In other to tackle the above-mentioned challenges, cooperatives should increasingly focus on directly enhancing socio-economic conditions of their members by engaging in value-added operations ,i.e activities that have significant impact on the wellbeing of members and also encourage participations through improved services and adhere strictly to the principles of openness, honesty, prudency and caring for the environments as well as the community. Cooperatives should make optimum use of the available resources, enhance efficiency while providing quality services to its members using the most acceptable and friendly approaches to mobilize fund or capital and develop a fundamental measures for it redistribution among the needy members.
2.5 MODEL AND FUNCTIONS
Models of co-operative and thrift societies
There are several models of thrift societies which are discussed further. Rotating savings and credit associations (ROSCAs) : These are formed when a group of people come together to make regular contributions to a common fund, which is then pooled as a source of credits. The members of the group may be neighbours, friends, or colleagues at work. The group forum provides an opportunity for social interaction and is quite popular with women. These self help groups may be classified under informal microfinance institutions. In Nigeria, the “Esusu†is also an example of the ROSCAs. “Esusu†is a revolving loan scheme in Nigeria and is entrenched in many West African countries as a source of credit and savings. Similarly, members in such a society make fixed contributions of money at regular intervals. At each interval, one member collects the entire contributions from all. The “esusu†is a programme that can assist people raise funds to execute projects including the expansion of capital for investment purposes.
The Grameen solidarity model: This model is based on peer group influence, and loans are made to individuals in groups. Group members collectively guarantee loan repayment, and access to subsequent loans is dependent on successful repayment by all group members. Payments are usually made weekly. These groups have proved effective in deterring defaults as evidenced by loan repayment rates attained by organizations such as the Grameen Bank, who use this model. Under the Grameen Bank variation of this model, groups contain 5 members and savings must be contributed for 4 to 8 weeks prior to receiving a loan. Savings must also continue for the duration of the loan term. Only two of the major group members receive a loan initially. After a period of successful repayment, 2 more members receive loans and after another period of successful repayment, the final members receive a loan. Ledger (1990) cited in Chuku (2010), highlight the fact that this model has contributed to broader social benefits because of the mutual trust arrangement at the heart of the group guarantee system. The group itself often becomes the building block to a broader social network (Nyele, 2011).
There is a need to critically examine this, as repayment is not always easy. Frustration of repayment in the scheme, always result to social decadence.
Village banking model: Village banks are community managed credit and savings associations which provide access to financial services, build community self–help groups, and help members accumulate savings. They usually have 25 to 50 members who are low-income individuals seeking to improve their lives through self-employment activities. These members run the association, elect their own officers, establish their own by-laws, distribute loans to individuals and collect payments and services. The loans are backed by moral collateral, the promise that the group stands behind each loan (Chuku, 2010). The function of this type of cooperative therefore is financial intermediation; recycling funds from surplus spenders to deficit spenders. More specifically, the services include;
(1) Savings mobilization
(2) Extension of credits and loans.
In practice, three forms of thrift and loan co-operations exist and are presented thus:
1. One category specializes in mobilization of savings among its various clients. These clients or members may be traders, commercial vehicle workers full time housewives among other especially low income earners.
2. Another category includes those specialized in entirely granting loans to their clients and other members of the public.
3. A third category involves those who mobilize savings and also extend credits to their clients.
Quite often, the average cost of borrowing from these cooperatives or loan associations by non-members, is higher than the cost of borrowing from commercial banks, but the ease of access to such loans and the personal touch between the contracting parties is a major attraction for many people. Consequently, a lot of people patronize these co-operatives and other non-bank financial houses. There is also a need to see the demerits of the micro capitalist views on it
2.6 CREDIT AND THRIFT CO-OPERATIVE
The focus of this discourse is the co-operative and thrift society, which may also be referred to as the credits and thrift co-operative or the thrift and loans co-operatives.
