Impact Of Co-Operative Financing In Rural Development

1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The rural economy of Nigeria is vital to at least, the larger number of the population residing in rural area. In the first place, no meaningful development can be achieved in a country without rural transformation.
Secondly, the rural area of the country are the major source of food and agro-industrial raw materials supplied to the entire nation. It is worthy of note that, the rural area act as an indispensable source of raw materials. Surprisingly, despite of the critical role of the rural area in Nigerian development, there have been the intense and persistent neglect of official government policy since independence. Although it would not be exactly correct to say that no conscious effort have been made by successive government of Nigeria to uplift the condition of rural area. But such effort will not be better without active implementation. Therefore, rural development in Nigeria was abandoned to the state of sudden change that is difficult to predit of agricultural development programme, for example Operation Feed the Nation (OFN) would have neither succeeded in modernizing agriculture or enhancing the quality of rural life. Recently, it has become absolutely necessary to teach middle level agricultural manpower area, such as modern technology in agriculture and agricultural extension service. These hopefully will improve agricultural production and consequently the income level of the rural people.
The Nigeria rural economy is surrounded with poverty, low income, low savings and low investment. A necessary condition for breaking the cycles is to increase capital accumulation, (savings) and the channeling of this accumulated capital into productive investment.
Perhaps, the inauguration of the rural banking scheme in Nigeria in 1977 was made in recognition the vicious cycle of poverty facing rural area in the country. The rural banking scheme was embarked upon to inculcate banking and enhance rural lending by commercial banks for productive investment index scheme, in the commercial banks allocated given numbers of branches phase, any bank which falls shorts of its quota is appropriately sanction by the central bank of Nigeria (Tell Magazine 2005).
Also the Central Bank of Nigeria has implemented the phase of the rural banking scheme and this has resulted in an appreciable rise in the number of rural branch of commercial banks in Nigeria. This achievement however has not been transacted into flow of credit to the rural area. Commercial banks by the nature of their operations are not attending to the credit need of small scale producers.
In addition, for the fact that the small scale producers are at risk, their credit need are small and infrequent, hence increasing the cost of credit administration. Above all, the rural dwellers who base on small scale producers lack the ability to meet the conditions for securing commercial bank loans. As a result of believing that the rural banking scheme has acted as conduct pipe for the transfer of rural savings to urban dwellers thus, further impoverishing the rural areas. Since the rural banking scheme has failed in its task of championing rural development in Nigeria, a central question which emerge is what other options exist for finance of rural development in the country. This is the problem which the research project addressed.
A veritable instrument for rural development which has been used successfully by many developing countries in rural transformation and which has a fairly long history in Nigeria. Cooperative performs a wide range of development function amongst which is acting as semi-former finance institution. The beginning of cooperative involvement in Nigeria can be traced to the world depression of 1929 to 1930.
The cooperative movement was formalized in 1936 which cooperative law was passed. The basic unit of cooperative movement is the primary society organized at village level. The early cooperative were primarily marketing societies, which they specialized in marketing of cocoa. But gradually other forms of cooperative were established and they are as follows:
– Consumer cooperative societies
– Group farming cooperative societies
– Multi-purpose cooperative societies
More than 90% of all cooperative is constantly agricultural cooperatives.
Despite the finance problems of cooperative they have made significant impact for the development of the rural area. The cooperatives have helped individuals (members) to achieve a level of success, which would have not been easy to come by working individually out side the cooperative. The coming together of people for joint action in the provision of rural infrastructure has helped to grease the wheel of economic development.

1.2 STATEMENT OF PROBLEMS
Finance which ensures the smooth and proper running of an organization has been a major problem facing cooperative societies. In most cases insufficient finance has posed great problem to cooperative in terms of executing their plans or project as at when due. There are other problems facing cooperative societies, such as lack of education of members on cooperative business. This is a very big problem facing cooperative societies because majority of members are not educated hence with their little or no knowledge, they cannot achieve a good goal in terms of proper planning and administration of duties.
We also have in efficiency of management as a problem facing cooperatives, this is as a result of lack of managerial skill education and fund respectively. This is because people who should have been educated find it difficult to be educated due to high cost of acquiring education.
Another problem challenging cooperative societies is lack of infrastructures. It is will known that cooperative should posses good offices and equipment for their various operations, but on like developing countries reverse is the case. Like Auditing, inspection etc. If Auditors don’t have a conducive environment they will not be able to carry out their functions or duties effectively. This will now lead to in-efficiency of all organizational activities. Also cooperative Assistants (Inspectors) if there is no conducive office, they will not be able to write adequately on the inspection carried out by them.

1.3 THE OBJECTIVE OF THE STUDY
The major objective of the study, was to determine the impact of cooperative financing in rural development of Ahiazu Mbaise Area Cooperative Council Ltd. The specific objectives include the following:
1. To identify the forms of cooperative finances available to Ahiazu Mbaise ACC Ltd.
2. To identify the forms of cooperative finances available to Ahiazu Mbaise ACC Ltd.
3. To determine the contributions of such cooperative projects to the development of Ahiazu Mbaise.
4. To identify any problems encountered by Ahiazu Mbaise ACC Ltd in their business and operations.
5. To make recommendations based on the findings.

1.4 RESEARCH QUESTION
1. What effect has cooperative financing on rural development?
2. Does cooperative financing help to boost rural productivity?
3. Has cooperative financing helped rural farmers to increase cultivatable land and improve their output and income level?
4. What are the problems encountered by the rural formers in obtaining production credit?

1.5 STATEMENT OF HYPOTHESIS
The following hypothesis would be stated and tested later to enable the researcher test the theoretical framework of research work and through empirical analysis of data collected to enable the researcher arrive at the reasonable conclusion as the reality of the hypothesis.
1. H0: Cooperative financing has no impact on rural development.
HI: Cooperative financing has impact on rural development.
2. H0: Cooperative financing has no effects on the members.
HI: Cooperative financing has effects on the members.

1.6 SIGNIFICANCE OF THE STUDY
Cooperative financing is very significant in Nigeria, especially to the rural areas. Ahiazu Mbaise Council in particular. This is because it brings about development in the rural areas and overall economic development of a country. This study on cooperative is important for the following reasons.
The study on the impact of cooperative financing on rural development with special reference to Ahiazu Mbaise Area Cooperative Council shall intend to enhance the members of the cooperative on the availability of finance to cooperatives and how it helps their day to day business activities.
To rural developers/planners, this study will also help them as regards to their planning activities towards improving the lives of the rural dwellers by bringing in essential amenities of life. Also to the researcher, this study will tend to develop and equip the researcher on the presence and relevance of cooperative financing.
To Ahiazu Mbaise L.G.A as a case study this study will encourage the L.G.A to enhance the opportunity available to them, there by using cooperative financing as an instrument for rural development and also to the general public. The study also sensitizes them on knowing the importance of cooperatives and rural development and its overall importance in National Development at large.

1.7 THE SCOPE OF THE STUDY
This study is limited to Imo State, Ahiazu Mbaise L.G.A in particular. This is due to time constraints which made it impossible to travel to all rural areas in Ahiazu Mbaise local government areas, but majority of rural areas with cooperative society where visited.

1.8 THE LIMITATIONS OF THE STUDY
In this case, the researcher encountered a lots of problems which affected this work. Some of these problems include: Most of the rural dwellers were too conservative to respond to the questionnaire issued by the researcher. There was financial problem on the side of the researcher which could not allow the researcher get into the interior villagers. There was the problem of getting materials like Textbooks, Newspapers, Journals etc based on this topic. The researcher also underwent a lot of stress during the course of this study.
Despite these problems, the researcher did not relent in the work that was carried out, rather he sorts for the grace of God to help him carry on.

1.9 DEFINITIONS OF TERMS
COOPERATIVE: this is an association of persons varying in number who are grappling with the same economic difficulties and who voluntarily associated on a basis of equal rights and obligations, endeavour to solve these difficulties, mainly by conducting at their own risk an undertaking to which they have transferred one or more of such of their economic functions as correspond to their common needs and by utilizing this undertaking in joint cooperation for their common material and moral benefits and with the intension of serving its members and the community as a whole. (Chukwu 1990:169)
FINANCING: This is the act of raising and using of funds by individuals, cooperative societies, firms and governmental organizations for the day to day operations and management of their business undertakings. (Igwe and Ugwuanyi 2006).
IMPACT: This is the powerful effect that something has on anything or anybody. It can also be seen as a help rendered with result to achievement of recommendable success.
RURAL DEVELOPMENT: World Bank, defines rural development “as a strategy designed to improve the economic and social life of a specific group of people who live in the rural area.
It involves extending the benefit of development to the poorest among those who seek a livelihood in the rural areas. These groups include small scale farmers, tenants and the handless women.