CO-OPERATIVE SOCIETIES

A co-operative society is a voluntary association of persons, businessmen, traders or organization with common needs and interests. The resources of members of are pooled together to promote the economic and welfare interest of the members.

PRINCIPLES OF CO-OPERATIVE SOCIETIES

Co-operative societies are based on the following principles.

Open and Voluntary membership
Democratic management and control:

Decisions are taken by voting and each member of a co-operative society has one vote in all decisions taken by the society. In other words, voting does not depend on members shareholding

Distribution of surplus (i.e. profits) based on participation or patronage
Neutrality in race, politics and religion
Encouragement of the habit of saving and thrift
Promotion of education of members
Protection of members from exploitation of normal market forces
Sale of only pure goods: All goods offered for sale must be good quality (not inferior or imitations)

TYPES OF CO-OPERATIVES SOCIETIES

Consumers’ Co-operatives Society: This is formed by consumers who pool their resources together to buy essential commodities in bulk direct from manufacturers. Such commodities are then distributed or sold at reasonable prices to members.
Retails Co-operative Society: This is an association formed by many small independent retailers pooling their resources together and buying in bulk either from the manufacturers or wholesalers
Wholesale Co-operative Societies: Association of wholesalers buying in large quantities from the Manufacturer
Producers Co-operative Society: This is an association of producers of similar commodity who have come together for the promotion of the market for their products. They could also purchase tools and raw materials in bulk and share or sell them to members at reduced prices.

FUNCTIONS OF PRODUCERS CO-OPERATIVE SOCIETIES

Negotiation for better prices from buyers
Provision of Joint transport facilities
Provision of specialist advice
Provision of Information
Provision of short –term loans/Facilitation of loans from specialized institution e.g. World Bank Assisted FADAMA Project
Provision of Joint Storage Facilities
Education of Members

Credit and Thrift Co-operative Society: This is an association of low income earners who jointly pool their resources or fund together by contributing on a weekly or monthly basis. This type of society encourages saving habits among their members and grant loans to the members out of the accumulated fund. The Loan attract a low rate of interest. At times however, non-members too can borrow from such a society but at a higher rate of interest. At the end of the year, surplus will be distributed to members as dividends. The members can also be afforded the opportunity of purchasing household need like television, fridge etc.
Multipurpose Co-operative Society: This is formed by existing co-operative societies. They undertake a variety of co-operative activities that is profitable and serving the interest of members

EVALUATION

List six types of co-operation societies
State four distinguishing features and functions of each of the co-operative societies

FEATURES OR CHARACTERISTICS OF CO-OPERATIVE SOCIETIES

Perpetual existence
Minimum of two members and no maximum limit to the number of members

iii. Liability to the members is limited to the shares held

Members buy shares to contribute the initial capital; extra capital may be raised in from members in the form of loans
Shares are not transferable but can be withdrawal or added to at any time
Democratic in nature

vii. Profit (surplus) is shared based on patronage

viii. It is separate legal entity

Control is in the hands of management committee elected by members
The objective of co-operative society is to promote members interest.

ADVANTAGE OF CO-OPERATIVE SOCIETIES

It encourages thrift and saving habits among members
There is democracy inherent in its control and management
Loans are more easily obtained by members
Perpetual existence: i.e. death of members cannot bring the society to an end
It facilitates improvements in member’s standard of living
They prevent loading of goods
Helps in marketing members products
They encourage investments
They encourage production of high standard products
They could easily obtain loan facilitates from banks or government agencies
They are very prominent in consumer protection activities

DISADVANTAGES OR PROBLEMS OF CO-OPERATIVES SOCIETIES

Problems of loan recovery – Loan recovery is difficult and in some instances even impossible.
Inefficient Management – Member elected to manage the business may lack experiences.
Inadequate Capital – This occurs as a result of the prevalence of low income earners in their membership
Misappropriation and embezzlement of funds
High level of illiteracy among members
Indiscriminate enrolment of members

SIMILARITIES BETWEEN CO-OPERATIVES SOCIETIES AND LIMITED LIABILITY COMPANIES

Both are legal entities
Members buy shares
They hold Annual General Meetings (AGM)
Both are registered
The shareholders (members) receive dividends
Both have perpetual existence

DIFFERENCE BETWEEN CO-OPERATIVE SOCIETIES AND LIMITED LIABILITY COMPANIES

	Points	Co-operatives Societies	Limited Liability Companies
1.	Formation	Registered under Co-operative law of the ministry of commerce	Incorporated under CAMA 1990
2.	Management	By elected Management committee	By elected Board of Directors
3.	Distribution of Profits	On Patronage basis	In proportion to number of shares held
4.	Members voting rights	Equal	On the basis of their shareholding
5.	Aim	To promote members welfare	To maximize profits

SOURCES OF CAPITAL/FINANCE FOR A CO-OPERATIVE SOCIETY

Voluntary contribution of members
Retained profits (ploughed – back profits)
Fines and other special levies
Loans from banks
Loans from government agencies and independent agencies (e.g. N. G. O’S)
Loans from umbrella bodies such as credit unions etc