THE IMPORTANCE OF STUDYING PRINCIPLES AND ECONOMICS OF CO-OPERATIVE AS A QUALIFYING SUBJECT FOR THE AWARD OF OND IN BUSINESS STUDIES (BUS 123)

PREFACE

The problems faced by co-operatives and students studying co-operative Economics stems from their lack of understanding of the co-operative principles and the uniqueness of the co-operative Business Enterprise.

In this project the principles of co-operative were reviewed to enable readers understand the basic concept underlying the co-operative principles.  It analyzed the basic steps to be taken in the organization of a viable co-operative society, since it possess  a major problem in the co-operative movement.

 I hope that co-operators who read this project will be able to at least be able to organize a successful co-operative society.

TABLE OF CONTENTS

Chapter One

Meaning of Co-operative

Co-operative Value

Chapter Two

Principles of Co-operative Business

I.C.A Principles of 1937

Voluntary and Open Membership

Democratic Member Control

Member economic participation

Autonomy and Independence

Education, Training and Information

Co-operation among Co-operatives

Concern for Community

Chapter Three

The Rochdale Pioneers I.C.A

Aim of the I.C.A

I.C.A Membership

Types of membership

  1. Collective membership
  2. Individual membership
  3. Ordinary membership

Rights of members.

Duties of members

Past I.C. A Congresses

Chapter Four

Introduction

Reasons for joining co-operatives

i.                    Economic motive

ii.                  Sociological motive

iii.                External pressure

Classification and Types of co-operatives

 Producer co-operative society/movement.

Chapter Five

i.                    Findings

ii.                  Recommendations

iii.                Conclusion.

CHAPTER ONE

MEANING OF CO-OPERATIVE

The co-operative institution will tell us that the co-operative institution is about people. It’s about a business.  It is in line with these assertion that various definitions of this subject have been postulated by some school of thoughts.  Whereas some scholars see co-operative or define co-operative as an association of person usually of limited means who have voluntarily joined together to achieve a common Economic goals through the formation of a democratically  controlled business organization, making equitable contribution to the capital required and accepting a fair share of the risk and benefits of the undertaking in which the members actively participate.

Other International Co-operative Alliance (I.C.A) compliments with the view that co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

Furthermore, a co-operative society can be defined as an enterprise formed and directed by association of users applying within itself the rules of democracy and directly intended to save both its own members and the community as a whole.

Finally, according to (Bob-Igwe, 1993:15), he defined Co-operative as a voluntary, evolutionary democratic process resulting from initiative and enterprise at the “grassroots” by individuals motivated by the principle of self -help and mutual aid.

From the above definition we can infer that the co-operative society is basically:-

a)      An association of persons

b)      A union of capital

c)      A common need to solve a mutual problem (self help.)

Co-operative Value.

Values are basic conceptions of what is good or bad, a standard for behaviour and quicker for action when properly inculcated.  The I.C.A in 1995 amended the 1966 principles of co-operatives, the principles were derived from co-operative values which clearly states the co-operative attitude to social and economic life which distinguishes them from other forms of business.

 

When we understand the co-operative values, then we can understand the nature of co-operatives.  Co-operative values are stated by the I.C.A in 1995.

a)      Self-help

b)      Democracy

c)      Equality

d)     Equity

e)      Solidarity

f)       Honesty

g)      Openness

h)      Social responsibility

i)        Caring for others.

These values can be divided into two parts namely:

A)      Organization related values.

B)       Moral behaviour related values.

 

The first set of values deal with the happenings inside the co-operative complex, which relates to the effectivity and efficiency in the co-operative society.  While the second group of values are concerned with what is good and what is bad.

Self-Help:-  Basically a co-operative is an association of persons who come together to solve a common problem which they cannot solve on their own.  The idea of self-help springs to mind immediately, the need for them to assist one another in solving an immediate problem and not rallying on the government or other external bodies to come to their aid.  These doesn’t take out the possibility of it getting external assistance.  They can of course enjoy that through their joint effort – a self-help.

Democracy:-  In the co-operative society each member has only one vote irrespective of his contribution to the organization in capital and effort.  This originated from the Rochdale Pioneers and was an attempt at safeguarding the organization from their multiple share holders who may tend to dictate the tune for running the co-operative business enterprise.

Equality:-  Without any discrimination of sex, race, religion, politics, creed, social status and economic class, men are equal.  In the conduct of the affairs of a society, members are regarded as equals and treated as such.  In simple analysis, equality entails same right to participation, right to be informed, right to be heard, right to be involved in decision making and executive work.  The value of equality recognizes the importance of all members not minding their social status or economic contribution to the society.

Equity:-  While the society tends to recognize all their members as being equal, it would also be unfair not to acknowledge the fact that some members may have played very active role for the success of the co-operative business through high patronage, higher capital contribution.  According to Onuoha, equity means proportional equality.  This is usually represented in percentages for instance, 10 percent of shareholding of patronage, etc..  what is being emphasized here is that all will not benefit equally but one should benefit to the extent of his/her involvement in the society.

Furthermore, equity also relates to how their parties are treated.  By this I mean how employees, suppliers, creditors and other non-member customers are handled by the society.  The rule of equity means that each of these receives a fair share of their industry.  Co-operative wealth or earnings must be distributed on the basis of one’s contribution.

Solidarity:-  The most important co-operative value is self help while the second most important is solidarity.  Solidarity simply stated means unity, interdependency and mutual support.  They need to stand together to be able to carry out decisions which have been jointly taken by the members of co-operative.  Alone members would be unable to stand but united they stand strong.

Honesty:-  Honesty has always been applied in the running of the co-operative enterprise.  The Rochdale Pioneers made it one of the rules when they insisted on sales of pure and unadulterated goods.  The value states that members of the co-operative and their officers should be honest in their transactions with the co-operative business enterprise clearly stating all their transactions for members accordingly.

Openness:-  Co-operative society is a social group, not a secret society or a cult.  It is also a public organization.  Therefore openness states that the members of the co-operative should give clear statement of their transaction, which should be recorded and made it available to all members on demand to inspect, commend or criticize.

For many co-operatives in Nigeria, one major problem has always been mismanagement  characterized by abuse of office by officers, embezzlement of funds, fraudulent conversion of associations property to personal use, etc.  if the co-operative books are recorded accurately and kept open for inspection, the likelihood of these sharp practices occurring will not emerge, for fear of being found out immediately the books are inspected on demand by any member.

Social Responsibility:-  For hundreds of years age, co-operatives being people oriented have learnt to be socially responsible and environmentally friendly.  Today, in Nigeria, many multi-national corporations still refuse to comply with corporate social responsibility stipulations.  For instance, we are all aware of the persistence youth restlessness in the Niger-Delta area of Nigeria as a result of environmental recklessness on the part of these multi-nationals.  We can also say social responsibility, the co-operative has over the years been used by members, government and non-governmental agencies to address the issues of social development.  This is because of the social nature of the co-operative-society.  They have a social obligation in solving the social problem of their members and non-members as well.

Caring for others:-  Both within the co-operative enterprise and outside co-operative provide for the needy.

The value encourages the co-operative to reach out to people other than the members of their co-operative according to their financial ability.

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