In this post, I want to share with you how you can start a cooperative society in Nigeria regardless of your educational background or influence.
Starting a cooperative society in Nigeria is very simple. There are no harsh rules and the good news is, anybody can start a cooperative society in Nigeria and not be afraid of any government body interrupting the cooperative.
A cooperative society is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise – afcd.gov.hk
The best thing about a cooperative is it leverages on the power on the whole, the ability to get more done in shorter time with little resources. I have seen people form a cooperative to buy real estate where each member gradually pays off the principal.
So instead of coughing up huge sums of money to buy the land, each member was allowed to pay in installments until the money was paid off.
You can get access to loan with single digit interest rate when you belong in an cooperative. Some government loan and grants like Fadama III are available only to cooperatives.
If you are an employee, you can set up a cooperative society among yourselves in the company and profit from it.
Handling a cooperative society is simple as everyone is involved in the management. There is no rule regarding the number of people to form to join a cooperative society. If you have a big vision with your cooperative society, you can get it registered which is not also difficult to do.
There are several types of cooperative you can start. Whichever one you choose, the process to get it started is largely the same.
How to start a cooperative in Nigeria
Create a Plan
The first thing you must do before starting a cooperative society is to first create a plan. Just like any business, you need a plan to be able to structure how you want to run the cooperative.
A plan helps you state the objectives, rules and regulations, benefits, registration fee, penalty on contribution defaulting, how the money will circle round every member and lots more that is important in running a cooperative society.
One best way to create a plan for your cooperative is by setting a meeting with someone that owns a cooperative. This way, the person will sit you down and tell you what you need to know and how to go about it.
Allow Only Credible Members
There is nothing as bad as a member defaulting in payment. This really hinders the structure and objectives of the cooperative. There should be a rule of entry. You can choose to allow only business owners into your cooperative.
You can also use high contribution amount as a way to filter some members who may default as they will see the money too high for them to contribute.
Make sure you only allow credible members into your cooperative. Credibility should be your watchword for accepting members.
Get the Cooperative Registered
Though optional, you can register your cooperative society with the Registrar of Co-operatives or the Corporate Affairs Commission (CAC). Like I said earlier, it does not involve a long process and too much documentation.
The reason I said it is optional is that you may decide to form a cooperative in your workplace and not extend it to welcome outside members. This kind of cooperative may not need to be registered as nobody aside your workplace will know except someone wishes to speak about it outside the realms of the office.
On the other hand, if you have plans to make your cooperative society very big where it will be able to pull funds into investment, you can get it registered. To register your cooperative, you will need to provide the following information and documents:
- Proposed name of the cooperative
- Objectives of the cooperative
- Membership rules
- Society laws
Documents that you will be asked to present and submit are;
- Letter of intent
- Cooperative laws (4 copies)
- Feasibility reports on how the cooperative operate
- A certificate of a copy of resolution passed at the first meeting of the group with the Province Cooperative Officer (PCO)
Open a Central Account
This is very important in setting up a cooperative society. The account will be wholly for the cooperative and not a personal account. However, you will need two signatories to the account to facilitate easy withdrawals.
With a central bank account, you can easily issue a cheque to members when it gets to their turn instead of giving them cash as it may not be safe. Each beneficiary for the month can go to the bank to withdraw their contribution with an issued cheque.
Set a Fixed Number of Members to Accept
I will advise anybody who wants to start a cooperative society to create this as a rule and stick to it. Personally, I can’t wait for up to 8 people to collect money before it gets to my turn. A small pool of members is advisable instead of stocking crowd in your cooperative.
With fewer members, it is easy to monitor and manage.
From reports gathered, it has been observed that when people are too much in a cooperative, some members start defaulting on payment as they know that it will take a long time before it will get to their turn, and start getting serious when it is getting closer to their turn to collect their share of the contribution.
You can avoid this by setting a fixed number of members to accept.
In conclusion, starting a cooperative society is more or less similar to starting a business. You will be dealing with human beings and their emotions. You will be dealing with people’s hard earned money.
You should be ready before making the decision to starting a cooperative society. Good luck!
Do you have an experience running a cooperative? Share with us in the comment section. I’d be interested to hear from you.