CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Cooperative society may
be described as a group of people with the common objective of creation
of funds to be lent to its members, all the member must be residing in
same, village or group of village (Onuoha, 1986). Cooperative society
may also be described as the coming together (freely) of a group of
people called cooperators for the purpose of improving their financial
position or standing by putting their resources together which would
have been difficult or almost impossible to achieve individually. The
procedure can be inform of sharing, saving and deposit out of which will
be lent to any member in need with reasonable interest (Epetimehin,
2006).
Cooperative Thrift and Credit Societies are member-based
organizations that help members to address economic problems. They are
not banking institutions because of their goal. The ultimate goal is to
encourage thrift among the members and to meet credit needs of people
who might otherwise fall prey to loan sharks and other predatory lenders
(The Ledger, 2004). Cooperative societies are widely spread
organization in developing countries, they are known for a strong
commitment of, as well as participation in the decision making of their
members (Haan et al., 2003).
The International Cooperative Alliance
(ICA) in its Statement on the Cooperate Identity, in 1995, defines a
cooperative as “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.†It is a business voluntarily owned and controlled by its
member patrons and operated for them and by them on a nonprofit or cost
basis (UWCC, 2002). It is a business enterprise that aims at complete
identity of the component factors of ownership, control and use of
service, three distinct features that differentiate cooperatives from
other businesses (Laidlaw, 1974).
These societies mobilize local
savings and administer credit to members, there by encouraging thrift
and entrepreneurial activity. When first started, credit unions use
relatively unsophisticated administrative practices, so that the costs
are very small and most interest income from loans may either be
distributed to the members or reinvested in the credit union within a
capitalization programme. Consequently, they can be set up in poor
communities, where access to means of secure savings and to credit at
non-exploitative terms is of greatest importance (Olorunlomerue, 2011).
Cooperatives
are community-based, rooted in democracy, flexible, and have
participatory involvement, which makes them well suited for economic
development (Gertler, 2001). The process of developing and sustaining a
cooperative involves the processes of developing and promoting community
spirit, identity and social organization as cooperatives play an
increasingly important role worldwide in poverty reduction, facilitating
job creation, economic growth and social development (Gibson, 2005).
Over
some years, substantial work has been put into the use of computer in
cooperative society for carrying out daily activities such as membership
registration, loan monitoring and deduction and all other operation and
transaction within and outside the society. Recently, there has been an
upsurge in the information about capital base investments
profit-sharing or dividends of co-operative society in Nigeria have
since become as strong instrument of achieving rural, communal and
national development (Osusu et al, 2006). There is an urgent need for
the development of a centralized system for cooperative society so has
to help in keeping large volume of data, performing necessary operation
and reducing the number of hours spent on compilation and some other
activities. This system intends to develop a centralized system where
each cooperative society can log on with a unique password to register
her society and also to give details of their financial statement such
as (membership saving, loan issued, loan repaid, loan out-sand, net
surplus or dividend, interest rate, number of register member etc.) at
end of each fiscal year. These societies mobilize local savings and
administer credit to members, thereby encouraging thrift and
entrepreneurial activity. When first started, credit unions use
relatively unsophisticated administrative practices, so that the costs
are very small and most interest income from loans may either be
distributed to the members or reinvested in the credit union within a
capitalization programme. Consequently, they can be set up in poor
communities, where access to means of secure savings and to credit at
non-exploitative terms is of greatest importance (UNDESA, 1999).
Challenges of Cooperative Societies
Cooperatives
the world over are in a state of flux. In almost all parts of the
world, cooperatives face one or more of the following crises: crisis of
ideology, crisis of capital, crisis of credibility and crisis of
management (Taimni, 1997).
Cheney (1995) identified five challenges
facing cooperatives. These are cultural transformation, competition and
expansion, wage solidarity, centralization and reorganization, and
programmes to increase productivity and participation. Groves (1985) on
the other hand, posits that one of the major problems of cooperatives is
how to keep balance in the two parts of cooperative business,
efficiency and democracy since those who are charged with the operation
of a cooperative chiefly the board and manager must serve two masters:
the imperatives of good business practice and the social purpose of a
community of people. Hence, to maintain their special character,
cooperatives must be two things in one: a business organization and a
social movement. This is what makes a cooperative a business enterprise
with a human face and so, very difficult to manage. In striving for
efficiency, cooperatives often tend to imitate other business, but in
pursuing a social purpose they bring out the features, which make them
different (Laidlaw, 1974).
