How Should Cooperative Generate its Fund?

All Cooperative Farmers Association

7.1.      Co-operative Societies are expected to make good use of the following opportunities to generate money for the Societies/Unions.

a.      Entrance fees

b.      Members Share Capital

c.       Thrift Savings

d.      Compulsory Savings

e.       Gains Acquires from Investment

f.        Other Dues

7.1a.    Entrance fees; this is the money somebody must pay to become a member of a co-operative society. This amount is decided upon by already active members of the co-operative Societies/Unions. It is advisable not to make this money affordable, so that it will be easy for intending members to afford.

The society/Union can easily lay hold or make use of this money to meet up with some initial expenses. This money (entrance fees) is not return-able to the person/group that paid it. As the co-operative societies/Unions automatically becomes the rightful owner of the said money. All new members are mandated to pay it.

7.1b.    Members Share Capital; Alhaji S. W. EGWA the Director of co-operatives Edo State defines Share Capital as the amount agreed upon by the group in the general meeting to be paid by each of the founding members of a co-operative society/Union and subsequently, other members that embrace the group to help the group towards financing the mutually agreed objective or project of the society/Union.

The amount could be paid at once or on at least three installments within a year of the initial commencement of the share capital. This money can only be refundable at the point where a member intends to leave the Society/Union.

It is not a law that every member should pay the same or equal share, so far it correspond with the principle of share payment in co-operatives that “one individual member should not contribute more than one fifth (1/5) of the total paid up capital share  of the Society/Unions.

In Edo State for instance where every member is obligated to pay equal share ‘both those that are managing  and those that are a little bit richer’ is not supportive by the co-operative Law. As it discourages injection of fund as share capital, into the coffers of the society/Union.

7.1c.    Thrift Savings; Thrift savings is the regular payment by members of the co-operative society/Union to raise the capital base of the co-operative groups. And it is not refundable. Members can only request for the money when intending to vacate the group. And a notice of about six months must be given to the management of the society/Union, in order to make the money available.

            Note: every co-operators paying this money is entitled to dividend from the profit made from 

                     the investment the money was used for.

It is advisable for all active and intending members of the co-operative movement to subscribe to regular thrift payment which also is not expected to be a uniform amount by all members of the group.

The thrift payment if regular will help the group to off-set some required fund by banks or other financial body that is intended to support co-operative societies/Union that is already on ground, to benefit from Loans or Grants. To be on ground is to have all financial responsibilities of the group met. Such which is (thrift payment). This money is only to be withdrawn on the permission by either the Board of executive or Committee for necessary or productive purposes.
 

7.1d.    Compulsory Savings; Apart from share capital and thrift savings, members can also subscribe to what is known as compulsory savings. Many co-operative societies initiate this program in order to help them raise money among themselves instead of borrowing from external body. This compulsory savings can be withdrawn by the depositor when ever he/she has a need of it. But he/she will give a firsthand notice to the Secretary who will pass the information to the committee for approval.

7.1e.    Gains Acquires from Investment; Most time people refer to gains acquires from co-operative investment as reserve fund. The Bye-Law mandates co-operative societies/Unions to set aside part of this money. Alhaji Egwa, in the lecture he presented on co-operative financing, challenges and prospect reminded co-operators that 25% (twenty five percent) must go to reserve fund from the total money declares as surplus by the society/Union.

The truth is that co-operative society/Unions can only have reserve if the group is privileged to embark on productive ventures. This fund can only be used on the permission of the Director of co-operatives.

WHAT CO-OPERATIVE SOCIETIES ARE NOT

8.1.      To get accurate answer to this idea is to position co-operative side by side with other organization with the same goals, but not with the same structure. For instance:-

1.      Co-operative is not trade unions.

2.      Co-operative are not political party

3.      Co-operatives are not parastatals because these are extra ministerial organizations

4.      It is also very clear that Co-operative are not like Lions Club, S^T. Johns Brigade, or Red Cross among others. Because these are humanitarian or philanthropic organizations

5.      Co-operatives are not private companies or public limited companies who are quoted in the Nigeria stock exchange, as they are profit oriented organizations’.