CHAPTER ONE
1.0 INTRODUCTION
This project research tends to look at the sources of funds open to cooperative society in Imo state, a case study of some selected primary cooperative societies in Imo state.
Observation and questionnaire shows the sources of funds opened to cooperative society, and emphasis is placed on the sources. The existence of a business enterprise to a large extent depends on the availability of fund both for initial take off and for running the business. Enough capital outlay is needed to buy assets (e.g cars, building, equipment etc), and for handling daily needs (e.g stationeries, paying wages and salaries etc). lack of fund can put a firm on a standstill. The capital requirement of business varies from firm to firm.
Financing is the act of raising and using of funds by individuals, cooperatives, firms and governmental organizations for their day to day operations, running and management of a business undertaking as opted by Okeke (2006). As a discipline, finance is merely a body of facts, principles and theories which deal with the raising (e.g by borrowing) and using (e.g by investing) of money by individuals, cooperatives, firms and governmental organizations. In the truest concept and practice, finance is concerned with money (that is the life blood of any business enterprise) be it cooperatives, partnerships, limited liability companies etc.
Adeyeye (1978), implied that no business organization can thrive and survive without constant and adequate flow of finance . He opted that in business financing there are three ways of going about it, and is as follows;
- By short term
- By intermediate term
- By long term
To further explain, short term is the type of borrowing that is repayable within one year intermediate is more than one year but less than5 years, while long term is 5 years and above.
A key consideration in choosing the source of cooperative finance is to strike a balance between equity and debt to ensure the fund structure suits the business. The main difference between borrowed money (debt) and equity and that bankers request interest payments and capital requirements, and the borrowed fund is usually secured on business assets or the personal assets of shareholders/ directors. The overall objective in rraising funds in cooperatives to excessive high borrowings, but without unnecessarily diluting the share capital. Raising funds is often a complex process. Cooperative needs to assess several alternatives and then negotiate terms which are acceptable to the fund provider.
Bob Igwe (1996), quoted that the sources of funds opened to any cooperative society has made it possible for the director/management to take a reasonable decision that will effect changes in cooperative development.
Calvert H (1956), said finance is the most encompassing of all business enterprises.
Cooperative society have expanded forms of business due to the opportunity to raise shares of capital through the public and the ease with which fund can be available to them owing to the fact that they have collateral to borrow money from financial institution.
- BACKGROUND OF THE STUDY.
According to thirlwal (1972;260), the study of the sources of funds opened to cooperative van be viewed from domestic resources. Some members of cooperative societies in the rural arrears are characterized by poverty, illiteracy, unemployment etc. and has become a huge problem to financing cooperative.
The formation or starting up of a cooperative need good financial planning, by this the researcher means an adequate identification of the financial needs of cooperative through aggregate budget of the various units or department or division that make up cooperative.
The capital needs in cooperative incorporate thee need to solve certain problems militating the growth of cooperative. With this the cooperative society will look inward to see what is available, and how to source for fund internally and externally. Serious attention should be given to financial need of cooperative in terms of time, sources and economically feasible method of acquisition.