Edited by Sarah Owoeye and Toluwalase Solanke
Co-operative societies are a voluntary association of individuals who come together to meet their common economic, social, or cultural needs through a jointly owned and democratically controlled enterprise.
The primary goal is not profit-making, but mutual support and benefit for all members.
Table of Contents
Benefits Or Advantages of Co-operative Societies
Co-operatives aim to improve the economic well-being of their members, promote self-reliance, and reduce exploitation by middlemen or profit-driven companies.
1. Promotes Savings
Co-operative societies help members build a habit of saving regularly.
2. Operates Democratically
Every member has an equal voice in the society. Decisions are made on a one member, one vote basis, no matter how many shares a person owns.
3. Provides Financial Support
Members can access loans and funding through the society. These can be used for business growth or personal needs.
4. Continuous Existence
The society does not dissolve if a member dies or leaves. It remains active because it is legally registered.
5. Raise Living Standards
By offering affordable access to valuable items like electronics or land, the society helps improve members’ quality of life.
6. Offers Goods At Lower Prices
Co-operative societies buy directly from producers and sell to members at reduced costs, cutting out middlemen and their markups.
7. Helps Resolve Conflicts
Disagreements among members are settled within the society, promoting peace and co-operation.
8. Member Education
Co-operative societies provide members with useful technical knowledge and training, such as improved farming methods in the case of farmer co-operatives.
9. Access To Loans
They can secure loans more easily from banks, especially co-operative banks. Members may also benefit from government financial support.
10. Support In Marketing Products
Co-operative societies help members sell their products and ensure they get fair and reasonable prices.
11. Connection To Government And Institutions
They serve as a bridge between their members and government agencies, research bodies, and financial institutions.
12. Removal Of Middlemen
Co-operatives cut out intermediaries in the supply chain, helping members to save money and earn more.
13. Protection Of Members’ Interests
Members are shielded from exploitation or unfair practices by dishonest distributors and manufacturers.
Challenges Or Disadvantages Facing Co-operative Societies
1. Difficulty In Loan Recovery
It can be challenging for co-operative societies to recover loans from members. In some cases, the loans are never repaid, which can disrupt the society’s operations.
2. Risk Of Fund Mismanagement
Elected officials may misuse the society’s funds. In many cases especially in Nigeria officers grant themselves large loans without meeting the proper qualifications.
3. Limited Financial Resources
Co-operative societies often struggle with inadequate capital. They mostly depend on members’ contributions, which may not be sufficient to meet the society’s financial needs.
4. Restricted Share Sales
Shares are not offered to the general public. Instead, they are sold privately among members, which can limit capital growth.
5. Limited Liability
Members have limited liability. If the society is dissolved, members only lose the amount they’ve invested. Their personal assets remain protected by law.
6. Separate Legal Identity
The co-operative is legally independent of its members. It can enter into contracts, sue, or be sued in its own name, separate from the individual members or managers.
7. Continuity Of Existence
The co-operative continues to operate even if a member dies or withdraws. This ensures business stability, but may also reduce individual control.
8. Limited Share Transfer
Shares cannot be freely sold or transferred. A member must get approval from other members before transferring ownership, which can make exiting the society difficult.
9. Management By The Board Of Directors
Day-to-day decisions are handled by a board of directors, which may lead to poor representation if directors do not act in the best interest of all members.
10. Low Public Awareness And Support
Co-operative societies often lack visibility and support from the general public, making it harder to grow or attract new members.
Public Enterprises
Public Enterprises are businesses owned and managed by the government. They are usually established through an act of legislation and are primarily aimed at promoting the welfare of the general public, rather than making a profit.
These enterprises may be referred to as Corporations, Authorities, Commissions, or Boards, depending on their functions.
Examples Of Public Enterprises in Nigeria
These examples include:
- Nigerian Television Authority (NTA)
- Federal Radio Corporation of Nigeria (FRCN)
- Nigerian Railway Corporation (NRC)
- Nigerian Ports Authority (NPA)
Formation Of Public Enterprises
Public corporations are business organisations owned by the government, primarily established to carry out commercial activities. They are usually created by an Act of Parliament at the federal level.
Public enterprises are created based on legal provisions, which differ from one country to another depending on national laws and regulations.
In most cases, the government passes specific legislation that gives it the authority to set up and manage these enterprises.
This legal framework outlines the enterprise’s purpose, structure of governance, and how it should operate. The government can either establish new enterprises from scratch or take over existing private companies through processes like nationalisation.
Forms Of Public Enterprises
1. Public Utilities
These are government agencies that provide essential services such as water, electricity, and transportation at subsidised rates.
They aim to balance public welfare with economic sustainability. Example is State Water Corporation.
2. Political Boards
These are independent bodies that implement government policies within specific sectors or regions.
They are responsible for overseeing operations in line with government objectives. Example is Schools Management Board.
3. Commercial Enterprises
These are profit-oriented government-owned organisations established to operate in competitive markets.
They are financially and operationally autonomous. An example is NITEL (Nigerian Telecommunications Limited).
Management Of Public Enterprises
Public enterprises are overseen by a board of directors or a governing body appointed by the government.
This board is responsible for setting the overall direction of the enterprise, supervising its operations, and ensuring it follows relevant laws and policies.
The daily activities and operations are handled by professional managers and staff employed by the enterprise.
While the board and management run the enterprise, the government maintains oversight by monitoring performance and ensuring that the management is accountable for meeting the organisation’s goals.
Sources Of Capital for Public Enterprises
1. Loans And Overdrafts
Public corporations can obtain loans or overdraft facilities from banks and other financial institutions to support their operations or fund capital projects.
2. Internally Generated Revenue
These are funds earned from the corporation’s own activities, such as service charges, fees, and sales of goods or services.
3. Government Grants
The government may provide financial support in the form of grants. These grants help cover operating expenses or fund specific projects.
4. Grants From International Financial Institutions
Organisations like the World Bank or International Monetary Fund (IMF) may offer grants or aid for development purposes.
5. Grants From Foreign Countries
Some public corporations receive financial assistance from foreign governments to support developmental or humanitarian projects.
Read also: Similarities And Differences Between Retail Cooperative Society And Public Limited Company
