Developing a Credit Risk Management Framework for Savings and Credit Cooperative Societies in Kaduna State

Credit risk management in savings and credit cooperative societies involves identifying, assessing, and mitigating the risk of loan default, a function that most SACCOs in northern Nigeria perform informally rather than through structured frameworks. This study developed a credit risk management framework specifically designed for SACCOs operating in Kaduna State, North West Nigeria. A framework development methodology combining risk landscape assessment, comparative analysis of SACCO credit frameworks from comparable sub-Saharan African contexts, and local stakeholder consultations was employed. The risk landscape assessment involved review of loan records and default data from twenty SACCOs in Kaduna North, Kaduna South, and Giwa LGAs. Comparative analysis examined SACCO risk frameworks from Kenya, Ghana, and Uganda as reference models. The framework developed encompasses four risk management stages: credit application assessment and credit scoring, loan monitoring through standardised repayment tracking, early warning signals and triggering criteria, and recovery procedures for delinquent accounts. A simplified credit scoring card using income, employment status, previous repayment history, and savings behaviour as variables was validated against historical default data, showing 74.3 percent accuracy in default prediction. Expert review by ten SACCO managers and cooperative finance specialists confirmed the framework's practical applicability. The study recommends that the Kaduna State Cooperative Registration Department mandate all SACCOs with loan portfolios above five million naira to adopt the framework within an eighteen-month compliance window.

Keywords: credit risk management, SACCOs, Kaduna State, cooperative credit, North West Nigeria