Cooperative
societies are another form of business ownership and organization. It is the
soul of entrepreneurship at communal level of the society. The principle of
cooperation is the driving force behind the cooperative societies. It is
founded on the philosophy of the common pool. This common pool concept
recognizes that
societies are another form of business ownership and organization. It is the
soul of entrepreneurship at communal level of the society. The principle of
cooperation is the driving force behind the cooperative societies. It is
founded on the philosophy of the common pool. This common pool concept
recognizes that
people when they come together with little resources can
achieve a greater level (synergy) of financial capacity to executive individual
economic goals than when they operate as separate individuals. Thus the common
pool created serves everyone effectively when the managers of the cooperative
allocate available resources efficiently.
The
economic objective of cooperation is to create wealth through provision of fund
to their members via loans with an agreed interest rate. Also some cooperative
societies engage in trading. They use the profit earned from such trading
activities to accumulate fund. They also create wealth by running any form of
business they consider profitable enough and can even buy shares in public
companies. They can buy stocks, fast moving commodities and sell to their
members at reduced prices and yet still make profit.
economic objective of cooperation is to create wealth through provision of fund
to their members via loans with an agreed interest rate. Also some cooperative
societies engage in trading. They use the profit earned from such trading
activities to accumulate fund. They also create wealth by running any form of
business they consider profitable enough and can even buy shares in public
companies. They can buy stocks, fast moving commodities and sell to their
members at reduced prices and yet still make profit.
The profits
they make through the above revenue generating economic activities are
accumulated for the year. It is shared among its members as dividends at the
annual general meeting according to the percentage of thrift contributed and
also according to the number of purchase made for the year under review.
they make through the above revenue generating economic activities are
accumulated for the year. It is shared among its members as dividends at the
annual general meeting according to the percentage of thrift contributed and
also according to the number of purchase made for the year under review.
Again
cooperative societies are run with democratic principles. The practice of one
man one vote is the norm and members of the cooperative at the AGM elect the leaders
of the organization aka management committee or simply committee members for
one term or year period. Here every member or co-operator is entitled to one
vote irrespective of position or status. The cooperative societies are
established by law – Decree No. 90 of 1993. The body of rules that govern its
administration is called the cooperative bye laws. It is this body of rules
which the management committee must abide with in discharging the business of
the cooperative
cooperative societies are run with democratic principles. The practice of one
man one vote is the norm and members of the cooperative at the AGM elect the leaders
of the organization aka management committee or simply committee members for
one term or year period. Here every member or co-operator is entitled to one
vote irrespective of position or status. The cooperative societies are
established by law – Decree No. 90 of 1993. The body of rules that govern its
administration is called the cooperative bye laws. It is this body of rules
which the management committee must abide with in discharging the business of
the cooperative
Types
of cooperative society
of cooperative society
Several
authors have valuable contribution on this issue and many have touted several
forms of cooperative societies. But a careful assessment signifies that the
numerous forms suggested can be conveniently grouped into three basic types
viz:
authors have valuable contribution on this issue and many have touted several
forms of cooperative societies. But a careful assessment signifies that the
numerous forms suggested can be conveniently grouped into three basic types
viz:
1.
consumers cooperative society
consumers cooperative society
2.
producer cooperative society
producer cooperative society
3.
credit and thrift cooperative society
credit and thrift cooperative society
Illesanmi
(2003) offers the following insights in the above three:
(2003) offers the following insights in the above three:
v Consumer’s cooperative society: as the name
implies, consumers pool their resources together in order to buy goods in bulk
from manufacturers. They by-pass the middlemen in order to get these goods at
cheaper rates and then distribute to their members at prices much lower than
the prevailing market price. Members are expected to buy from warehouse of the
cooperative and in some instance the more a co-operator buys from the
cooperative store, the higher his dividend will be at the end of the years
business
implies, consumers pool their resources together in order to buy goods in bulk
from manufacturers. They by-pass the middlemen in order to get these goods at
cheaper rates and then distribute to their members at prices much lower than
the prevailing market price. Members are expected to buy from warehouse of the
cooperative and in some instance the more a co-operator buys from the
cooperative store, the higher his dividend will be at the end of the years
business
v Producers cooperative society: this is the
association of producers of similar products who have come together in order to
promote the production and sale of their product. Members of this society
include farmers, fishermen, artisan etc. They organize other producers who contribute
money in order to buy or hire equipments, machinery and raw materials at
reduced rates. The products they buy border on raw inputs and other such
requirement meant for the production and promotion of their businesses
association of producers of similar products who have come together in order to
promote the production and sale of their product. Members of this society
include farmers, fishermen, artisan etc. They organize other producers who contribute
money in order to buy or hire equipments, machinery and raw materials at
reduced rates. The products they buy border on raw inputs and other such
requirement meant for the production and promotion of their businesses
v Credit and thrift cooperative society: this is one
of the commonest cooperative societies found in our present day society,
especially among civil servants and salaried workers. In this society, members
are encouraged to save their money, sometimes through check off at source,
believing in the common pool concept that what an individual cannot achieve by him,
he can realise by using the contribution of others to trade and meet his
economic objectives. Thus thrift and saving cooperative societies make money
through credit facilities and hence create profit by lending out the money and
charging a marginal and modest interest usually between 10% – 15%. Thus the
borrower can enjoy the use of others fund and pay back by instalment usually within a year or two
depending on the nature of collateral securities offered or deposited.
of the commonest cooperative societies found in our present day society,
especially among civil servants and salaried workers. In this society, members
are encouraged to save their money, sometimes through check off at source,
believing in the common pool concept that what an individual cannot achieve by him,
he can realise by using the contribution of others to trade and meet his
economic objectives. Thus thrift and saving cooperative societies make money
through credit facilities and hence create profit by lending out the money and
charging a marginal and modest interest usually between 10% – 15%. Thus the
borrower can enjoy the use of others fund and pay back by instalment usually within a year or two
depending on the nature of collateral securities offered or deposited.
Objectives of
Multi-purpose Cooperative Societies
Multi-purpose Cooperative Societies
According to the Bye-laws of the Cooperative Societies
of Delta state, as administered and published by the Ministry of Commerce and
Industry, the following are the basic objectives of cooperative societies:
of Delta state, as administered and published by the Ministry of Commerce and
Industry, the following are the basic objectives of cooperative societies:
1.
To engage in Thrift and credit operations
To engage in Thrift and credit operations
2.
To engage in arable and tree crops farming
To engage in arable and tree crops farming
3.
To engage in poultry farming
To engage in poultry farming
4.
To undertake simple processing and marketing of cooperative farm
products
To undertake simple processing and marketing of cooperative farm
products
5.
To stock and distribute various kinds of farm inputs such as fertilizers
and other farm chemicals to farmers.
To stock and distribute various kinds of farm inputs such as fertilizers
and other farm chemicals to farmers.
6.
To produce and distribute consumer commodities to the community at
reasonable prices
To produce and distribute consumer commodities to the community at
reasonable prices
7.
To carry out any activities designed on cooperative principles which
will encourage the spirit and practice of cooperation among the members.
To carry out any activities designed on cooperative principles which
will encourage the spirit and practice of cooperation among the members.
Features
of Cooperative Societies
of Cooperative Societies
a)
Any ten (10) persons can form a cooperative society according to the
bye-laws
Any ten (10) persons can form a cooperative society according to the
bye-laws
b)
Membership is open to those that meet specific requirement necessary as
may be stipulated
Membership is open to those that meet specific requirement necessary as
may be stipulated
c)
Its aim is to promote economic activities of their members and hence
create wealth
Its aim is to promote economic activities of their members and hence
create wealth
d)
They operate on a democratic
principle
They operate on a democratic
principle
e)
They share profit on the basis of percentages of individual contributors
They share profit on the basis of percentages of individual contributors
Benefits of Cooperative Society
1)
Democratic principle: They are democratic in nature and operate with known democratic
principle. Hence every member of the organisation has equal vote at an AGM.
However, there are certain occasions where the president of the cooperative can
have a casting vote. Such situation arise when during a voting exercise, there
is a tie e.g. 50 – 50, i.e. the yeh and ney situation being equal. In this case
the president has what is called a casting-vote again to any side he wishes and
that side automatically carries the day.
Democratic principle: They are democratic in nature and operate with known democratic
principle. Hence every member of the organisation has equal vote at an AGM.
However, there are certain occasions where the president of the cooperative can
have a casting vote. Such situation arise when during a voting exercise, there
is a tie e.g. 50 – 50, i.e. the yeh and ney situation being equal. In this case
the president has what is called a casting-vote again to any side he wishes and
that side automatically carries the day.
2)
Encourage saving: This pertains especially to the thrift and saving type of cooperative
society. Members make regular thrift contribution and based on the amount
contributed by each member, loans are granted. The member however, cannot
borrow more than three times, x3 his total thrift saving. Hence if he savesN15, 000.00 he can only be entitled to
borrowN45, 000.00 only and not a penny
more.
Encourage saving: This pertains especially to the thrift and saving type of cooperative
society. Members make regular thrift contribution and based on the amount
contributed by each member, loans are granted. The member however, cannot
borrow more than three times, x3 his total thrift saving. Hence if he saves
borrow
more.
3)
Encourages Economic Development: The situation is true when one considers that Cooperative
societies in general have an economic orientation and hence the desire to
accumulate capital. This informs the trade and thrift contributions. Many
Cooperatives are so rich that some can even equal the capital budget for a
state for a year. Many invest such funds in high yielding shared of blue chip
organisations to further expand their financial boarders for the benefit of
their members and dividend size at the AGM.
Encourages Economic Development: The situation is true when one considers that Cooperative
societies in general have an economic orientation and hence the desire to
accumulate capital. This informs the trade and thrift contributions. Many
Cooperatives are so rich that some can even equal the capital budget for a
state for a year. Many invest such funds in high yielding shared of blue chip
organisations to further expand their financial boarders for the benefit of
their members and dividend size at the AGM.
4)
Efficiency: Many societies are experts at trading at least cost as they often buy
commodities in large quantities at low price. With the low price they do a
mark-up which in the end do not escalate price. They make price lower relative
to other market stalls. Hence there is efficiency in resource utilization.
Efficiency: Many societies are experts at trading at least cost as they often buy
commodities in large quantities at low price. With the low price they do a
mark-up which in the end do not escalate price. They make price lower relative
to other market stalls. Hence there is efficiency in resource utilization.
5)
Promote welfare: One of the cardinal objectives of Cooperative Societies is the spirit of
the co-operator. This initial and sustains a drive towards help members out of
problem with the aid of finance. Many cooperative societies are statutorily
required to fund education and training out of the Ministry of Agriculture and
Natural Resources M.P.C.S Ltd., Asaba; set some money apart for the education
of deceased members ward. This initiative was sponsored by Mr Larry Onyechi,
the president of the society and was generally adopted by the house after a
sound debate.
Promote welfare: One of the cardinal objectives of Cooperative Societies is the spirit of
the co-operator. This initial and sustains a drive towards help members out of
problem with the aid of finance. Many cooperative societies are statutorily
required to fund education and training out of the Ministry of Agriculture and
Natural Resources M.P.C.S Ltd., Asaba; set some money apart for the education
of deceased members ward. This initiative was sponsored by Mr Larry Onyechi,
the president of the society and was generally adopted by the house after a
sound debate.
6)
They Scuttle Hoarding: This is true when one looks at their immense fund and large purchases
in their warehouses. Thus at a time when merchants are hoarding their products,
Cooperative societies help out buy selling products at lower cost and price.
Other advantages of cooperative societies include:
They Scuttle Hoarding: This is true when one looks at their immense fund and large purchases
in their warehouses. Thus at a time when merchants are hoarding their products,
Cooperative societies help out buy selling products at lower cost and price.
Other advantages of cooperative societies include:
¯ The are saved the cost of advertisement as they
mainly sell directly to their members
mainly sell directly to their members
¯ Members are entitled to in dividend payment at
every AGM
every AGM
¯ They help to fight deflation in the economy
¯ They foster unity among members with the spirit of
the co-operator kept alive and vibrant
the co-operator kept alive and vibrant
¯ They encourage good human relations and build
bridge of friendship
bridge of friendship
Problems
of cooperative societies
of cooperative societies
1.
Illiteracy: Many cooperative societies are run by illiterate especially
the farmers cooperative societies and this rubs on the quality of their
leadership
Illiteracy: Many cooperative societies are run by illiterate especially
the farmers cooperative societies and this rubs on the quality of their
leadership
2.
Tax evasion: cooperate societies do not pay tax to government, but it
should be mentioned that they are charged COT by the banks on their cheque
drawals
Tax evasion: cooperate societies do not pay tax to government, but it
should be mentioned that they are charged COT by the banks on their cheque
drawals
3.
Corruption: because of the large pool of funds, sometimes the vice of
fraud creep in which can subtract from the lofty objectives
Corruption: because of the large pool of funds, sometimes the vice of
fraud creep in which can subtract from the lofty objectives
4.
Lack of discipline: some cooperative societies often suffer from
bickering and disputes and lack discipline because many use the freedom of
democratic practices to scuttle cooperative business
Lack of discipline: some cooperative societies often suffer from
bickering and disputes and lack discipline because many use the freedom of
democratic practices to scuttle cooperative business
5.
Political problems often result as some members would want to divide the
cooperative into factions for selfish gains and vain glory. This ha lead to the
break up or moribund nature of some cooperative societies
Political problems often result as some members would want to divide the
cooperative into factions for selfish gains and vain glory. This ha lead to the
break up or moribund nature of some cooperative societies
6.
Weak management: often many committee members that administer
cooperative societies do not understand how to run the society effectively. And
this sort of ignorance can result inefficiency in cooperative management
Weak management: often many committee members that administer
cooperative societies do not understand how to run the society effectively. And
this sort of ignorance can result inefficiency in cooperative management
7.
Limited expansion due to lack of funds
Limited expansion due to lack of funds
8.
Indiscriminate membership drive can lead to recruitment of trouble
makers
Indiscriminate membership drive can lead to recruitment of trouble
makers
Officers
of the cooperative
of the cooperative
The
leaders of the cooperative societies are supervised by the Ministry of Commerce
and Industry to ensure that they run the organizations well. They act as the
eye of the government in ensuring that cooperatives are established, grow and
contribute meaningfully to economic development. Apart from supervision, they also
intermediate in dispute situations in any society. The following officers are
key members of the committee elected
leaders of the cooperative societies are supervised by the Ministry of Commerce
and Industry to ensure that they run the organizations well. They act as the
eye of the government in ensuring that cooperatives are established, grow and
contribute meaningfully to economic development. Apart from supervision, they also
intermediate in dispute situations in any society. The following officers are
key members of the committee elected
¯ The president: who is the leader of the society
¯ The treasurer: who serve to keep record of all
finance of the organization
finance of the organization
¯ The secretary: who organizes and keep membership
records register and correspondence of the organization
records register and correspondence of the organization
¯ Other officer include: the vice president, ledger officers,
key erstwhile officers or any other officer that may be appointed by the House
to facilitate the smooth operation of the society.
key erstwhile officers or any other officer that may be appointed by the House
to facilitate the smooth operation of the society.
Duties/
power of the committee
power of the committee
According
to the Bye-laws, the committee shall exercise all the powers of the society
except those reserved for the General meeting subject to any restrictions duly
laid down by the Society in a general Meeting or in the Bye- law and in
particular, shall have the following powers and duties
to the Bye-laws, the committee shall exercise all the powers of the society
except those reserved for the General meeting subject to any restrictions duly
laid down by the Society in a general Meeting or in the Bye- law and in
particular, shall have the following powers and duties
1.
To observe in all their transaction the Decree , the regulation and the
Bye- Laws
To observe in all their transaction the Decree , the regulation and the
Bye- Laws
2.
To ensure the maintenance of true and accurate accounts of all monies
received and expended and all the assets and liabilities of the society
To ensure the maintenance of true and accurate accounts of all monies
received and expended and all the assets and liabilities of the society
3.
To keep a register of members correct and up to day
To keep a register of members correct and up to day
4.
To lay before the annual general meeting an income and expenditure
account and an audited balance sheet
To lay before the annual general meeting an income and expenditure
account and an audited balance sheet
5.
To examine the accounts, sanction contingent expenditure, and supervise
the maintenance of the prescribed registers
To examine the accounts, sanction contingent expenditure, and supervise
the maintenance of the prescribed registers
6.
To admit new members subject the confirmation by the General Meeting
To admit new members subject the confirmation by the General Meeting
7.
To arrange for the recovery of share instalments and interest on overdue
instalments
To arrange for the recovery of share instalments and interest on overdue
instalments
8.
To summon General Meetings
To summon General Meetings
9.
To contract loans subject to and restriction imposed by the General
Meeting or the Director
To contract loans subject to and restriction imposed by the General
Meeting or the Director
10. To decide the terms on, and the period for the
which loans are to be given, to approve or reject the security offered by
borrowers, to arrange for the recovery for loans and in and interest and to
sanction renewals when necessary
which loans are to be given, to approve or reject the security offered by
borrowers, to arrange for the recovery for loans and in and interest and to
sanction renewals when necessary
11. To decide the term on, the period for, and the rate
of interest at which deposits and loans from non members are to arrange for the
payment or return of such
of interest at which deposits and loans from non members are to arrange for the
payment or return of such
12. To decide the terms of purchase and sales of any
goods or stock which the society may require for its members and to arrange for
the custody of such while in stock
goods or stock which the society may require for its members and to arrange for
the custody of such while in stock
13. To watch and ensure that loans borrowed are used
for the exact purpose for which they are granted
for the exact purpose for which they are granted
14. To assist the inspection of the books by any person
authorized to do so
authorized to do so
15. To institute, conduct, defend, compromise, refer to
arbitration, or abandon legal proceedings by or against the society, fix the
salary of or dismiss any other employee
arbitration, or abandon legal proceedings by or against the society, fix the
salary of or dismiss any other employee
16. To fix the maximum credit limit for each member
17. To fix the maximum credit limit for each member
18. To take necessary action regarding debtor or
delinquent members and
delinquent members and
19. Generally to carry on the business of the society,
to watch over the interest of the society and to set an example of keenness and
cooperative spirit to the other members of the society
to watch over the interest of the society and to set an example of keenness and
cooperative spirit to the other members of the society