IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH (IJSSMR )

E-ISSN 2545-5303
P-ISSN 2695-2203
VOL. 9 NO. 11 2023
DOI: https://doi.org/10.56201/ijssmr.v9.no11.2023.pg239.249

---

Effectiveness of Financial Cooperatives as Cost-Effective Models for Financing Rural Economies in Nigeria

Otaokpukpu Justina Njideka, Dr Nwankwo Leopold Arinze, Dr Uneze Chijioke Uchechukwu

---

Abstract

Financial cooperatives, commonly known as credit unions or savings and credit cooperative societies (SACCOs), have emerged as integral components of Nigeria's financial landscape, especially in rural areas. This paper explores the effectiveness of financial cooperatives as cost- effective models for financing rural economies. The study delves into their structure, benefits, challenges, and impact on rural communities, with a focus on Nigeria's unique context. Financial cooperatives, characterized by member ownership and control, aim to provide affordable financial services to low-income populations. In Nigeria, where rural areas face challenges in accessing traditional banking services, financial cooperatives have been promoted as a sustainable approach to extend financial inclusivity. SACCOs leverage member savings to offer loans at reasonable interest rates, fostering cost-effectiveness compared to other microfinance models. The paper also discusses the structure of the rural economy in Nigeria, its challenges, and potential policy pathways for fostering rural economic growth. The components of financial cooperatives, such as membership, governance, savings mobilization, lending methodology, and regulation, are examined. The study emphasizes the significance of good governance in ensuring cooperatives act in the best interests of their members. It also discusses the positive impact of financial cooperatives on rural communities, offering accessibility, affordability, and contributing to community development. In conclusion, financial cooperatives present a promising model for rural economic development in Nigeria. The paper provides recommendations for enhancing their effectiveness, emphasizing collaboration with regulatory bodies, targeted initiatives for financial inclusion, capacity building, technological adoption, diversification of financial products, community

---

References:

Ajayi, A. R., & Torimiro, D. O. (2004). Policies and Programmes for Effective Agricultural and
Rural Development in Nigeria. Agricultural Journal, 5(2), 52–58.
Akpan, S. B., Patrick, I. V., James, S., & Agom, D. I. (2015). Comparative Analysis of the Impact
of Credit Unions and Microfinance Banks on Rural Dwellers in Nigeria. International
Journal of Business Administration, 6(2).
Akpan, S. B., Patrick, I. V., James, S., & Agom, D. I. (2015). Comparative Analysis of the Impact
of Credit Unions and Microfinance Banks on Rural Dwellers in Nigeria. International
Journal of Business Administration, 6(2).

DOWNLOAD PDF

---

Back