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COOPERATIVE SOCIETIES IN NIGERIA : PROSPECTS AND

PROBLEMS
ADU, CECILIA ADURAYEMI
Department of Accounting & Finance, Crawford University, Igbesa, Ogun State, Nigiria

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ABSTRACT
This study examined the meaning of cooperative societies, types, formation, roles played by cooperative societies
in the economic development of Nigeria, the problems faced by cooperatives and their prospects, brief history of
how cooperative societies began and concluded by stating how government could be of help to the cooperative
societies in Nigeria.
Key words: Cooperatives, Potential Users, Organizational Skills, Steering Committee and Market Analysis.

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INTRODUCTION:
Cooperatives represent a strong, vibrant and economic alternative. They are formed to meet
peoples mutual needs. They are based on the powerful idea that together, a group of people can
achieve goals that none of them could achieve alone. For over 160 years, cooperatives have been
an effective way for people to exert control over their economic livelihoods. They provide a
unique tool for achieving one or more economic goals in an increasingly competitive global
economy. As governments around the world cut services and withdraw from regulating markets,
cooperatives are being considered useful mechanisms to manage risk for members in
Agricultural or other similar cooperatives, help salary/wage earners save for the future through a
soft felt monthly contribution that is deducted from source, own what might be difficult for
individuals to own by their efforts , strengthen the communities in which they operate through
job provision and payment of local taxes. Cooperatives generally provide an economic boost to
the community as well.
Incidentally, cooperatives despite its old age is not very popular in Nigeria. Only recently
worker cooperatives started gaining ground among working class citize ns, most of who find it
difficult to save part of their salaries / wages for rainy day. Hitherto, cooperative societies were
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thought to be associations meant only for farmers, small traders and other very low- income
earners. This explains why quite a number of cooperative farmers are found, particularly in
southern Nigeria.
The problem is that many people do not know much about cooperative, its mechanisms and
roles in economic development, and how it is considered in the world as a Third Force, an
alternative and countervailing power to both big business and big government.
PROBLEMS OF COOPERATIVE SOCIETIES:
Cooperatives the world over are in a state of flux. In almost all parts of the world , cooperatives
face one or more of the following crises: crisis of ideology, crisis of capital, crisis of credibility
and crisis of management (Tiamni,1997).
Cheney(1995) identified five challenges facing cooperatives . These are cultural transformation,
competition and expansion, wage solidarity, centralization and reorganization, and programmes
to increase productivity and participation. Groves (1985) on the other hand , posits that one of
the major problems of cooperatives is how to keep balance in the two parts of cooperative
business, efficiency and democracy since those who are charged with operation of a cooperative
chiefly the board and manager must serve two masters : the imperatives of good business
practice and the social purpose of a community of people. Hence ,to maintain their special
character , cooperatives must be two things in one : a business organization and social
movement. This is what makes a cooperative a business enterprise with human face and so, very
difficult to manage . In striving for efficiency, cooperatives often tend to imitate other business,
but in pursuing a social purpose they bring out features, which make them different
(Laidlaw,1974).
Educating , training and retraining of members in general and officers in particular is always a
challenge to cooperatives especially in developing countries. A cooperative without a strong
component of education is in danger of losing its essential character, that is , the human and
personal characteristics which distinguish it as a cooperative.
Education is of paramount importance to the cooperative sector. Unless all those responsible for
cooperatives(directors, officers, members, staff) are well informed

and knowledgeable ,

cooperatives are likely, in some countries, to become much like capitalist, profit seeking
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business, or in other countries to become handmaids of the state. Education makes people easy to
lead , but difficult to drive ;easy to govern but impossible to enslave.
Assuming the validity of the sector concept( the mixed economy, as it is often called),
cooperators face such questions as what type of business activity is most suitable for each of the
three sectors , public, private and cooperative? Are there certain kinds of business that rightfully
belong to the public sector? Are there others, which are best left to private enterprise? What
kinds, ideally , are most suitable for the cooperative way of business? Are there some fields in
which all three may engage and compete? Hence , one other challenge that cooperative societies
face is the choice of business most suitable for the enterprise.
Another challenge facing cooperatives is adaptation . No business in a national economic system
is completely independent and self- sufficient but operates in conditions of dependence and
interdependence. Both capitalist business and cooperatives depend to some extent on the state
and services provided by the state (highways, water supply, the postal system, etc). Similarly the
state and public enterprise depend greatly on private enterprise, or on cooperatives. Sometimes
private-profit business depends on cooperatives. And, of course , the reverse, cooperatives
depending on private business in some way or other, is quite common.
Thus, cooperatives cannot be thought of as an exclusive economic system but rather as one
section of the total economy. They constantly operate in co-existence with other forms of
business and sometimes in conjunction with them. Co-operatives therefore, have to adapt
themselves by struggle in one place, by agreement in another- to the elements of a complex
environment , partly free and partly organized . It must now decide what place it means to claim
for itself in the new economy, either organized or in process of organization.

PROSPECTS OF COOPERATIVE SOCIETIES

Given the high level of poverty in Nigeria and paucity of loan able funds, the patronage of these
credit associations is very high (Ewubare, Aiie and Akekere,2008).
According to the last national living standard survey report published in 2006 by the federal
office of statistics(also known as Nigeria Bureau of Statistics ), the poverty profile in Nigeria is

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very critical and unemployment is steadily on increase(Otto,2009). So , the prospect of any

business that will service and help to alleviate the plight of the poor is good.
According to Todaro and Smith (2003), the marginal savings rate of the poor , when viewed
from a holistic perspective are not small; this high volume of savings from the poor who usually
constitute the target group of credit co-operatives can be encouraged and efficiently mobilized
for the benefit of the individuals , the co-operative and the entire economy.
The governments in Nigeria as governments in many parts of the world are committed towards
poverty emancipation and so, are likely to be less hostile but supportive of credit co-operatives.
More succinctly ,stringent tax imposition and adverse operational policies inimical to the
progress of co-operatives are not likely.
Besides the needs and problems of the poor including emergencies such as unanticipated deaths
of those relatives , school fees, rents, among others, are not likely to cease in the near future.
These needs will constantly require attention whenever and wherever they occur. Cooperatives
can thrive anywhere; be it in the rural area or urban. It is not constrained by infrastructural
inadequacies as power supply and many other difficulties common in the rural areas. The
cooperative societies are potential source of self employment for any individual or group of
individuals with sufficient interest in such ventures. More so because the initial cost of setting up
ventures are not prohibitive.

SUMMARY AND CONCLUSION:

A cooperative is a unique form of business used by people and business for their mutual benefit.
Regardless of its purpose or membership, starting a cooperative requires considerable time,
energy, commitment and technical resources. Recognition of a common need is fundamental to
the formation and successful operation of a cooperative.
Potential members must devote much time and energy to developing their new business. A
cooperative requires member commitment to finance and use the business and select
knowledgeable directors who hire a competent manager. A strategic business plan is important to
harmonize all of the elements for cooperatives success.
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In order to achieve their maximum strength and effectiveness, cooperatives of various kinds must
regard themselves and, as far as possible , act as a distinct sector within the national economy of
any country. As business organizations, cooperatives are partly private , partly public, but
essentially different from both private enterprise and public enterprise. They are a middle way ,
an economic sector in their own right.
A cooperative is a business enterprise in which the elements of ownership, control a nd use of
service are united in one group of persons. The distinguishing feature of cooperative business is
its dual nature as economic enterprise and social organization.
Governments are expected to provide a supportive policy , legal and institutional framework,
provide support measures based on activities, provide oversight on terms equivalent to other
forms of enterprise and social organization, adopt measures to improve access to finance for
disadvantaged groups and topically, to promote the formaliza tion of the informal economy.
Government can contribute significantly to improving cooperative performance by facilitating
access of cooperatives to support services, particularly support to cooperative human resource
development.

References
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Port Harcourt
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Grove, F (1985): What is Cooperation? The Philosophy of Cooperation and Its Relationship to
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Henehan, B(1997): Cooperating for Sustainability USA: Cornell University
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Laidlaw, A.F (1974) The Cooperative Sector, Columbia: University of Missouri

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