AHMADU BELLO UNIVERSITY ZARIA

TOPIC

ESTABLISHING AND MANAGING A SUSTAINABLE COOPERATIVE SOCIETY

Being a Paper Presented During a Sensitization Workshop for ABU Staff on the Need to Establish and Manage a Sustainable Cooperative Society

By

Dr. Yusuf Iliyasu

Chairman, FUD Staff Cooperative Society Limited Federal University Dutse

WHAT IS A COOPERATIVE SOCIETY?

1. A voluntary association of group of people (3 and above) with like minds coming together to mutually assist each other towards an economic activity

2. A private organization and not a public institutions or government agencies

3. Members run the society in accordance with an acceptable bye-laws prepared by them

4. It is a unique organization or association with both social and economic objectives

5. As a social unit, the cooperative is made up of a group of persons who voluntarily agree to come together and utilize their resources for the attainment of common objectives and fulfillment of common felt needs

6. As an economic unit, a cooperative aims at promoting and protecting the economic interest of its members

UNDERSTANDING THE MEANING OF A GROUP

1. A group is made up of three or more people who have a common vision, mission, goals and objectives.

2. Group sizes vary according to purpose. Small groups usually work better than large groups.

3. Small groups get to know and trust each other and tend to work more closely with fewer formalities.

4. Development services are more efficiently delivered and have greater impact when groups are used. What an individual cannot achieve alone can easily be achieved through a group.

5. Groups provide a framework to pool together, harness and utilize both human and material resources for development purpose.

WHAT ARE NOT COOPERATIVE SOCIETIES

1. Traditional institutions

2 Cultural institutions

3. Religious institutions

4. Tribal institutions

5. Professional institutions

6. Political institutions

7. Public institutions

8. Philanthropic institutions

9. Capitalist institutions

10. Trade unions

OBLIGATIONS OF MEMBER TO HIS SOCIETY

1. Members are to have a common interest

2. Members are to have a clear understanding of the groups objectives

3. Members are to make regular payment of dues

4. Members are to make regular contributions to group savings fund

5. Members are to make prompt repayment of group loans

6. Members are to attend meetings regularly

7. Members are to participate actively in groups activities

8. Members are to be guided by the groups bye laws

9. Members are to be honest and ready to work hard to achieve group objectives

10. Members are to help other members when in need.

IDEAL FEATURES OF COOPERATIVE SOCITIES

1. A self-help group

2. Encourages self-reliance

3. Eliminates the exploitation of middlemen

4. Promotes equality

5. Ensures justice and equity

6. An investment from each according to his capacity

7. A benefit to each according to his contribution

8. Promotes economic democracy

IDEAL FEATURES OF COOPERATIVES (CONT)

9. An association of mutual brotherhood

10. All members are for each and each member is for all

11. Provides liberty and independence

12. Encourages autonomy

13. Provides a business to service its members

14. Ensures the sovereignty of the consumers

15. A base for reforming the economy

16. A cooperative commonwealth

BASIC PRINCIPLES OF SUCCESSFUL GROUP FORMATION

1. Groups should start with a small number of members between to enable them work together

2. Groups should be homogeneous with members from similar background

3. Groups should be formed around the same income-generating activities

4. Group membership should be voluntary and democratic

OBJECTIVES OF FORMING COOPERATIVES

1. To pursue mutually beneficial, social and economic interest

2. To provide goods and services to each other in the most cost effective way

3. To prevent the exploitation of weaker members of the society by bringing them together to help themselves 4

4. To protect the right of members as producers and consumers of goods and services

5. To promote mutual understanding and peaceful coexistence among members

6. To reduce the cost of goods and services

7. To empower the depressed members of the society

OBJECTIVES OF FORMING COOPERATIVES (CONT.)

8. To expose members to the best technology to advance their businesses

9. To improve the quality of services provided by members

10. To give members the economic independence in running their businesses

11. To break monopolies and curb economic dictatorship of middlemen and companies

12. To educate and stimulate the intellectual capacity of members

13. To serve as a tool for implementing government economic policies

ROLE OF GOVERNMENT IN COOPERATIVE DEVELOPMENT

1. Legislation: To provide the enabling law for the development of cooperative organizations

2. Administration and Supervision: To provide the administrative machinery for managing cooperative societies

3. Technical Assistance: To provide experts in specialized areas eg. finance, auditing, engineering and other technical services

4. Financial Assistance: To provide financial assistance in form of loans, grants or guarantees

5. Educational Development: To assist cooperative societies through the establishment of educational institutions for the training of cooperative officials

MAJOR CHALENGIES OF COOPERATIVE SOCIETIES

1. Inadequate funding of the cooperative organizations

2. Building large volume of capital for investment

3. Lack of trained managers and committee members

4. Lack of education among membership of the societies

5. Apathy in the management of cooperative matters

6. Dishonesty among leadership of the societies

7. Inefficiency in mobilization and utilization of credits

8. Poor financial management by the leadership of the societies

9. Weak and inefficient regulatory bodies to provide effective supervision to the societies

10.Inadequate logistics to support supervision by the supervisory organs

TYPES OF COOPERATIVE SOCIETIES

1. Production Cooperatives Society

2. Processing Cooperatives Society

3. Marketing Cooperatives Society

4. Financing Cooperatives Society

5. Services Cooperatives Society

6. Multipurpose Cooperatives Society

CONDITIONS FOR REGISTRATION OF COOPERATIVE SOCIETIES

1. It must consist of at least Ten (10) members

2. It must be a limited liability society

3. The word “Cooperative” must form part of the name of the society

4. The word “Limited” must form the last word in the registered name of the society

5. It must have in its objectives the promotion of socio-economic interest of its members

6. It must have an acceptable Bye-Laws developed by its members

7. The word “Bank” or “Banking” should not be part of the name of the society

ITEMS TO BE INCLUDED IN A COOPERATIVE BYE-LAWS

1. Name and registered address of the society

2 .Objectives for which the society is established

3. Clear and distinct area of the societies operation

4. Qualifications and terms for admission of members

5. Mode of electing executive officers

6. Purposes to which its funds may be applied

7. Mode of custody and investment of its funds

8. Nature and limits of the liability of members

9. Withdrawal and expulsion of members and the payment (if any) of entitlements to those members

ITEMS TO BE INCLUDED IN A COOPERATIVE BYE-LAWS (CONT.)

10. Transfer of shares or interest of members

11. Manner of raising the share capital and other funds

12. General meetings and procedure for and power of those meetings

13. Appointment, suspension and removal of members of any committee appointed by the society

14. Powers and duties of the executive committee and other committees

15. Authorization of an officer to sign documents and to use the seal on behalf of the society

Disposal of annual surplus

RIGHTS, PREVILAGES AND LIABILITIES OF MEMBERS

1. An individual shall not exercise the right of being a member of the society unless or until he has paid his registration fees as prescribed in the bye-laws of the society

2. Except with the prior consent of the registered society, no person shall be a member of more than one registered primary society particularly where the primary objective is to grant loan to its members

3. A member of a registered society shall be entitled to have one vote only as a member in the conduct of the affairs of the society except where there is a case of equality, then the chairman shall have a casting right

RIGHTS,PREVILAGES AND LIABILITIES OF MEMBERS (CONT)

4. No individual shall hold office in more than two national or state apex cooperative organizations at the same time and any member term of office shall not exceed two terms of two or four years each

2. If an officer is removed from office in a state primary or secondary cooperative organization, or as a member of a state or national apex organization, his membership at the state or national level shall cease forthwith

3. No member of a registered society shall hold more than one fifth of the share capital of the society

RIGHTS,PREVILAGES AND LIABILITIES OF MEMBERS (CONT)

7. The transfer or charge of the share or interest of a current, past or deceased member in the capital of a registered society shall be subject to such conditions as maximum holding as may be prescribed under the law

8. The liability of a past member for the debts of a registered society as they existed on the date on which he ceased to be a member shall not continue for a period of more than two years from the date he ceased to be a member

9. The estate of the deceased shall not be liable for the debts of the society as they existed on the date of his death and for a period of more than two years from the date of the members death

RIGHTS,PREVILAGES AND LIABILITIES OF MEMBERS (CONT)

10. If an order to wind up a society becomes necessary and is made immediately, the liability of the past or deceased member shall continue until the entire liquidation process of the society is completed provided that liability shall extend only to the debt of the society at the time of his ceasing to be a member or of his death

SOURCES OF FUNDING COOPERATIVE SOCIETIES

1. Registration fees

2. Sales of shares

3. Payment of dues

4. Savings

5. Grants

6. Donations

7. Loans

8. Marketing/Trading/Business

9. Fines

ROLES OF A LEADER OF COOPERATIVES

1. Planning

2. Organizing

3. Leading

4. Controlling

ROLES OF A LEADER IN PLANNING

1. Assessing where you are and determining where you want to be

2. Identifying what needs to be done in order to get where you want to be

3. Setting objectives and targets

4. Defining activities and timelines

5. Agreeing upon measurement indicators

6. Allocating resources (human and financial) to get where you want to be

ROLES OF A LEADER IN ORGANIZING

1. The right human, financial and physical resources are in place to get the job done

2. Everyone understands their role and responsibilities

3. Appropriate and clear communication channels are established and maintained

4. Healthy relationships are developed between individuals and units of the institution

5. The implementation of related activities is coordinated.

ROLES OF A LEADER IN LEADING

1. Articulating a vision

2. Setting an example

3. Setting priorities

4. Displaying innovative thinking and problem solving

5. Creating an environment in which others can thrive

6. Coaching, advising and encouraging members

7. Helping members to adapt and change

ROLES OF A LEADER IN CONTROLLING

1. Keeping an eye on what is happening

2. Measuring results, comparing with expectations and taking correct action as necessary

3. Reporting in a way that helps others keep track of performance.

DUTIES OF THE CHAIRPERSON

1. Organize meetings and review sessions

2. Chair meetings and summarize deliberations of meetings

3. Encourage participation by all members in discussions and decision making

4. Ensure that the societies Bye-Laws is followed

5. Ensure that all members of the society do their jobs

6. Ensure that members pay their contribution as agreed

7. Ensure that work plan is followed

8. Maintain harmony among members of the society

9. Represent the society in meetings with others

DUTIES OF THE SECRETARY

1. Write minutes and keep record of meetings

2. Maintain all societies records

3. Deal with correspondences to and from the society

4. Assist the chairperson in discharging his responsibilities

DUTIES OF THE TREASURER

1. Keep financial records of the society

2. Safeguard and manage the societies money

3. Report and update members with all receipts and expenditures of the society and the balances available in cash or at the bank

4. Give receipts for money received

5. Deposit all monies of the society with the bank

MANAGEMENT STYLES

1. Autocratic: Strong result-driven authority who make things happen

2. Charismatic: A leader by example with a dynamic p ersonality

3. Bureaucratic: Follows the rules and ensures that others do also Democratic: Actively involves subordinates in decision making

4. Laissez-faire: Gives staff total freedom to achieve result

6. Supportive: Assists emotionally and professionally

BEST MANAGEMENT STYLE

IS ANY ONE STYLE THE BEST?

NO!

Different conditions call for different management styles.

Different people respond better to different approaches.

QUALITIES OF A GOOD LEADER

1. Integrity: Operate by principles and straightforwardness.

2. Humility: Simple, gentle and easily approachable; not proud.

3. Intelligent & knowledgeable: Ability to be right most of the time.

4. Sympathetic: Show concern for people as well as for results.

5. Decisiveness: Ability and willingness to take decisions and stand by it.

6. Maturity: Capacity to handle situations wisely and calmly.

7. Motivation & drive for achievement: Never easily gets discouraged.

8. Honest: Transparent, trustworthy and accountable.

9. Share responsibility: Gets everyone involved in the group process.

QUALITIES OF A GOOD LEADER (CONT.)

11. Disciplined: Behaves well, and has self control.

12. Sensitive: Shows concern for the needs of members.

13. Problem solver: Sees that problems get solved.

14. Good listener: Patiently listen to people before taking any action.

15. Good communicator: Ability to pass information across clearly and correctly.

16.Visionary: Have a goal and be able to guide people towards achieving the goal.

17. Leading by example: Sets standards and keeps to them.

18. Impartial: Not discriminatory, impartial and biased

19. Decisive: Readiness to absorb challenges

20. Hardworking: Not lazy or loves taking short cuts

QUALITIES OF A GOOD LEADER (CONT.)

21. Courageous: Bold, not easily intimidated and always ready to face difficult situations.

22. Kindness: Caring and thoughtful about people.

23. Openness: Not too secretive but teachable and willing to let others know what is useful to them.

24.Admit mistakes: Able to admit mistakes and apologize whenever he is wrong.

25. Delegates authority: Delegate some functions and involve others in meaningful projects.

26. Appreciate others: Recognize the contributions of others and give them appropriate rewards.

CHARACTERISTICS OF EFFECTIVE MANAGER SOURCES OF GROUP FUNDING

Registration fees Sales of shares Payment of dues Savings Donations and grants Marketing/Trading/Business Loans Fines

BENEFITS OF WORKING AS A TEAM

1. Gingers performance of members towards the specific result

2. Members feel committed and obliged to do their job in order to meet set target

3. Creates a sense of purpose and confidence among the members

4. Builds trust among members

5. Transforms broad objectives into specific and measurable performance goals

6. Produces a result members can associate with and can say we did it

7. Encourages skill development among members, because they share what they know.

8. Builds commitment among members

9. Creates an enabling environment where they share their individual problems and interest

10. Encourages accountability and transparency

11. Creates an avenue where members strengthen each other’s weakness.

ADVANTAGES OF CONSENSUS BUILDING

1. Think together

2. Talk together

3. Work together

4. Collective opinion

5. Communicate among members

6. Agreement among members

7. Supportive to members

8. Mutually agreed decision

9. Genuine dialogue

10. Spirit of togetherness

11. Participatory decision making

12. Process of tapping the ideas and thinking of members

13. Willing to bend on ones decision/desire to arrive at a group’s decision

HOW TO ARRIVE AT A CONSENSUS

1. Members should be free to share or state their views

2. Members views should be listened to and be considered

3. Members should remove personal sentiments and position

4. Members should be part of the decision reached

5. Members should be open and thorough

WHY DO WE NEED CONSENSUS?

1. Promote team spirit and oneness among members.

2. Enable group produce joint decisions and responsibilities.

3. Make group more productive

4. Allows efficient utilization of their resources and potentials

DETERMINANTS OF EFFECTIVE MEETINGS

1. Time: Deciding the amount of time needed, appropriate date and time of the day for the meeting.

2.Eventfulness: Build liveliness and momentum into discontinuous activities to increase motivation, such as song, drinks, food, games, etc.

3. Accomplishment: Pull together decisions of the team so they can be remembered and built upon. That is what to do with the outcome of the meeting, how to ensure implementation.

4. Method: Use appropriate method(s) in order to encourage participation in the meeting.

5. Space: This has to do with the venue for the meeting, space needed for the number of people expected, seating arrangements and beautification of the venue.

TYPES OF PEOPLE IN A MEETING

1. The Quarrelsome Type: Keep calm. Don’t get involved in an argument. Don’t let anyone get personal. In time he will probably make a silly statement which the other group members can deal with.

2. The Positive Type: Use him frequently but don’t let him monopolize. Can be a great help to leader.

3. The I Know all Type: Don’t let him dominate or intimidate the group. When he offers an opinion ask him for reasons. If the reasons seem faulty invite other members of the group to comment.

4. The Loquacious Type: Limit his speaking time by tactful interruption. Ask someone else a direct question. Don’t forget that if he is well – informed he can be of real value to the leader.

5. The Shy Type: Don’t try to rush him. Ask him an easy question when an opportunity presents itself. Give credit whenever possible to build up his self confidence.

TYPES OF PEOPLE IN A MEETING (CONT)

6. The Uncooperative Type: Recognize his knowledge and experience and try to use them. Try to gain his friendship. Give him the feeling that you need his help for the success of the meeting.

7. The Thick Skinned Type: Ask him direct questions about his own work and experience. Ask for his advice. Try to make him feel that you value his opinion

8. The Highbrow Type: Don’t criticize him. Be patient, but keep him to the point. If necessary reward his comments for the benefit of other members of the group.

9. The Persistent Questioner: Tries to trap the group leader. Refer his questions back to the group and then ask for his own views.

BENEFITS FOR JOINING COOPERATIVES

1. Provide financial services to members

2. Requires little or no collateral to obtain loans

3. Ensures less stringent pre-loan savings requirements

4. Promotes an increases in future loan volume upon previous loan repayment

5. Encourages an implicit guarantee of future loans if present loans are repaid fully and promptly

6. Finances income-producing activities of members

7. Build assets and stabilize consumption of members

8. Reduces poverty level of members and improves their living standard

PATTERNS OF MONEY MANAGEMENT

1. Save up Savings

2. Save down Borrowing

3. Save through Save and collect (Adashe) * Surprisingly poor people are active money managers because they are involved in one form of money management activity or the other

USES OF COOPERATIVE

1. Stabilizes consumption (Food)

2. Finance micro enterprises

3. Pay children school fees

4. Cope with medical expenses (Doctors bills)

5. Protection from bumps and shocks (illness, economic crises, natural disasters)

6. Manage life events (Weddings, Birth, Funerals)

* All lives have equal values

* The poor need to be able to store and access money to meet their daily needs, cope with risk and lead a healthy and productive life

* For microfinance to be successful it has to be

: Reliable  Localized  Frequent

MEMBERS PREPOSITION TO COOPERATIVES

{S – A – F – E – T – I – N – E – T}

S: Safe, secure and private

A: Affordable at low price

F: Flows and adopted to clients cash flow

E: Easy to use, friendly, understandable and simple

T: Timely and is there when you need it

I: Incremental and build trust towards success

N: Nearby proximity to reduce transaction cost

E: Even more permanent with reliable future access

T: Tiny transactions of a naira value

IMPACT OF COOPERATIVES

1. Ensures long-term increases in income and consumption

2. Smooth cash flows

3. Makes it easier to manage shocks like theft, sickness, or natural disasters

4. Build assets such as buying and developing land for future security

5. Provides self-empowerment

6. Improves the quality of life

BUILDING INCLUSIVE FINANCIAL SYSTEM

1. Lower interest rate

2. Improved profit margin for the providers

3. Improved commercial attractiveness

4. Increased entrepreneur capital

5. Increased pressure on regulation

6. Increased demand for financial services

7. Expanded outreach

8. Reduced subsidy

9. Expanded product offerings

* Reduced costs and increased ease of use will lead to increased access

* People will always want to tell you what you want to know, what you want to hear and what you give loan for but not telling you what they actually want the loan for

GUIDE TO SUCCESS IN DEPOSIT MOBILIZATION

1. Good management

2. Friendly services

3. Right products

4. Effective marketing

5. Full range of services

6. Attractive environment

* For a cooperative society to be profitable, viable, and sustainable, its deposit portfolio should be higher than its loan portfolio

BARRIERS TO SAVINGS MOBILIZATION

1. Unclear goals and objectives

2. Mistrust in the leadership of the society

3. Uncertain and Irregular sources of income

4. High transaction costs to depositors

5. High transaction costs to savings providers

6. Restrictions on deposit taking

7. Restrictive prerequisites

8. Inappropriate product design

9. Distrust in the financial system

10. Insecurity in members savings

MANAGING RISKS THE FIVE (5) C’S OF GOOD LENDING

C1: Capacity (Profitability and viability)

C2: Character (Clients)

C3: Collateral (Security)

C4: Capital (Equity)

C5: Condition (Loan terms and market conditions)

PATHWAY TO EMPOWERING THE POOR

1. Providing small volumes of credit facilities to those who cannot ordinarily get such facilities from conventional banks due to stringent collateral requirements.

2. Financing economic activities that will generate enough income to repay the loan

3. Grant should be giving to the poorest to finance consumption

4. Loans should be given to the poor to pursue economic activities

5. The poor need financial services

6. Savings help the poor to build micro fund

7. Government institutions should provide grants while private microfinance institutions provide microfinance services

8. Government should provide the enabling environment for microfinance services

9. No one will come to your land to develop you. You have to wake up and make serous progress to develop yourself by yourself

10. The develop nations under develop other nations to develop their area

ANALYTICAL FRAMEWORK FOR COOPERATIVES

1. Adopting a holistic model where Micro, Meso and Macro levels are integrated

2. Focus on a graduation model with multiple pathways

3. Use different entry points for different stakeholders

4. Categorise the poor using diverse pathways

5. Establishing an agency for the poor Establishing a credit bureau to keep records of all credit beneficiaries and loan defaulters for reference purposes

* Not every one that ask for credit needs credit

Money lenders are said to exploit the poor by imposing stringent payment measures that makes them be enslaved in the system

* Don’t overburden your member with loans for it will make them worse off

Thanks For listening

 

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