ESSENTIALS OF CO-OPERATIVE SOCIETIES BY OSOBA ENAKALI. C. O (CHAPTER ONE)
ESSENTIALS OF CO-OPERATIVE SOCIETIES
CHAPTER ONE
THE
MEANING AND DEVELOPMENTAL STAGES OF CO-OPERATIVES IN NIGERIA
1.0
CHAPTER’ OBJECTIVE
After reading through this Chapter the student would
be able to:
i.
Understand the
meaning of Co-operative.
ii.
Know the Co-operative
structure in Nigeria.
iii.
Know how
government has contributed to the development of Co-operative movement in
Nigeria.
iv.
Know the stages
of Co-operative Development.
1.
The Meaning of Co-operative
Co-operative is the voluntary coming together of individuals
with similar interest with the aim or achieving a common economic goal, in
order to actualize this economic goal, each member makes equitable contribution
to the required capital and accepts a fair share of
the benefits and risks of the business. The activities of this business is democratically,
controlled. By this, it means members are free to rub minds together to achieve
desired results.
In the opinion of Helms (1968), co-operative is a
registered voluntary association of persons whose membership must not be less
than ten, with a common interest formed and operated along democratic
principles. This is to secure social and economic interests at minimum cost to
its members. Members contribute the capital and management of the business.
Some powers are then delegated to an elected management team to manage the
affairs of the business.
Analyzing the two definitions above, it could be said
that the primary objective of the co-operative movement is to provide goods and
services to members at a cheaper rate. The co-operative is able to do this by
selling its goods and services to members at a slightly higher rate above their
cost price. On the other hand, the same goods and services are sold to the
public at the prevailing market price of the commodities. Though this method,
the co-operative is able to generate resources internally for its management.
By selling its goods and services to its members at a
cheaper rate, the co-operative is able to protect members from the exploitative
tendencies of other sellers of goods and from manufacturers thereby cutting off
the middle men.
The co-operative society guarantees equality and
fairness among members. This promotes mutual co-operation among them.
2.
The Genesis of Co-operative Movement in Nigeria
Before delving into how Co-operative society came into
being in Nigeria, it is important to trace its origin. The first co-operative
came into existence in 1844. It was established in England by Rockdale. It was
then known as the Rockdale Pioneer Society a (Consumer Co-operative). Twenty-four
years later, a Credit Co-operative Society was established in Germany.
Before the emergence of modern co-operative societies
in the 1930s in Nigeria, there was Co-operative such as the Ibadan Agricultural
Society. This Co-operative was established in 1904. In 1907, the Agege Planters
Union came into being. This was followed by the Egba Farmers Association in
1910. These Co-operatives were the efforts of some indigenous farmers who saw
the need to organize Co-operative Societies.
In recognition of the importance of co-operative, the
then colonial masters and the protectorate of Nigeria commissioned the
Strickland committee to advise her on the feasibility of introducing
co-operative societies in Nigeria. Based on the report of this committee, the
co-operative law was enacted in 1935.
The aim of co-operative societies into Nigeria
according to Strickland was “not only a matter of increased or improved crops,
nor even of increased credit to cultivators who wish to change their farming
methods but it is also a question of urban and rural drift, of co-operative
building, labour contracts, afforestation and of handicrafts; of supply of
electric light; the organization of individuals for better diet; for precaution
against diseases and for sanitary measures in towns and cities; of the
extension of education and of group agreements for the removal of social evils
and the spreading of better customs.”
In 1936, Major E. F. G. Haig, appointed the first
Registrar Co-operative Societies in Nigeria. He was assigned to foster
co-operative spirit among members;
1.
To encourage
members to have savings deposits;
2.
To introduce some
market reforms;
3.
To re-organize
the Cocoa Farmers Societies and the Ibadan Union.
In 1951, Nigeria was divided into three regions – the North,
West, and East. Each region appointed its own registrar and all co-operative
matters were managed exclusively by each divorced from one another. For
effective management, each region formulated its own Co-operative Laws from the
parent law established in 1935. Each region emphasized different aspects of the
Co-operative organization. For example, the Northern Nigeria Co-operative law
which was enacted in 1956, placed emphasis on the development of multipurpose
co-operatives combining agricultural marketing and credit.
The Western Nigeria Co-operative law which was enacted
in 1953 saw the establishment of the co-operative Bank with a marketing Board
grant.
The Eastern Region sought to develop the Co-operative
into a full-fledged self-supporting movement in the areas of thrift and credits,
agricultural co-operative, group farming and credits, group farming and
Co-operative bank. In pursuance of its objectives, the co-operative bank of
Eastern Nigeria was established in 1954. The creation of the Mid-West region in
1963 and the sub-subsequent creation of States in Nigeria over the years gave
birth to the numerous co-operative society movements in each of the states of
the federation.
The
Co-operative Structure in Nigeria
There are
basically two levels of organization structure of co-operatives in Nigeria.
These are: the National and the States levels.
Structure at
the National Levels
At the National level, four societies were recognized.
They are:
i.
The Nigeria
Co-operative Supply Association (NCSA).
ii.
The Co-operative
Federation of Nigeria (CFN).
iii.
The Association
of Nigeria Co-operatives Exporters (ANCE).
iv.
The National
Association of Credit Co-operative Union of Nigeria (NACCUN).
At this level, these societies were charged with the
responsibility of overseeing the general welfare and interests of the
Co-operative movement.
The Nigeria Co-operative Supply Association (NCSA),
registered in 1940, forms the first national consumer association to be
established as a wholesale association to cater for the consumer co-operative
societies, thrift and credit, thrift and loan and the Cocoa Farmers Societies. Among
the functions of this body is the purchase and
distribution of equipment such as stationery, machines, weighing strong boxes,
safes, and other needs for use by members. It later focused its attention on
the importation of consumer goods and later ceased to function following the
regionalization of co-operatives in 1951. It was however replaced by the
Western Nigeria Co-operative Supply Association (WNCSA).
The co-operative Federation of Nigeria was established
in 1944. In 1945, the Association of Nigeria Exporters (ANCE) was established
to serve as central agency for the exportation of co-operative products.
The National Association of Credit Co-operative Unions
of Nigeria (NACCUN) came into existence in 1978 charged with the responsibility
of rendering services to all credit unions and societies in Nigeria. All the
co-operative financing agencies and all the credit unions in Nigeria are
members of this body. NACCUN is promotes savings and credit unions in Nigeria.
It assists in the financing of co-operative projects. It also promotes
co-operative education. NACCUN is an affiliate of the Africa Co-operative
Saving and Credit Association (ACOSCA) and the World Council of Credit Unions
(WOCCU).
Co-operative
Structure at State Level
At the State level are the primary co-operative
societies whose members are individuals at local or village level. At the local
government levels, these primary co-operatives federated into secondary
societies or unions by becoming a specialized co-operative or a multipurpose
co-operative.
The co-operatives at the State level have the
following as its objects viz:
i.
To promote the
general development of co-operative.
ii.
To provide
essential inputs and other services to members.
iii.
To promote thrift
and credit among its affiliates.
iv.
To serve as a financing
agency for all co-operative organizations in the State.
v.
To coordinate and
serve as a link between the credit arm of the co-operative movement and state
government on matters bordering on investment in agriculture and allied
industries.
Government’s
Contributions to Co-operative Development in Nigeria
Since its inception in 1935, the government of Nigeria
has contributed meaningfully to the development of co-operative societies. Its
principal areas of contributions include educational development, technical
assistance, administration and supervision, finance assistance and legislation.
As a way of developing co-operative societies in
Nigeria, the government established institutions for the training of its
officials. Buttressing this further, some federal and state owned co-operative
colleges are in existence solely for the training of co-operative officials.
The government also organizes oversea training for co-operative personnel in
order to enable them to update their knowledge on the current techniques of
managing co-operatives.
On technical ground, the government provides technical
assistance to co-operative societies through the provision ‘of experts in their
areas of needs.
In order to enhance the administration and supervision
of the co-operative, the government appoints registrars to administer the
societies. Government Co-operative officials appoint and Auditors are also
assigned to inspect and audit the financial activities of the co-operatives to
ensure prudent management of its financial resources.
The government renders financial assistance to
co-operatives in the form of loans and grants. Loans are given on soft interest
rates to co-operatives. The loans could be used for the acquisition of
equipment, office, stores, warehouses and the payment of workers monthly
emoluments operational guides are also provided by the government through the
enactment of laws.
It is however important to emphasize here that
co-operative executives and management team should be exposed to symposium,
seminars and workshops to update their knowledge on the concepts of
co-operative ideals.
When training programs are being organized for members
who are mainly illiterates, the most suitable language that would enhance their
understanding should be adopted.
Appropriate enlightenment campaign should be put in
place to educate potential members of the public about the activities of the
co-operative societies.
Development
Stages of Co-operative Society
The developmental stages of the Co-operative could be
categorized into primary co-operative, secondary co-operative and the
international co-operative alliance.
Primary
Co-operative
Primary Co-operative also known as co-operative at
local level is formed by the voluntary coming together of twelve of less number
of individuals.
A committee is formed through election conduced among
members. The Co-operative is managed by the elected committee through the
assistance of paid staff in the co-operative could be likened to the board of
directors in joint stocks companies. However, it differs in the sense that the
committee operates on part-time basis and its members are not paid for the
services they render in the co-operative. By virtue of its small size, its
capital is also small.
The Primary Co-operative is able to maintain its value
to members by growing in membership, in resources and level of operation. It
finally develops to a stage of being able to function as an independence
business.
Primary Co-operatives could grow in size and still
remain small either by amalgamation of small Co-operative Societies or through
its efficient management. At this stage, the co-operative is able to execute
new functions and services. It is also able to draw membership beyond its
immediate environment. Though the co-operative is able to command local loyalty
and respect, it suffers the disadvantage of not being able to get in touch with
its numerous members.
The conditions under which primary co-operatives could
remain small are:
(i)
Where village
constitutes its socio-Economic base;
(ii)
Where
communication is difficult;
(iii)
Where for
technical reasons the business of the Co-operative could only carried out on a
small scale.
At the juncture, as the co-operative may not be able
to provide all it requires by way of resources, its functions are shared
between primary and secondary co-operatives respectively. In explaining this
point, if a primary co-operative operates a consumer store where bread is being
sold, it implies that to ensure regular supply of bread to the community, it
may require a bakery. As the co-operative may not be able to own a bakery all
alone, it joins a few similar co-operatives to operate a mechanized bakery at
the nearest town. As the co-operative is not able to mill the flour for use in
the bakery, makes it mandatory for it to become a member of a National
Co-operative Wholesale Society. The Secondary or National Co-operative has the
capital to carry out forward purchases, acquire premises where large stocks
could be stored and hire skilled staff trained in the area of buying at the
most favorable terms. It also has the facilities for processing and packaging
of the raw material which is flour in this case.
Secondary Co-operative
Secondary co-operative is formed from a collection of
primary co-operatives. The Co-operative is made up of delegates from the
primary co-operatives. From these delegates, election is conducted to elect a
committee to manage the Co-operative as a business entity.
The Secondary Co-operative educates, coordinates and
audits the activities of Co-operative. It also undertakes the function of the
public relations and the general welfare of the co-operative.
Secondary co-operatives enjoy perpetual existence and
limited liability as is the case of the joint stock business.
The
International Co-operative Alliance (ICA)
The highest body of the co-operative movement is the
International Co-operative Alliance. This is where the most complex activities
of the co-operative movement take place.
The development stages of co-operative society could
be diagrammatically represented as shown below:
1.
Membership of co-operative society is
voluntary and open to every interested person.
However, it is not open to those with questionable characters, trade
rivals, and those living far away by virtue
of which, they are not able to take part in, its activities.
2.
The main purpose
of a co-operative society is to render services to its members. By this it means it is not a profit making
business. In view of this interest paid
on shares is relatively low and is either fixed or fluctuates within narrow
limits. Once interest has been paid on
capital, the trading surplus that is left is shared among members in proportion
of their level of patronage in the co-operative during the year.
3.
It is expected
that the control and decision making in the co-operative should be in the hands
of its members. However this is not
often the case because the members are also committed in other businesses. For example, in retail co-operative, it is
the members that are its customers who earn their living in other fields. This absence of total commitment of members
to the activities of the co-operative retards its efficiency.
4.
Co-operatives
provide education and training for their members elected, representatives,
managers and employees to enable them contribute effectively to the development
of their co-operatives.
5.
Co-operative, as
altruistic institutions extends their hands to their immediate and large
communities to allow a sustainable economic development this makes them to work
harder to generate the desired financial resources to actualize this goal.
6.
Every member in a
co-operative has equal rights in its affairs irrespective of the number of
shares a member may have gift in it.
Hence every member is entitled to one voice.
The Co-operative Law
Early
attempts at co-operative trading experienced some disasters. This was mainly as a result of the inability
of the poorly educated pioneers to function properly and the faulty organizations
they formed. However, in recognition of the value of Co-operative and the
organizations it produced, the government then made some moves to make its
operations easier by laying down some standard methods of operation. This was what led to the formulation of what
is now known as the co-operative law.
The
first law is that, the co-operative is a lawful organization serving a
desirable end and in this regard, it is recognized as having legal personality.
By this, it can own property, borrow, and lend money, buy and sell goods, sue
and be sued.
Secondly,
the law lays down what kind of organization a co-operative is, its objectives
who is qualified to be its member, how it is to be financed and controlled, how
surpluses or losses are to be distributed and how it could be brought to an end
where it becomes necessary.
Thirdly,
the law indicated ways the government is prepared to assist co-operatives to
develop. This does not however apply in
all cases.
Government
assistance could come in the form of granting them tax reduction; capital loans
on easy terms contribution to share capital subsides; guarantees provision of
trained staff; consultant and supervisors.
On the other hand, government’s assistance could be confined to a mere
requirement that Co-operative should submit their rules as well as amendments
thereto, for official approval. In
addition, it could be requested to present certain annual reports indicating
the co-operative’s state of affairs.
The Co-operative Bye-Laws
Bye-Laws
are the application and translation to subsidiary legislation or rules to a specific
co-operative movement. The bye-laws reflect the general spirit of the co-operative law, with certain
provisions of the law, finding their applications in them. The bye-laws form the constitution of a
co-operative society. Hence the structure
of the co-operative is a function of its bye-laws and vice versa.
The bye-laws determine whether the
co-operative is going to be national in outlook or a fairly homogeneous
membership. The bye-laws determine
whether the co-operative is going to be controlled by a few rich and powerful
people. This is because it allows voting according to share capital and or the
volume of business a member does with the society. The bye-laws must be approved by the Registrar. This makes it possible for him to advise
members on certain issues as situation demands.
The Registrars involvement in the preparation of bye-laws is to ensure
that it is properly and adequately prepared in the interest of the society and
the co-operatives movement.
Components of the Bye-Laws
1.
Limited Liability of Member is liable to the
full payment of his shares and shall not he called upon to make any further
contribution to the funds of the co-operative should it still have unsettled
debts at the point of winding up.
Co-operatives also practice multiple liabilities. This liability goes beyond a member’s
subscribed shares. In this situation,
members make a legally binding pledge to contribute extra money to the funds of
the Co-operatives should there be some outstanding debt on liquidation. It is multiple because the liability is a
multiple of a member’s shares.
Unlimited liability is where members’ private assets
are sold to offset any outstanding debts of the Co-operative at the event of
its winding up where the assets of the Co-operative are inadequate to cover the
debt owed.
Other matters on which every co-operative society must
make provisions for in the bye-laws include the following:
2.
The name of the co-operative and place of its
registered address
3.
The area of operation of the co-operative;
4.
The object of the co-operative
5.
The manner of generating the share capital of
the co-operative and the terms of
withdrawal or transfer of shares.
6.
The authorization of an officer or officers
to sign documents and use the steal on behalf of the society;
7.
The disposal of the annual net surplus of the
co-operative.
8.
The powers and duties of general meeting and
committee apart from those specified in the rules;
9.
The nature and extent of liability of members;
10.
The required
notice for withdrawal of membership;
11.
The qualification for membership;
12.
The terms of admission of members;
13.
The entrance or affiliation fees if any,
payable and the mode of election.
Co-operatives and the Environment
Since
the late 1970s, the co-operatives have been active in environmental
Issues. This is evidenced on the fact
that by 1990, environmental protection programs became common place for
co-operatives in many countries of the world.
Members of co-operatives realized that economic development cannot be
separated from environmental protection.
The improvement of co-operatives on the lives of its members makes the
protection of the natural resources on which they relied a necessity.
In
response to the increased interest of its members in the environment, the
International Co-operative Alliance (ICA) made some contributions to the United
Conference
on Environment and Development which focused world attention on the interrelationship
between the state of the environment and the development processes. Among the most significant outcomes of the
conference was government adoption of what was later known as a” blue print for
environmentally- sustainable development” – Tagged Agenda 21.
In
October 1992, the Co-operative movement reaffirmed its own commitment to action in the promoting sustainable
development practices in all sectors of activity, citing the preservation of
the natural environment, the importance of promoting environmental education
and the need to influence government policy in the areas of the environment and
development. The International
Co-operative Alliance (ICA) membership mandated the preparation of a “Co-operative
Agenda 21” to identify specific areas of activities to be addressed by each
co-operative sector. Based on a compilation of the contributions of the
movement co-operative agenda 21 was formally adopted on the occasion of the
International co-operative. Alliances
(IAC) Centennial in Manchester in September 1995.
Co-operative Agenda 21
The
preparation of Co-operative Agenda 21 was a participator activity within the
International Co-operative Alliance.
Consultations with the International Co-operative Alliance’s specialized
bodies, showed that environmental protection activities have been widespread in
all sectors of economic activity in both developed and developing countries.
In many countries Co-operatives have been
Leaders
in promoting concern for the environment in their communities and within their
industries. Co-operatives have been
important in raising environmental awareness to allow people to influence the
policies and actions of the local and national governments. In some co-operatives, environmental or
ethical policies attracted new members, increased commercial activity and led
to larger market shares.
SELF EVALUATION QUESTIONS
1.
What
do you understand by co-operative?
2.
In what ways has the government of Nigeria
contributed to the
Development of co-operative
3. Why was co-operative introduced in Nigeria?
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