Read the Problems and Prospects of Cooperative Societies in Nigeria. See the types of cooperative societies, problems, prospects as well a recommendations
Cooperative Societies are organizations that are made up of people who have come together to contribute their resources for their common benefit. Cooperative societies are enterprises jointly owned and managed, who engage in the production or sale of goods and/or services for the common benefit of its members.
Cooperative societies can also be defined as an autonomous group of individuals pooling their resources together in order to jointly elevate themselves economically, socially, or culturally.
Cooperative societies come in many types and kinds. In the simple description, some cooperative societies are formed by a set of people who intend to lift each other up financially or otherwise, so they pool their resources, and each member benefits at intervals.
Some of these cooperatives engage in businesses, and their members share the returns. Others, which are locally popular, just help their members get money in bulk. For example, 10 people come together and contribute N1000 monthly. Each month, one of the 10 goes home with N10,000 and continues his payment monthly.
Also there is a kind of cooperative, usually found in large commissions and Local Governments. These are owned by a set of people as a business. They accept people to join and deduct a certain sum usually from their salaries, adding the amounts up in the person’s account with them. At any point in time, the individual can request for a loan.
The cooperative can give more than even what the person has in his/her account with them, depending on their terms. They take their percentage. Also they invest the money and give the members dividend at the end of the year.
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These are usually formed to eliminate middlemen and capitalist groups from industrial production. This cooperative society produces goods for the requirements of its members. The members get dividends according to the capital invested by them.
The main objectives of this cooperative society is to purchase raw materials at economical prices, produce goods and services efficiently, eliminate middle men, and dispose surplus in form of sales to outsiders at maximum prices.
These kinds of cooperatives are formed by ordinary people to meet their needs. They majorly buy goods in bulk from producers or wholesalers and distributes the goods purchased to its members, thereby skipping retailers. The surplus is sold and profits are distributed among the members according to the value of their purchases. Their main objectives are to eliminate retailers, capitalists and sometimes wholesalers and promote the welfare of the members.
These kinds of cooperative societies are formed by producers in order to collectively, effectively and efficiently dispose off their output. Profits are divided according to each member’s contribution to the collective output. The main objectives of these kinds of cooperatives are to eliminate middlemen and their high cost of marketing, influence the demand-supply forces, provide storage facilities, provide information to the members, provide financial facilities to the members, and essentially help sell the members produce at the most convenient prices to achieve good gains.
This type of cooperatives are created for the purpose of providing group insurance facilities to its members. They come together and collectively make contracts with sound insurance companies on collective basis. The main objective of this cooperative is to decrease the amount of insurance premium.
This is usually an association of middle and low income earners, formed in urban areas to help its members get the best and cheapest housing deals, prevent exploitation by landlords and provide financial assistance to members in respect of building materials. This is also known as a building society.
This kind of cooperative is organized for the purpose of maximizing the benefits of large scale farming. It helps increase production per acre and improve technique of cultivation, irrigation system and assist members.
These kinds of societies are formed with the purpose of providing short term financial aid to its members. These cooperatives are very common and can be grouped into agricultural credit societies and non agricultural credit societies.
Despite the many benefits of these societies, they are heavily ladened with some inherent problems. Some of them are:
The senior officials of these cooperatives on the average lack business experience. Their managerial skills are low and thus reduces the efficiency of the cooperatives.
These societies are usually made up of ordinary people who want to get better deals. The members are mostly illiterates and create so many problems for the societies without even realising it.
Since the members are made up of people from different backgrounds and with different experiences, there is usually a lack of cooperation since people have different views of things.
The members have a lackadaisical attitude towards the cooperation since they consider it ”just a group”. They leave most of the work to their leaders and just contribute their quota and go.
This is a major problem. People at the helm of affairs in cooperatives always seek ways to gain something for themselves secretly and as a result are usually dishonest about the true state of things.
Since the members are not business professionals, they plan wrongly a lot. They make some investments that turn out bad, and cause real problems.
Overdue loans is one serious problem facing cooperative societies, as members often default in payment of loans granted to them which usually leaves the cooperative stagnant and in constant tension.
Other Problems include:
– Insufficient Capital
– Individualistic Tendencies
– Absence of statistical data
1) Since cooperative societies are business organizations, the management should be made up of people with some experience with business management. This way, cooperative societies would be better managed and even more profitable.
2) Cooperatives have started employing qualified employees to carry out basic functions, so this should help properly shape the overall structure of cooperatives.
3) Members these days are having a better understanding of what cooperatives truly are, and thus are acting appropriately.
4) Checks and balances are being placed on leaders and management of cooperatives in some areas. If this continues, there would be less cases of embezzlement.
5) Giving direct roles and responsibilities to members will make them more committed. This has started happening.
6) Cooperative Societies can become banks, or at least microfinance banks and make even more profits and help more people.
7) Cooperatives can exist forever.
8) They are helpful in poverty alleviation programmes
9) They can grow to influence public policies.
10) Cooperatives complement conventional banking services and promote continuous and sustainable economic development of its members.
1) There should be strict supervision of loan takers and they should be made to comply as necessary.
2) In some cases, guarantors and or collateral should be requested for loans.
3) Well trained and qualified accountants should be employed to manage the finances of the cooperative.
4) There should be training and retraining of leaders through attending of seminars, etc.
5) Cooperatives should not be just for middle and low income earners and poor people. The rich should be incorporated to an extent.
6) Committees should be created within the cooperatives to monitor their activities.
7) The government should provide aids and financial assistance, as well as NGOs and corporate bodies to reduce the problems of inadequate capital and small size loans.
8) Cooperatives should be registered with the government to ensure better monitoring.
9) Regular meetings should be held to discuss issues as appropriate. This improves commitment.
10) No decision should be taken at the top without being passed down to the ordinary members for review.
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Cooperative societies are very beneficial for economic development and poverty alleviation. However, the inherent problems should be fought with the above solutions and the prospects should be looked into as goals are set.