Hello, special welcome to this Class. Here we are going to be looking at the topic: CO-OPERATIVE SOCIETIES: Definition of Co-operative Society, characteristics, types of Co-operative society, advantages and Disadvantages of Co-operative society.
Table Of Contents
- What is co-operative society
- Characteristics of co-operative society.
- Types of co-operative society.
- Advantages of co-operative society.
- Disadvantages of co-operative society
WHAT IS A CO-OPERATIVE SOCIETY
Meaning: A co-operative society is a voluntary organization in which individuals, businessman and traders with common interest who pool their resource together to promote the economy and welfare interest of their members. It is own and control by the members.
CHARACTERISTICS OF CO-OPERATIVE SOCIETY
- Perpetual existence: There is continuity in co-operative societies. Death of a member cannot bring the organization to an end.
- Registered as a limited liability: The liability is limited to the shares held by individual shareholders.
- Democratic in nature: The activities of co-operative societies are democratic in nature. Each members is entitled to one vote, irrespective of the total shares.
- Profit is shared based on patronage: Surplus for the year is shared among the members on the basis of their patronage during the year.
- The objective is to promote members interest: The main aim and objective of the society is to promote and advance the interest of their members, by rendering services to them.
- Manage by a committee: The control and management of the organization is by an elected committee whose members must be members of the society.
- Capital is provided by members: Capital is raised through voluntary contributions from the members.
- Owned by people with common interest: Co-operative societies are owned by by people with common interests. This makes ownership to be restricted as some conditions must be met before one becomes a member
Types of Co-operative Society
- Wholesale co-operative
- Retail co-operative
- Producer co-operative
- Credit and drift co-operative
- Multipurpose co-operative
- Consumers co-operative
1. WHOLESALE COOPERATIVE: Wholesale types of co-operative society is formed by small scale wholesalers who purchase goods in bulk from the manufacturers at a reasonable price and sell in small quantities to retail co-operative. They are able to raise a large sum of money to finance wholesale purchases when they come together. As an entity, they have better bargaining power to purchase in bulk from the manufacturer they also settle dispute among their member.
2. RETAIL CO-OPERATIVE SOCIETIES: Retail types of co-operative society is a contractual organization formed by many small independent retailers. They pool their resources together to enable them buy in bulk and then sell the goods at lower prices to their members who receive some form of patronage returns based on the amount of goods they purchase.
3. PRODUCER CO-OPERATIVE SOCIETIES: Producer types of co-operative society is formed by producers of similar products who organize co-operative production and undertake joint marketing of the product on wholesale or retail basis. They share useful information among members can also Purchase Farm implements such as equipments, cutlass, seeds, fertilizer in large quantities and sell to members at reduced prices.
4. CREDIT AND THRIFT SOCIETY: Credit and thrift society is an association of low income earners who jointly pool large resources or fund to together by contributing on a weekly or monthly basis. This types of Co-operative society encourages saving habit among their members and Grant loans to the members out of the accumulated fund. The loan attracts a low rate of interest. At the end of the year, surplus will be distributed to members as dividend. The members can also be afforded the opportunity Of purchasing household needs like television and fridge.
5. MULTIPURPOSE CO-OPERATIVE SOCIETY: Multipurpose co-operative is a society formed by existing co-operative societies. Multipurpose co-operative undertakes any form of co-operative activity that is profitable to the society. This association also serve as a protective body for it’s members. The society makes facilities used for co-operative activities available for sharing among members. They also mediate in case of rift among members.
6. CONSUMERS CO-OPERATIVE SOCIETY: Consumers corporative society is owned and operated by a group of ultimate consumers who pool their resources together to purchase goods and services in large quantity and distribute primarily to it’s members. The operating policies used are:
- Membership
- Democratic control
- Limited interest paid on Capital invested.
- Proportionate dividends based on their level of purchases or patronage.
ADVANTAGES AND DISADVANTAGES OF CO-OPERATIVE SOCIETY
Below are the Advantages of co-operative society in commerce:
- Encouragement of savings: Co-operative societies encourage saving habits among their members.
- Democratic in nature: Each member of the society has equal say in the organization. Members are entitled to one-man-one voice, irrespective of shares held.
- Render financial assistance to members: They can mobilize fund needed for business investment and expansion by giving loans to the members
- Perpetual existence: Perpetual existence is another advantages of co-operative society. Death of a member cannot bring the society to an end since they are registered under the relevant laws.
- Improve member’s standard of living: This is another advantages of co-operative society. They improve the standard of living of their members by providing goods which they cannot buy on their own, e.g, electronics and land.
- Ensure low price of Goods: They buy from producers and sell to members at low prices, hence the middlemen and the attendant high prices of goods are bypass.
- Settlement of disputes: Settlement of dispute is another advantages of co-operative society; co-operative society also settle rifts or disputes among their members.
- They educate their members: Co-operative society also provide technical information to their members about the best methods of production, e.g, farmer co-operative.
- Loan facilities from banks or Government: This is another advantages of co-operative society. They can obtain loan easily from the banks, e.g, co-operative banks. Members can also receive financial assistance from the government.
- Helps in marketing member’s Products: They assist their members in marketing their products by ensuring fair prices for the products.
DISADVANTAGES OF CO-OPERATIVE SOCIETY
Below are the problems or Disadvantages of co-operative society:
- Problem of loan Recovery: The society may not be able to recover loans given to members. This may destabilize the society. Recovery is difficult and in some instance even impossible.
- Opportunity for embezzlement of Fund: This is another disadvantages of co-operative society. The elected officers can misappropriate the funds of the society, and this is very rampant in the Nigerian co-operative societies. They can give large amount of money to themselves even though they are not qualified.
- FINANCIAL PROBLEMS: This is another disadvantages of co-operative society; there is lack of adequate capital to run the society. They rely heavily on members contribution which may not be enough.
- Low dividend: Here is another disadvantages of co-operative society. People prefer to invest their money in other areas because of the low level of dividend.
- Weak and unspecialised management: The committee in charge of the administration usually consists of people who are not specialist and are part-time managers, hence the society may not be effectively and efficiently managed.
- High level of illiteracy is another disadvantages of co-operative society: The high level of a literacy in Africa has made the training and education of members very difficult.
- Political intervention and Government Control: Another major problem or disadvantages of co-operative society especially in Africa is government interference in it’s activities. All co-operative societies must be registered with the ministry of commerce and Industries.
Revision Questions
- Define co-operative society
- What are the characteristics of co-operative society
- Name the types of co-operative society
- State the advantages and Disadvantages of co-operative society