By Babajide Komolafe
The first thing cooperative societies do to individual members is development of savings culture. It is an age long established fact that nobody can escape poverty without a savings habit. Anybody that spends everything on consumption is just a step away from poverty and its various consequences, no matter how rich the person is today. The story of the prodigal son is instructive in this regard.
Savings culture means, irrespective of how much you earn today, and your needs, you put something aside for tomorrow, or invest, to make additional income. This, however, is a great challenge for many people, especially for low income people, whose needs are far more than what they earn. Some of them attempt to save, but because the saving is always within their reach, they find it difficult not to spend the money. Yet, everybody needs to save and invest to escape poverty. This is made relatively easy with cooperatives.
As a member of a cooperative, you must contribute regularly, most times monthly. The contribution is usually deducted from your income, before you even receive it. So, irrespective of your needs, you save compulsory. Also, because the money is not within easy reach, you cannot easily access it to spend.
The second thing you benefit from cooperative as an individual is access to loans either in cash or in the form of goods. As it is difficult for a camel to pass through the eye of a needle, so it is for the average individual to get loan from the banks in Nigeria. For low income earners, it is even worse, because they don’t have collateral.
Even for those that can meet the conditions for bank loans, the loan may not come promptly as needed. But as a member of a cooperative, you can access loan promptly. Your contributions serve as collateral and fellow contributors are accepted as guarrantors. Also, the interest rate and repayment terms are not crushing as that of the banks. This easy access to loans has helped many people achieve improved welfare.
Corporate power is another benefit of cooperative to an individual. There are some things that a corporate body can achieve easily, which are near impossible for an individual. For example, if an individual buys a parcel of land, the land owners can go back and resell the same land to another person. The individual, especially a low income earner, most of the time loses out eventually or may have to repurchase the land. But if it was a corporate body, especially a cooperative, the land owners will not even try such mischief, because from the beginning, a legal expert and government is involved (remember cooperatives are regulated by government).
Also, with a co-oporative, the individual participates in the running of the business of the group, and in the process, acquires knowledge and expertise, which can be beneficial in his personal affairs.
Compare these benefits to investment in shares or bonds or in a collective investment scheme. These other investment options do not impact savings culture, neither do they provide easy access to loans. The individual also does not have the opportunity to enjoy corporate power. In fact, he may become a victim of corporate power. And because the individual does not participate in the management of the companies or his investment, he does not have opportunity to acquire business acumen.