Factors That Leads To Success Of Cooperative Society

Project and Seminar Material for Cooperative Economics and Management CEM

Factors That Leads To Success Of Cooperative Society


Abstract


In this study, our focus was on the factors that leads to success of cooperative society, Cooperative Societies in Komboso Local Government, Kano State as case study. The study is was specifically focused on establishing how membership size influences the performance of cooperatives in Komboso Local Government; assessing how education level and training of leaders influences the performance of cooperatives in Komboso Local Government; examining how the level of income of members influence the performance of cooperatives in Komboso Local Government and assessing how the quality of management influences the performance of cooperatives in Komboso Local Government.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are members of Cooperative Societies in Komboso Local Government, Kano State. Successful cooperatives must meet members’ expectations, have higher extent of achieving set objectives, high level of member participation and higher management capacity.


Chapter One


Introduction

1.1 Background to the Study

Cooperatives are classified as one of the business organizations but operate in a special way different from all other forms of business enterprises. The distributive nature of cooperative provided that they must be owned, used and controlled by their members. In view of this, cooperatives are organized and managed through the system of large or small, multipurpose or single purpose and central or federal. All these systems put together are under direct coordination and supervision of the cooperative federation.

Yahaya, (2001) notes the cooperative federation is an organization where there are basic units at each level that determine on their own initiative. The relationship between the federation which is a higher organ and the secondary societies which are lower organs is that there is a dividing line where the lower organs reserve to themselves certain functions and delegate others to the higher organs. Though the cooperative federation controls the activities of cooperative to ensure efficiency, it has by the affiliated societies since such affiliated societies do not surrender their autonomy to the cooperative federation.

In Nigeria where the cooperative development is generally a state affairs, cooperatives are organized on three structures based on geographical locations namely village or town level (primary cooperatives) state or regional level (secondary cooperative), national level (tertiary cooperatives).

In the light of the above, a number of states especially in the northern parts of the country, Kano inclusive, the cooperatives activities come under one umbrella known as cooperative federation limited.

In some states, particularly the former western and eastern regions, cooperative movement operates under a central organization called cooperative union. However, there are numbers of tertiary cooperative organizations which equally perform central functions and represent Nigeria cooperative movements at international and regional level. These includes cooperative federation of Nigeria (CFN) which is affiliated to international cooperative Alliance (ZCA), National Association of cooperative credit union of Nigeria (NACCUN) which is affiliated to African cooperative credit and savings association (ACOSCA) and world council of credit unions (WOCCUN).

The establishment of cooperative federation in each state of the country is a reflection of which was obtained in the early cooperative movement in Britain. For instance, the first successful consumer retail cooperative societies in 1844 were united under two national federation known as cooperative wholesale society and cooperative union Ltd. Similarly, the Irish agricultural wholesale society which is popularly known as CWS is the central organization set up by the retail cooperative societies in united kingdom to meet their trading needs.

Other notable countries have similar central controlling bodies for cooperative activities. Like the approach in Israel empowers the Jewish cooperative association known as Hevaratt Ovdim to supervise the activities of various cooperative affiliated to it.

Furthermore, in Denmark, the Danish wholesale society known as (FDB) established in 1964 had entered into agreement with the local cooperation on voluntary basis to create voluntary claim. In this agreement, the FDB provided a number of services to the local cooperatives to ensure their survival and progress.

From all the aforementioned instances, the existence of a central working body to oversee the activities of cooperative societies, the case of Nigeria is not peculiar. The Kano state cooperative federation like other state federations regulates cooperative activates under the auspices of the state ministry of Agriculture it should however be noted that in different states, different names are given to the ministries where cooperative federation exists. Whatever their names, such ministries have their responsibilities towards cooperatives and of course cooperative federations.

Like all the other cooperative federations, the Kano state cooperative federation is responsible for cooperative efficiency and effectiveness in the areas of promotion, organization, coordination, supervision, limitation, administration, training, interpretation and advice. In Kano state, it is doubtful if the cooperative federation is effectively performing these duties as the development of cooperatives, particularly primary cooperatives are yet to obtain desired growth. Besides, most cooperatives societies in the state are incapacitated in one way or the other making it difficult for such societies to impact maximally on the socio-economic lives of the people.


1.2 Statement of the Problem

(ICA, 1995), Cooperatives of whatever types are organized to satisfy members, needs, be it economic, social, cultural or political.

According to Amahahu (2006), people join cooperative for economic motives in most cases while others join for socialization and emotional motives as well as because of outside pressure. In Kano state, the Kano state cooperative federation. Like other cooperative federation is an apex body concerned mainly with the promotion, administration and legalization of cooperatives through its agency known as the cooperative department the relevance of the cooperative federation has been well documented in available literature (Yahaya, 2001, Ijere, 1975, Chukwu, 1990). It is however, doubtful weather the Kano state cooperative federation is effectively performing these essential roles as there are obvious lapsesin cooperative movement in the state as majority of the primary cooperatives are just clutching to life.


1.3 Objective of the Study

The purpose of the study was to assess the factors that leads to success of cooperative society (Case Study Of Komboso Local Government, Kano State). The study was based on four specific objectives .These were:

  1. To establish how membership size influences the performance of cooperatives in Komboso Local Government.
  2. To assess how education level and training of leaders influences the performance of cooperatives in Komboso Local Government.
  3. To examine how the level of income of members influence the performance of cooperatives in Komboso Local Government.
  4. To assess how the quality of management influences the performance of cooperatives in Komboso Local Government.

1.4 Research Questions

The following were the research questions addressed by the study:

  1. Does the membership size influence the performance of cooperatives in Komboso Local Government?
  2. Does the education level and training of leaders influence the performance of cooperatives in Komboso Local Government?
  3. Does the level of income of members influence the performance of cooperatives in Komboso Local Government?
  4. Does the quality of management influence the performance of cooperatives in Komboso Local Government?

1.5 Significance of the Study

There is little information on studies that have been conducted regarding Cooperatives in Komboso Local Government. Therefore this study is important in various ways.

This research work will provide a basis upon which the cooperative stakeholders can use to restructure and effect changes effectively to ensure success. The findings will also be useful to the Ministry of Industrialization and Enterprise Development (MIED) in strengthening the cooperative advocacy in marginalized areas and formation of effective policy framework for different cooperatives.

To the donors interested in community development through cooperative approach, the study will be valuable to inform on actual situation on the ground.


1.6 Scope of the Study

The study was carried out in Komboso Local Government. It covered only active cooperatives with known contacts. There are many factors that influence the performance of cooperatives either positively or negatively. This study considered and narrowed down to only four factors which influence performance of cooperatives. These include membership size, education level and training of leaders, level of income of members and the quality of management of cooperatives.


1.7 Limitations of the Study

This study faced some challenges emerging from the choice of the design and scope of the study. Some of the potential respondents were inaccessible due to the vast area of coverage and poor terrain of Komboso Local Government. High expectation from the respondents arose in the process of data collection. Some respondents saw researcher as the mediator between cooperatives and the MIED. Some of the respondents also saw the researcher as a stranger and an intruder with hidden agenda. Time and financial constraints also posed a challenge to the study which led to narrow variables of study against what the respondents may feel to have been considered in the study.

These challenges were mitigated by use of introduction letter from MIED. Briefing of the leaders at first served to strengthen the rapport with the respondents. Objectives and the need for the study was continuously made explicit to the respondents.


1.8 Definition of the Terms

Cooperative:

It is an autonomous association of persons united voluntarily to meet their common economic, social, cultural needs and aspirations through a jointly owned and democratically controlled enterprise (ICA, 1995).

Factors:

These are elements that bring about certain effects or results.

Performance of Cooperatives:

It is the accomplishment or the achievement of stated goals under some prescribed standards and indicators in a particular activity or undertaking. In this study performance will be indicated by the number of meetings, resource base, level of member participation, management capacity and socio economic benefits.

Membership Size:

This refers to the registered number of members in a particular cooperative. In this study the higher the membership size means higher resource base and vice versa.

Education Level:

The highest level of education or literacy attained in a formal education system. It is the primary, secondary or post secondary level of education.

Training:

In this study training is the process by which cooperative leaders acquire specific skills to enable them perform their duties and specific tasks effectively.

Level of Income:

It is the range of earning within which a particular person earns per annum.

Quality of Management:

It refers to the acceptable level of management capacity of leaders in respect to laid down procedures. Level of member participation, flow of information and frequency of meetings will be used to measure quality of management.

Influence:

To produce an effect by one variable on another variable either positively or negatively

Active Cooperatives:

Cooperatives that are still in existence and carrying out their functions.


1.9 Organization of the Study

The study is organized into five chapters. Chapter One gives the introduction to the study. This contains the background to the study, statement of the problem, purpose of the study, objectives of the study, research questions, significance of the study, scope of the study, limitations of the study, assumptions of the study and definition of terms. Chapter two contains the reviewed literature based on the objectives of the study. It also gives a description of the theoretical framework. Moreover it the conceptual framework of the variables under the study. Chapter three covers the research methodology. It gives a highlight on the research design, target population, sample size and sampling procedure, research instruments, pilot testing, methods of data collection, methods of establishing validity and reliability of data collection instruments, operational definition of variables, methods of data analysis and ethical considerations. Chapter Four consist of data analysis, interpretation and presentation. Finally is Chapter Five which comprises of the summary of findings, recommendations and conclusions of the research findings. It also gives a brief description of the findings, conclusions and recommendation for further study.


Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the factors that leads to success of cooperative society, Cooperative Societies in Komboso Local Government, Kano State as case study. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was on the factors that leads to success of cooperative society, Cooperative Societies in Komboso Local Government, Kano State as case study. The study is was specifically focused on establishing how membership size influences the performance of cooperatives in Komboso Local Government; assessing how education level and training of leaders influences the performance of cooperatives in Komboso Local Government; examining how the level of income of members influence the performance of cooperatives in Komboso Local Government and assessing how the quality of management influences the performance of cooperatives in Komboso Local Government.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are members of Cooperative Societies in Komboso Local Government, Kano State.


5.3 Conclusions

With respect to the analysis and the findings of this study, the following conclusions emerged;

It was concluded that membership size influences the performance of cooperatives. Most members join cooperatives at roll out phase to access loans. Cooperatives enable members to pool limited resources together for common investment and members enjoy economies of scale on production, purchasing or marketing.

Education level and training of leaders influence performance of cooperatives. The study has shown that cooperative leaders should be well educated because educated leaders have good governance skills, good management skills, and visionary and can be relied on. Members should also be trained since trained members clearly understand cooperative goals, participate fully in the cooperative, understand their rights in the cooperative, exert control over their cooperative and own their cooperative.

Members’ level of income influence performance of cooperative sincere liability of income influences contribution ability, member participation, consistency of contribution, control, consistency of contribution and continuity of cooperative. Higher level of income also influences contribution ability, leads to higher resource base and financing of cooperative and membership of cooperative.

Quality of management influences the performance of cooperatives. Cooperatives are managed by elected leaders and members should be involved in the election of leaders. Successful cooperatives must meet members’ expectations, have higher extent of achieving set objectives, high level of member participation and higher management capacity.


5.4 Recommendation

Based on the findings the researcher recommends that;

  1. The membership should be controlled since small number of members leads to good member participation, good management, low resource mobilization ,promotes member social interaction and affects continuity of cooperatives since with increasing group size, collective action becomes more difficult due to social problems emanating from group interactions such as free-riding. Large number, however, leads to economies of scale but on the other hand leads to increased transaction costs as a result of added group monitoring.
  2. Members and leaders of cooperatives ought to be trained to improve performance of cooperatives. This is because educated leaders have good governance skills, good management skills, visionary and can be relied on. Members should be trained since trained members clearly understand cooperative goals, participate fully in the cooperative, understand their rights in the cooperative, exert control over their cooperative and own their cooperative.
  3. Members should improve their level of income by involving themselves in income generating activities and diversifications because reliability of income influences contribution ability, member participation, consistency of contribution, control, consistency of contribution and continuity of cooperative.
  4. Quality of management influences the performance of cooperatives and therefore leaders of cooperatives should be elected by members and trained on relevant cooperative management skills.

5.5 Suggested Areas for Further Research

The following areas are suggested for further studies from the results of this study.

  1. Carry out a Study to find out social economic factors influencing the performance of cooperatives.
  2. Carry out a study to establish the factors that influence the performance of cooperatives in other parts of the country.
  3. An assessment of the role played by financial institutions on farmers cooperatives.

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Frequently Asked Questions


What makes a co-op successful?

Cooperative movement was designed to create harmonious societies by involving and empowering communities, that is, the spirit of cooperation. There are many factors that help make a successful operation of the cooperatives. However, in some cases specific factors are more dominant than that of general factors.

What factors contribute to cooperatives’ performance?

There are several contributing factors that lead to cooperatives’ performance. Strategic planning, members’ participation, human capital, structural an d relational capital are among the identified factors by past literatures. Past and present literatures agree that strategic planning is one of the factors contribute towards firms’ performance.

What is the principal motivation of a cooperative society?

This principle underscores the fact that services and not profit is the principal motivation of a cooperative. This basic orientation should be internalized by the members, officials and employees of a cooperative. b. It forestalls speculation on capital contribution or share capital.

What are the determinants of cooperative success?

Determinants of success include the size of the cooperative, the proportion of women in the cooperative, the proportion of nuclear families, active participation in the cooperative and the type of product cultivated.

What factors lead to cooperatives’ success?

There are several contributing factors that lead to cooperatives’ performance. Strategic planning, members’ participation, human capital, structural an d relational capital are among the identified factors by past literatures. Past

What drives cooperatives performance?

 There are several contributing factors that lead to cooperatives performance. Strategic planning, members™ participation, human capital, structural and relational capital are among the identified factors by past literatures.

Do cooperatives perform well in a competitive business atmosphere?

Unfortunately, cooperatives have been seen struggling to maintain their performance in today’s competitive business atmosphere. Despite some researchers have proven that strategic management practices have resulted in increased performance, yet there has been relatively little study of this evidence in small organizations like cooperatives.

Does good governance matter for co-operatives’ performance?

The results demonstrated that good governance (p-value of 0.095 (p<0.1) and t=1.669 (more than 1.64) has a moderate relationship between members’ participation and cooperatives’ performance. On the other hand, good governance did not strengthen the relationship between the extension officer and co-operatives performance.

What is the basic principle of a cooperative society?

All for each and each for all is the basic principle of a cooperative society. The primary objective of a cooperative is to provide goods and services to the members at a fair price. The profit at the end of the year is distributed among the members on the basis of their transactions with the society.

What is the difference between business enterprises and cooperative societies?

Many business enterprises established to earn a profit, but cooperative society has a motive of service to the members of the society for common welfare not to earn a profit.

Why are people reluctant to become members of cooperative societies?

Generally, people do not have faith and confidence in the cooperative society. Since many cooperatives have failed, the people are reluctant to become members of cooperative organizations.

Who are the members of a cooperative society?

The members of a cooperative society are voluntary. The individuals who have a common interest in a society can buy the shares and be enrolled as a member of the society. All the members of the society enjoy equal rights and status.

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