The Cooperatives sector’s share of the Gross Domestic Product (GDP) is put at N500b. The sector is also credited with having the capacity to spur development, alleviate poverty and achieve the Sustainable Development Goals (SDGs). Despite its huge potential, it remains largely untapped. This has prompted the push for a review of the Nigerian Cooperative Act and demand for the right regulation to fully harness the cooperative economy and fast-track diversification. Assistant Editor CHIKODI OKEREOCHA reports.
They are widely acknowledged as engines for poverty reduction, employment creation, and promotion of social integration. Sadly, however, cooperative societies or enterprises in Nigeria have continued to take the back seat in the search for a new development paradigm, unlike other countries of the world, including the less-endowed African countries.
For instance, Nigeria, Africa’s largest and most populous economy, has an estimated 19 million individual cooperative members who provide jobs for about 100,000 Nigerians, according to the Cooperative Rating and Award Society of Nigeria (CRASoN), an organisation that monitors and tracks the performance and socio-economic impacts of cooperatives across the country.
The founder/CEO of CRASoN, Mr. Victor Oyegoke, however, told The Nation that based on one of CRASoN’s projects, tagged “Coopcount,” which collated and analysed the activities of cooperatives in the last one year, cooperatives thrive more in the Southwest, particularly Lagos State, under Governor Akinwunmi Ambode.
He said of the sector’s estimated N500 billion share of Nigeria’s Gross Domestic Product (GDP), Lagos State accounts for about N150 billion, attributing this to “The enabling environment in Lagos State, following the digitalisation of operations of cooperatives and the right regulatory system and policy.”
Indeed, checks by The Nation’s revealed that Lagos State has a vibrant cooperatives economy. The state’s cooperative movement represented by the Lagos State Cooperative Federation Ltd (LASCOFED) is an independent non-governmental organisation set up statutorily to represent and serve the member-affiliates for the benefit of cooperators.
LASCOFED is registered under the Lagos State Cooperative Societies’ Laws. All cooperative societies registered in the state are statutory member affiliates of LASCOFED. And members of LASCOFED are found in all sectors of the economy including agriculture, banking, health, transport, the informal sector, corporate organisations and industries as well as Federal and State Ministries, Departments and Agencies including House of Assembly.
The state government, however, provides the enabling environment for the various types of cooperative societies to thrive, by making laws and regulating the activities of the societies through the Ministry of Agriculture and Cooperatives.
Oyegoke, who reiterated that Lagos State was the only state that has digitalised and regularly monitors the operations of its cooperatives and updates its by-laws, said that a 2017 annual account report showed that a particular cooperative in the Southwest recorded N22.3 billion surplus.
However, this is considered a drop in the ocean considering that while Nigeria is eyeing a 30-per-cent contribution to GDP from the cooperatives sector by 2025, the contribution of cooperatives to Kenya’s GDP is put at 45 per cent; with regard to savings and deposits, the contribution is 31 per cent.
The Minister of Agriculture and Rural Development, Chief Audu Ogbeh, brought this reality nearer home when, citing a recent report by the International Cooperative Alliance (ICA), he said Kenya ranked number seven in the world and number one in Africa in terms of the number, size and contributions of cooperatives to development.
The ICA is a non-governmental organisation established in 1895 to unite, represent, and serve cooperatives worldwide. With headquarters in Brussels, Belgium (since 2013), the Alliance provides a global voice and forum for knowledge, experience and coordinated action for and about cooperatives.
The ICA defines a cooperative as “an autonomous association of persons united voluntarily to meet their common social, economic and cultural needs as well as their aspirations through a jointly owned and democratically controlled enterprise.”
Cooperatives are considered as useful mechanisms to manage risks for members in agricultural or other similar cooperatives, to help salary earners save for the future through monthly contribution that is deducted from source, own what might be difficult for individuals to own by their efforts.
Cooperatives also strengthen the communities in which they operate through job provision and payment of local taxes. They employ people directly, while also promoting employment indirectly through creating market opportunities and improving market conditions.
While savings and credit cooperatives facilitate their members’ access to financial capital, agricultural cooperatives help farmers access the inputs required to grow crops and keep livestock and help them process, transport and market their products.
In Ethiopia, for instance, 800, 000 people in the agricultural sector are said to generate most of their income through cooperatives.
They are also known to influence those who are not members of cooperatives but whose professional activities are closely related to transactions with cooperatives. Also, in Egypt, four million farmers derive their income from selling farm produce through agricultural marketing cooperatives.
Ogbeh quoted the ICA as saying that about 26 million people worldwide work in cooperative enterprises as employees or worker-members, while 800 million people around the world are cooperative members.
Speaking at a recent inauguration of a two-day congress of the Cooperative Federation of Nigeria (CFN) in Minna, Niger State, he, however, expressed optimism that the Federal Department of Cooperatives will achieve its target to increase the cooperatives sector’s contribution to GDP to 30 per cent by 2025.
The minister hinged his optimism on the on-going re-engineering of the cooperatives sector by the Federal Department of Cooperatives, which is a department under his ministry. He noted that if the potential of the cooperatives sector was well harnessed, it would go a long way in fast-tracking government’s efforts to diversify the economy.
Unlocking the sector’s potential
As major job providers, cooperatives are said to employ at least 100 million people worldwide. The livelihoods of nearly half the world’s population are also secured by cooperative enterprises, while the world’s 300 largest cooperative enterprises boast collective revenues of $ 1.6 trillion.
For Nigeria to position her cooperatives economy as an engine for poverty reduction and employment creation, development experts say that there is need to put more steam in the on-going re-engineering of the cooperatives sector upon which the minister hinged the Federal Government’s hope of driving economic diversification.
Oyegoke, said, for instance, that policy makers must support cooperatives in Nigeria through the provision of adequate funding and an enabling environment. He added that putting in place the right regulatory system and policy for cooperatives to thrive will position Nigeria to benefit from her N500 billion cooperative economy.
The expert called on other states across the country to borrow a leaf from Lagos and Gombe states, which, according to him, have full-fledged Ministry of Cooperative. This, he said, would enable the country ride on the back of a vibrant cooperative economy to attract more Foreign Direct Investments (FDIs), reduce poverty and create jobs.
He said it was important that the Federal and State Governments and private entities commit financial resources into cooperative ventures, which will in turn, contribute to economic growth and development.
Oyegoke said going by the number of Nigerians currently employed in productive cooperative ventures, cooperative societies have the capabilities to turn around the fortunes of the economy of Nigeria for the better.
He stressed that government should take cooperative business very serious because the sector elevates poverty in the world in line with the Sustainable Development Goals (SDGs).
The CRASoN CEO emphasised that most great nations don’t joke with their cooperatives. According to him, all the G8 nations rose to where they are on the back of cooperative enterprises; they give top priority to the activities of their cooperative societies as driving force of their economy.
To further underscore the need to revitalise the cooperatives sector, Oyegoke advised government to channel recovered looted funds into cooperative businesses by supporting existing ones especially in the agricultural sector with finance.
More importantly, Oyegoke said it was important to review the Nigerian Cooperative Act of 1993. According to him, the Act was last reviewed in 2014, meaning that it is long overdue for a review to bring it up to speed with international global standards.
Indeed, unlike cooperatives in the more developed countries of the world, cooperatives in Africa including Nigeria have remained rather informal and consequently poorly documented and coordinated due to lack of updated laws and policies to streamline their operations.
With cooperative societies or enterprises playing an increasingly important role in facilitating job creation, economic growth and social development, Oyegoke said the time has come for Nigerians and policy makers to think of cooperative ventures as viable and feasible means of making impact to themselves and the economy as a whole.
“We are doing everything possible to make Nigeria’s cooperatives meet up with their international counterparts,” he said, noting, for instance, that CRASoN has recruited people in all the 744 local governments in Nigeria to help tract and monitor the activities of cooperatives across the country.
The President of CFN, Chief Tajudeen Oriyomi Ayeola, expressed worries that the contribution of cooperatives is yet to be captured in the national GDP, otherwise, government would have paid more attention to the sector like several other countries to help better grow the economy, especially in creating jobs.
He, however, said CFN members had been yearning for a National Cooperative Bank, which will be an independent bank to cater for the needs of CFN members.
Ayeola, who made this known at the fourth National Cooperative Summit held in Abuja, recently, said this was necessary in view of the exit of the former Cooperative Bank following the Central Bank of Nigeria (CBN’s) consolidation exercise in 2005.
He said preliminary work and the registration of a new cooperative bank was already on course. He also confirmed that the cooperative was contributing over N150 billion to the Lagos State Government’s GDP.
The confirmation underscored the need to step up the on-going re-engineering of the cooperatives sector to bring other states into the cooperative net and achieve the target to increase its contribution to GDP to 30 per cent by 2025.