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THE EFFECT OF CREDIT RECOVERY ON THE PERFORMANCE OF NACRDB

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The administration of credit can be regarded as important to financial institutions in any economy. Consequently the formulation and implementation of bound credit policies among the most crucial responsibilities of management in any financial institution. Thus this formulation of a sound credit policy is a necessary condition if financial institutions are to attain their objectives to serve the public in an efficient manner and more importantly, ensure the safety of their funds. An articulate credit management policy not only seeks to balance profit ability with liquidity but in doing so, it is expected to determine to whom credit must be granted, how to ensure successful recovery. (I Yowu 2015).

The achievement of an efficient credit management entails an element of subject judgment. Abdullahi (2013) posited that “in order” to arrive at a good judgment there is a need to evaluate the cannons of lending or the five’s of credit namely condition, character, capacity, capital and collateral. Nigeria Agricultural cooperative and rural development bank (NACRDB) was established on the 24th November 1972 and went into operation on 6th March 1973 its establishment was hinged on the now enhanced vindicated conviction that the bank will enhance the income level of farmers and this make farming more attractive.

Today (NACRDAB) started as the Nigeria Agricultural bank ltd (NAB) and actually took it’s new name in 1978 at the instance of the Nigerian government. This in the government view was to reflect more vividly, the bank commitment to Agricultural development through the promotion and financing of co-operates the general consensus however, was that these credit financing institutions, failed die to some factors. Agricultural experts say these factors ranged political interference, inefficient project, appraised monitoring and supervision, the low coverage of the farming population, trade quite funding adoption of the excessively rigid and time consuming procedures for processing loans application, low loan recovery and untimely loan disbursement, the loans institutional lending consisting of such informal sources as money lenders, friends relations and thrift societies, took advantage of the weakness of these institutional lenders to change exorbitant rate themselves which the government commissioned a number of studies which finally culminated in the world bank stonenam report of 1969.

The report recommended among other things the establishment of a National Agricultural credit institution, whose major function would be the provision of credit to farmer so as to exterminate the major impediment to agricultural development in Nigeria. And after 22 years of existence (NACRDB) can unequivocally be said to have lived up to these objectives it has provided diverse credits to improve the whole ambit of the country’s agricultural and agro business. Thus, the (NACRDB) of today is a welcome relief to Nigerian farmers, the banks inauguration market an important land mark in the history of the nation’s agricultural development and it is has continued to serve as a national financing institution devoted industry to investing in all aspect of the agricultural industry. And more importantly, it has continued to serve as a source of fund to Nigeria farmers.

1.2 OBJECTIVE OF THE STUDY

The following are the objectives of the extended essay;

·         TO find out the beneficiaries of NACRDB loan.

·         To find out the rate of loan repayment and its consistency

·         To find out how NACRDB loan is disbursed to its beneficiaries.

·         To make the essay work the basis upon which other essay writers can improve upon.

1.3 SIGNIFICANCE OF THE STUDY

The relevance of any essay work to the society being studied and the economic work of the nation lies or the qualify of the work carried out. Nevertheless, Nigeria Agricultural cooperative and rural development bank (NACRDB) Kaduna was assessed by the then Head of State, General Yakubu Gowon (Rtd) at its launching in 1973 as also concerned on the validity of the conception it has become a household name, in agricultural financing might be a risky venture, but that it will be the magnitude of agricultural development of  the national economy in the long run.

The essay will serve as means of appraising the agricultural sector as to determine if the aims and objectives are being met to other financial institutions it will serve as a means of estimating their contribution to the overall economic development of the small scale farmers in particular and the larger scale farmer (exporters) in general through the different loan schemes. To this end, we will be also to see if their different schemes are meeting the expectations required to them and to suggest remedies where they are found wanting.

To farmers, the paper will serve as a means of creating much needed awareness as regards the different ways that they can meet up with their commitments to the bank and in making the bank continue to assist irrespective of the various schemes it is involved in this work will also serve as a reminder to other financial institution other than NACRDB of the need to extend their activities to the venture of agricultural financing sector of the economy that concentrating only on the banking aspect. Finally, this paper will serve as a guide of enlightening the general populace of the importance of agricultural financing and suggesting ways and strategies of reducing the risk involved in loan.

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