Academic journal article International Review of Management and Business Research

Stakeholders Perception of Cooperative Societies as a Micro-Credit Delivery Channel in the Nigerian Financial Sector Reform Era

Academic journal article International Review of Management and Business Research

Stakeholders Perception of Cooperative Societies as a Micro-Credit Delivery Channel in the Nigerian Financial Sector Reform Era

Article excerpt

Introduction

The vision of the cooperative development policy of the government, as expressed by the federal ministry of agriculture and rural development (FMARD, 2002), is to promote members' entrepreneurial capacities so that they can generate adequate surpluses for themselves and create opportunities for economic progress for the public. According to Cameron (1972), for an economy to experience development, two conditions are necessary and sufficient. These are the presence or availability of entrepreneur and providers of external finance. Asaolu (2004:3) described cooperative societies as popular organizations which are voluntary associations set up by citizens in order to promote their common welfare. Abrahamsen (1976:2) opined that people cooperate because they have learned that it is extremely difficult to achieve some future goal by working alone. This is because; according to Lawal (2006:4) Cooperative Society is a kind of business for

the benefit of its member. It is a general view that solution to economic problems lies in the human factor; and that more can be accomplished when people coordinate their efforts with each other and take concerns and talents of other into considerations. Reeves (2003) opined that creating wealth requires that we cooperate with each other to make the most valuable use of our limited time, effort and resources, and that human progress can continue to be made through, communication, coordination and cooperation. Levine (1997) viewed that the efficacy of financial intermediation can affect economic growth and as a result there is a positive relationship between economic development and financial growth.

The micro finance power of cooperative societies cannot be overemphasized. Small scale enterprises (SSEs) have been promoted greatly by Microfinance Institutions (MFI's), the major and most geographically spread of which are cooperative societies. Apart from ready access to microcredits, Small Scale Enterprises (SSEs) obtain loans with softand convenient term. Adelaja (2006:2) noted that the current banking consolidation programe though desirable, is likely to be more of threat than opportunity for MSMEs. Therefore there is the need to embrace the cooperative options. Most members of cooperative societies engage in one economic activity or the other and thus contribute in no small measure to economic outputs of the nation. Economic development is better achieved through cooperation to solve the problem of scarcity.

Statement of the Problem

Despite its microfinance power, the Cooperative Societies as an informal source of finance has serious setbacks. One of these problems is the inadequate amount of capital that can be raised from the members of the cooperative society when compared to the need of small scale industrialists. There are factors however that have militated against the efficiency of cooperative sector as an economic tool of microfinance, job creation, poverty eradication and wealth creation. Some of these are bad leadership, lack of mutual training and exposure to modern management techniques, ambiguous government role in the cooperative movement, as well as the challenges of the changing world. The perceived benefits and problems of cooperative societies in the financial sector era is worthy of exploration. There is paucity of research in this regards in the Nigerian context.

Research Questions

i. Is there a significant impact of cooperative societies as a microfinance delivery channels?

ii. Is there a significant difference in the impact of cooperative societies as a microfinance delivery channels across states in Nigeria?

iii. What are the factors militating against cooperative societies as an effective microfinance channels in Nigeria?

Objectives of the Study

In the light of the above, it is the intention of this study to examine the impact of cooperative societies as a micro-credit delivery channel, especially in the promotion of micro enterprises in Nigeria. …

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