co-operative society. types of co-operative

A co-operative 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.

A cooperative society, also known as a cooperative or co-op, is a type of organization that is owned and operated by a group of individuals who come together to achieve common goals and meet their shared needs. The primary purpose of a cooperative society is to provide goods, services, or benefits to its members, rather than generating profits for external shareholders.

In a cooperative society, the members pool their resources, such as capital, skills, and labour, to establish and run the organization. They jointly make decisions on various aspects of the cooperative, including governance, policies, and operations. Each member typically has an equal say in the decision-making process, following the principle of \”one member, one vote,\” regardless of the amount of capital or investment they have contributed. \"co-operative

Cooperative societies can take various forms, depending on their specific objectives and the nature of the activities they undertake. Some common types of cooperatives include consumer cooperatives, where members collectively purchase goods and services at competitive prices; agricultural cooperatives, where farmers collaborate for joint production, marketing, or purchasing activities; worker cooperatives, where employees collectively own and manage the business; and housing cooperatives, where members jointly own and manage residential properties.

The benefits of co-operative society include:

  1. Member empowerment: Each member has a voice in the decision-making process, allowing for a more democratic and inclusive organizational structure.
  2. Shared risks and rewards: Members share the risks and rewards of the cooperative, which promotes a sense of ownership and encourages active participation.
  3. Economic advantages: Cooperatives often aim to provide goods or services at fair prices, eliminate middlemen, and maximize benefits for their members, rather than maximizing profits for external stakeholders.
  4. Knowledge sharing and support: Cooperatives often provide a platform for members to exchange knowledge, share resources, and support each other, fostering a sense of community and collaboration.
  5. Social and community impact: Cooperative societies can contribute to the social and economic development of their communities by creating employment opportunities, promoting sustainable practices, and supporting local businesses.

Cooperative societies are typically governed by a set of principles, such as voluntary and open membership, democratic member control, member economic participation, autonomy and independence, education and training, cooperation among cooperatives, and concern for the community.

It\’s important to note that the specific laws and regulations governing cooperative societies may vary from country to country, so it\’s advisable to consult local legislation and seek professional advice when establishing or joining a cooperative society.

history of co-operative society

Co-operative society is one of the oldest forms of business organization. As far back as 1808, Robert Owen (1771-185 8) established the first producer co-operative society in New Lonark, England.

Also in 1844, Rochdole in collaboration with a group of twenty-eight weavers established a retail co-operative society. In Nigeria, the first producer co­operative society was established in 1922 by a group of cocoa farmers, their objective was to get a reasonable price for their products.

Today, co-operative societies can be found in virtually all commercial activities.

It has really contributed to the development of the Nigerian economy by increasing the standard of living of the people.


  •  Formation: Co-operative societies are formed by two or more persons but there is no stipulated maximum number of persons.

  • Ownership: Co-operative societies are owned by people with common interests. This makes ownership to be restricted as some conditions must be met before one becomes a member.

  • Objective: The aim and objective of the society is to promote and advance the interest of their members, by rendering services to them.
  • Management: The control management of the society is vested in an, elected committee whose members i be members of the society.

  • Capital: The capital is raised through voluntary contributions from the member
  • Perpetual Existence: There is a continuation in Co-operative societies. The death withdrawal of a member cannot bring the organization to an end.

  • Registered as a limited liability: The liability is limited to the shares held by 1 individual shareholder.
  • Profit is shared based on patronage Surplus (profit) for the year is shared among the members on the basis of t patronage during the year.
  • Democratic in nature: The activities co-operative society is democratic in nature. Each member is entitled to vote, irrespective of the number of shares held.


Producers\’ co-operative society: Producers co-operative society is formed by producers of similar products who organize co-operative production and undertake joint marketing of their products on wholesale or retail

They share useful information. The farmers, for example, can also purchase farm implements such as hoes,seeds and fertilizers in large quantities to members at reduced prices.

Consumers co-operative society: A consumer co-operative society is owned and operated by a group of ultimate consumers who r resources together to purchase goods and services in large quantities and distribute them mainly to its members. The operating policies used are open membership, and democratic. limited interest paid on capital invested, patronage dividend based on their level of purchase or patronage.

Wholesale co-operative society: Wholesale co-operative society is formed by small-scale wholesalers who purchase goods in l manufacturers at reasonable prices I in small quantities to retail co-operatives. They are able to raise large sums of money to finance wholesale purchases when they come together.

As an entity, they have better bargaining power to purchase in bulk from the manufacturers.

Retail – co-operative society: Retail co-operative society is a contractual organization formed by many small and independent retailers.

They pool their resources together to enable them to buy in bulk and then sell their goods at lower prices to members who receive some form of patronage returns based on the amount of goods they purchased.

Credit and thrift society: Credit and thrift society is an organization of low income earners who jointly pool large resources or fund together by contributing on a weekly or monthly basis.

This type of society encourages saving habits among its members and grants loans to the members out of the accumulated fund. The loan attracts a low rate of interest.

At the end of the year, the surplus in the form of accrued profits are distributed to members as a dividend. The members can also afford the opportunity of purchasing household needs like television, fridge, video camera and chairs

Multipurpose co-operative society: Multi-purpose co-operative society is a society formed by existing co-operative societies. Multi­purpose co-operative societies undertake any form of co-operative activity that is profitable to the society

This association also serves as a protective body for its members. The society makes facilities used for co-operatives available for sharing among members. They also mediate in case of a rift among members.


 Encouragement of savings: Co­operative societies encourage saving habits among their members.

 Financial assistance: They can mobilize funds needed for business investment and expansion and render financial assistance or give loans to members.

 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. electronics and land.

Loan facilities from banks or government: Co-operative societies can obtain loan easily from the bank e.g. Co­operative Banks. They can also receive financial assistance from the government.

 Democratic in nature: Each member of the society has an equal say in the organization. Members are entitled to one-man-one-vote right, irrespective of shares held.

 Lower prices: Co-operative societies usually buy goods in bulk from the manufacturers at cheaper prices and this enables members to get these goods also at lower prices.

 Marketing of members’ products: They assist their members in marketing their products there by ensuring fair prices for the products.

 Elimination of middlemen: The activities of co-operative societies help to eliminate the existence of middlemen (i.e. wholesalers and retailers) whose profits would have added to the ultimate cost of the goods.

 Prevention of exploitation: Co­operative societies, especially the consumers’ co-operatives, assist to make sure that the final consumers(members) are protected.

 Encouragement of hard work: Co­operative society members are always encouraged to work very hard because of joint ownership of the organization.

 Strong interpersonal relationship: In co-operative societies, there is a strong interpersonal relationship among members as they often regard themselves as one.

Education of their members: Cooperative societies do train their members in the area of production, distribution buying and selling of goods and services.

  • Insufficient capital: There is lack j adequate capital to run the society. They rely heavily on members’ contribution which may not be enough.

  •  Inefficient management: committee in charge of administration usually consists of people who are specialists and are part-time men hence the society may not be effectively and efficiently managed.

  •  High rate of embezzlement: M the leaders in co-operative societies highly corrupt; some often embark embezzlement and misuse of belonging to the societies.

  •  Problem of loan recovery: The s may not be able to recover loans given to members ’, this may destabilize the Recovery is difficult and in some even impossible.

  •  High level of illiteracy: The majority of members of co-operative society are illiterate and such people are not: make positive contributions to the growth of the society.

  •  Lack of initiative: There is usually of individual initiative as the s, confers on everyone equal rights opportunities.
  •  Evasion of tax: Most of the net of Co-operative Societies are not rather they share it among themselves.

  • Limited expansion: Co-operative societies in most cases cannot expand due to limited capital available to them.
  • Lack of discipline: Most members are not disciplined as they are often involved in activities capable of causing disunity among members.

  • Government intervention: Government can interfere with some forms of control on co-operative societies and this tends to down the pace of growth of the societies.

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