Cooperative Societies’ Role In Economic Growth

Cooperatives are important in the world’s economic and social development because by their very nature they target the welfare of the poor.
Over the past few decades, cooperative societies in public and private institutions in Nigeria have impacted positively on individuals’ lives, from the economic standpoint.
The primary objective of forming a cooperative is to protect the economically weaker sections of society from the oppression of the economically organised strong segment of the society.
A cooperative society is one formed by a group of persons who share common goals relating to their social and economic advancement. Although not as popular as limited liability companies or limited liability partnership, cooperative societies afford certain advantages that investors may find favourable.
Cooperative societies in Nigeria, governed by the Nigerian Cooperative Societies Act, are registered by the director of cooperatives in each state. In Lagos State, for example, the Ministry of Commerce, Industry and Cooperatives oversees the registration and regulation of Cooperative Societies.
Cooperative societies are exempt from the provisions of the Companies and Allied Matters Act (CAMA). Consequently, obligations required of limited liability companies and limited liability partnerships by CAMA such as the filing of annual returns and registration of charges and debentures do not apply to cooperative societies.
Considering the squeeze on investment capital in the country, coupled with high rates of interest, which have been an impediment to growth on micro and small businesses that make up the largest segment of the economy, cooperatives are a viable alternative to garner investment capital.
As a matter of fact, government policy on cooperatives makes for their easy formation and operations.
Regardless of their economic statuses, with the will, persons can come together to form cooperatives and build investment capital.
They can do so because it is a voluntary association of people with collectively owned funds, organised on the democratic principle of equality, who join together to supply for their requirements through mutual action, and in which the objective is service rather than profit.
A cooperative society is easy to form because it is a voluntary association and may be formed with a minimum of ten adult members. Its registration is simple and can be done without much legal formalities.
Membership in a cooperative organisation is open to all people having a common interest. A person can become a member at any time he likes and can leave the society at any time by returning his shares, without affecting its continuity.
The liability of the members of a co-operative society is limited to the extent of capital contributed by them. They do not have to bear personal liability for the debts of the society.
A co-operative society has a separate legal existence. It is not affected by the death, insolvency, lunacy or permanent incapacity of any of its members. It has a fairly stable life and continues to exist for a long period.
The operation of a cooperative society is quite economical due to elimination of middlemen and the voluntary services provided by its members.
Some of the expenses of the management are saved by the voluntary services rendered by the members. They take active interest in the working of the society. So, the society is not required to spend large amounts on managerial personnel.
Cooperative societies promote the spirit of mutual understanding, self-help and self-government. They save weaker sections of the society from exploitation by the rich. The underlying principle of co-operation is self-help through mutual help.
The share is always open to new members. The shares of co-operative society are not sold at the rates higher than their par values. Hence, it is free from evils of speculation in share values.
Cooperative societies provide loans for productive purposes and financial assistance to farmers and other lower income earning people.
At economically tough times like the world is undergoing, and the effects that COVID-19 has left in its trail, cooperative societies are a viable alternative Nigerians can veer into as businesses are in dire need of investment capital.