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FINANCING OF CO-OPERATIVE SOCIETIES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1     Background of the study

Throughout human history, groups rather than individuals have always undertaken some activities simply because this was a better and economic way of doing things (parnell, 1999). The interdependent and mutual help among human beings have been the essentials of social life. History tells us that man cannot successfully live by himself and for himself alone. The spirit of association is important to human progress. Since the beginning of human society man has cooperated first in foraging and then in hunting, later in agriculture and still in manufacturing. There is practically nothing which a man by himself alone can achieve but much acting together with others (Krishnaswamy and Klandaiswamy, 2000).

Collective actions of cooperatives are more effective than separate actions of individuals. through co-operatives, individual households and communities can create opportunities for themselves, find a productive work that not only facilitate their wellbeing and stability but also give them the support they need to improve their lives and remain active in civil rights and political arenas (Destahun, 2007). Data compiled by international co-operative alliance (ica) indicated that cooperatives have increasingly become the sources of secured employment and income for millions of the world’s population. Over 800 million people are members of different co-operative societies in the world (ICA, 2000 cited in Mekonnen et al., 2007).

In such situation co-operatives represent a strong and viable economic alternative. cooperative organization offers the best machinery for reaching the masses of the small-scale famers. International Co-Operative Alliance (ICA) (2010) defines co- operative as an autonomous association of persons unified voluntarily to meet their common economic, social and cultural needs through a jointly-owned and democratically controlled enterprise. it is a business voluntarily owned and controlled by its member patrons and operates for them and by them on a non-profit basis. it is also a business enterprise that aims at complete identity of the component factors of ownership control and use of services (Nweze, 2001). Co-operative societies are very popular in Nigeria. Onuoha (2002) in his study of co-operative history in Nigeria state that there are traditional and modern cooperative societies. the modern co-operative societies started in the country as a result of the Nigerian cooperative society law enacted in 1935 following the report submitted by C. F. Strickland in 1934 to the then British colonial administration on the possibility of introducing cooperatives into Nigeria. co-operatives societies in          Nigeria         like their counterparts all over the world are formed to meet people’s mutual needs. co-operatives are considered useful mechanism to manage risks for member in agriculture. through co-operatives, farmers could pool their limited resources together to improve agricultural output and this will enhance socio-economic activities in the rural areas (Ebonyi & Jimoh, 2002). Arua (2004) viewed co-operatives as an important tool of improving the living conditions of farmers.

 According to bhuyan (2007) co-operatives are specially seen as significant tools for the creation of jobs and for the mobilization of resources for income. but cooperatives may not be able to serve its members or to be able to expand its service unless they are viable. viability can only be achieved only when co-operative products and services attract profits. it is a statement of fact and supported by conventional wisdom that businesses can only be sustainable if they make adequate returns on investments. co-operative businesses are technically not different from other businesses when making sufficient returns on investments in order to remain viable and sustainable.

A co-operative can be viewed ideologically in two opposing fashions. firstly, as an integral part of a capitalist society and secondly, as an organization that is in some manner the antithesis of a capitalist firm. co-operative legislation in nigeria and in many countries with anglophone colonial background, effectively (and possibly unintended) assumes the latter view by making it difficult for a cooperative to raise funds on market-determined terms. the government often steps in to make available funds to co-operatives on concessional terms. however, there has always been a view that it is good for a co-operative to raise funds from its operations by way of profits, thereby preserving its autonomy and independence.

Co-operative societies as business enterprises depend on joint association of its members to function. joint association can be interpreted to mean coming together to participate in the enhancement of the co-operative business activities as well as patronize its goods and services. to this end, co-operative societies encourage member participation in terms of savings; both voluntary and mandatory savings, which guarantees membership as well as increase economic benefits for joining cooperative. in other words, participation is important for the success of any cooperative society irrespective of type; in so far as it helps in achieving the co-operative objectives.

In other to achieve its objectives, co-operative societies must be adjudged as performing. Gavrea, Ilies, and Stegerean (2011) in citing Lebans and Euske (2006) define performance as a set of financial and nonfinancial indicators which offer information on the degree of achievement of 

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