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Full Project – Design and implementation of a web based cooperative society thrift management system

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CHAPTER ONE

INTRODUCTION

1.1 Background of Study

Thrift and Credit Cooperative Societies (TCCS) are member-based organizations that help members to address economic problems. The ultimate goal is to encourage thrift among the member and to meet credit needs of people who might otherwise fall prey to loan sharks and other predatory lenders (Adekunle et al., 2007).

Cooperative Societies are widely spread organization in developing countries, they are known for strong commitment as well as participation in the decision making of their members (Haan et al, 2003). These societies mobilize local savings and administer credit to members, thereby encouraging thrift and entrepreneurial activity (Adekunle et al., 2007).

A cooperative society according to International Cooperative Alliance (ICA, 1995) is “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations, through a jointly owned and democratically controlled enterprise”. When first started, credit unions use relatively unions use relatively unsophisticated administrative practices, so that the cost are very small and most interest income from loans may either be distributed to the members or reinvested in the credit union within a capitalization programme. Consequently (UNDESA, 1999) has it that they can be set up in poor communities where access to means of secure savings and to credit at non-exploitative terms is of greatest importance.

Thrift and Credit Cooperative Societies (TCCS) assure any group of individuals an effective means to combine resources, however small they further started. It can exist among traders, farmers, craftsmen, artisan, academicians, and so on, who pull their resources together to meet their common needs by means of regular savings passbooks in which his savings are recorded for keeps. It permits a larger savings mobilization than within the capacity of most individuals. Financial intermediation through TCCS may be a catalyst of most entrepreneurial growth.

The society retains capital and the surplus from outside transactions in the society with which it operates and is used for further entrepreneurial development. According to Adekunle et al (2007), cooperatives are a form of participatory, democratic economic and work organization in which members are simultaneously the owners, managers and workers. Credit is important element in any progressive and dynamic economy. As economic activities increases, economic becomes more diversified, credits become unavoidable. The unsurpassed solution is formation of TCCS among close associates. TCCS also in (Adekunle et al, 2007), has characteristics which include discretionary power of members, open communication, management suggestions rather than instructs, risk and uncertainty are shared and there is motivational potential.

Federal University Otuoke Staff Multipurpose Cooperative Society (FUOSMCOS) is a cooperative society that provides all members with convenient and secured means of interest. The cooperative society maintains the records of members, the accounting books and provide passbook for each member just as the banks were doing before.

However, the banks have become more effective in regards to the saving and monetary management of funds by the use of relevant information technology platforms. So it is believed that the same approach could be integrated in the management of credit and multipurpose cooperative society.

The development of a web-based and thrift management system has become necessary to keeping records and adequate management of the credit system as this will allow for efficiency, credibility, reliability, availability and accessibility of necessary funds to members. A web-based management system will allow for easy fund management and boost accessibility irrespective of where the members are as the world is globally connected via the web services of the internet.

1.2 Statement of the Problem

The following are the problems associated with the traditional system of multipurpose cooperative society used by the Staff of Federal University Otuoke;

Lack of Proper Management: One of the major setbacks in establishing and running a business in any organization is the lack of appropriate leadership. It is the quality of leadership that is displayed at the committee or board level, which determines the success of failure of the cooperative.
Lack of Adequate Financing: Traditionally, cooperatives have developed around persons of limited means who lacked the financial strength to adequately capitalize their organizations. Until recent years, the commercial banking sector had no faith in the cooperative movement, and credit from this sector to cooperatives was virtually impossible. Government provided only minimal assistance through its lending agencies.

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