What is a Cooperative Society?
A cooperative society is a non-profit-making organisation owned and controlled by a group of individuals with the aim of improving their standard of living. Although making profit is not the main aim, cooperatives can make some profit, called a bonus.
Principles of Cooperative Societies
- Voluntary and open membership: anyone willing to join or leave is free to do so if they meet the required conditions.
- Democratic member control: each member has one vote, regardless of shares or contributions made.
- Non-profit making: the main aim isn’t profit, though bonuses may be shared based on members’ participation.
- Ownership and management: owned by members who take part in its activities, and managed by a committee elected by members who contributed the initial capital.
- Members enjoy limited liability, and accounts are kept and audited annually.
Types of Cooperative Societies
- Credit and thrift: formed by low-income earners to pool funds through weekly contributions, granting loans at low interest rates.
- Wholesale: formed by wholesalers to raise money to finance bulk purchases before selling in smaller units.
- Consumers: members contribute money and buy goods in bulk before distributing to members at a cheaper cost.
- Producer: producers of similar goods pool resources for joint marketing to wholesalers or retailers, and share information and production techniques.
- Housing and building: gives housing loans at lower cost to members to help them build their own homes.
- Craftsmen’s: members of the same trade buy raw materials together in bulk and sell to members at reduced rates.
- Multipurpose: combine the functions of two or more cooperatives, to diversify objectives, eliminate middlemen, and promote savings.
Advantages of Cooperative Societies
- Democratic management respects the interests of the majority.
- Economies of scale from large-scale production or bulk buying.
- Greater profits, since eliminating middlemen reduces costs.
- Education and training for members through seminars.
- Limited liability protects members’ private property.
- Lower taxes, since cooperatives are classified as non-profit organisations, and cheaper loans.
Disadvantages of Cooperative Societies
- Poor management, since leaders are often elected for popularity rather than skill.
- Risk of embezzlement, especially where members are less literate and hired managers act without the cooperative’s interest at heart.
- Low capital, since members are often poor and can’t fund large-scale operations.
- A global reputation for lower-quality goods, which can reduce sales.
Government Support for Cooperatives in Cameroon
- Cooperative schools in Bamenda and Ebolowa train and retrain cooperative technicians.
- Government subventions and loans help cooperatives operate at a larger scale.
- Negotiation with foreign countries and international organisations for technical and financial assistance.
- Encouragement to form cartels, such as the National Products Marketing Board (NPMB), to help purchase, grade, and sell products.
- Boards set up to run cooperative affairs, such as the former National Center for the Development of Cooperatives (CENADEC) and the Food Development Authority (MIDEVIV).
