Should Government Undertake Collateral for Cooperative Debt Financing?: Introduction, Literature Review, Discussion and Recommendation

The finding of the research is because of having low amount of share capital; cooperatives use more debt finance from bank through the collateral of government. The performance of Unions and their affiliated primary cooperatives were inefficient during the period under the study. The major reasons were low capacity of cooperative management to gather marketing information, lack of professional skills of cooperative promoters for technical support, lack of facilities, etc. As the sector provides a means of subsistence to 85 percent of the population and significant proportion of foreign earning, the government should continue to undertake the collateral for cooperatives debt financing. Effort has also to be made to improve the production and marketing structures of the rural producers so that they can produce marketable products that fetch higher values. The organization and management aspects of cooperative unions have to be critically examined and technical support provided to improve their performance.