The Co-Operative Society (Movement)




Co-operative Society had their origin at the end of the 18th Century, when great industrial changes were taking place. Until the 18 Century, most of  she manufacture was done in the home, under what is known as the Domestic System
but as a result of the Industrial Revolution, the Factory System of  manufacture developed, and went to factories to wok for Wages, instead of being their  own masters at home. Much social distress and unemployment accompanied the great industrial changes which situations were made worse by the effects of the  Revolutionary and Napoleonic Wars which brought in untold hardship after the conclusion of peace in 1815.

According to Whitehead (1980), the idea of co-operation arose during the years of distress. The aim of the early co-operators was to remedy the distress of the working class by obtaining some of the benefits of the machinery and
greater production for the workers. Two methods were attempted in order to do this. To set up workshops owned and controlled by the workers themselves  whereby the employees where to subscribe the capital, run the factory under  direction of elected foremen and to share in the profits made from the sale of their products. This idea was borrowed from the French at the time of the French Revolution, and in it we see the origin of what is called today

To form associations of consumers who would buy their requirements collectively from wholesalers, and thus buying in bulk, would be able to sell to members at a lower price. This principle is the origin of the


At this time, many of the shops in the Northern industrial towns were owned either by the mill owners or by shopkeepers who were under the influence of  the mill owners. The general shortage of coins and reliable banknotes meant that workers were often cheated on part in the morning and were then quickly sent to the shop to spend their money at once so that the coins could be sued later  the same day to pay other -workers. This reduces the workers’ chances of  choosing goods carefully. The Rochdale Pioneers showed how to avoid dealing at all with the “company store” In addition to these two traditional methods mentioned above, other forms of Co-operative retailing, such as., Thrif/ Credit/Savings, Craftsmen,  Multi-purpose co-operative societies and production (or industries co-operative
societies) have also developed in most of the West African countries. These attempts after distresses were not very successful, but better organised movements emerged 1820.

The first successful society was founded in 1844 as a co-operative store in Toad Lane, Rochdale, Lancashire by a small group working men who become known as 28 Rochdale Lancashire Pioneer Weavers who based &men the who
based the operations of their society on principles which have since been copied through world. By 1845 there were 74 members, coupled with the fact that the turnover and profits became high.

Thomas (1970) opines that though wages were low and living conditions poor, these men put all their savings together and set up those shop for themselves Each took his turn in serving during his free time and profit
made was divided up among the group. In this way they provided the basic necessities of life at prices below those asked in other shops. The venture was successful and other societies grew up On the same lines. Today, there are co-operative retail societies Ogun Out the country. They vary in size from those in cities with membership
around the million mark to those in villages with only a small membership around  the million mark to those in villages with only a small membership. As a matter of fact, the idea was to buy foodstuffs at wholesale prices and
sell them (to members only) at market price. Profits were divided among member in proportion to the value of their purchases. Although the first co-operative society was formed in Nigeria in 1945, yet history has it that the Producers Co-operative Society was formed in 1922 to produce cocoa farmers a common front so as to be able to secure loans and fa prices for their produce. Western, Eastern and Northern Nigeria, as Nigeria  they called, passed their co-operative laws, which are still in force in  the State created from each former Region. The relevant co-operative laws gave addition impetus to cocoa farmers, and soon producers of coffee, rubber, cotton,  groundnut palm produce, et cetera, began to promote co-operative societies to cater for the interests. Its principal aim was to identify people of similar character and interest who were willing to work together to promote and project their members  social
and emotionally.


A co-operative society or movement is an organisation in which a group persons who have common interest mutually agree to come together for promotion of economic and social interests. Thus, after the identification of members themselves, a programme of activity is usually drawn up whereby members agree on certain lines of action. these lines of action were:
a. Whether to produce goods for distribution, or

b. Whether consumer goods would be bought in bulk and sold in retail at reduced prices; or

c. whether to go into thrift or credit operations raising funds and giving out loans to their members.


A co-operative society is not just a collection of individuals coming together merely for the sake of an association, but that over the years, a co-operative society was guided by some tested principles which, if strictly adhered to, would
lead to the successful realisation ot the goals for which the organisation was  formed. These principles reflect and underscore:
a. Open and Voluntary Membership.
b. Democratic control (one member, one vote)
c. Payment of limited interest on capital invested
d. Co-operation among co-operatives
e. Patronage Rebate
f. Distribution of surplus funds in proportion to member’s transactions.
g. Maintaining political and religious neutrality
h. Promotion of education
i. Cash trading.

a. Open and Voluntary Membership: This means that every member who is willing and ready to identify him/herself to the aims of the organisation is allowed to come in and participate in the activity of the organisation  irrespective
of his political or religious beliefs.

b. Democratic Control (one member, one Vote): Decisions are normally taken on the floor of the house based on the agreements reached by the generality  of the entire members. It is strictly based on the principles of the one man
one vote. It must be emphasised here that in case of a tie in reaching  decisions, the President/Chairman is allowed a casting vote. In a consensus situation. no vote is required.

c. Patronage Rebate: At the end of the financial year when the profits
realised by the organisation have been worked out, an amount is set aside  as dividend payable to members as a rebate for the business done with the organisation This is aimed at encouraging members to do business with the organisation rather than going elsewhere.

d. Payment of Limited Interest on Capital Investment: This is where dividend is paid to members who are the owners of the business based on the share capital subscribed by each member. The co-operative society law stipulate
that not more than five percent of the profits realised for a given year  shoe be paid as interest to members,

e. Co-operation Among Co-operatives: This aims at bringing primary operatives together to rob mind and find solutions to commonly problems identified. Thus, we have today, the Co-operative Unions which the
are encouraged to form among themselves. Here there must be at least co-operative societies coming together to form one. All the cooperation societies in a given focal government area can come together to form of
They subscribe to the shares and manage the business collectively. Aloe height of it all is the apex body. This is the parent body of all the  co-operatives societies as well as the Union in the State. A good example is the Delta
operative Federation

The above principles are still applied today throughout the cooperative movement which forms one of the retail outlets in many West African  countries the idea of co-operation is being strongly encouraged, and this can be seen
by the setting up of a special government department or Ministry to take charge of  the set-up, Government in statements and by direct loans, have helped various classes of co-operative societies and the student is advised to work across the road to set one of the societies to study its working in Edo State of Nigeria, there
are sever consumers and producers co-operative societies such as the Benin Carvers Co-operative society, the Berin Shoemakers Co-operative society, the  consumer co-operative society, etc


Different types of co-operative stores exist today. However, the most common once are

1. The Producers’ co-operative societies: Unlike the consumers’ societies
the producers actually engage in production of goods. These are the categories of the co-operative societies that are being given encouragement by those governments which have programmes for rural integration. The
farmers, for instance, are encouraged to form producers’ co-operative societies after which certain agricultural facilities are made available to them as a group. Such facilities include funds, modern machineries and
equipment, crops, insecticides (for killing plants’ diseases), expert advice and training. The producers’ societies could take either of two forms 5.
a. Joint Ownership: All members would fuse into one association owning in common-land, machineries, capital, receiving expert advice and working as a team
b. Individual Ownership: Alternatively, each member of the society could stand on his own, having his owns farmland. capital and sharing as much as possible the use of machineries, equipment, et cetera with one another Producers’ co-operative societies are like cartels. after their harvest, they pool their products together, selling to the
consumers’ co-operative societies who in turn sell to the final consumers. Any recurring profits are shared among member produce on the basis of quota contribution to the pool. in Ghana, there are producers’ co-operative societies engaged poultry farming and distilling of spirit (hot drinks).

2. The consumer co-operative societies: These are shops where they retail goods to members and others. They deal mostly on consumer goods. The main function is to make the cost of items cheaper and lower the cost
living for their members. The full price is charged in the shops for goo but profits are returned to members in the form of patronage rebates. instance, they retail consumer co-operatives retail goods, while the wholesale
co-operative societies sell both in bulk and in retail.

3. The Credit/Thrift/Savings Co-operative Societies: These play dual role They function as a business organisation putting their resources together which in this case are savings. At the same time, they function as financial
institutions. They make their savings available as loans to their member at very minimum rates of interest, thereby encouraging their members undertake small business risks. Member savers are content with the low interest rates, in the satisfaction that they have been useful to other members who are able to make some living out of such loans deployed in petty trading activities. In addition any other big funds in form of grants or loans from the headquarters of the co-operative Bank Limited are passed through the coffers of these cred and Thrift Co-operative Societies.

4. Production (or Industrial) Co-operative Society: A Production Co operative Society is made up of individuals engaged in specialised, skilled services such as tailors, carpenters, mechanics, panel beaters, welders- painters, block moulders, masons, and so forth. Each service area  co-operative under the umbrella of the Production Co-operative Society

5. Multi-Purpose Co-operative Society: While other forms of co-operative society tend to specialize, for example, in consumer goods, farming,  fishing, etc, the Multi-purpose Co-operative Society combines different activities
such as marketing of consumers goods, credit and loans, etc A Muti- purpose Co-operative Society or a Farmers’ Multi-Purpose Co-operative the term, “multi-purpose”, allows the society to undertake any form of co- operative activity that it considers profitable in the interest of the  society and its members.

The types of cooperative society discuss above have advantages and  disadvantages altered to them it must be stared that there are other type of co-operative societies in  various parts of the world, although its Organisation varies from one to another


Asaolu (1982) listed the following aN tne characteristic of a Co-operative  Society


i. This Is open to all people on payment of a small fee
ii. The share list is also open all the year round
iii. Voting is by person and not by shares as in the public and the private companies.
iv. There is a limit to the amount of investment that any one member could  make.
v. Shares are not transferable and would be repaid on demand
vi. Each member is identified by a number for the purpose.

2 Motive: The Primary motives are the welfare of members. To this end, t operate on the basis of substituting co-operation for the rat-race competition in the capitalist economy

3. Sources of Capital;  Capital comes from shares bought by members, loans from members, and undistributed profits that are plug back into the business There are also some loans from outside bodies as a interest.

4. Range of Goods: in order to cater for the growing tastes of members . society rotors a wide range of goods such as alcoholic drinks, food, clothing and furniture They also provide services such as banking insurance

5. Management; This is by a committee of management and the president are selected by election, but are unpaid
The committee takes decision on policy matters Such decisions are carried out by salaried managers ad officials appointed by the committee.

6. Prices of Goods: Goods are sold at momentum retail prices and snot Me slightly lower prices as a from of passing returns on business Operator Customers

7. Management of Dividends: Calculation and payments of dividends are on value of purchases made by customers. However, in order to avoid the arduous task of keeping endless records of customers’ purchases, books and stamps
are issued to all customers at the time of purchases. The stamps are pasted  on the pages of book which, when filled, have certain values. Dividends and paid on the number of books fully filled and submitted. sometimes bonuses, are

The problems facing the organisation and operation of co-operative societies in Nigeria and in most West African countries are outlined below as put  together by Ahukannah, et al (1992).
1. Amateur management
2. Divided loyalty
3. The consumer-type society is dominant.
4. Financial problems
5. Bad economic conditions
6. Communication problems
7. Slow returns on investment
8. Difficulty in recovering loan
9. High level of illiteracy among members
10. Excessive governmental control.

Advantages of Co-operative Societies: Some of the merits of co-operative societies are:
a. Membership: To become a member is easy and without any intricate formalities. Membership is open to all on payment of a nominal fee. Registration of members is a continuous exercise.

b. Thriſt and Business Enterprise: Savings habit is encouraged by paying interest, however small, to members on their sayings. Other members are encouraged to take interest in business by giving them loans with low
interest rates out of members’ savings.

d. Loyalty: Members are loyal and devoted because of the pride of  joint ownership
Equal Rights: Members have equal rights and equable Voices and equality of rights.

e. Divided Rights and Effects: Each member is entitled to payment of  dividends. based on purchases. This ensures equitable sharing of profits, and increases sales turnover by widening and consolidating the societies’ share of the
1. Members Welfare: A fixed percentage of profits is reserved for improving educational, economic and political advancements. For instance,  scholarships

could be awarded to the children of members, while useful training courses are organised in the interests of members. War Aptest Monopolies they constitute a strong competitive force the monopolistic tendencies of large stores, and also serve to urge others to be more efficient

I sewers to Challenges: As answers to charges against them of be conservative and unenterprising, the societies now engage in aggressive devices, nation wide advertisements, sales of a wider-range of goods and
or dividend stamps The customers who shop at the co-operative get good quality products,  prices, and a share of all the profits made.
il range of benefits for members and employs includes such items as With education, convalescence after illness, youth camps for children assistance with funeral expense.
iii At one time, the societies has a private market’ at there members supported the societies for idealistic as well as practical reasons. No tax is paid on this type of business organisation. Other principal advantages attached to the system of co-operation relation to the payment of a dividend to the consumer and the fact that the
con can take part in the control of the business. In addition, some of the  surplus are used for social and educational purposes for the benefit of both member

Below states some of the disadvantages of Co-operative societies!
a. Lack of Competitive Drive: Some have argued that co-operative some are not as competitive as the other stores where prices are lower, qua branded superior goods, faster services and more business-like.
The conflict or

b. High Dividends and Low Prices: the sanity of a paying high dividends while maintaining low prices has been a long-term policy. Some argue that such a policy might deprive the so of much needed profit reserve.
c. Erect or Low Dividends Payments: It has been observed that the dividends payable on purchases is not enough incentives for of the co-operative societies to do their shopping share. They could such dividends promptly in the competitive stores reputed for lower

d. Quality of Management. The Committee of management that societies might have little or no industrial experience. Appointments officials equally take no account of qualifications and interviews. Then the attains or the society might not necessarily be in capable hands.

e. Low Salary Se-ale: The salaries paid to their officials are not  competitive and therefore, they could not possibly attract adequate qualified personnel

f. Outlets for Competitors’ Products;  Some of the Co-operative Societies have no products of their own and therefore, serve only as channels of  distribution for their competitors

g. Members Lack of interest in Meetings and Administration The interest of members in the running of the societies might be minimal once their dividends are paid promptly.

h. Non members Lack of Interest: Non-members might not be interested in shopping there for resentment of not being treated like registered members Other disadvantages are that the members are often only interested in the
dividend and are not concerned with the management of the business or the conditions under which employees are working. Also, it is sometimes thought that many of the management committees are composed of persons who are
lacking in business experience


In this chapter one has learnt that: Co-operative societies or stores had their origin at the end of the 18 century It was established by 28 Rochdale Lancahsire Pioneer Weavers in 1844 at Toad Lane, Rochdale, Lancashire;
The basic aim was to buy goods in bulk purchases and sell to members at reduced (controlled) prices,
Co-operative movement (societies) is defined as an organisation in which a group of persons who have common interest mutually agree to come together for the promotion of economic and social interest The establishment of co-operative societies is based on nine sound principles for its successful operation. There are many types of co-operative societies a few of them are consumers, producers, production, multi-purpose; credit/thrift
savings, etc The features of co-operative societies are membership, motives, sources of capital, range of goods, management, prices of goods etc, The problems facing co-operative society are inefficient management,
divided loyalty, finance, lack of communication, bad economic conditions, interference by government, high level of illiteracy, etc. Some of the principal advantages attached to the system of co- operation lie in relation to the payment of a dividend to the consumer and the fact that the consumer can take part in the control of the

business. In addition, some of the surplus funds are used for social and educational purposes for the benefit of both members and staff Finally, the main disadvantages are that the member is often only interested in the dividend and is not concerned with the management of the business or the conditions thought that many of the management
of the business or the conditions under which employees are working Also, it is sometimes thought that many of the many of the management committees are composed of persons who are lacking in business experience, and do not have the will and encouragement to inspire others.

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