Edited by Edogbanya P.R. Ocholi and Olorundare Oluwapelumi
Lesson Objectives
By the end of this lesson, students should be able to:
- Define a cooperative society.
- Identify and explain the main features of cooperative societies.
- Describe the different types of cooperative societies.
Table of Contents
Definition of Cooperative Societies
A cooperative society is a voluntary association of individuals who come together to achieve common economic, social, or cultural goals. It is owned and controlled by its members, who pool their resources such as money, skills, or effort to meet their collective needs.
Unlike ordinary businesses that focus mainly on profit, a cooperative society is established to provide services and benefits to its members, such as fair prices for goods, access to credit, or better marketing opportunities. The guiding principle of a cooperative is fairness and equality, where decisions are made democratically and any surplus is shared among members based on participation rather than capital contribution.
Features of Cooperative Societies
- Voluntary Membership
Membership in a cooperative society is open to anyone who wishes to join, provided they meet the basic requirements. People join willingly without force or pressure, and they also have the freedom to leave whenever they wish. This ensures that only interested individuals become members, making participation genuine.
- Democratic Control
Cooperative societies operate on the principle of “one man, one vote.” This means that decisions are not based on how much money a person invests, but on equal participation. Every member has the same voting right, and leadership positions are chosen democratically. This ensures fairness and equality in decision-making.
- Equal Rights
All members are treated equally, regardless of their financial contributions or social status. Each member enjoys the same rights and responsibilities, such as access to goods, services, or loans. This feature prevents discrimination and promotes unity among members.
- Service to Members
Unlike ordinary businesses, cooperative societies are not formed to maximise profit for a few individuals. Instead, they aim to provide services and benefits to all members. For example, a consumer cooperative focuses on selling goods at fair prices to members, while a credit cooperative helps members access cheap loans.
- Shared Responsibility
Members of a cooperative society contribute resources, usually money, to run the society. Since they all contribute, they also share the risks involved. If the society makes a loss, the burden is spread among members instead of one person carrying it alone. This creates a sense of joint responsibility.
- Surplus Sharing
When a cooperative society makes a profit, it is called a surplus. Instead of one person keeping it, the surplus is shared fairly among members. The sharing is usually based on how much each member has used the society’s services, not on how much capital they invested. This encourages fairness and cooperation.
- Legal Recognition
For a cooperative society to operate officially, it must be registered under the law. Registration gives it a legal identity, meaning it can sue or be sued in its own name, own property, and enter into contracts. This helps protect the interests of members and ensures transparency in its operations.
Types of Cooperative Societies
Consumer Cooperative
Consumer cooperatives are formed by individuals who come together mainly to purchase goods in large quantities directly from producers or wholesalers. By buying in bulk, they are able to avoid middlemen and reduce costs. The goods are then sold to members at fair and affordable prices.
The main aim of a consumer cooperative is not to make profit but to protect consumers from being cheated or exploited by private traders. A common example is when school staff or community members form a cooperative to buy food, soap, or fuel in bulk.
Producer Cooperative
This type of cooperative is established by producers of goods and services who join resources together to increase production and improve sales. Members may include farmers, artisans, or small-scale manufacturers. They often share equipment, tools, or machines, and sometimes combine their products for processing and marketing.
By doing this, they are able to produce more efficiently, reduce costs, and get better prices for their goods in the market. For example, a group of farmers may form a cooperative to buy tractors or irrigation machines together.
Credit and Thrift Cooperative
These cooperatives are created by people who want to encourage savings and provide loans to members at low interest rates. Each member makes regular contributions (weekly or monthly), which form the cooperative’s capital. Members who are in need of money can borrow from this pool instead of going to commercial banks, which may charge high interest.
Such cooperatives help members develop the habit of saving and provide financial support during emergencies. An example is a teachers’ cooperative thrift society in schools, where teachers contribute money and give loans to themselves.
Marketing Cooperative
Marketing cooperatives are formed by producers, traders, or farmers to help them sell their products in large quantities and at better prices. Instead of selling individually in small amounts, members combine their produce, which makes it easier to transport, advertise, and sell to wholesalers or even export.
These cooperatives may also engage in storage, grading, packaging, and transportation of goods. For instance, cocoa farmers in Nigeria may join a cooperative that helps them sell cocoa in international markets.
Multipurpose Cooperative
Multipurpose cooperatives are societies that combine the functions of two or more types of cooperatives in one organisation. For example, a multipurpose cooperative may provide consumer goods at cheap prices, give out loans to members, and also help market their products.
This type of cooperative is usually larger and more diverse than the single-purpose cooperatives because it offers a wide range of services. An example is a large community cooperative that operates a savings scheme, runs a shop for members, and also helps farmers in the group to sell their crops.
Final Thoughts
- A cooperative society is an association of people who come together to solve common economic problems.
- Main features: voluntary, democratic, limited liability, mutual help.
- Types include: consumers’, producers’, credit & thrift, marketing, and multipurpose.
Tags
Cooperative society, Mutual help, Economic interests, Voluntary membership, Democratic control, Open membership, Limited liability, Legal status, Surplus, profit sharing, Consumers’ cooperative, Producers’ cooperative, Credit and thrift cooperative, Marketing cooperative, Multipurpose cooperative
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