CO-OPERATIVE SOCIETIES

A cooperative society is defined as a voluntary business organization in which a group of individuals with common interest pool their resources together to promote the economic welfare of their members in the production, distribution and consumption of goods and services.

Table of Contents

TYPES OF CO-OPERATIVE SOCIETIES

CONSUMERS CO-OPERATIVE SOCIETY: A consumers’ cooperative society is an association of consumers. They buy goods in bulk at wholesale prices from manufacturers and sell them at retail prices to both members and non-members of the cooperative. The by-pass the middlemen in order to get these goods at cheaper rates and then distributes them to their members.
PRODUCERS CO-OPERATIVE SOCIETY: This is the association of producers of similar products who have come together in order to promote the production and sale of their products. Members of this society like farmers and other producers contribute money in order to buy or hire equipment, machinery and raw material at reduced rates meant for the promotion of their productive activities e.g. agricultural co-operatives society.
CREDIT AND THRIFT CO-OPERATIVE SOCIETY: This is one of the commonest co-operative societies found in our present day society. In this society, members are encouraged to save their money together, of which, all or part of it may be lent to any member that is in need.

FEATURES OF CO-OPERATIVE SOCIETY

There is usually no limit to the size of its membership.
It is usually open to persons with identical interests who wish to join.
Profit or dividends are shared according to the purchase from or sales to the society within a given trading year.
All the members bear the risks of the business jointly.
The aim of setting up a co-operative society is to maximize the welfare of the members who have pooled their resources.
Management and control is democratic.
Co-operative societies are owned by two persons to any number.
Co-operative societies are owned by people with common interest.
They are not necessarily formed to make profit but to promote the economic activities and welfare of their members.
Capital is raised through voluntary contributions from the members.
The liability of members is limited to the amount contributed to the society.
A co-operative society is similar to a limited liability company, as it can exist in perpetuity.

ADVANTAGES OF CO-OPERATIVE SOCIETY

ENCOURAGEMENT OF SOCIETY: Co-operative societies encourage saving habits among their members.
Provision of loan facilities to members: Members find it very easy to obtain loans from the society, which would have been difficult to get from financial institutions.
Improve members’ standard of living: They improve the standard of living of their members by providing goods when they cannot buy on their own. e g. land, electronic, etc.
Encourage Joint Marketing of Products: They organize joint marketing, transportation and distribution of their products.
Pooling of resources for investments: They pool resources together to invest in different areas of investment opportunity.
Perpetual existence: Co-operative society can exist for a long period of time.

DISADVANTAGES OF CO-OPERATIVE SOCIETY

Insufficient capital: The capital available for investment is very low. Most of the members are low income earners.
High rate of embezzlement: Most of the leaders in co-operative society are highly corrupt, some often embark on embezzlement and misuse of funds belonging to the societies.
Problem of loan recovery: The society may not be able to recover loans given to members. This may destabilize the society.
High level of illiteracy: There is wide spread illiteracy among members which makes their education and training very difficult
A major problem for co-operative society is the difficulty of finding experienced person to manage the business.

PUBLIC ENTERPRISES

Public Enterprises, also known as public corporations are government or state-owned business organizations which are usually set up by Act of legislation with the main aim of maximizing public welfare. Examples in Nigeria include the Federal Radio Corporation of Nigeria (F.R.C.N), The Nigeria Ports Authority (N.P.A), The Nigeria Railway Corporation (N.R.C), etc

FEATURES OF PUBLIC ENTERPRISES

They are owned by the government usually set up by Act of Legislation or Act of parliament
The government provides the capital for setting up the business.
They are established purposely to provide essential services for the generality of the people.
The business is controlled by a board of directors appointed by the government.
The management of the business is accountable to the government that set up the business
Public enterprise is a legal entity or a corporate body.
Not profit oriented

ADVANTAGES OF PUBLIC ENTERPRISES

Provision of infrastructural facilities
Availability of large capital
There is continuity
Development of capital project
Avoidance of exploitation of consumers
Creation of higher standards of living
Accountability to the public
Provision of employment opportunities

DISADVANTAGES OF PUBLIC ENTERPRISES

Lack of privacy
Delay in decision- making process
Corruption and embezzlement
Danger of government interference
Inadequacy of funds
Not profit oriented
Danger of monopoly

REASONS FOR PUBLIC ENTERPRISES

Provision of essential and infrastructural facilities
For security and strategic reasons
Limitation of foreign controls of the economy
Safeguard economic and political interest
Large capital requirement
Control of monopoly
Employment opportunities.
To stabilize price
Increase in the standard of living

QUESTIONS

Explain six reasons for government participation in business enterprises.
Explain any five differences between public limited companies and public corporations.
How are public corporation financed.
Explain the ways in which government participates in economic activities.