Role Of Commercial Banks In Financing Agricultural Co-Operative Societies

INTRODUCTION
BACKGROUND OF THE STUDY
Union Bank of Nigeria Plc was established in 1917 as a colonial Bank with first branch in Lagos. In 1925, Barclays Bank acquired the Colonial Bank, which resulted in the change of the Bank’s name to Barclays Bank (Dominion, Colonial and Overseas) following the enactment of the Companies Act in 1968 and the legal requirement for all foreign subsidiaries to be incorporated locally, Barclays Bank (DCO), in 1969 was incorporated as Barclays Bank of Nigeria Limited. The ownership structure of Barclays Bank remained un-changed till 1971 when 8.33% of the Bank’s shares were offered to Nigerians for public subscription. In the same year, the Bank was listed on the Nigerian stock exchange as one of the players. As a result of the Nigeria Enterprises Promotion Act of 1972, the Federal Government of Nigeria acquired 51.67% of the Bank’s shares, which left Barclays Bank Plc London with only 40%. By the enactment of the 1972 and 1977 Nigeria Enterprises Promotion Acts, Barclays Bank International disposed it’s shareholding to Nigerians in 1979. To reflect the new ownership structure and in compliance with the companies and Allied Matters Act of 1990, it assumed the name Union Bank of Nigeria Plc.
In consonance with the government’s programme of privatization and commercialization of public enterprises the Federal Government in 1993, sold it’s shares in Union Bank to private individuals. Thus, Union Bank became fully owned by Nigerian citizens and organizations.
In line with the Central Bank of Nigeria’s banking sector consolidation policy, Union Bank of Nigeria Plc acquired the former Universal Trust Bank Plc and Broad Bank Ltd and absorbed it’s erstwhile subsidiary Union Merchant Bank Ltd. The Bank also increased it’s shareholders funds through a public Offer/Rights Issue in the last quarter of 2005. With these development, Union Bank remains one of the most capitalized banks in Nigeria. It has a shareholders funds of N119.160 billion and operates through 405 network of branches that are well spread across the country, all of which are on-line, real time, etc.
The subsidiaries of the Union Bank Plc are thus:
(a) Union Homes Savings and Loans Plc
(b) Union Trustees Limited
(c) Union Assurance Company Limited
(d) Union Bank UK Plc
(e) Banque Internationale du Benin, Cotonou.
(f) UTL Communications Services Limited
(g) UBN Property Company Limited
(h) Union Capital Markets Limited
(i) Union Registrars Limited.
ASSOCIATED COMPANIES:
(a) Consolidation Discounts Ltd.
(b) HFC Bank of Ghana Limited
(c) Unique Venture Capital Management Co. Ltd.
Union Bank Group Operates an interlocking organizational structure whereby some Board Members of the Union Bank of Nigeria Plc act as External Directors in the subsidiaries and associated companies. This arrangement ensures effective oversight and participation in the decision –making process of these companies, thereby safeguarding the Bank’s investments.
Today, the Bank is a leading regional bank in Sub-Sahara Africa in terms of it’s diverse investments across the globe. A glance at the Bank’s Financial Summary as at 31st March 2008 reveals its solidity. For instance the Bank’s gross earnings was N112.988 billion; profit before tax was N33.012 billion; total assets showed N1.128.890 billion; and shareholders’ fund stood at N199.160 billion.
The Union Bank of Nigeria Plc created the “Union Homes” and “savings section” to grant holders. It’s objectives includes efficient and effective credit administration with target beneficiaries on rural poor farmers when loan is granted is 25%, maximum loan amounts are revised upward depending on timely repayment of previous loans and the cooperative investments.
Agricultural cooperative, also known as Farmers’ Cooperative Society is a cooperative society when farmers pool their resources in certain area of activity, Amahalu (2007) defines agricultural cooperative as those society which embrace all the cooperative activities which aim at helping farmers in professional capacities as producers. The inherent weakness of farming call for this type of cooperative society. The standard of planting tag techniques to seed procuring and farm financial subsidization to produce display in proper places are all what agricultural cooperative are seeking to uplift collectively.
Obodechi (2006), in his own contribution, stated that financial is the life-line of any organization. Cooperative as a business organization needs to raise fund for it to effectively and efficiently deliver it’s goals.

STATEMENT OF THE STUDY
Cooperative in Nigeria has always been focused with numerous problems caused by the stakeholders such as, the Federal Government, State Government, Local Government Authorities as well as the members of cooperative society. However, agricultural cooperatives inspite of all the efforts being made, still experience some problems that hinder their growth and development, especially in the area of collateral and high lending rates.

PURPOSE OF THE STUDY
The main purpose of this study is to discover the role Banks play in financing agricultural cooperative in Enugu State though with the Union Bank of Nigeria Plc as a case study and also to highlight the following:
(i) To suggest means of improving Bank involvement in financing agricultural cooperative in Enugu State.
(ii) To determine what can be done to enhance agricultural production
(iii) To suggest ways in which the problems identified could be rectified.
(iv) To appraise the contribution of the Union Bank of Nigeria Plc towards agricultural development.

SIGNIFICANCE OF THE STUDY
It is very useful to students in tertiary Institutions in Nigeria, studying cooperative economics. The various tiers of Government are also going to benefit from this work, because it would enable them adopt the right agro-business credit policies to enhance credit effectiveness and efficiency.
In Furtherance, members of the Agricultural cooperative are considered the major beneficiaries of this research work since it will enable them know the immense benefits of approaching Banks in the financing of agriculture. Also, all intending members of Agricultural Cooperative will know through this work that Bank credit is a major accelerator of development.
Finally, on the part of the masses, the modified outcome of this work shall contribute immensely towards the improvement of standard of living.

HYPOTHESIS
In this research the following hypothesis shall be tested:
(i). Lack of adequate fund causes problems for agricultural cooperative in Enugu State.
(ii). Lack of adequate fund do not cause problems for agricultural cooperative in Enugu State.
(iii). Inadequate loan contributes to low productivity in agricultural cooperative.
(iv). Inadequate loan do not contribute to low productivity in agricultural cooperative.

LIMITATION OF THE STUDY
This research study is limited to the geographical and political boundaries of Nigeria in general and Enugu Metropolis in particular. This research study is to ascertain the role of banks in financing agricultural cooperative. How they have been able to facilitate the development of agricultural cooperative societies and to boast small stockholders and large scale inventors
Limitations: It would have been ideal to involve other financial institution but for constraint of time, finance and other resources, which makes it difficult as regards these projects only Union Bank Enugu Zonal Office were studied.
(i) Time: It’s certain that time waits for no man the period at hand is not enough to gather data from paper analysis and other academic responsibility and curriculum activities which has been an obstacle to this study.
(ii) Finance: In terms of finance, places could have visited to collect data materials were cut short due to lack of finance. A good project needs current and relevant information and they are just available in a place so, one need to search from one place to another which require a lot of money due to financial handicap as a student, one can afford to channel all resource to one base.
(iii) Limitation of Resource Material: Limited resource of material such as government and Bank’s Publications papers, journal are limited in supply as some Bank officials give little or partial cooperation. This result to limitation of acquisition of information.

RESEARCH QUESTION
The under listed are relevant research questions, which will help the researcher to actually evaluate the Role Commercial Banks in financing agricultural co-operative societies in Enugu State
1. What are the criteria for granting loan?
2. To what level do you consider banking loan facility toward agricultural financing?.
3. What level or capacity have your Bank been able to finance agricultural co-operative within the past five (5) years?
4. What impact has your Bank created towards the financing of agricultural co-operative society within this period?.