. The
implication could be that the higher these values are the more chances a
cooperative had to access the services of the bank. The mean differences for
age and distance from the agency were negatively signed probably indicating
that the younger a cooperative was and the nearer it was to NACRDB the better
its chances of accessing the services of the bank.
Guidelines for the
operations of Nacrdb Ltd
The N50
billion domiciled with the NACRDB for on-lending to farmers cooperative
societies was part of the Federal Government of Nigeria’s special Presidential
Initiative on cassava production and export. Part of the objectives of the
initiative included the expansion of primary processing and utilization of
cassava, identification and development of new market opportunities for import
substitution and export, stimulation of increased private sector investment in
the establishment of export oriented cassava industries. It was, therefore,
expected that cooperatives that will borrow from the N50 billion
intervention fund would be involved in one aspect or the other of the cassava
production initiative.
The credit guidelines
issued by the NACRDB Ltd for cooperatives expecting to borrow from the
intervention fund included (1) opening an account with NACRDB Ltd, (2) a
minimum deposit in this account of at least one-third of the amount to be
borrowed, (3) an interest rate of 15%, (4) group formation and (5) an insurance
cover for the business of the cooperative group.
To ascertain how these
operational guidelines of the NACRDB Ltd affected the access of cooperative
societies to the credit services of the bank a Likert scale rating of members’
perception was conducted using the presidents and the general secretaries of
the affected cooperative societies as respondents. Likert scale of 5-point was
adopted. The 5-point scale was graded as Very serious effect = 5, Serious
effect = 4, Undecided = 3, Not serious effect = 2, Not very serious effect = 1.
The mean score of the
respondents based on the 5-point scale was 5 + 4 + 3 + 2 + 1 = 15/5 = 3.0.
Using the interval scale of 0.05, the upper limit cut-off point was 3 + 0.05 =
3.05, the lower limit was 3 – 0.05 = 2.95. On the basis of the limit, any mean
score below 2.95 (i.e. MS < 2.95) was taken as “Not serious effect”, those
between 2.95 and 3.05 were considered of “Serious effect” (i.e. 2.95 ≤ MS
≤ 3.05), while any mean score that is greater than or equal to 3.05 (i.e.
≥ 3.05) was considered of “Very serious effect.”
Table 3 presents a
summary of the mean distribution of the perception of how the operational
guidelines of NACRDB Ltd affected cooperative societies’ access to the N50
billion intervention fund.
The minimum deposit
requirement was meant to serve as collateral offered by the cooperative groups
for the amount of loan requested. The loan beneficiaries perceived this
requirement as of no serious effect on their access. However, the
non-beneficiaries perceived this requirement as a very serious impediment to
their access. This requirement may have been informed by the reported high rate
of default in loan refund by cooperative societies in previous programmes.
Both beneficiaries and
non-beneficiaries perceived interest rate as of not serious effect on their
access to this fund. This may be because the interest rate charged was much
lower than the going commercial rates of between 25% and 30%. Government
subsidized the credit from this intervention fund to ensure access by
cooperative societies.
Time of loan release
was not part of the guidelines but both beneficiaries and non-beneficiaries
agreed that it affected their access. It was observed that bureaucracy that ensued
in the process of loan application led to late release of loans beyond the
planting season for the main crop of the intervention programme.
Both beneficiaries and
non-beneficiaries perceived loan size which was dependent on the deposit the
cooperative was able to make as a constraint. For the beneficiaries it was a
constraint to the extent that they would have wanted to borrow a higher sum if
they could afford a higher deposit. For the non-beneficiaries this requirement
was one single reason that barred them from access. In addition an official
ceiling was placed beyond which no cooperative would borrow from the fund
irrespective of ability to raise higher initial deposit.
Group formation was
not perceived as a constraint by either of the groups. This may be because they
were already in groups before application.
To the beneficiaries
the type of crop grown was not a constraint probably because they were already
involved in cassava production but may have needed more money to expand
operations. Cassava growing belts of Nigeria do not extend to the northernmost
parts of the country. For this group of farmers the initiative did not take
their interests into consideration and to that extent limited their access to
cassava production.
The particular
enterprise in cassava production the beneficiaries were involved was important.
Those groups that had facilities to produce cassava and its derivatives for
export were more favoured. The non-beneficiaries perceived this as a constraint
because most of them could not produce cassava in the first instance.
Cooperative societies
that wanted to benefit from the scheme were required to take an insurance cover
for their operations. Because of the difficulty of obtaining insurance services
for agricultural activities in Nigeria, both groups perceived this requirement
as a constraint on their access.
Table 3: Mean distribution of effects of NACRDB Ltd
operational guidelines on cooperative societies’ access to credit services of
the bank.
Conclusions
and recommandations
This study showed that
socioeconomic characteristics of cooperative societies affected their access to
the services of the Nigerian Agricultural Cooperative And Rural Development
Bank Ltd. The study raised a fundamental issue in cooperative formation requiring
promoters of cooperative societies to pay particular attention to socioeconomic
characteristics such as membership size, size of share capital holding, assets
holding, level of education of members and others, because these have
fundamental effects on the performance of cooperative societies. NACRDB Ltd
used operational guidelines that were perceived to have contributed to lack of
access by cooperative societies.
Based on the findings
of the research the following recommendations have been made:
- · There is need for a nationwide cooperative awareness campaign emphasizing the importance of forming cooperatives with appropriate socioeconomic characteristics to ensure that such cooperatives benefit from services of development agencies created to serve them.
- · Cooperative development agencies should be sited close enough to cooperative societies they serve since distance was found to have affected the access of cooperative societies in this study. In this study younger cooperatives were found to have more access to services of the bank than older ones.
- · Cooperative development agencies therefore need to pay enough attention to older and successful cooperative societies in their dissemination of assistance to cooperative societies. This will tackle the problem of forming emergency cooperative societies designed to cash in on new government schemes. Such emergency cooperative societies have been found to fizzle out as soon as they fail to get the assistance desired.
- · The Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB) Ltd needs to tinker with her credit guidelines to ensure a wider access by a wider range of cooperative societies no matter what part of the country they are located.
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Sumber : http://iptaana.wordpress.com/2012/10/13/international-journal-of-cooperative/
