CRD 301 Consumer Cooperative - 0

COURSE
GUIDE
CRD 301
CONSUMER COOPERATIVE
Course Team: Dr. Babatunde Agbi (Course Writers/Developers)

UNILAG
Ass Prof. Mande S. (Course Editor)

NOUN
Lawal Kamaldeen, A. A. Ph.D – (HOD)

Department of Entrepreneurship
Faculty of Management Science,– NOUN
Dr. Ishola, Timothy O. (Dean) –

Faculty of Management Science – NOUN
NATIONAL OPEN UNIVERSITY OF NIGERIA
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CRD 301 CONSUMER COOPERATIVE
National Open University of Nigeria

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e-mail: centralinfo@noun.edu.ng
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Published by:
National Open University of Nigeria
ISBN:
Printed: 2017
All Rights Reserved
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CRD 301 MODULES
CONTENTS PAGE
iii
MAIN
CONTENT
CONTENTS PAGE
MODULE 1…………………………………………….…… 1
Unit 1 The History of the British Consumer

Cooperative Movement…………………...…… 1
Unit 2 The Structure and Problems of Consumer
Cooperative in Nigeria…………………………. 5
Unit 3 The Concept of Competitive and
Monopolistic Market Structure……………..…. 12
Unit 4 The Social Criticisms of the Capitalist
Market – High Prices, Wasteful Advertising,
Hoarding Goods etc…………………………….…. 15
Unit 5 The Diseconomies of the Prevailing Distributive
System…………………………………………….. 18
MODULE 2………………………………………………………. 23
Unit 1 The Introduction of Consumer Cooperative

In Nigeria With The NSCA In 1940.
Reasons for Failure of Early Societies…..…… 23
Unit 2 The Choice Between a “Top-Downwards”
and “Bottom-Upward” Organisation Structure.. 32
Unit 4 Organisation Structure of Cooperative Societies
in Nigeria………………………………………… 35
Unit 3 The History and Strength of Consumer
Cooperatives in Nigeria Today………………… 40
Unit 5 Organisation and Management
of Consumer Cooperatives……………………. 45
MODULE 3………………………………………………………. 51
Unit 1 Selling, Financing, Pricing and Salesmanship…… 51

Unit 2 Book-Keeping in a Consumer Cooperatives……… 56
Unit 3 Distribution of Surplus…………………………….. 64
Unit 4 General Meetings: Committee Meetings, Functions
of the General Manager……………………………. 68
Unit 5 Duties of Secondary and Apex Consumer
Societies. Case Study Guides to Case Study for
Examination Purposes And Class Discussion............. 77
1
MODULE 1
Unit 1 The History of the British Consumer Cooperative

Movement
Unit 2 The Structure and Problems of Consumer Cooperative in
Nigeria
Unit 3 The Concept of Competitive and Monopolistic Market
Structure
Unit 4 The Social Criticisms of the Capitalist Market – High
Prices, Wasteful Advertising, Hoarding Goods etc.
Unit 5 The Diseconomies of the Prevailing Distributive System
UNIT 1 THE HISTORY OF THE BRITISH CONSUMER

COOPERATIVE MOVEMENT
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Rochdale‟s Rules and Regulations
3.2 Values and Principles of Cooperative
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Readings
1.0 INTRODUCTION
This chapter traced the historical evolution of the British consumer

cooperative movement beginning from the Owenites and up till the time
of Rochdale pioneers in 1844. It also discusses the general areas of
focus of the early cooperative movements and the rules and regulations
which guided the early cooperative movement.
2.0 OBJECTIVES
After reading this section, the reader should be able to:
 understand the history of the british consumer cooperative

movement
 explain the reasons that led to their creation
 the rules and regulations to put in place to guide their activities
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3.0 MAIN CONTENT
The history of the British cooperative movement can be traced to

Rochdale Pioneers' shop in the northern English town of Rochdale in
1844. United Kingdom is home to a widespread and diverse co-
operative movement, with over 7,000 registered co-operatives which are
owned by 17 million individual members with a contribution in the
range of £34bn a year to the British economy.
Though the history of the co-operative movement in the UK is often

traced back to the Rochdale Pioneers of 1844, the origins of modern co-
operatives is largely due to the extreme poverty faced by many in the
18th and 19th centuries, as well as the rapid social changes of
urbanisation, coupled with the rising food prices which resulted from the
marketisation of the economy and the manifestation of lack of political
representation for the working class during this period. In the views of
Okonkwo (2001), the industrial revolution and the attendant factory
systems with its attendant socio-economic problems gave rise to the
birth of cooperative movement in Britain. Some scholars expressed the
views that the exploitation of factory workers by factory owners, traders
and middlemen as a result of the industrial revolution led some well-
intentioned individuals and social reformers like Robert Owen and Dr
Wilham King to encourage workers to come together and find ways of
alleviating their hardships. This led to the cooperative movement of that
time to be called Owenite cooperative movement. This movement
however collapsed but was quickly replaced in 1844 when twenty eight
workers following the advice of Dr King pulled their personal savings
together and launched their cooperative movement in Rochdale. These
Rochdalers as they were called successfully opened a cooperative
consumer shop and stocked it with essential commodities and sold to
members and non-members alike at moderate prices. According to
Andrew Bibby, (2015) this early cooperative societies focused on the
provision of essential services (notably food) to members where the
market was either unable to provide these services sufficiently or was
considered unjust. Indeed the more successful co-operatives were
established around the trades which were experiencing the largest
impact from the rapid industrialization such as mining and weaving.
This was likely due to the clearer direct benefits of membership and the
solidarity of workers with a similar plight. The provision of food was a
highly successful area for co-operatives with many becoming involved
in milling and baking bread. The Hull Anti-Mill Co-op, established in
1795 and which traded for a century, provides an example of such a
successful society. The Rochdalers also encouraged members‟
participation by paying dividends based on the volume of transactions.
They proceeded to formulate rules and regulations to guide the
operations of the cooperative. Some of these rules were later fine-tuned
3
and constitute what is generally referred to as the Rochdale equitable

principles of cooperation. These factors resulted to several of social
changes including an increased focus on mutual businesses (notably co-
operatives) in public discourse during this time and also to events such
as the Swing Riots of 1830 (Wilson, Webster, & Vorberg-Rugh, 2013).
3.1 Rochdale’s Rules and Regulations
 Open and voluntary membership

 Cash sales
 Payment of dividend based on patronage of consumer shop
 Democratic control of the cooperative society
 Education of members
 Sale of commodities at market price
 Neutrality of political and religious affiliation of members
 Limited interest on capital to avoid the cooperative been high-
jacked by some people.
3.2 Values and Principles of Cooperative
Cooperative societies are of value to their members in the following

ways:
a. Patronage divided – this is also known as patronage refund

which is calculated based on the volume of transaction of a
member. The money paid to the member can be considered as a
bonus, because the recipient is enjoying such privilege due to the
business transacted with the cooperative shop.
b. Quality products at reasonable prices – the member is able to
buy quality products at a moderate prices. This is so because
adulteration of products or selling poor quality commodities is
completely absent. This serves to attract and encourage members
to patronize the cooperative shop. Consequently, this will lead to
increase in sales turnover of the shop and higher profitability.
c. Dividend on shares – this is another benefit for members.
Members are paid dividend from the surplus of the society from
the profit made by the shops.
4.0 CONCLUSION
In this unit, the reader has been exposed to the historical evolution of the
British Cooperative movement and the motives that led to its creation. It
also discussed the initial challenges the society confronted and the steps
taken by way of the introduction of rules and regulations to guide its
operations.
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5.0 SUMMARY
In this section we have discussed the history of British consumer

cooperative movement. The unit explicitly highlight the origin of
cooperative movement, the challenges they had to deal with to be able to
survive. The Rochdale‟s rules and regulations were highlighted, with the
unit concluding with the benefits and principles of cooperative.
6.0 TUTOR MARKED ASSIGNMENT
1. Explain the evolution of the British cooperative movement

2. Outline the Rochdale‟s principles
3. What are the benefits of cooperative societies to their members?
7.0 REFERENCES/FURTHER READINGS
Andrew Bibby. "The history of the British co-operative movement -

timeline | Social Enterprise
Network"(https://www.theguardian.com/social-
enterprisenetwork/gallery/2014/jan/29/the-history-of-the-british-
co-operative-movement-timeli ne). The Guardian. Retrieved
2015-09-04.
Mohammed, B.M. (2014). Agricultural Cooperative. Alico Computer

publishers, Kaduna Nigeria.
Ogbu, S.O. (2007). The basic principles and economics of cooperative
business. Homec Global Inc. Abuja ISBN 978-35488-8-3.
Umebali, E., Akubuilo, C., Onugu, C., & Emejulu, G. (2006). Readings
in cooperative: Economics and Management. Computer Edge
Publishers 2nded.
Wilson, J. F., Webster, A. and Vorberg-Rugh, R. (2013). Building Co-

operation: A business history of The Co-operative Group.
Oxford University Press, Oxford.
5
UNIT 2 THE STRUCTURE AND PROBLEMS OF

CONSUMER COOPERATIVE IN NIGERIA
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Structure of Consumer Cooperatives
3.2 Primary Cooperative
3.3 Secondary Cooperative
3.3.1 Tertiary Cooperatives
3.3.2 National Level
3.4 Structure at the State Level
3.5 Problems of Consumer Cooperatives in Nigeria
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
In the previous unit we looked at the history of British consumer

cooperative movement. In this unit our focus is on the structure and
problems of consumer cooperative in Nigeria. We discussed the
categorization of consumer cooperative movements in Nigeria and the
problems that often confront them.
2.0 OBJECTIVES
At the end of this unit, you should be able to:
 explain the structure of consumer cooperatives in Nigeria

 understand the problems of consumer cooperatives in Nigeria.
3.0 MAIN CONTENT
3.1 Structure of Consumer Cooperatives
Structure here refers to framework, layout and composition of

cooperative movement. According to Ogbu (2007), he observed that
cooperative movement is organized in pattern that can be likened to a
pyramid structure consisting of three levels namely – primary,
secondary and tertiary.
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Figure 1: showing the structure of cooperative society in Nigeria
3.2 Primary Cooperative
From the diagram above, is at the bottom of the pyramid structure. It is

where the socio-economic needs of members is the driving force. Here
the principles of cooperation is manifest by according each member the
right to vote irrespective of his or her share capital holding.
3.3 Secondary Cooperative
This is the second layer of the cooperative structure. It formed by

primary cooperative societies. Membership is not on individual basis but
organized entities of primary cooperatives. Secondary cooperatives
provides a platform for primary cooperatives who have challenge of
funds, low membership and weak capacity acquisition pull their
resources together under one umbrella.
The essence of secondary cooperative Puri (1978) noted is not

necessarily to observe cooperative principles, but to meet up with the
desires of members of the primary cooperatives that formed it.
Basically, the secondary cooperatives exist to provide adequate benefits
to the members of the primary cooperatives that are within its fold. This
means that the secondary cooperatives are mainly for economic entities
for providing solutions to challenges of primary cooperatives. In
secondary cooperatives, one man one vote is not practiced but graduated
voting, which means voting according to shareholding capacity in the
society. Examples of secondary cooperatives are Divisional cooperative
council (DCC) which can be found in each local government area in
7
Nigeria. Furthermore, in consumer cooperatives, the wholesale type

exists to solve the challenges in the retail cooperative societies.
3.3.1 Tertiary Cooperatives
This is the highest level of the cooperative structure. Tertiary

cooperatives are formed by secondary cooperatives who desire to solve
their problems, which they cannot handle individually. Similar to the
secondary cooperatives, tertiary cooperatives exist to take care of the
interest of members of the secondary cooperatives. Tertiary cooperative
is the highest platform via which single or multi-purpose societies can
attain their economic needs. It must be emphasize that primary
cooperative can bypass the secondary cooperatives and join the tertiary.
These types of cooperatives are often found at state levels.
3.3.2 National Level
i. Cooperative federation of Nigeria (CFN) which was founded in

1968with its base in Ibadan is the apex cooperative body in
Nigeria. It is affiliated to International Cooperative Alliance
(ICA) and other international cooperative organisations. The
CFN is at the 6th level of the cooperative structure.
ii. Another national body is the National Association of Cooperative
Credit Union of Nigeria (NACCUN). It was established in Lagos
in 1978. It is the apex body for all cooperative financing
agencies, credit unions and thrift and credit societies. NACCUN
mobilizes savings from members from which members can
benefit from in a later date.
iii. There is also the Nigerian National Cooperatives wholesale
Association (NNCWA) established in 1976 and funded by the
government. Its main objective is to import and distribute
essential consumer goods through state cooperative wholesalers
especially during the oil in the 70s.
iv. In 1979, the Federal government set up the National Cooperative
Insurance Society of Nigeria (NCISON) with base in Kano.
NCISON was set primarily to deal with issues of motor, marine,
fire and cash –in-transit insurance for its members‟ cooperative
societies and for the general public. Its activities are purely
commercial driven, but is funded bythe Federal Government of
Nigeria.
v. The National Advisory Council (NAC) as the name suggest is
statutorily empower to advise the President of Nigeria on issues
relating cooperative in general and specifically on matters
relating to policies and strategies.
vi. In 1976, the Federal government of Nigeria established three
cooperative colleges for the sole purpose of enhancing
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CRD 301 MODULES
continuous cooperative education in the country. These colleges

are located in Ibadan, Kaduna and Enugu (Oji-river).
3.4 Structure at the State Level
In 1996, the Federal government created additional states bringing the

states in the country to 36. Each state including the Federal capital
territory (FCT) Abuja has a cooperative society organized in a pyramid
structure with three layers namely – primary, secondary and tertiary. As
we had earlier discussed the primary tier can be found in all corners of
the states including villages and towns, while the secondary
cooperatives are located at the local government headquarters. The third
category is tertiary cooperative which is a federation of the secondary
cooperatives. Meanwhile consumer cooperatives have one apex for
wholesale supply of consumer goods. These apex bodies come together
to form the state cooperative federation.
The head of these federated cooperative societies are government

officers appointed from the supervising ministry. They could come in
different nomenclatures such as Chief Executive Officer (CEO),
Secretary or Managing Director as in Enugu cooperative federation
(ECOFED).
3.5 Problems of Consumer Cooperatives in Nigeria
Every organisation or systems have challenges or problems which it

confronts and Nigerian cooperative societies are not an exemption.
Yahaya (2011) believe that the problems confronting consumer
cooperatives in Nigeria are due largely to the agricultural based
economy because majority of her people earn their living from
agricultural based activities. Meanwhile the following reasons which are
both internal and external have been identified by Umebali et al (2014).
These are:
1) Little need for consumer cooperative

2) Low purchasing power
3) Higher overhead cost and stiff competition from small retailers
4) Unavailability of some cooperatives due to their smallness
5) Poor management and Organisation
6) Lack of supportive loyalty of members and general awareness on
the part of the public
7) Over-dependence of societies on private manufacturers and
producers for the supply of goods.
8) Over-dependence of the country as a whole on importation
9) Over-dependence on manufactured goods instead of on basic
need items most of which can be produced locally
9
10) Too much government involvement in the affairs and

cooperatives
11) Corruption of government cooperatives officials and cooperative
officers and employees
12) Competition from well managed big stores
13) Poor financing
According to Umebali et al (2014), there some peculiar problems

associated with consumer marketing cooperatives which they
highlighted as follows:
i. Fund – All marketing cooperatives both at primary and apex

level suffers from inadequate capital for their operations. Due to
the low income earning of its members, internal funding by
members is low. Capital is needed for critical assets such as
vehicles, buildings, land etc.
ii. Management – This has to active, reliable and efficient if the
cooperative is to grow. Indeed the integrity of the officials should
never be in doubt. However, if any of these critical variable is
missing the society will stagnate and collapse.
iii. Volume – high sales turn-over is important. But a situation where
there is consistent decline in sales for a period will lead to profit
decline and subsequently bankruptcy.
iv. Storage facility – a well-built warehouse facility is very essential
to any cooperative society. Bur a situation whereby the
warehouse has a leaking roof or poorly constructed can lead to
damage of items.
Other problems that are peculiar to produce marketing cooperatives are:
a. Low membership – The greater the membership in produce

societies, the greater the turnover, but if the membership is low
then it will have a negative effect on the society.
b. Quality of produce- if the society buys produce from non-
members, they will no longer be in position to control the quality
of their produce. In this situation, the possibility exist for non-
member suppliers to resort to sharp practices by supplying poor
quality produce and engaging in other shoddy deals in order to
secure better bargain.
c. Capital – this is one of the major problem of produce marketing
cooperatives. The members of the society are subsistence
producers, they do not have much savings from which to raise the
necessary and sufficient share capitals with which to step up their
production. Adequate capital is required to buy needed equipment
such as machineries, weight scales, container, bags, warehousing,
vehicles etc that will aid their production efforts.
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d. Corruption and dishonesty – the officials of the marketing

Boards are crooked and often cheat members of the marketing
societies. Similarly, many officials in the cooperative societies
are corrupt and adopt all manners of tricks to exploit their
members.
e. Non-linkage – these societies are likely to make better success
through forward integration. For example if marketing produce is
linked with its processing, the society will earn more money for
its members
f. Transportation–inadequate and inefficient transportation
systems has caused severe discomfort and losses to the general
produce marketing cooperatives. For example, the roads are in
dismal state of disrepair with the attendant loss of produce for
delayed evacuation. Other transportation systems such as rail and
sea are not easily available
g. Storage–poor storage facilities which are prevalent in the
cooperative societies are often the cause of produce spoilage.
This is so because some of the warehouse if they are not
dilapidated often times lacked preservation facilities resulting to
deterioration and subsequent spoilage.
h. Management – poor management of the societies leads to poor
performance. This can be traced to corruption, dishonesty and
low skilled personnel.
4.0 CONCLUSION
In this unit we have learnt the structure of consumer cooperatives in

Nigeria, both at the national and state levels. Similarly, we have also
identify the problems of consumer cooperatives and highlighting those
which are peculiar to marketing cooperatives.
5.0 SUMMARY
In this section we have discussed the framework, layout and

composition of consumer cooperatives in Nigeria. Efforts have been
made to explain the problems that confront consumer cooperative and
those which re peculiar to marketing cooperative societies.
4.0 TUTOR MARKED ASSIGNMENT
1. Write short notes on the following:

a) Tertiary cooperative
b) Secondary cooperative
c) Primary cooperative
2. Outline the problems of consumer cooperatives in Nigeria
11
Adeyeye, A. (1978). Cooperative Movement in Nigeria, yesterday, today

and tomorrow, Ibadan, University Press
Berko, S. Y. (2001). Self-help Organisations, Cooperative and Rural

Development. Enugu, Computer edge
Chukwu, S.C (1990). Economics of Cooperative Business Enterprise,

Marburg

business. Homec Global Inc. Abuja ISBN 978-35488-8-3
Publishers 2nded.
Wilson, J. F., Webster, A. and Vorberg-Rugh, R. (2013). Building Co-

operation:A business history of The Co-operative Group. Oxford
University Press, Oxford.
12
CRD 301 MODULES
UNIT 3 THE CONCEPT OF COMPETITIVE AND

MONOPOLISTIC MARKET STRUCTURE
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 The Concept of Competitive and Monopolistic Market
Structure
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
The concept of competitive and monopolistic market structure is our

main concern in this section. We are going to explain how market
structure affects firm‟s behaviour and its implication on price and
output. This unit also discusses the characteristics of different market
structures.
2.0 OBJECTIVES
 The concept of competitive and monopolistic and market

structure
 Characteristic of different types of market structure
3.0 MAIN CONTENT
3.1 The Concept of Competitive and Monopolistic Market

Structure
Structure is the organisational features of an industry that impacts on the

firm‟s behaviour in its choice of price and output. Market structure is an
economically significant feature of the market and is generally classified
on the basis of the degree of competition namely:
i. Perfect Competition
Perfect competition is a market situation in which a large number of

producers offer a homogeneous product to a very large number of
buyers of the product. The number of sellers could be so large that each
13
seller offers a very small fraction of the total supply and therefore has no
control over the market price. Similarly, the number of buyers is so large
that each buyer buys an insignificant part of the total supply and has no
control over the market price. Perfect competition has the following
features.
a) There is a large number of firms (producers and sellers) and

buyers of a product
b) Products of all firms are homogeneous
c) There is freedom of entry and exit by firms
d) All firms and buyers have perfect information about the
prevailing market prices of the product.
e) Both buyers and sellers are “price takers” and not “price makers”
f) The price of a commodity is determined in this kind of markets
by the forces of market demand and market supply.
g) Each firm is in competition with so large a number of firms that
there is virtually no competition.
This kind of market is however more of a hypothetical nature rather than

being a common or realistic one. Some examples of a perfectly
competitive market include stock market and vegetable markets.
ii. Imperfect Competition
a. Monopolistic Competition
b. Oligopoly with and without product differentiation
c. Duopoly
iii. Monopoly
i. Perfect Competition is a market situation in which a large number

of producers offer ahomogeneous product to a very large number
of buyers of the product. The maximum output which an
individual firm can produce is very small compare to the total
demand of the industry product so that no firm can affect the
price by varying its supply output.
There are four important characteristics of perfect competition
1) There is a large number firms (producers and sellers) and buyers

of the product.
2) Products of all firms are homogeneous
3) There is entry and exit by firms
4) All firms and buyers have perfect information about the
prevailing market price of the product.
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Which is based on three core components (1) the number of firms

producing a product, (2) the nature of the product produced by the firms,
that is whether they are homogeneous or differentiated, and (3) the ease
with which new firms can enter the industry
4.0 CONCLUSION
The concepts of competitive and monopolistic market structure have

been discussed. Market structures carried with them some features
which largely impacts on a firm‟s behaviour. All firms and buyers
operating in a perfect market have perfect information about the
prevailing market situation which is dependent on the number of firms
producing the product, the nature of the product and ease of entry and
exit prevalent in the industry.
5.0 SUMMARY
In this unit you have learnt how the concept of competitive and
monopolistic market structure operate. The characteristics of the various
types of market have been highlighted which help have explained how
they impact on organisational behaviour.
6.0 TUTOR MARKET ASSIGNMENT
1. Explain what is meant by a perfect market?

2. What are the significant differences between a monopoly and
imperfect market
3. Outlie the features of perfect competition.
Ahuja, H; & Ahuja, A. (2009). Managerial Economics: Analysis, of

Managerial Decision making. S. Chand & Company Ltd, Ram
Nagar, New Delhi – 100 055

Marburg
Dwivedi, D.N. (2008). Principles of Economics. Viskas Publishing

House PVT Ltd
Umebali, E., Akubuilo, C., Onugu, C., &Emejulu, G. (2006). Readings

Publishers 2nd ed.
15
UNIT 4 THE SOCIAL CRITICISMS OF THE CAPITALIST

MARKET – HIGH PRICES, WASTEFUL
ADVERTISING, HOARDING GOODS ETC
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Capitalist Market
3.2 Criticism
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
In this unit, the Reader will learn about the criticisms of the Capitalist
market and its inherent drawbacks such as high prices, wasteful
advertising, hoarding and other market abuse. Capitalism is an economic
system driven by free enterprises. In a capitalist system, government is
focused on political and policy making while private individuals run the
activities of the economy and pay taxes to the government. In
Capitalism, prices of goods and services are determined by the interplay
of the forces or demand and supply.
2.0 OBJECTIVES
 understand what capitalism means

 identify areas of similarities between cooperative societies and
capitalism
 identify the differences between cooperative outfits and
capitalism
 explain the social criticisms of a capitalist market
3.0 MAIN CONTENT
3.1 Capitalist Market
Capitalism or capital market is an economic system or an ideology based

on private ownership of the means of production and other operation for
profit. Characteristics central to capital market include private property,
capital accumulation, wage labour, voluntary exchange, price system
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CRD 301 MODULES
and competitive markets. In other words Capitalism is a system of

economic organisation carried on for profit by private enterprises with
minimal interference from government. The key features of capitalism
are:
a) Individualism and personal gain are the primary motives

b) The private ownership of the means of production
c) Competition in the market as the regulator of price and business
activity
d) Freedom of contract and enterprise
e) Class conflict between labour and capital
f) Freedom from state interference
Cooperative and Capitalism have been viewed as same on account of the

following points of similarity:
i. Like capitalism cooperative also accept the right of private

property, the right of contract, inheritance and right to private
enterprise.
ii. Cooperatives also use capital to carry on its activities and pay
interest for its use.
iii. Like capitalist enterprise, cooperatives employ experts and pay
them remuneration based on the quality of service rendered
iv. Cooperatives also depend on business efficiency for their
successes same as enterprises.
v. Both systems frown at any intervention from the government.
On the other hand, the main differences between cooperative and

capitalism can be situated along the following:
i. In a capitalist system, a group of shareholders can band together

and influence policy direction, but in cooperative each member
occupies equal position.
ii. In capitalist economy while capital occupies a pride of place,
cooperatives give it a secondary attention.
iii. Capitalism is driven by profit motives while cooperative is
basically for service. Profit is only a bye-product of services
rendered.
iv. In a capitalist economy voting is done on the basis of the strength
of shareholdingswhile in cooperative enterprises every member
has only one vote irrespective of the number of shares held.
v. While capitalism is built on exploitation of man and resources,
cooperatives seek an end to exploitation.
vi. Capitalism encourages competition and rivalry which often leads
to clash of interest, but cooperative rides on the platform of self-
help and adopts cooperation in a spirit of service.
17
vii. In capitalist system, while money rules men, the reverse is the
case in cooperative outfits.
viii. Capitalism leads to concentration of wealth in few hands and
create inequality, while in cooperative efforts are directed at
bringing about equality and dispersing wealth to many people.
ix. A capitalist organisation is the coming together of the strong with
the desire to exploit the weak, while cooperative is the weak
coming together to resist the strong.
x. In the capitalist system the capitalists employ workers and
undertake the risk while in a cooperative system the workers
deploy capital and undertake the risk of the business.
xi. The evolution of capitalism is towards monopoly, while the
cooperative evolution is from decentralization.
xii. In capitalism there is hardly equal ownership, control or sharing
of profit, but in cooperative all are equal owners, in control and
equitable profit sharing.
xiii. Capitalism leads to booms and slumps, while in cooperative,
there is steady production which prevents speculations and
stabilizes prices.
xiv. Capitalism exalts materialism, while cooperatives strives for the
development of cultural and spiritual values of members.
3.2 Criticism
Social critics of the economic system believe that capitalism is related

with social inequality; unfair distribution of wealth and power; a
tendency toward market monopoly or oligopoly (and government by
oligarchy) with the attendant high prices, wasteful advertising and
hoarding of goods leading untold hardship to the citizens. Other
drawbacks are imperialism, counter-revolutionary wars and various
forms of economic and cultural exploitations; repression of workers and
trade unionists. Some critics consider it to be irrational, in that
production and direction of the economy are unplanned, creating many
inconsistencies and internal contradictions
4.0 CONCLUSION
In this unit, you have learnt the concept of capitalist market. Equally,
you have been exposed to the similarities between cooperative and
capitalism. Of importance is the criticisms of capitalism as an economic
policy driven by profit and other abuses.
5.0 SUMMARY
Discussions in this unit have explained what capitalism represents and

the criticisms often thrown at it. The section equally highlighted the
18
CRD 301 MODULES
similarities and differences between cooperative society and capitalism.

Features of capitalism have been explained to enable readers
differentiate it from other economic ideologies.
6.0 TUTOR-MARKED ASSIGNMENT
1. Carefully explain what you understand by capitalism/

2. What are the similarities between capitalism and cooperative
societies.
3. Outline the criticisms of capitalism.
Brander, J.A (2006). Government policy towards business. 4th ed.

Mississauga, Ontario, John Wiley & Sons Canada.
Korstanje, M. (2015). A difficult World, examining the roots of

Capitalism. New York, Nova Science.
Louis, H & Edward, E. (2014). American Capitalism. Simon &

Schuster. ISBN 978-1285-05535


Publishers 2nded.
Zimbalist, S., Brown, A., & Howard, J. (1988). Comparing Economic

Systems: A political-economic approach. Harcourt College
publications
19
UNIT 5 THE DISECONOMIES OF THE PREVAILING

DISTRIBUTIVE SYSTEM
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Distributive System of Cooperative Marketing
3.2 The Advantages of Integration
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
In this unit we are going to examine the distributive channel system as it

relates to the cooperative societies operations. Distribution channels are
critical to how cooperative societies will able to effectively serve their
members.
2.0 OBJECTIVES
At the end of the unit, you should be able to:
 explain distributive system of cooperative marketing

 distributions channels in cooperative organisations
 describe the economic consequences of poor distribution system
3.0 MAIN CONTENT
3.1 Distributive System of Cooperative Marketing
The key objective of cooperative marketing is to develop distribution

and consumer demand that will take as much as possible of the entire
output of the cooperative membership at a price which will yield the
maximum return per unit of the product (Umebali et al, 2014). So the
question could be asked about how far should a cooperative follow their
produce to the market? To sell a product requires an integrated
distribution systems that will ensure the produce get to as many retail
outlets as possible to ensure availability at all times. Buyers will prefer
to buy their food items from shops that are not far from their homes. To
this end it will be helpful to take the products close to the buyers as
much as possible. However, with the prevalent of big stores, competition
in the retail business will be heightened with the resultant effect on
20
CRD 301 MODULES
margins and profit. It is important to point out that efforts to establish

wholesale and retail stores by marketing cooperatives could alienate a
great part of the present distributive system especially in areas where it
is nott feasible to establish cooperative retail outlets.
The channels of distribution in cooperative marketmeans a flow through

which goods produced by primary producers to the final consumers. The
channel is depicted below:
Where a marketing organisation performs the process and function of

two or more stages of distribution extending from the producer to the
consumer is often referred to as “vertical integration”. This vertical
integration may be partial as when only two or three of the several steps
in the chain, from the producer to consumer are performed by a given
firm. Both consumers‟ producers may derive benefits from such an
improvement in marketing. The functions in the integration are:
 Branding
 Packaging
 Processing
21
 Preservation
 Storage
 Propaganda/Enlightenment
3.2 The Advantages of Integration
The following are the advantages of integration:
1) Economies of scale
2) Labour and cost reduction
3) Efficient distribution of farm commodities
4) More control by the cooperative in product distribution
5) Benefits from branded products
6) Gaining complete control of the distribution system
7) Gaining market opportunities from efficient product distribution.
Notwithstanding the advantages, the prevailing distributive systems

suffers from diseconomies some of which include:
1) Need for greater managerial skills: greater managerial skills

are required to coordinate multiple activities than in a specialized
one stage market organisation. Management will be called on to
operate in wider market areas where competition may be stiff
2) More capital: more capital will be needed by an integral market
organisation and the capital is to cover both fixed asset facilities
as well as operating current capital. This will involve more
capital, greater risk and perhaps more credit and collection
problems
3) Adequate volume of business: there must be adequate volume
of business to support the programme. Large volume is needed
for efficient and effective operation and to keep per unit cost to a
minimum. This requirement is particularly important if entry into
national and international markets is planned.
4) Efficiency of existing marketing firms and system: in
determining how far cooperatives should go in the market
integration, it is important to determine how efficient the firms
and marketing systems through which products will be sold are.
Before entering into a marketing integration system, cooperatives
should carefully and objectively evaluate the operations of
present market firms and systems to determine what and how
much improvement may be effected by making such a move.
5) Monopolistic practices: the cooperatives should discover if any
monopolistic tendencies exist in the producer – consumer chain,
which enables some firms to take advantage of a large chunk of
the market returns.
22
CRD 301 MODULES
4.0 CONCLUSION
In this unit you have studied the importance of having an effective

distributive channel that will support the cooperative society in serving
their members satisfactorily. An integrated distribution channel will of
immense benefit to the cooperative societies in their efforts towards cost
reduction, profitability and ultimately meeting the needs of their
members.
5.0 SUMMARY
Integrated distribution channel is a key objective for a cooperative

society to effectively cut cost and effectively serve its members. It is a
system that described the flow of goods in a For example members will
prefer to buy their products from shops that are closest to them.
1. Describe the distribution channels in cooperative society

2. Explain the effect of weak distribution system on the capacity of
a cooperative society to effectively meet the needs of its members


Publishers 2nded.
23
MODULE 2
Unit 1 The Introduction of Consumer Cooperative In Nigeria

With The NSCA In 1940. Reasons for Failure of Early
Societies
Unit 2 The Choice Between a “Top-Downwards” and
“Bottom-Upward” Organisation Structure
Unit 3 The History and Strength of Consumer Cooperatives
in Nigeria Today
Unit 4 Organisation Structure of Cooperative Societies in
Nigeria
Unit 5 Organisation and Management of Consumer
Cooperatives
UNIT 1 THE INTRODUCTION OF CONSUMER

COOPERATIVE IN NIGERIA WITH THE NSCA
IN 1940. REASONS FOR FAILURE OF EARLY
SOCIETIES
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Types of Cooperative Societies in Nigeria
3.2 Consumer Cooperatives
3.3 Credit Cooperatives
3.3.1 Agricultural/Farmers‟ Cooperatives
3.3.2 Housing Cooperatives
3.3.3 Fishing Cooperatives
3.3.4 Worker Cooperatives
3.3.5 Community Co-operatives
3.3.6 Transport Cooperatives
3.3.7 Craftsmen‟s Cooperative Societies
3.4 Problems of Early Consumer Cooperatives in Nigeria
3.5 Factors that Militated against the Growth of Consumer
Societies
4.0 Conclusion
5.0 Summary
24
CRD 301 MODULES
1.0 INTRODUCTION
The establishment of consumer cooperative in Nigeria was a product of

the war condition occasioned by the scarcity of consumer goods
especially imported items. The scarcity led to abuses such as hoarding,
high prices, price discrimination and adulteration of commodities. The
rationalization of essential commodities especially among the colonial
merchant and their local collaborators during the war period was the
catalyst for the formation of cooperatives in Lagos because economic
abuses helped merchants to make huge profit at the expense of the
consumers. It was therefore thought that a well-organized cooperative
society could gainfully negotiate with importing firms to secure goods
and retail same to their members at lower cost than at market price.
2.0 OBJECTIVES
In this unit, the history of consumer cooperative societies in Nigeria is

discussed. After reading this section, the reader should be able to:
 explain the history of consumer cooperative societies in Nigeria

 identify types of cooperative societies in Nigeria
 outline and explain the problems of consumer cooperatives in
Nigeria.
 identify and discuss the factors that are mitigating against the
growth of cooperatives societies in Nigeria.
3.0 MAIN CONTENT
Consumer cooperative was not anurban affair only because few rural
towns also saw the need to form cooperatives to help meet some of their
economic needs. In Eastern part of Nigeria, Ogwofia and Owa in the
then Udi native authority under the leadership of Colonial Divisional
Officer, Mr Chaldwickin 1945 established a cooperative shop. They
came together and raise funds to finance the cooperative shop by buying
goods from Enugu and retail to members at a moderate price. This
society dealt in commodities such as salt, soap, white and khaki drill,
matches and Epson salt. In the course of time several other towns like
Ondo, Benin and Calabar provinces established their respective
cooperative outfits.
The spread of cooperative in the North followed the same pattern. There
were two urban cooperatives that blazed the trail in Northern provinces.
They are the Garkida cooperative society in Bornu province which
started in 1943 with the assistance of the Brethren Mission which
supplied some essential items to rural communities and also provide
thrift facilities and accumulate funds for community development. The
25
other is was the Northern consumer society domiciled in Kaduna which

was started by the Enterprise of Clerical and Technical workers of
southern origin. This society was started without official backing and it
became an example which appealed to others.
3.1 Types of Cooperative Societies in Nigeria
Cooperative societies in Nigeria were introduced by the British during

the colonial period. Unlike what was obtainable in the United Kingdom
wherein cooperatives emerged as an organized weapon by poor workers,
farmers and artisans, Umebali, Akubuilo, Onugu and Emejulu (2014)
believed that the emergence of cooperatives in Nigeria was at the
instance of the government. This was so because the colonial
government needed an organized body through which it can use in
stimulating the production, processing and export of cocoa, palm oil,
groundnut, cotton and other crops to overseas.
The first cooperative in Nigeria was formed in 1907 when a group of

cocoa farmers and merchants in the Agege axis of Lagos came together
and formed a sort of a market union named Agege Planters Union
(APU). Their primary objective was to bypass the long chain of
intermediaries (middlemen) in the cocoa business. The union
encouraged farmers to improve on the quality of their cocoa beans by
adopting better fermentation processes. Encouraged by the success of
the APU, similar organisations around Ibadan, Abeokuta, Ilesha, Akure
and other towns in the cocoa producing areas of Western region of
Nigeria. Considering the benefits accruing from this organisational
initiative, the agricultural department of the then colonial government.
Around 1920s started to organize farmers into similar or what some
scholars referred to as pseudo-cooperative agricultural associations. In
addition to educating farmers on new and improved techniques for the
production and processing of cocoa beans for sale, indeed the
agricultural associations assumes a critical marketing role for the
European export companies.
In view of the pivotal role these unions were playing, in 1935, a

Cooperative Ordinance was enacted which was aimed at not only to
streamline the activities of the nascent unions, but also made it an
offense fir any association not registered under the ordinance to bear the
title of “cooperative”.
In Nigeria there are of variety associations and other community based

organisations whose nature and operations are based on the principles of
mutual cooperation and self-help. These include cooperative societies,
community development associations, rotating savings and credit
associations (isusu), traditional labour cooperative groups (called gayya
26
CRD 301 MODULES
in Hausa and aro in Yoruba), age-grade organisations and mutual self-

help clubs. Although the aforementioned bodies have similar features as
cooperative society, but they cannot in real sense be referred to as one.
The international Labour Organisation described cooperative as a formal
organisation, formed by persons usually of limited means, who have
voluntarily come together for the achievement of a common economic
and social objectives of its members by making equitable contributions
to the risks and benefits undertakings.
Although cooperatives vary in types and membership size, all were

formed to meet the specific objectives of the members and are structured
to adapt to members‟ changing needs. The following are basically the
common types of cooperative societies in Nigeria.
3.2 Consumer Cooperatives
Its role is to provide affordable price for goods and services which are
essential for the overwhelming majority of people. It is crucially
important in the case of domestic commodity shortage. However,
consumer cooperatives made its debut in during the second world war of
the mid-40s. Aniagu in Umebali (2014) believed that the Second World
War in its wake brought scarcity of consumer goods especially imported
consumer items. He further argued that the scarcity been experienced
during the war indeed brought about many abuses as well, such as high
prices of goods, hoarding and discrimination and adulteration of
products. These abuses enabled merchants to make abnormal profits at
the expense of the consumers. It was suggested that a well cooperative
could stand-up to the shylock merchants of imported items and negotiate
price reduction for their members.
Consumer cooperative cuts across both urban and rural settings in its
development process. For example from the Eastern part of Nigeria, it
was reported that the people of Ogwofia Owa in Ezeagu Local
Government Area were the first community to demonstrate a noticeable
intention to set up a consumer shop during the early years of the Second
World War. They came together and raised capital to build and finance a
cooperative village shop to buy goods at Enugu at a moderate price.
3.3 Credit Cooperatives
Such cooperatives exist for providing savings and loan services to its
members. There are such advantages such as convenient collateral for
loans, low-interest rates on issued loans, high speed of decision-making
on granting of the required amount of money, the minimum difference
between interest on deposits and loans
27
3.3.1 Agricultural/Farmers’ Cooperatives
In Nigeria, the agricultural sector is the main sphere of production. It

involves the overwhelming mass of the population (about 43% of the
working population). However, the low level of development of
productive forces and the predominance of traditional low productivity
types of farming makes this industry the most deprived in the structure
of the national economy. This type of cooperatives is the most popular
among Nigerians. Two-third of all the cooperatives in south eastern
Nigeria are farmers‟ multi-purpose type. They harmonized the functions
of marketing, credit, farming, fishing etc together. They assist their
members in input purchase and serve as village bank where farmers can
keep saving and also obtain a loan on short term basis at low interest
rate. It sometimes undertake marketing function for farmers‟ members.
World practices show that development of agriculture is largely
determined by the use of the benefits of farmers‟ cooperative society.
The development of a system of agricultural cooperation is the question
of social, political and economic importance.
3.3.2 Housing Cooperatives
It is a cooperative where every member can buy a piece of land, take

part in building houses and make investments on a profitable basis in
real estate business. It offers several services to both tenants and owner
members. To tenant members they offer services such as providing
community services and other common facilities such as gardens,
recreation/relaxation centres, central laundry, health centres, nursery
schools etc.
To owner member they provide the following services:
i. Extension services to member by advising them in all the

problems involved in house building.
ii. Technical services such as design and drawing of building plan,
quantity survey and site supervision either by the society‟s staff
or by contracted private Architect and Surveyor.
iii. Real estate services such as purchase and development of
building plots for the owner members.
iv. The supply of building market – cooperative housing societies
differ from most other cooperatives in one important
characteristics. It is that while other cooperative societies carry
on more or less continuous business with their members
involving a number of individual‟s recurrent business
transactions, the housing or society is limited to a single
transaction, which is the supply of housing or related services.
The moment the sale of dwelling units have been wound up, there
28
CRD 301 MODULES
is no longer a functional relationship between members and the

housing society since the economic aim has been fulfilled.
3.3.3 Fishing Cooperatives
This is usually organized for providing either fresh or processed fish

products. There is even a special discount for its members for buying
nets and gears. The fact that the prices are reasonable is why it is easy to
get into this kind of cooperation.
3.3.4 Worker Cooperatives
A worker co-operative is a co-operative owned and democratically

controlled by its employees. There are no outside- or consumer-owners
in a worker co-operative. Only the workers own shares of the business.
There are several worker owned and controlled co-operative societies in
Nigeria.
3.3.5 Community Co-operatives
Community shops are not dissimilar from food co-ops but are often
found in more remote villages and provide some of the services of a
convenience store but also frequently have cafe, healthcare or library
services.
3.3.6 Transport Cooperatives
In practice the term transport cooperative is applied to a number of

different ventures such as the:
i. Cooperative organized by members in need of transport for

themselves, such as a bus services arranged by parents in outlying
districts to take their children to school.
ii. Productive societies formed by drivers, mechanics, etc offering
transport services to the general public.
iii. Cooperatives formed by independent transporters for the purpose
of increasing the efficiency of their business.
3.3.7 Craftsmen’s Cooperative Societies
Many societies of this nature grew especially in Eastern and Western

Nigeria. There was the Awka carvers and blacksmith and in Ikot Ekpene
there was the raffia workers based in eastern Nigeria. In Western
Nigeria there was the Benin then under Western region with Benin
bronze and wood workers, Oyo seamstresses and Oyo calabash carvers‟
29
societies. Government provided legal recognition, while occasionally

provides financial support.
3.4 Problems of Early Consumer Cooperatives in Nigeria
There is a perception in some quarters that consumer movements has not

been that successful in Nigeria because as at March 1948, there were 10
consumer cooperative societies flourishing in Nigeria, but were all
eventually stifled. The reasons for this state of affair could be attributed
to the following:
1) The societies were unable to withstand the stiff competition from

well-established entrepreneurs especially the Importers who bring
in these consumer goods usually want to exchange them for cash
crops which they happily shipped overseas to their parent
companies.
2) Due to the nature and circumstances of surrounding the
establishment of such organisation, it was not long before the
problems of management manifested. This problem it was
assumed was due to the hurried manner the cooperatives were
started.
3) It was reported that most members were ignorant of the basic
cooperative principles and proper structure and administration of
their societies.
4) They sold goods in their shops at the lowest possible prices not
minding what is competitors prices are in the local market
5) Their rivals allowed market forces to determine the prices of their
goods, but this was not applicable in running of the cooperative
shops.
6) The cooperatives inability to obtain goods at wholesale prices
which compelled them to buying from middlemen at retail/semi
retail rate and reselling to members often at a loss or the barest
minimum profit.
Meanwhile, the indigenous consumer cooperative which functioned like

village shops had same problems especially in eastern Nigeria. It was
the Gorkida consumer society formed in August 1942 with membership
of 200 that became the most successful. The story was not different in
western Nigeria where the experiment to use marketing unions to trade
in consumer goods failed.
In 1940, the Nigerian Cooperative Supply Association (NCSA) was

formed. The idea was well intended because the NCSA was to supply
societies nationwide with stationery and equipment such as weighing
scale and create export bags. However, these lofty ideals became
farfetched because people came to realize that establishing and
30
CRD 301 MODULES
managing consumer cooperatives was more difficult than they had

anticipated. In no time caution and pessimism set in. Nonetheless, things
started looking up when upon the creation of NCSA, it commenced
massive importation of goods into the country. The abundance of goods
led to credit sales to societies. The attendant result was more failure.
3.5 Factors that Militated against the Growth of Consumer

Societies
The following are factors which negatively affected consumer

cooperatives in Nigeria:
a) Nigeria‟s economy is predominantly agriculture based and less

industrialized. This indicates that most of the consumable goods
are imported.
b) Consumer cooperatives in Nigeria do not stand on a solid
economic ground. Its existence in Nigeria was directed at solving
scarcity problems. So, if there is no scarcity, no need for
consumer cooperative.
c) Strong cartel and monopoly formed by expatriate firms usually
work against cooperative societies.
d) There are insufficient trained manpower to run the affairs of
consumer cooperatives societies.
e) High level of illiteracy and ignorance made it difficult to create a
good sense of loyalty to their local cooperative shop
f) Consumer societies faced stiff competition from prospective
members.
4.0 CONCLUSION
In this unit, you are exposed to the history of consumer cooperatives in

Nigeria and the common types of cooperative societies. The importance
of consumer cooperatives especially the role it has played in improving
the standard of living of its members cannot be discounted. The unit
concluded by identifying those factors mitigating against the growth of
consumer cooperatives in Nigeria.
5.0 SUMMARY
The unit explained the historical evolution of cooperative societies

Nigeria and the problems they confronted in their early stage of
development. It also identify the various types of consumer cooperatives
in Nigeria. The section also identified and described the factors that
have mitigated against the growth of consumer cooperatives in Nigeria.
31
1. Identify and describe the types of cooperatives in Nigeria.

2. Outline and discuss those elements responsible for the poor
growth of consumer cooperatives in Nigeria.
3. Clearly explain the challenges that confronted early cooperative
organisations in Nigeria.
Amahalu, A.C (2006). Understanding some aspects of cooperation. 3rd

ed. Don-Ell Publishers, Enugu.

Publishers 2nded.
Yahaya, I. (2001). The Cooperative Movement and poverty alleviation

programme. Nigeria Journal of cooperative studies, 1(1).
32
CRD 301 MODULES
UNIT 2 THE CHOICE BETWEEN A “TOP-DOWNWARDS”

AND “BOTTOM-UPWARD” ORGANISATION
STRUCTURE
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 History of consumer cooperative in Nigeria
3.2 Organisation and Management of Consumer Cooperative
3.3 Functions of Consumer Cooperatives
of Consumer Cooperatives
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
The presence of financial institutions in rural areas will have positive

effect on rural development. Besides community banks, there is need to
establish rural bank branches to encourage rural investments through
disbursement of loans. Micro-finance banks should have more presence
in the rural areas to help develop the economic activities in the rural
settings. There is therefore the need in addition to cooperative societies,
the need to form groups such as youth clubs, women organisations,
committee of friends etc with development oriented objectives.
2.0 OBJECTIVES
At the end of this unit, the reader should be able to:
Describe top-downwards and bottom-upwards organisational structure.

Explain the differences between the two approaches
Outline the strengths and weaknesses of each approach
3.0 MAIN CONTENT
3.1 Top Downwards and Bottom Upwards Structure
In dealing with the rural dwellers, it is better to adopt the bottom

upwards approach. It gives those I charge the opportunity to ascertain
the feelings of the masses as against the top downwards where the
decision was taken and handed down to the rural dwellers. If the option
of top downward is preferred the fate and choice of the rural dwellers
33
will not be considered and such efforts can be frustrated in the end. The
bottom upwards is therefore the preferred choice because of its ability to
better galvanize support towards the attainment of the declared
objectives.
The bottom-up philosophy which can be likened to democratic approach

is also relevant to organisations in the sense that if policies and decisions
are made at the top level without allowing contribution or participation
from those in the lower cadre, there is a likelihood that such decision
will not be implemented effectively. In fact such decisions are often
greeted with apathy and in some cases suffer from sabotage from those
who fell alienated. To this extent it is important for organisations to
embrace collectivism by ensuring that majority of the people are carried
along in the decision making process for it to be effective. People who
have participated in a process are more likely to have a buy-in and be
ready to defend it at all times. It makes for harmony and solidarity.
Some advanced economies such as Japan and Germany are reported to

have largely adopted this bottom-up approach which obviously has
served them well. In other words bottom-up or democratic approach will
help an organisation to build team spirit that is critical to galvanizing the
organisation to greater height. It also help in directing individual efforts
towards a common goal since everyone will show commitment since
they have participated in taking the decision.
On the contrary, top downward approach although might have a few

merit, but is often derided for it capacity in creating apathy and
disillusionment amongst the staff of an organisation. Similarly, top
down approach demotivates and stifle creativity by not allowing those in
the lower cadre to express themselves in the governance structure of the
organisation. It could be harmful to the overall well-being of the
organisation if staff have a feeling that they are not recognized or
considered worthy enough to be consulted in matters in which they are
the ones who will implement.
4.0 CONCLUSION
The two approaches have their merits and demerits. It must be

acknowledge that some situation might favour top downward approach
especially when it concerns strategic decision making, but nonetheless
its drawbacks are more than its benefits. Creating a team approach is the
new strategy in management that has proven to be successful. The
bottom-up is better suited to creating a team spirit than the top
downward for the reasons already discussed. It is to this extent, we
suggest that the bottom-up should be embrace in view of its numerous
advantages
34
CRD 301 MODULES
5.0 SUMMARY
This unit has discussed the top-downwards and the bottom-upwards

organisation structure and their inter-relatedness. Each of the approaches
has its advantages and disadvantages depending on the situation.
However, it is important for managers to carefully analyze a situation
before adopting the approach that will better provide the desired
outcome. Nonetheless, the bottom-upwards appears to be superior due to
its capacity for creating team approach.
1. Carefully explain what you understand by top-upwards and

bottom-downwards organisation structure?
2. Outline and discuss the weaknesses and strengths of each
approach.
Nwaoke, N. M., & Umebali, E.E. (2005). Cooperatives: A Historical

Perspective. Computer Edge Publishers, Ejigbo, Lagos.
Olayide, S.O., Ogunfowora, O., Essang, S., & Idachaba, F.S (1981).
Elements of Rural Economics, Ibadan University Press, Ibadan.
35
UNIT 3 THE HISTORY AND STRENGTH OF CONSUMER

COOPERATIVES IN NIGERIA TODAY
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Top Downwards and Bottom Upwards Structure
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
The establishment of consumer cooperative in Nigeria was a product of

the Second World War conditions. The war brought in its trail scarcity
of consumer goods especially imported consumer items. But not long
after the war ended the societies collapsed. This was because,
immediately after the war conditions would return to normal and the
consumer and the consumer cooperative would have no relevance any
more.
2.0 OBJECTIVES
At the end of this unit,, you should be able to:
Explain the history and strength of consumer cooperative in Nigeria

today
Describe the functions of consumer cooperatives
Discuss the problems confronting consumer cooperatives
3.0 MAIN CONTENT
3.1 History of consumer cooperative in Nigeria
In eastern region of Nigeria, the first ever recorded consumer

cooperative started in Ogwofia, Owa in then Udi native authority.
However, as at March 1948 there were 10 consumer cooperative shops
already flourishing but all these societies were stifled. This was because
these societies were unable to withstand the fierce competition from
well established companies.
Within the same period under review, that is around the mid-40s there
were about 13 cooperative consumer shops in Northern Nigeria. These
36
CRD 301 MODULES
shops can be categorized into two; those caring for the urban dwellers
and those looking after the rural dwellers.
Meanwhile the indigenous consumer cooperatives which operated like

village shops had some problems in the east. It was the Gorkida
consumer cooperative established in 1942 with 200 members that
became most successful.
The story in the Western Nigeria was not different from what was
obtainable in other parts of the country. The experiment to use
marketing unions to undertake trading in consumer goods failed
woefully.
3.2 Organisation and Management of Consumer Cooperative
The responsibility of managing cooperatives in entrusted to the

management committee or board of directors. The members of the
committee are elected through a democratic process of voting. A general
meeting is summoned and notice of the meeting is sent out in good time
to all members informing them of the meeting, the time and place where
the meeting will take place. During the meeting, members are allowed to
discuss all matters concerning the election. Every member qualified to
vote must be allowed to exercise his right without hindrance. It is one
man one vote. The members must also[have the right to be involved in
other decision making such as determining the credit limit of the society
and members appointment to certain categories of staff (top
management).
Furthermore internal democracy is another key part of cooperative

management. This allow members to delegate power to certain officials
and still retain the power to withdraw same through a resolution.
Therefore, to ensure democratic control, the members must have access
to certain books and documents of the society, have the right to
information and be allowed to exercise their control. In addition,
periodic and final accounts and reports should be made available to the
members. The accounts and operations of the societies must be audited
and the report submitted to members.
3.3 Functions of Consumer Cooperatives
The effects of the activities of consumer cooperative had micro

economic effects with socio-political implications. Onah (2000)
believed that on the social aspect the principles of democracy and equity
according to which cooperative societies operated created a sense of
dignity in the members. Irrespective of a member‟s age, sex, race or
social background, irrespective of the volume of business transactions a
37
member undertakes, when members meet in their cooperative meeting to

take a decision on the fortunes of the cooperative, they meet as persons
on the basis of equality, one man one vote. This cooperative principle is
structured to afford every member a sense of pride and importance
which may take the drabness out of his life.
When consumer cooperative operate efficiently, they have the effect of

raising the standard of living of the members/customers, making the
retail trade competitive. Some of the specific functions of consumer
cooperatives are:
1) Ensuring fair and reasonable price for good and services

2) Ensuring the scale of goods with accurate weight and measure
3) Making goods available to a cross section of the community
4) Ensuring the sale of pure and unadulterated goods
5) Helping the government in its distribution policy
6) Protecting consumer interest especially during periods of scarcity
of goods, trade malpractices by traders and uncontrollable
inflation.
7) Helping to educate consumers
8) Ensuring competition.
9) Offering credit sales to their members.
3.3.1 Problems of Consumer Cooperatives
The question often asked is why do consumer cooperatives do better in

advanced economies than in developing countries such as Nigeria.
Yahaya (2001) is of the view that consumer cooperatives in Nigeria
have not done well because her economy is predominantly agriculture
driven. This can be explained in terms of internal and external factors:
 Little need for consumer cooperative

 Low purchasing power
 Higher overhead cost and stiff competition from small retailers
 Unavailability of some cooperatives due to their smallness
 Poor management and organisation
 Lack of supportive loyalty of members and general awareness on
the part of the public
 Over-dependence of societies on private manufacturers and
producers for the supply of goods
 Over-dependence of the country as whole on importation
 Over-dependence on manufactured goods instead of on basic
need items most of which can be produced locally
 Too much government involvement in the affairs of cooperatives
38
CRD 301 MODULES
 Corruption of government cooperative officials and cooperative

officers and employees
 Stiff competition from well managed big stores
 Poor financing.
4.0 CONCLUSION
In this unit we have learnt the history and strength of consumer

cooperative societies in Nigeria. You are now also conversant with the
functions and problems of consumer cooperatives. Discussions on the
organisation and management of consumer cooperatives have helped
thrown more light on how they can be better managed for successful
delivery on their mandate.
5.0 SUMMARY
This unit was focused on the history and strength of consumer

cooperative in Nigeria. The section successfully traced the historical
evolution of consumer cooperatives and also explained the functions
they perform. The unit further discussed the problems confronting them
and also explained how they are organized and managed.
1. Explain the functions of consumer cooperative in Nigeria

2. Describe the challenges confronting consumer cooperative
societies
3. How are consumer cooperatives organized and managed?
Okechukwu, E. (2001). Making Cooperative societies viable through

effective management. Nigeria Journal of Cooperative
Economics and management 1(1) Jan – Jun.
Okeke, E.U (2001). Cooperative Movements: Meaning, Origin and

Ideology. Nigeria Journal of Cooperative Economics and
management 1(1) Jan – Jun.
Onah, R. (2000). Financing cooperatives and fund management.

Contemporary issues in Local Government Administration and
Rural Development in Nigeria. Computer Edge Publishers,
Enugu.
39

Publishers 2nded.

programme. Nigerian Journal of cooperative studies 1(1).
40
CRD 301 MODULES
UNIT 4 ORGANISATION STRUCTURE OF

COOPERATIVE SOCIETIES IN NIGERIA
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 The Consumer Approach
3.2 Wholesale Societies
3.3 Retail Societies
3.4 The Producer Approach
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
It is difficult to have a uniform classification that will be accepted by all

as there is no fixed method of classifying cooperative societies. In this
section therefore, various approaches will be discussed to help enhance
understanding of the topic. Ordinarily, it is possible to classify
cooperative societies as either consumer or producer. This is to enable
us identify members as either providing daily needs or services or helps
members improve their well-being through production.
2.0 OBJECTIVES
At the end of this study session, the readers should be able to:
 Explain what an organisation structure means

 Describe the various types of categorizations
3.0 MAIN CONTENT
3.1 The Consumer Approach
In the consumer approach, two types are prevalent. These are:
i. Goods
ii. Services
Under goods, we have
a) Wholesale societies and;
41
b) Retail societies
3.2 Wholesale Societies
These are tertiary or secondary cooperatives with affiliates. The main

objectives of these type of societies is to pull resources of affiliate
members by buying in bulk from producers. Some in advanced
economies even go as far as importing scarce goods from abroad.
3.3 Retail Societies
These are basically primary cooperatives with individuals as members.

They sell to members in small quantities.
In the category of services, there are cooperatives established by

individuals who wishes to meet their socio-economic need through their
membership of cooperative societies. Some of the services availed to
members include:
a) Housing
b) Telephone
c) Banking
d) Recreation
e) Insurance
3.4 The Producer Approach
This is a type of cooperative where members are producers and not

consumers. Due to the flexible nature of cooperatives, producers
leverage on it to increase their relevance and earning capacity.
Membership of this type of cooperatives is often found in agricultural
driven economies prevalent is developing countries. This is so because
the producers are farmers who farm on fragmented small scale farms
using poor and archaic farming tools such hoes and cutlasses etc. To this
end they form cooperative societies to improve their productivity and
proficiency as was practiced by cocoa farmers in the old western region
of Nigeria.
It is also possible for producers to be manufacturers in non-agricultural

sector or industrial sector with membership cutting across artisans and
industrialists. In essence they use membership of cooperative society to
further their socio-economic well-being.
Under this category are producers in agriculture and non-agricultural

sectors. Under the agriculture sector are:
42
CRD 301 MODULES
a) Supply cooperatives
b) Purchasing cooperatives
c) Marketing cooperatives
d) Credit cooperatives
e) Fishery cooperatives
f) Insurance cooperatives
g) Farming cooperatives
h) Production cooperatives.
Others in non-agricultural sector includes:
a) Industrial cooperatives
b) Artisans cooperatives
c) Credit cooperatives
d) Builders cooperatives
e) Manufacturers cooperatives
However, scholars such as Onuoha suggested that five categorizations

based on economic zones such as:
1. Production
2. Processing
3. Sales
4. Purchasing
5. Services.
Onuoha further argued that all cooperatives can be categorized under

any of the categories listed above. A further breakdown into sub-
divisions. For example in production you have the following:
1. Livestock
2. Fishing
3. Lumbering
4. Mining
Under processing, you have:
1. Mills
2. Gin
3. Diary
4. Butchery
Sales has only marketing; while purchasing has consumers and supply
cooperatives. The last category which service has the following:
1. Credit
43
2. Banking
3. Insurance
4. Housing
5. Transport
6. Health
7. Education
8. Electricity
9. Recreation
Classification criteria – there are about 10 criteria for classifying

cooperative societies. These are by:
1) Legal status
(a) Registered cooperative – liability limited by shares

Liability limited by guarantee
Unlimited liability
(Formal society)
(b) Unregistered cooperative - Unlimited liability
(Informal society)
2) Functions performed
a) Productive cooperative - ordinary productive cooperative
Full productive cooperative
b) Auxiliary cooperative - Multi-purpose cooperative
3) Geographical area of operations
a) Urban
b) Rural
c) Semi-urban
d) Maritime
It is important to emphasize that readers should understand that while

some types of cooperative excel in each of this areas, consumer
cooperative do well in urban areas while Artisans seems to blossom in
the semi-urban areas. Equally, fishery will easily do well in the maritime
sector, while agriculture will excel in the rural areas.
4) Economic function performed

a) Production (i) extractive (farming, mining, fishing, forestry,
livestock etc
(ii) Craft or Artisan cooperative (iii) manufacturing small, medium and
large scale.
b) Processing mills, gins cosmetics etc
c) Sales (i) marketing cooperatives (ii) collective bargaining
cooperative
d) Purchasing of producer‟s goods
44
CRD 301 MODULES
4.0 CONCLUSION
This unit has exposed us to the various categorization of organisation

structure in consume cooperatives. The various categorizations and
criteria made it easier to differentiate and understanding them.
Thesecategorization include producers and consumers approaches. Of
significance is the economic functions performed by each of the
elements identified.
5.0 SUMMARY
In this unit we have discussed organisation structure. The various

approaches of categorization were also highlighted. Indeed several
categorization were identified which covered the consumer and producer
approaches. Also covered were the classification criteria for the
classifications. Wholesales and retails societies were outlined and
discussed.
1. Outline the various categorization of organisation structure

2. Explain the differences between the consumers and producers
approach
3. Discuss the legal status of registered and unregistered cooperative
society
Mutalla, B. (1977). The development of Cooperative Movement and

Banking in Nigeria. The Nigerian Trade Journal July/September
edition
Ogbu, s., &Ottah, J. (2006). Fundamental principles and Economics of

Cooperative business. Homec Global Inc, Abuja
Onuoha, E. (1998). The cooperative identity, Amazing Grace printing

company, Enugu

Publishers 2nded.
45
UNIT 5 ORGANISATION AND MANAGEMENT OF

CONSUMER COOPERATIVES
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 The Nature of Cooperatives
3.2 Management of Cooperatives
3.3 Elements of Cooperative Management
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Cooperative management can be described as the act of combining

ideas, processes, materials, facilities, and people to effectively provide
the services to meet members-owners expectations. It sometimes
demands the creation of a unique business model, which is based on its
peculiar characteristics which have their roots in the template designed
by Rochdale pioneers several years ago. Therefore, the roles of
management in cooperative requires formulating, and executing policies,
operating efficiently, providing goods and services, keeping the
cooperative financially sound so as to adequately meet the objectives for
which it was created.
2.0 OBJECTIVES
 The nature of cooperative societies

 Management of cooperatives
 Elements of cooperative management
 The functions of each organ of the cooperative
3.0 MAIN CONTENT
3.1 The Nature of Cooperatives
Cooperatives were first introduced into Nigeria during the colonial

period. The British colonial masters who introduced cooperatives
already had a good knowledge of its operation through the cooperative
movement and equitable society of Rochdale Pioneers who had its
46
CRD 301 MODULES
origin in Britain in 1844. However, unlike the British whose

cooperatives emerged as a weapon of the peasants such as farmers and
artisans, cooperative societies in Nigeria owe their origin, objectives and
pattern of development to the benevolence of the government. The
colonial government introduced cooperative society into Nigeria as part
of its overall policy of stimulating the production, processing and
exporting of cocoa, palm oil, groundnuts and other crops to Europe.
This historical antecedent Umeabali et al (2014)noted has left the

Nigeria cooperative movement with three essential legacies. First, the
Nigeria cooperative society has remained essentially a government
affairs, wherein the government is often the one initiating, spreading,
mobilizing and organizing the people into cooperatives for their own
benefits and to also help achieve the socio-economic policies of the
government. Second, the cooperative movements has remain largely a
rural affairs with agricultural cooperatives of various types forming the
bulk of registered cooperatives. This situation has tended to a wrong
signal that only the rural farmers need cooperative society. Third, there
seems to be very little interest from the generality of Nigerians in
forming cooperatives based on self-help. To this extent the Nigeria
cooperative movement appears weak and lethargic in pursing self-help,
independence and self-reliance which is the bedrock of cooperative
societies generally.
3.2 Management of Cooperatives
Cooperative management can be described as the act of combining

ideas, processes, materials, facilities, and people to effectively provide
the services to meet members-owners expectations. It sometimes
demands the creation of a unique business model, which is based on its
peculiar characteristics which have their roots in the template designed
by Rochdale pioneers several years ago. Therefore, the roles of
management in cooperative requires formulating, and executing policies,
operating efficiently, providing goods and services, keeping the
cooperative financially sound so as to adequately meet the objectives for
which it was created.
Meanwhile, managing a cooperative remains a challenging undertaking.

This is because it goes beyond just managing of resources and business
operations as is common with other types of business, but includes
dealing with challenges arising from cooperative unique characteristics.
In cooperatives, members are both owners and also patron, consequently
special relationships and problems often arise with respect to
responsibilities of the members and board of directors.
47
To successfully manage a cooperative society, the following skills and

competences must be acquired by a cooperative manager that desired to
be effective on the job.
1. Ability to adjust decision making process to suit a business where

owners are also patrons
2. Ability to deal with complex issues of equitable treatment of
owners – patrons
3. Ability to work in a service oriented organisation
4. Competencies in appreciating the managerial implications of
business ownership and control peculiar to cooperative.
3.3 Elements of Cooperative Management
Generally speaking, cooperative management is carried out by three

major components. These are:
a. Member
b. Board of Directors
c. Hired Management
A. Members
These are individual/group who have joined the cooperative right from
inception or were admitted after the cooperative was registered.
Members have interest and responsibilities in the broad management of
the cooperative. They are both the owners and patrons and responsible
for its operations.
Each members is required to gives its full support and cooperation and
offer continuous loyalty by living up to his membership agreement.
Members are also expected to show concern for the management of the
cooperative and its policies.
Some of the major management responsibilities of members are:
i. Adopt and amend bye-laws that cover all the control and rules of
operations of the cooperative
ii. Select competent board of directors (who must fairly represent
the interest of the management
iii. Study major issues and cast votes (eg adoption of long range
plans, major expansions in facilities, change in capital structure,
adoption of marketing contracts etc)
iv. Required the management to make complete, accurate and
detailed accounts of each member‟s business and to make prompt
returns
48
CRD 301 MODULES
v. Examine or request an audit of the books, records and property of

the cooperative.
In order for the members to exercise their rights, they must take action
in properly called meetings. The bye-laws should specify the procedure
of calling meetings. The annual general meeting, or a special meeting
called meeting is regarded as the proper time for legislation and policy
making by members.
B. The Board of Directors (Executive/Management Committee)
This refers to a group of elected members of a cooperative who are

vested with all the corporate powers other than those deliberately
conferred on members. Their powers and responsibilities are set forth in
the cooperative bye laws. Directors (Exco members) occupy a position
of trust, responsibility and liability. They are subject to legal actions
resulting from gross negligence, fraud and dishonesty. It is therefore
very important they are good leaders and have a philosophy and purpose
in sync with that of the cooperative. Their major functions are:
i. Establishment of business objectives and policies which are in

line with the bye laws and programmes adopted by the
membership
ii. Function as trustees for the membership in safeguarding the
assets in the cooperative
iii. Adopt long range plans
iv. Employ competent managers and other officers and delegate
authority and responsibilities to them
v. Pressure the cooperative character of the organisation
vi. Control the local operations of the cooperative in a business-like
manner
vii. Attend board meetings regularly
viii. Distribute net margins and or savings made by the cooperative
equitably
ix. Provide tools for effective communications
x. Employ qualified auditors to make an independent audit
xi. Provide indiscriminate leadership
xii. Patronize the cooperative
xiii. Keep informed (attend meetings, read magazines and papers,
study reports, observe compilation, inspect cooperative‟s asset
etc)
Meanwhile, the following considerations are important when electing

members of the Board (Executive Committee).
49
a) Personal characteristics: This talks about integrity and the

strength of character to resist undue pressure, good inter-personal
relation, fair-mindedness and good judgement, loyalty, ability to
communicate and express ideas clearly and emotional stability.
b) Business characteristics: Entrepreneurial skills which is
necessary to manage the business successfully, knowledge of
cooperative business, leadership abilities, knowledge and
understanding of finance and ability to relate information to
affairs of the business.
In essence, to have an effective management, the board of
directors of a cooperative must be honest, selfless, level-headed,
progressive, punctual, innovative, knowledgeable and above all
respectable.
c) Directing: This refers to the day-to-day implementation of
detailed activities. It is the process of instructing
employees/members on what to do and when to do it. Basically
directing involves assigning duties, delegating the necessary
authorities, creating the desire for success, setting targets to be
achieved and ensuring that the job is executed perfectly.
d) Coordinating: This is basically a communication function. It is
fitting together all the components of an organisation/corporation
such as people, facilities and other resources to achieve a
seamless operation.
e) Controlling: This consists of checklist of expected outcomes to
ensure that plans are being followed as intended. Control is not
primarily to prevent certain activities from being carried out, but
to serve as yard-stick for measuring the progress of the business.
Therefore, control is a complementary function to other functions
of the board of directors (or a manager).
C. The Cooperative Manager (Hired management)
a) He must know his job. In other words he must grounded in

knowledge of his job. He must have the capacity to adjust
decision-making to a business where patrons or suppliers are also
members and be able to deal with complex issues to achieve an
equitable treatment of owners/patrons
b) He must be a good administrator – this is to say he must
understand various efficient methods of doing the job; delegate
responsibilities while maintaining authority; work in a service
oriented organisation.
c) Must have the education and experience that go with the job
d) Must have thorough understanding of the operations of
cooperatives. Understand the purpose of the business/service,
understand his position between the Board and the members;
promote the cooperative to non-members.
50
CRD 301 MODULES
e) Must have the ability to go along with the clients, Board of

Directors, supervisory committees, members, other groups and
other individuals or stakeholders connected with the cooperative
f) Must realize the managerial implications of business ownership
and control techniques unique to cooperatives.
4.0 CONCLUSION
This unit has explained the nature, management and elements of

consumer cooperative management. Indeed the management of
cooperative is key determinant of whether consumer cooperative will be
successful. It is due to this imperative that the functions of each organ of
the cooperative was outlined and discussed.
5.0 SUMMARY
The unit discussed the nature, management and key elements of

cooperative societies. It highlighted their functions to help us understand
the role each one of them is expected to play. The skills and
competences expected from those who which to be elected officials of
the cooperative or manage its affairs were discussed in detail.
1. Outline and discuss the elements of consumer cooperative

2. Enumerate and explain the qualities expected from those to be
elected into the board of cooperative societies
3. Clearly explain the major responsibilities of members of a
cooperative society.
Adeyeye, A. (1978). Cooperative Movement in Nigeria, yesterday, today

and tomorrow, Ibadan, University Press

Okeke, E.U (2001). Cooperative Movements: Meaning, Origin and

Ideology. Nigeria Journal of Cooperative Economics and
management 1(1) Jan – Jun

Publishers 2nded.
51
MODULE 3
Unit 1 Selling, Financing, Pricing and Salesmanship

Unit 2 Book-Keeping in a Consumer Cooperatives
Unit 3 Distribution of Surplus
Unit 4 General Meetings: Committee Meetings, Functions of the
General Manager
Unit 5 Duties of Secondary and Apex Consumer Societies. Case
Study Guides to Case Study for Examination Purposes
And Class Discussions
UNIT 1 SELLING, FINANCING, PRICING AND

SALESMANSHIP
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Pricing
3.2 Salesmanship
3.3 Selling
3.3.1 Selling Process
3.4 Financing
3.5 Sources and Methods of Cooperative Financing
3.6 Share Capital
3.6.1 Capital reserve
3.6.2 Borrowed Capital
3.7 Trade Credits
4.0 Conclusion
5.0 Summary
1.0 INTODUCTION
In this unit we are going to look at the supply problems display, selling,
stock-keeping, financing, pricing and salesmanship in the context
cooperative organisation.
2.0 OBJECTIVES
52
CRD 301 MODULES
 Explain the meaning of supply problems display, selling, stock-

keeping, financing, pricing and salesmanship.
 Understand how this variables operate in a cooperative setting
3.0 MAIN CONTENT
3.1 Pricing
Price is a critical factor in ay economic activity. The importance of price

has always been recognized. In micro economic theory or price theory,
is essentially devoted to the study of those factors that determine what
price to charge for a good or service.
Pricing Agbonifor, Ogwo, Nnolim and Nkamnebe (2007) said can be

define as “the process of price determination or price fixing”. Pricing is
a key activity in any free enterprise economy. Pricing is important to
both the seller and the buyer of a product. To a seller price is very
important in several interrelated ways. For example the price of a
product determines what quantity can be sold at given time. Similarly,
the price of a product helps to determine the revenue accruing to the
seller. Furthermore, price has an effect on the profit or loss margin of the
seller. In essence the higher the price the higher the profit margin, given
that all other things remain equal.
3.2 Salesmanship
Salesmanship is a key skill adopted in personal selling. In other words

Salesmanship is the tactics of convincing a buyer to buy a product or
service. According to Ifezue (1999) “Salesmanship is the effort of the
sellers to provide the buyers with important product information aimed
at motivating and persuading them to take favourable buying decisions
concerning a product. Salesmanship involves persuading people to buy
what you are selling by making them wanting it and helping them make
up their minds as fast as possible. A salesman must have the ability to
explain a product features adequately to buyers by focusing on the
product benefits to the buyer. Salesmanship can be executed through the
application of selling techniques and advertising. However, it must be
pointed out that while advertising brings buyers to the product, personal
selling brings the products to the buyers.
A salesman man have the following qualities
i. Education
ii. Honesty
iii. Good appearance
iv. Good temperament
53
v. Loyalty
vi. Initiative
vii. Commitment
3.3 Selling
This refers to those activities directed majorly at immediate exchange. It

is the responsibility of the sales personnel to ensure that the company‟s
products are sold.
3.3.1 Selling Process
The personal selling process represents the various stages a salesman

has to go through before actualizing the sale of his goods. The number
of stages a sales person passes through in selling his products depends
on the nature of the product and the selling situation that the sales person
is being confronted with. Several marketing scholars have come up with
various versions of personal selling process. However, for the purpose
of this module, we shall list the stages of personal selling adopted by
(Eniola & Olutade, 2013). The processes which must be followed in the
order listed are:
1. Prospecting
2. Pre-approach
3. Approach
4. Presentation demonstration
5. Objection (NO/Acceptance (YES)
6. Closing sales
7. Follow-up
3.4 Financing
Finance is very critical to any organisation, cooperative societies

inclusive. There is no gainsaying that without financial capability and by
extension supported by effective financial management the programmes
and policies of the cooperative may not be able to be implemented.
Adequate financing of a cooperative business ensures and guarantees the

continuity of the enterprise. It also helps the organisation to plan ahead
in investing in other areas such as stocks, in human development and
other viable business interest.
3.5 Sources and Methods of Cooperative Financing
Cooperative societies need funds or capital to finance their fixed and

capital assets, pay for services and other commitments. Lack of funds
54
CRD 301 MODULES
has been identified as a major constraint of cooperative business in most

developing countries including Nigeria.
There are different sources of finance available to cooperative societies.

These sources can be classified as owned and borrowed capital.
Owned capital this is sourced from within the cooperative organisation
while borrowed capital is from outside the cooperative or third party.
Amahalu, (2003) noted that the ability of a cooperative organisation to
meet its long term and short term capital requirements is a function of
the extent to which it can raise money from other sources. The sources
cooperatives often turned to for financial help vary from country to
country. For example Rochdale Pioneers believed in accumulating
sufficient share capital while Raiffeisen credit societies depends
exclusively on borrowed funds and had no shares at all Onuoha (1996).
Owned capital is made up of share capital otherwise known as Equity or
risk capital and capital reserves. Owned capital is that part of a
cooperative‟s financial resources which remains in the society and is not
repayable at any future date with the exception of the share capital
contributions which is repayable on member‟s withdrawal or expulsion
(Helm, 1998)
.
3.6 Share Capital
This is the money contributed by members of the cooperative when they

join the society and by any subsequent payment. Share capital enables
the cooperative to be functional. In Britain, share capital is a prerequisite
for membership.
3.6.1 Capital Reserve
This is an example of self-finance or also called common or social

capital. It is the fund created and maintained within the cooperative
business enterprise for different reasons but essentially as a buffer
against unforeseen circumstances. Reserves can either statutory or
voluntary. Statutory reserve are backed by relevant cooperative law. It is
compulsory whether members like it or not. On the other hand voluntary
reserve derives its existence from the free will of members who maintain
them as a result of their conviction as to the advantages and its
necessity. Voluntary reserve is an addition to the statutory reserves and
it is created after the statutory reserves are met.
3.6.2 Borrowed Capital
This is sourced from outside the cooperative such as from a third party.
The need for it often arises due to the limitations of share capital and
reserve capital. It does not remain permanently in the cooperative and it
is repayable at a pre-determined interest and date.
55
3.7 Trade Credits
This is an option whereby instead of a cooperative paying cash for the

goods and materials procured, it gets credit facility form her customers.
It is an arrangement that allows a cooperative delay payment until future
date.
4.0 CONSLUSION
Selling, salesmanship, pricing and financing as are key ingredients for a

cooperative have been discussed. It is important for cooperative to
continually improve on them so as to better serve her members.
5.0 SUMMARY
Various key elements of cooperative such as selling, pricing,

salesmanship and financing have been discussed. For example the unit
outlined the various financing options opened to a cooperative
organisation which it can take advantage of to help it be successful.
Understanding of pricing mechanism is also noted. Salesmanship and
selling are other key areas which every cooperative should pay attention
to.
1. Write short notes on salesmanship, pricing and financing

2. Outline and discuss sources of financing available to a
cooperative
3. List five qualities of a salesman.
Agbonifoh, B., Ogwo, E., Nnolim, D., & Nkamnebe, A. (2007).

Marketing in Nigeria: Concepts, Principles & Decisions,
nd
2 ed, Afritowers Books Benin-City.
Amahalu, A. (2003). Marketing cooperatives for Nigeria Tertiary

Institutions, I.T.C Publishers, Enugu
Eniola, V. &Olutade E. (2013). Principles of Selling. Lagos Philglad

Publishers
Helm, C. (1998). Economics of Cooperative Enterprises, London.
Onuoha, E. (1996). How to organize a viable cooperative society, John

Best Publishers, Enugu
56
CRD 301 MODULES
UNIT 2 BOOK-KEEPING IN A CONSUMER

COOPERATIVES
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Legal provisions Relating to Accounting in Cooperative
Business
3.2 Level of Accounting in Cooperative Societies
3.3 Accounting Books and Records Kept by Cooperative
Societies
3.4 Importance of Accounting to Cooperative Societies
3.5 Nature of Cooperative Audit
3.6 Cooperative Audit Compared to Audit of other Business
Organisations
4.0 Conclusion
5.0 Summary
1.0 INTODUCTION
Book-keeping in cooperative society is statutory. Rule 8 of the

cooperative laws, rules and bye-laws mandates all cooperative
businesses to keep accounts of their transactions and to maintain such
books as prescribed by the Director of cooperative or Chief Registrar.
2.0 OBJECTIVES
At the end of this unit, the reader should be able to:
 The importance of book-keeping in consumer cooperative

 The legal requirement of book-keeping in cooperatives
 The various types of accounting records in use in a consumer
cooperative
 The benefits of conducting audit in cooperative societies.
3.0 MAIN CONTENT
3.1 Legal provisions Relating to Accounting in Cooperative

Business
Furthermore, rule 15 also stipulates that annual accounts are expected to

be prepared by the cooperative societies in order to reflect the trading
57
operations, income and expenditure or the profit and loss accounts, the
balance sheet and other financial information as may be required by the
Chief Registrar. The fore-going has indicated the importance the
governing law placed on cooperative societies to keep proper and up to
date accounting books. Adeleye (1976) observed that the primary
objective of cooperative accounting system is not for profit
measurement, but assessment and accountability of the resources
available for cooperative activities.
3.2 Level of Accounting in Cooperative Societies
The level of accounting in cooperative organisations depends on the

type and volume of businesses for which the organisation is involved.
For example in a credit cooperative society whose functions is usually to
give loans to members, collect savings etc. The accounting level is that
of income and expenditure accounts and balance sheet. These accounts
deal only with nominal items involve expenses incurred and income
earned.
Equally, in a produce marketing organisations whose functions involve

bulk buying and selling of members products, the accounting level is
that of trading, profit and loss accounts and balance sheet. Here, the
profit and loss accounts will contain other expenses and income which
are not reflected in the trading account during the accounting period and
also contains nominal charges such as depreciation and provision for
depreciation. This is also applicable to consumer organisation.
In a manufacturing cooperatives, there are three sets of accounts plus the

balance sheet. These are manufacturing, trading and profit and loss
accounts. Similarly, in a multi-purpose cooperative organisations, which
are involved in several activities as their functions, there is need to
segregate different accounts into different activities in order to judge the
trading or operational performance of each activity. According to Nnadi
(1991), “accounting is a language used to communicate financial and
other information to all the interested parties. Thus business enterprises
use accounting to plan, control their business activities and to report to
owners, creditors, labour unions and government agencies”. To this end
the accounting information contained in the arranged system according
to the nature of each type of cooperative organisation helpsmembers and
non-members to make sound economic decisions and make predictions.
Meanwhile, Nwokedi (1985) observed that although cooperatives
societies are not created to make profit in the business sense, however, it
is important they do not depend wholly on the funds from contribute by
members, but should be organized in such a way that their activities will
generate profit for the their owners. To this end, it is helpful there is an
accounting system that provide members the information that will help
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CRD 301 MODULES
them evaluate the business success in making profit like other

businesses.
Arising from the foregoing, Adeyeye (1976) suggested that financial

reporting for cooperatives should:
1) Cooperative reports should assist members in fulfilling their duty

to be accountable to each other and should enable users to assess
that accountability. Cooperative accounting should assist in
evaluating the operating results of the cooperative entity for the
year.
2) They should assist users in assessing the level of services that can
be provided by the cooperative entity and its ability to meet its
obligations when due.
3.3 Accounting Books and Records Kept by Cooperative Societies
Berko (1991), believed cooperative accounting systems have several

unique characteristics which are based on the nature of the business they
do. To meet their objectives, various types of accounting records are
operated to record their transactions for easy understanding,
interpretation of the data captured therein. The books include:
1) Cash receipt bool

2) Produce receipt book
3) Payment vouchers
4) Cash book
5) Monthly analysis book
6) General ledger
7) Personal ledger
8) Journal book
9) Purchase book
10) Sales book
11) Loan bonds
12) Loan register
13) Members passbook
14) Patronage register
These records help the cooperative society to evaluate their economic

resources as a business concern and to members as owners in decision
making.
3.4 Importance of Accounting to Cooperative Societies
Accounting play an important role as a process of identifying, measuring

and communicating economic information expressed in terms of money,
59
to enhance better judgement and decision by users of the information.

The relevance of accounting cooperative societies can be seen in the
impact it has on cooperative business. Conducting a business requires
several transactions and every transaction affects the financial position
of the business. Some of the usefulness of cooperative accounting are:
1) In cooperative business where loans are granted to members,

there is need to use accounting to value loans given to members
especially those issued in kind as cash. There is need to
determine the amount of loan issued, amount repaid and the
outstanding balance at any given time.
2) The monetary value of produce sold or marketed in a produce
marketing cooperative can be ascertained thorough accounting.
Similarly, in a processing cooperatives, the importance of
accounting is manifestly shown when the cooperative measures
and value paddy rice from members for processing or where it
buys for resale. It is through cooperative accounting that we can
determine the income generated from sales and expenses
incurred, thereby making it possible for the cooperative to adjust
and re-adjust for efficiency.
3) In consumer cooperative, accounting helps to determine the
quality and value of goods bought for resale. Stock books are
maintained and all incidental cost recorded in order to know how
the business of the cooperative has been fairing and the issues
that need attention, if necessary as it relates to the business.
Equally, where members are expected to receive patronage rebate
from profit made, there is need to maintain records of purchases
for easy patronage payment.
4) Cooperative organisations are expected to operate at a margin or
surplus. To determine if this outcome has been achieved is
dependent on well the accounting details of the cooperative are
articulated.
5) It helps to determine the appropriation of profit or disposal of
surplus. Indeed the importance of this cannot be understated
because cooperatives are established to ensure equity and comply
with statutory requirements. In preparing accounts of cooperative
organisation, provision of cooperative law with respect to reserve
funds stipulate that 25% of the surplus of the cooperative is
transferred to the reserve fund account. To comply with the
provision, it is important to keep proper accounting details of the
cooperative activities because such funds can be invested
elsewhere to generate income for the organisation.
6) Activities of the cooperatives are under the watchful eyes of the
Chief Registrar of cooperative societies who is a representative of
the government. To ensure effective control of this functions,
annual accounts prepared by cooperatives are sent to his office
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CRD 301 MODULES
for evaluation and approval. Thus, the Chief Registrar, obtains

accounting information about the cooperative. The financial
details sent to the Chief Registrar helps to evaluate the
performance of the societies.
7) Statistical information such as information on the shares, loans,
working capital help management to plan, to attract more
members to the cooperative and aid in national planning. All
these can be provided or made available if proper account are
kept by cooperative societies.
8) Cooperative accounting helps to ensure accountability of the
management committee to the shareholders/members and to
others who may have some contacts with the cooperatives.
However, where a cooperative organisation fails to keep financial

accounts of its activities section 40 of the cooperative law empowers the
Registrar to audit or cause to be audited by some persons authorized by
him by general or special order in writing the accounts of every
registered society at least once in every year.
Auditing Aguolu (1998) says is the independent examination of the

financial statements of an organisation with a view to expressing an
opinion as to whether these statements give a true and accurate view of
the financial transaction of the organisation in consonance with the
relevant laws.
3.5 Nature of Cooperative Audit
The primary focus of audit as postulated by Okoye (1998) is to examine

all available and relevant evidence that relates to financial statement
with the intent of reporting whether the said accounts give the required
information and in the manner prescribed by law. In cooperative
societies, the nature of audit work is guided by cooperative law 40(2).
The section states that audit of cooperatives activities shall include an
examination of any overdue debt and valuation of the assets and
liabilities of the registered society. Similarly, section 40 sub-section 3 of
the law also stipulates that the Chief Registrar and every other person
appointed to audit the accounts of a society shall have power to:
a) Summon at the time of the audit any officer, agent, servant or

member of the society whom he has reason to believe can provide
material information in regard to any transaction of a society or
the management of its affairs; or
b) Acquire the production of any book or document relating to the
affairs of, or any cash or securities belonging to the society by the
officer, agent, servant or member in possession of such boo,
document, cash or securities.
61
Therefore, any officer, servant or member of a registered society

willfully, neglecting or refusing to do any act of provide any
information, or providing information known to be false or without
reasonable excuse for disobeying any summons, requisition or order
under subsection (3) shall be guilty of an offence punishable on
conviction to a fine or imprisonment.
The nature of cooperative audit is conventional and is performed by an

independent statutory authority directly attached to the Chief Registrar
of the cooperatives. In recognition of this fact, the cooperative law gives
a special status to the auditor to guarantee his independence and
performance. Cooperative societies rules38(2) stipulates that any
contravention reported by the auditor shall be notify to the Chief
Registrar of the cooperative organisation concerned and such audit
report or notification shall be considered at the meeting of the general
management committee after its receipt and read out at the next general
meeting of the cooperative society.
3.6 Cooperative Audit Compared to Audit of other Business

Organisations
The appointment of cooperative auditor is governed by section 40 of the

cooperative which empower the Chief Registrar of the cooperative
organisations to audit and report on the accounts and events of
cooperative businesses which are entrusted to him to supervise.
However, in other statutory audits, the appointment of an auditor of a
limited liability company is governed by section 357 of the Companies
and Allied Matters Act of 1990 (CAMA) which provides as follows:
a) Every company shall at each annual general meeting (AGM)

appoint an auditor or auditors to audit the financial statements of
the company and to hold office from the conclusion of that
annual general meeting until the conclusion of the next meeting
b) At any annual general meeting, a retiring auditor, however,
appointed, shall be reappointed without any resolution being
passed.
On the qualification of the person to be appointed as auditor,

cooperative law does not specified the qualification necessary to be so
appointed. It only say that the Chief Registrar or any person authorized
by him by a general or special order in writing shall audit the accounts at
least once in every year. Therefore, for a person to be qualify to be
appointed by the Chief Registrar such an appointee shall not be a staff in
the Chief Registrar‟s office. In effect the law provides that a person shall
not be qualify to be appointed as an auditor of a company unless he is a
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CRD 301 MODULES
member of a body of Accountants in Nigeria established by an act or

decree.
With respect to the powers of the auditor Law 41(1) stipulates that the
Registrar and every other person appointed by him on his behalf under
the provision of this section shall at all reasonable times have access to
all the books, accounts, documents and securities of a registered society
and shall be entitles to inspect the cash in hand and every officer of the
society is required to provide such information as regards to any
transactions and workings of the society as the person undertaking such
inspection may require. But in the case of a limited liability company,
the auditors have some duties assigned to them under the Companies
and Allied Matters Act (1990).He is required to make a true and fair
report of the financial activities. If he is negligent in any way and fails to
discover that the financial statements contain matters that are untrue or
do not fairly represent the position, then he may be legally required to
make good any losses suffered by persons who have acted in reliance to
the false statements. To ensure the proper performance of its duties, the
act confers on the auditor extensive rights and protection. However, the
act does not specifically confer on the auditor any powers except to the
extent that he may include any matters in respect of which he has doubts
in his report.
With respect to report, cooperative auditors report to the Chief Registrar

at the end of their assignments, while the auditors of other business
organisations report to the Board of Directors. Section 359(3) of CAMA
1990 provides that every public liability company shall establish an
audit committee comprising an equal number of Directors and
representatives of the shareholders of the company subject to a
maximum number of six members. The committee will examine the
auditor‟s report and make recommendations thereon to the AGM as he
thinks appropriate for consideration.
4.0 CONCLUSION
Since cooperatives are not intended to make profit, but a surplus, they
however, lack the taxing capacity of a government. Taxing requires that
the revenues of a cooperative at least equals its expenses over the long
run, hence the need for cooperative accounting helps members to
evaluate the management performance while he society as whole use it
for outside business contacts. Thus, there is need to use it to help
improve the predictive power in cooperative business by giving a picture
of the financial condition and performance of the cooperative over time
and often reveals the direction of future trend. To this end cooperatives,
as an enduring group of people or persons who interact in a particular
63
ways towards fulfilling the basic institutional requirement needs by

accounting and auditing for its sustenance and improvements.
5.0 SUMMARY
We have discussed the legal requirement of book-keeping in

cooperatives, outlined the various types of records expected to be kept
and the importance of keeping the records. The unit also explained the
nature of audit to be carried out and highlighted the powers and
procedures of appointing an auditor.
1. Outline the types records kept by a cooperative society

2. What is the importance of keeping records to a cooperative
society
3. What are the powers of an auditors in cooperative setting
7.0 REFERENCES/FURTHER READING
Adeyeye, S.O. (1976). Cooperative movement in Nigeria today and

tomorrow. Daily times, July, p 11
Aguolu, S. (1998). Fundamentals of auditing, Nimo: Rex Charles and

Patrick Ltd
Berko, S. Y. (1991). Dynamics of traditional savings and credit

associations in rural development. Unpublished
monograph, Series No 1991/1, Centre for Rural Development
and Cooperatives, University of Nigeria, Nsukka.
Companies and Allied Matters Act, 1990
Nnadi, G.S. (1991). Accountancy profession and the Society. The

Nigerian Accountant, July/Sept 24
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CRD 301 MODULES
UNIT 3 DISTRIBUTION OF SURPLUS
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Surplus can be Created in Cooperatives from both
Member and Non-Members
3.2 Payment of Dividends on Members‟ Share Capital
3.3 Maintaining Reserve Fund
3.4 Temporary “Deposit” Account for Non-Members
3.5 Patronage Refund (Rebate)
3.6 Equitable Distribution of Surplus
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Although cooperative societies are not for profit making, it however,

accumulate surpluses from its transactions. These accumulated amount
is often shared amongst whose transactions with cooperative has
resulted in the surpluses. The equitable distribution of surpluses can be
possible through various methods. It could be by investing the money
back into cooperative activities or through providing common services
to members or by sharing the money for members in proportion to the
volume of their transactions.
2.0 OBJECTIVES
At the end of this unit, the student should be able to:
 Understand how surpluses are created

 Explain different ways of distributing surpluses
 The legal backing for the distribution of surpluses.
3.0 MAIN CONTENT
3.1 Surplus can be Created in Cooperatives from both Member

and Non-Members
The non-members‟ surplus can be thus:
a) Payment of dividend on members share capital
65
b) Maintaining reserve funds

c) Maintaining temporary “deposit” accounts for the non-members
as preclude to membership
Furthermore, there are three different possibilities of how funds can be

appropriated via maintenance of reserves, payment of dividends on
share and patronage refunds.
3.2 Payment of Dividends on Members’ Share Capital
Since consumer cooperative involves itself in business means that it has

to bear the risk which goes with operating a business. The share capital
has to bear this risks arising thereof. It is therefore suggested that this
share capital be compensated from the surpluses arising from the
business.
3.3 Maintaining Reserve Fund
In the opinion of Chukwu (1990), “reserves are usually indivisible social

capital unlike the share capital”. Their contributions result in improved
and enhanced cooperative effect. This means it is retained continuously
in the service of all.
3.4 Temporary “Deposit” Account for Non-Members
This is an advantage for practicing non-member business transaction. It

represents a painless way of raising the initial share capital payment for
the prospective member in case he later joins the society.
3.5 Patronage Refund (Rebate)
The disbursement of a rebate is according to the magnitude of patronage

of the business by the members. This is linked to turnover.
3.6 Equitable Distribution of Surplus
This implies that even though the cooperative is not a profit making
business, it is expected that in its operations or transactions there will be
some surpluses. In such a situation what is earned through cooperative
effort should be equitably distributed among members through whose
efforts the surplus was made possible. The equitable distribution of
surplus could be achieved in a cooperative through several methods. It
could be done through investing the money back into cooperative
activities of the society or through providing some common services
which will be beneficial to the entire membership and community at
large.
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CRD 301 MODULES
Meanwhile, section 34 of the Nigerian cooperative societies act, chapter

98 of the laws of the federation of Nigeria defined the criteria for
distribution of the surplus as:
1. As a registered society shall not pay a dividend or bonus or

otherwise distribute any part of its net surplus except as provided
under this decree and until the proposed payment or distribution
has been approved by the committee of the society.
2. At least one-fourth of the net profit of registered society as
ascertain by the audit report shall be paid into a fund to be called
the “reserve fund” which shall be applied as specified in this
decree but the Director may in case of any registered society of
limited liability grant from time to time exemptions from further
contributions to the reserve fund or reduce the rate thereof and
may at any time revoke the exemption or reduction.
3. A registered society may, with the approval of the Director, and
after one-fourth of the net profit in any year has been paid into a
reserve fund, contribute an amount not exceeding 10% of the
remainder of the net surplus to an education fund.
4. In the case of a society of unlimited liability, no distribution of
the net surplus shall be made without the approval of the Minister
or Commissioner as the case may be.
In practice, the formula for the distribution of the surplus is as follows:

25% - to the reserve fund 10% - to the development of common services
beneficial to all members. Not more than 5% as patronage refund and
not more than 5% as honorarium to the management committee
members of the society.
The reserve fund belongs to the cooperative society as an entity and the
purposeis to boost the society‟s capital base. It is expected that when the
capital base is improved, the society would be in a position to provide
micro services to the members or carry out more lines of business
operations. No individual member of the cooperative has a claim over
the reserved fund. The 10% is usually used to provide education to the
members, employees and the general public about the cooperative. The
members are given the education to create awareness that could lead to
active participation in business. While the purpose of educating the
employees is to enlightened them and encourage to be more dedicated to
their duties towards the cooperative.
Equitable distribution can be undertaken by a system of distribution

according to the contribution of each memberto the business activities of
the society at a given time period. However, the implication of this
principle is that even if it has been agreed that services to the members
should be provided in such a way that it can yield dividend for the
67
society, such of course should be equitably divided. This will lead to

reduction of economic disparities among members and also curb vested
interest. Therefore, the surplus should in such a way that it is not added
to the savings of members. Members should not expect profits in a
manner that is contrary to the basic cooperative philosophy of individual
equality of members. Hence this principle distinguishes a cooperative
society from other business organisations.
4.0 CONCLUSION
Distribution of surpluses is a major benefit to members of a cooperative.

It serves to encourage members to increase their volume of transaction
since surplus sharing is dependent on the amount of purchase a member
has made. It is important to adhere to the legal requirement stipulated for
its sharing and ensure it is equitably distributed
5.0 SUMMARY
The unit discussed the legal requirement of surplus distribution in a

cooperative setting and the different recognized criteria for sharing
surpluses. The unit made it clear that cooperatives are not for profit
making, hence members should not see it as a right that surpluses must
share at all times.
1. Outline and explain the criteria for sharing surpluses in a

cooperative society
2. Write short notes on patronage refund and reserved fund


Marburg


Publishers 2nded.
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CRD 301 MODULES
UNIT 4 GENERAL MEETINGS: COMMITTEE MEETINGS,

FUNCTIONS OF THE GENERAL MANAGER
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Organs of the Cooperative Organisation
3.2 General Meeting
3.3 Types of General Meeting
3.4 Quorum at General Meeting
3.5 Officers of the meeting and minutes Book
3.6 Minutes
3.7 Functions of the General Meeting
3.8 Management Committee
3.9 Functions of Management Committee
3.10 Committee Meeting
3.11 Subcommittees
3.12 The Council of Inspection or Scrutinizer
3.13 Secretary/Manager
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Cooperative societies are organisations set up to achieve a purpose for

the benefit of its members. To achieve this purpose it requires the
creation of specific organs that will enable it function and achieve its
goals and objectives.
2.0 OBJECTIVES
After studying this unit, the reader should be able to:
 understand the functions of a general manager and committee

meetings in a cooperative setting
 identify the major organs of cooperative organisations
 types of meetings and their functions
69
3.0 MAIN CONTENT
3.1 Organs of the Cooperative Organisation
The major organs of cooperative societies are:
a) General meeting
b) The Management Committee
c) The Council of inspection or scrutinizer
d) The secretary manager.
3.2 General Meeting
The general meeting is composed of all members of a cooperative

society. It is the supreme organ of any cooperative society.
The cooperative law in Nigeria accords the supremacy of the general

meeting in the following zones/regions.
1. Section 14 of the Eastern Nigeria Cooperative Societies rules

2. Section 16 of the Western Nigeria Cooperative Societies
regulations
3. Section 20 of the Northern Nigeria Cooperative Societies
regulations
The law in itself does not regulate the activities of the General Meeting
but empowers the rules and bye-laws to regulate the general meeting.
a) Procedures at General Meeting – Okonkwo, J.P believes that

the success or failure of the general meeting depends largely on
the effectiveness and efficiency of the society‟s secretary. For
example if a secretary is diligent h e/she will make sure that the
procedures of the meeting are clearly articulated by preparing an
agenda before the meeting. An agenda for a General Meeting can
read as follows:
 Reading and adoption of minutes of last meeting
 Matters arising from the minutes
 Finance: this includes payment of dues, entrance fee,
shares and thrift savings, loan request consideration and
refund of existing loans
 A.O.B (any other business) or other matters arising.
b) Voting at General Meeting – One of the cardinal principle of
cooperative society is democratic management and control which
emphasize one man one vote irrespective of shareholding.
However, this principle holds largely only in primary
cooperatives because when it comes secondary and tertiary
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CRD 301 MODULES
cooperatives the situation changes. This so because it makes

better sense that those who contribute more funds and run a
greater risk and have more at stake should have more say in
decision making. Therefore, in secondary and tertiary
cooperatives, they practice „proportional voting‟. That is your
vote is proportional to your share capital holding.
3.3 Types of General Meeting
There are four types of general meetings. They are:
i. Inaugural Meeting - This first general meeting to be held

immediately after registration
ii. The annual general meeting – As the name suggests, it takes
place once in a year.
iii. The ordinary general meeting – This is the usual meeting that is
held at regular intervals
iv. Special or Emergency meeting – This type of meeting is called
when there is an emergency or a need has arose that require an
urgent action of the cooperative. It can be called by:
(a) Management committee of the cooperative

(b) The Registrar/Director
(c) Scrutinizers or council of inspectors
(d) At least one-fifth of the members or delegates or 20
members or delegates whichever is less must be present to
form a quorum. The cooperative regulates the functions of
each of the meeting. Major functions of the meeting can
only be implemented by the Annual General Meeting.
3.4 Quorum at General Meeting
Quorum means the minimum number of members who must be present

before a meeting can commence and take binding decisions on behalf of
members present or absent. Okonkwo J.P suggested that the quorum for
a general meeting should be one quarter of members, but where the total
number of members exceeds 120, thirty members shall form a quorum
of members present shall be deemed to have formed a quorum provided
that at least four days‟ notice of such meeting was given by the
Registrar. This power of exemption of quorum given to the Registrar is
contained in:
i) Eastern Nigeria cooperative society‟s law and rules 17(2)

ii) Northern Nigeria cooperative regulations section 26
iii) Western Nigeria cooperative societies‟ law and rules section 19.
71
However, if after an hour there are no enough members present to form

a quorum in a meeting, the meeting shall be cancelled and another
meeting will be fixed for same day, same time and same venue. A notice
to this effect shall be circulated or pasted within 24 hours and if at the
next meeting a quorum is no formed within one hour from the time
stipulated for the meeting, the members present shall form a quorum and
any decision taken shall be binding.
3.5 Officers of the meeting and minutes Book
The Officers of the meeting shall include:

1) President and Vice President – The President presides in all
meeting or in his absence his absence the vice presides. However,
in the absence of the President and his Vice, the meeting has the
right to appoint any member or officer to act on their behalf.
2) Secretary/Assistant Secretary/Financial Secretary: In Nigeria,
posts are sometimes lumped together. For example the office of
the secretary and financial secretary is one. He keeps minutes of
the meeting and account of the cooperative. There may also exist
other offices such as treasurer, provost publicity secretary etc.
3.6 Minutes
The minute‟s book is where the summary of the meeting‟s proceedings

are recorded. It contains the following:
a) The number and names of members present unless recorded in

attendance register
b) The name of the chairman who presided at the meeting
c) Time, the meeting commenced
d) Deliberations and conclusions reached
3.7 Functions of the General Meeting
The general meeting carries out these functions:
a) Fixing the maximum credit limit of loans a society may

receive from members and non-members
b) Fixing a maximum credit limit for members
c) Considering any audit report and the registrar‟s audit
comment
d) Considering inspection reports and any other reports
e) Consideration of communication from the registrar and other
third parties and authorities.
f) Dealing with members‟ complaints.
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CRD 301 MODULES
As had been earlier noted, the general meeting is the most important
organ of the society as it embraces all members irrespective of
economic might and strength. It follows that a society with a strong
general meeting, where members attend and participate in decision
making will flourish better than that than the one where members buy
share and do not bother to attend meeting.
3.8 Management Committee
The cooperative law and rules refer to the “governing body of a

registered cooperative society to whom the management affairs is
entrusted as a Committee”. It is usual to refer to this central governing
body as MANAGEMENT COMMITTEE in a primary cooperative
society. Equally a committee of secondary society below the state apex
is also known as Management Committee, while the committees of
societies at the state apex level and above are called BOARD OF
DIRECTORS.
Although the cooperative law and rules in Nigeria do not expressly

makes this committee compulsory, as it is obtainable in other
cooperative laws in a country such as Germany, it is however if any
cooperative can exist without it. This committee is the body charged
with the responsibility of carrying out the directives of the General
Meeting. It must be emphasize that the committee is the servant of the
General Meeting and not its master. Indeed the relevance of the
cooperative management committee can be seen from the critical
functions it performs.
3.9 Functions of Management Committee
1. The committee shall represent the registered society before all

competent public authorities and all dealings and transactions
with third parties, with powers to institute or defend suits brought
in the name of or against the society. In general it shall carry out
such duties in the management of the affairs of the registered
society except those reserved for the general meeting and subject
to any instructions or restrictions duly lid down by the bye-laws
rule 27(1).
2. The committee is responsible for laying before the Annual
General Meeting, annual report and accounts approved by the
Registrar/Director.
3. The Management Committee is to ensure that the provisions of
the law, rules and bye-laws are complied with.
4. To ensure true and accurate account of the society is maintained.
5. To open and run a bank account on behalf of the society
73
6. To hire senior employees subject to, in some case the approval of

the General Meeting. It also determines the remuneration,
discipline and other conditions of employment of such
employees.
7. In marketing cooperatives, the committee has to ensure that the
produce marketed are of highest quality
8. In credit cooperatives, the committee approves loan and
supervises loan and oversees the processes preceding the loan
application.
9. To ensure that money is not borrowed in excess of the society‟s
maximum liability and that money is not lent to members in
excess of their maximum credit limits.
10. To take prompt action to remedy any discrepancies reported in
the audit report, Registrar‟s audit comment or inspection of the
society.
The functions of the committee are regulated by the rules. Besides, the
bye-laws of every society may give other functions and powers to this
body as contained in section 11(2). The management committee being
responsible for the smooth running of a society has varying degrees of
responsibility, depending on the type/nature of the cooperative society.
In the conduct of the affairs of the society, the management committee
shall exercise the prudence and diligence of men of business. Members
of the committee may be held responsible for any loss sustained through
their failure to exercise such prudence and diligence or through acts
which are ultra vires.
3.10 Committee Meeting
In order to successfully execute the various tasks assigned to it, the

committee members must meet regularly to fashion out policies and
regulations necessary in moving the society forward. It must be noted
that the management committee is not a master but a servant of the
General Meeting. Therefore, most or some of its decisions will have to
be ratified by the General Meeting as stipulated by the cooperative laws,
rules and bye-laws. Under no condition should members of the
committee see themselves as above the General Meeting, or over other
members especially where a lot of members are illiterate.
The agenda of the committee meetings should be as follows:
1. Reading and adoption of the previous minutes

2. Financial checking of cash and records
3. Reading of correspondence(s)
4. Any other business (AOB) that may be discussed.
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CRD 301 MODULES
The minutes of the meeting of the committee is as important as that of

the General Meetingand should be kept by the secretary.
The minutes will include:
 The number and names of those present

 The name of the presiding chairman
 A brief record of business done and decisions taken including
whether each decisions taken, including whether each decision
was taken unanimously or by majority vote.
3.11 Subcommittees
This body becomes useful when the society have need for special
attention to be paid to some specific areas, which the management
committee or general meeting may not have the time to attend to. Where
the activities of the cooperative society are many and varied, sub-
committee is set up to achieve specific objectives. In marketing
cooperatives, a sub-committee is to relief the management committee
and free them from engaging in various matters. This will enable
management committee focus on the core issue of managing the society.
The following are some of the sub-committees found in cooperative
societies.
i. Education committee
ii. Arbitration
iii. Loans committee, in the case of a society with credit functions
iv. Quality control of a cooperative committee, in case of marketing
cooperatives
v. Land acquisition committee in case of housing cooperatives.
Spreading the membership of the sub-committee among the members

allows more members to be involve in the running of the cooperative
society.
3.12 The Council of Inspection or Scrutinizer
Section 2 of the cooperative society‟s law defines the council of

inspection as “The elected council of members of the committee to
whom the supervision of the committee is entrusted”. The cooperative
law is section 2 defines Scrutinizer as “A member of a society and who
is elected to supervise the work of the committee on behalf of the
member of the society”. From the foregoing, the council of inspection
and the council of scrutinizers are same. The provisions of the rule on
this council are as follows:
a) The bye-laws of a society may suffix for this council
75
b) The Council is elected annually

c) The election comes up after the election of the committee
d) No member of the committee shall be elected a member of the
council, nor should any member of the committee fail to call such
a meeting within one month of the submission of its report.
It is clear that this council from all indication is a watch-dog. It is a

kind of separation of power invested in the cooperative to ensure
checks and balances. Meanwhile, it is perplexing that most
cooperatives in Nigeria do not constitute them. Government over
bearing influence on the cooperative institutions cannot be divorced
from it.
3.13 Secretary/Manager
The cooperative law, and bye-laws empower the management

committee of the society to, if need be, to hire employees. This is in
performance of its statutory role of ensuing day-to-day running of
the society. The highest employee to be contracted is the Secretary or
Manager or General Manager in the secondary societies. Cooperative
rule therefore authorizes the committee to appoint employees. The
need for hired Secretary is important because the rule in section 44
assigned him some duties. The bye-law of the society often extends
the duties of the secretary. The secretary often perform dual roles of
secretariat functions and pure business activities of the society.
It is therefore important for the management committee to hand-over

the day-to-day running of the society to the hired professionals,
while they exercise supervisory role. The secretary from the
functions it performs is the engine room of the society. It is not
surprising sometimes especially in marketing cooperatives to find the
President or other committee members assisting the secretary. In a
nutshell the secretary is an organ of the society because the
cooperative law recognize him and assigned clear responsibilities to
him.
4.0 CONCLUSION
This section is of particular importance because without which it will be

difficult for anyone to operate effectively within a cooperative society.
Understanding the functions of the various meetings and committees in
a cooperative and how they are organized will enhance members‟
participation and help achieve the objectives of the cooperative.
76
CRD 301 MODULES
5.0 SUMMARY
The unit outlined and offered a detailed explanations of the various

types of meetings prevalent in cooperative society and their respective
functions. The section also captured the functions of key officers of a
cooperative. It concluded by highlighting the procedures for conducting
meetings that enhances the smooth running of the societies.
1. Outline and explain the procedures of a General meeting

2. What are the functions of a General meeting?
3. Explain the functions of a management committee.
7.0 REFERENCES/FURTHER READING


Marburg
Igwe, C. (1993). Perspective on Cooperative Business. Acena Publishers

Enugu
Ogbu, S.O., & Ottah, J. (2006). Fundamental principles and economics

of cooperative business. Homec Global

programme. Nigerian Journal of Cooperative studies
77
UNIT 5 DUTIES OF SECONDARY AND APEX CONSUMER

SOCIETIES. CASE STUDY GUIDES TO CASE
STUDY FOR EXAMINATION PURPOSES AND
CLASS DISCUSSIONS
a) Read the instruction or question first

b) Satisfy yourself that you understand exactly what is expected of
you
c) Read the passage for the first time, carefully, and quickly look
out for specific problems
d) When you are satisfied that you have found all the problems
confirmed in the passage of the case study, write them out
specifically.
3.1 Case study
Abulesoki is a rural community where the people came together to form

a cooperative society in order to run a consumer cooperative business.
They made contribution in the following format
Share capital contributed by members N30, 000:00
Loan from the cooperative bank N40, 000:00
Loan from the village union N10,
000:00
Total amount N80,
000:00
The amount raised was sufficient to start a small shop because members
did a lot of work without payment. They constructed the shop and made
the furniture through self-help, paying only for the materials used. This
is how they used the money:
Materials for building N15, 000:00

Furniture and other equipment for the shop N10,
000:00
Goods N50,
000:00
Cash balance N5,
000:00
Total N80, 000:00
The consumer shop made a very good start. They sold goods to
members and collect cash immediately, thereby getting back some
money for the goods sold valued at N20, 000:00. The community
members were very happy with this development. Some members
therefore, suggested using part of the money to buy spare parts to repair
the old community tractor, so N10, 000:00 was used for that purpose.
78
CRD 301 MODULES
The action left very little cash to replenish the store. It was not quite
enough to refill the shelves completely. Nonetheless trading continued
and they got some more cash from their trading activities.
Unfortunately, the committee members could not resist taking money
from the shop and spending it on non-essential things. So the working
capital was further reduced. It became difficult to refill the shop with as
many goods as it was at the beginning because of depleted capital. To
compound the situation, committee members were not keeping adequate
records. Members were confronted with a lot of empty shelves, lost
interest, seek for alternatives and eventually the shop was closed.
3.2 Suggested Solution
a) List out the major problems of the society

b) As a cooperative officer, if this society was under your
supervision, how will you resuscitate it?
Answers:
a) The major problems of the society are:

1) Improper store management
2) Lack of cooperative education on the part of the committee
members
3) Empty shelves means members could not buy things
4) Misplaced priorities (diversion of funds for other purposes)
5) Non-observance of bye-laws
6) Improper record keeping
b) Solutions to reviving the society
1) Emergency general meeting will called by the cooperative officer
to appeal to members to return to the society with a promise to
turn things around for the best
2) There will be a complete reorganization of the society 9that is
new committees to be elected)
3) Committee members to be educated on sound cooperative
business investments and techniques.
4) Regular supervision of the society by cooperative officer(s) to
ensure compliance with the society‟s stated objectives and the
relevant bye-laws
5) Cooperative education to be intensified by cooperative officer(s)
6) The Secretary should be trained in the act of book-keeping and be
provided with the necessary accounting books for proper record
keeping.
79

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COURSE

Course Team: Dr. Babatunde Agbi (Course Writers/Developers)

Ass Prof. Mande S. (Course Editor)

Lawal Kamaldeen, A. A. Ph.D – (HOD)

Dr. Ishola, Timothy O. (Dean) –

NATIONAL OPEN UNIVERSITY OF NIGERIA

National Open University of Nigeria

All Rights Reserved

Unit 1 The History of the British Consumer

Unit 1 The Introduction of Consumer Cooperative

Unit 1 Selling, Financing, Pricing and Salesmanship…… 51

Unit 1 The History of the British Consumer Cooperative

UNIT 1 THE HISTORY OF THE BRITISH CONSUMER

This chapter traced the historical evolution of the British consumer

After reading this section, the reader should be able to:

 understand the history of the british consumer cooperative

3.0 MAIN CONTENT

The history of the British cooperative movement can be traced to

Though the history of the co-operative movement in the UK is often

and constitute what is generally referred to as the Rochdale equitable

3.1 Rochdale’s Rules and Regulations

 Open and voluntary membership

3.2 Values and Principles of Cooperative

Cooperative societies are of value to their members in the following

a. Patronage divided – this is also known as patronage refund

In this section we have discussed the history of British consumer

6.0 TUTOR MARKED ASSIGNMENT

1. Explain the evolution of the British cooperative movement

7.0 REFERENCES/FURTHER READINGS

Andrew Bibby. "The history of the British co-operative movement -

Mohammed, B.M. (2014). Agricultural Cooperative. Alico Computer

Wilson, J. F., Webster, A. and Vorberg-Rugh, R. (2013). Building Co-

UNIT 2 THE STRUCTURE AND PROBLEMS OF

In the previous unit we looked at the history of British consumer

At the end of this unit, you should be able to:

 explain the structure of consumer cooperatives in Nigeria

3.0 MAIN CONTENT

3.1 Structure of Consumer Cooperatives

Structure here refers to framework, layout and composition of

Figure 1: showing the structure of cooperative society in Nigeria

3.2 Primary Cooperative

From the diagram above, is at the bottom of the pyramid structure. It is

3.3 Secondary Cooperative

This is the second layer of the cooperative structure. It formed by

The essence of secondary cooperative Puri (1978) noted is not

Nigeria. Furthermore, in consumer cooperatives, the wholesale type

3.3.1 Tertiary Cooperatives

This is the highest level of the cooperative structure. Tertiary

3.3.2 National Level

i. Cooperative federation of Nigeria (CFN) which was founded in

continuous cooperative education in the country. These colleges

3.4 Structure at the State Level

In 1996, the Federal government created additional states bringing the

The head of these federated cooperative societies are government

3.5 Problems of Consumer Cooperatives in Nigeria

Every organisation or systems have challenges or problems which it

1) Little need for consumer cooperative

10) Too much government involvement in the affairs and

According to Umebali et al (2014), there some peculiar problems