Cooperative Societies are a powerful and effective tool for wealth creation and investment. Many people have heard about them, but only few understand them and the immense opportunities they offer. Cooperatives have the capacity to reduce poverty, enhance job creation, encourage savings, reduce business risk and improve national productivity.
Over the years the easy access to credit offered by Cooperatives ensured access to healthcare, payment of school fees, ownership of property, access to household items at reduced rates and most importantly improved the savings culture of a lot of Nigerians during their working careers but the truth is majority are still unaware of its benefits and this explains why it’s our focal point this week
A Co-operative Society is an autonomous and voluntary association of individuals who come together with the objective of owning common property, and promoting the economic interest of its members. In Nigeria, Cooperative Societies are regulated by Nigerian Co-Operative Societies Act which is a Federal Law that grants powers to the Governor of each state to establish a Directorate for Cooperatives which will be in charge of registering and regulating cooperatives.
Application for Registration
An Application for registration shall be made to the Director of Cooperatives and shall be signed by at least ten individuals qualified for membership of the society. All applications for registration must be accompanied by the Bye-Laws of the applicant Co-operative Society which are the rules and regulations which govern the affairs of the Co-operative Society.
The Director of Co-operatives has the authority to refuse to register a Co-operative Society where such an Applicant Society’s Bye-Laws, for example, do not comply with the provisions of the Nigerian Co-operative Societies Act.
Benefits of Registering a Co-operative Society
• Upon registration a Cooperative Society becomes a legal entity with the right to sue or be sued in its corporate name and assumes capacity to enter into contracts or agreements.
• Cooperatives can own movable and immovable property, of any description, in its corporate name.
• Profit and Gains made from trading or business activities of Cooperative Societies is exempted from Corporate Tax Liabilities
• A cooperative society has a separate legal entity. Hence, the death, insolvency, retirement, lunacy, etc., of the members do not affect the perpetual existence of a cooperative society.
• Government has adopted cooperatives as an effective instrument of socio-economic change. Hence, the Government offers a number of grants, loans and financial assistance to the cooperative societies
• The management of cooperative society is entrusted to the managing committee duly elected by the members on the basis of ‘one-member one -vote’ thus making the model democratic.
Tips for a running a successful Cooperative Society
Set the rules: It’s mandatory for Cooperatives to have a registered bye-law which would detail subjects like constitution of management committee, tenure of management committee, contributions, procedure for disbursing money, procedure for doing business with third parties, meetings, book keeping and accounts, dispute resolution procedure etc. Bye Laws ensure fairness and accountability among members and reduces abuse to barest minimum.
Due Diligence- To minimise or eliminate the risk of losing money, it is important that cooperatives investigate any investment or business opportunity before making the decision to invest or engage in the business. It is also important for a Cooperative Society to engage the right professionals to advice members on every business transaction.
International and domestic experience has shown that cooperative societies aid the economy and improves the well being of citizens especially the middle and low income earners. As various homes contend with the reality of our nation’s dwindling economic fortune, now is the time for Nigerians to avail themselves of the immense benefits of cooperatives.