Table Of Contents
1. Meaning Of Co-operative Society
2.Features Of Co-operative Society
3. Types Of Co-operative Societies
4. Advantages Of Co-operative Societies
5. Disadvantages Of Co-operative Societies.
Meaning Of Co-operative Society
A cooperative society is a business organization and operated by a group of individuals for their mutual benefit. It is an association of persons united voluntarily to meet their economics, social and cultural needs aspirations through jointly owned enterprise. It is a voluntary business association which is opened to all person irrespectively of religious, cultural and political affiliations.
Features Of Co-operative Society
1. It is registered under the relevant cooperative law.
2. It has a minimum of 6 for producer cooperative and a minimum number of 10 for other cooperatives;
3. It Adopts Democratic Principles: That is, it is democratically controlled. Its executive members are brought into office through elections;
4. It Has Legal Entity: It can sue and be sued;
5. Members Have Limited Liability: That is, they cannot be called upon to pay the firm’s debts.
6. There is continuity or perpetual existence.
7. Every members can participate in the running of the business.
Types Of Cooperative Societies
1. Consumer Co-operative Society:
It is an association of consumers who buy large quantity of consumer goods from manufactures or wholesalers and sell in piece meal, (small quantity) at relatively low prices, both to their members and non members. They set up a shop, like a supermarket or multiple shops called retail cooperative stores.
2. Producer Co-Operative society:
It is an association of producers, especially these in the same particular trade, like shoe makers, carpenters, tailors, farmers etc. They jointly set up a factory or a farm in which goods are manufactured or crops are cultivated.
The goods produced are mostly sold to other cooperative societies, like retail cooperatives. We have farmers or agricultural cooperative society, like, cocoa producers cooperative. This has a unique feature. The member do not jointly produce. The goods rather they jointly market(sell) their products.
3. Credit And Thrift Co-Operative:
This movement is usually formed by low income earners who find it difficult to save on their own efforts. The members agree to contribute an equal amount monthly which is deposited into the cooperative account with commercial bank. Members decide what to do with the money and when.
4. Wholesale Co-Operative Society:
It is owned and run by high income earners, wealthy traders etc. They set up a warehouse or large store into which they, deposit goods bought directly from manufacturers at wholesale prices.
Some wholesale cooperatives have production units, like factories or large farms. They sell their products or goods to retailers, especially retail co-operative society at moderates prices. However, it is not a popular form of co-operative in Nigeria.
5. Multi-Purpose Co-operative Society:
It is set up by a particular group of people, like workers, consumers etc to undertake various business ventures like supermarket, hotel, transport, laundry and secretarial service (computer photocopy) etc. That is, they set up multi-purposes mini-supermarket and render a variety of services like those mentioned above. Its management, voting right and method of sharing profit are similar to those discussed above. A good example of co-operative societies is the Co-operative Bank.
Advantages Of Co-operative Societies
1. The societies encourage their members to form savings habit.
2. The societies help members to market price and thus reduce loss due to surplus production.
3. Co-operative societies give loans to their members at a low interest rate.
4. There is democracy in the control and management of cooperative societies. A member has only one share which entitles him to one vote.
5. Limited Liability: In most cases the liabilities of the members of the society are limited to the extent of capital contribution.
6. Stability And Continuity: A co-operative society cannot be dissolved by the death of a member or as a result of insolvency.
Disadvantages Of Co-operative Societies
The co-operative society suffers from certain limitations and draw backs. Some of these are:
1. Co-operative societies do not always have adequate capital to run their business.
2. The members elected to manage the society may have little or no experience about managing a business.
3. Any misunderstanding between the members and the management committee may affect the smooth running of the co-operative business.
4. The management committees often misuse the society’s money at times for political purpose.
5. Lack Of Secrecy: The co-operative society does not maintain any secrecy in business because the affairs of the society are openly discussed in meetings.
6. Absence Of Motivated: Members may feel unenthusiastic about business growth because the law governing cooperatives puts some restriction on the rate of return.