By Babajide Komolafe

The first thing that makes cooperative societies  appealing as means of investment is that any group of people can come together to form one.  That is why cooperatives exist in the formal sector and informal sector. In the formal sector, there are cooperatives formed by employees of the same company. In the informal sector, there are cooperatives formed by traders and artisans in the same business activity.

In recent times, members of the same religious group or organisation have come together to form cooperatives, and even group of friends have formed cooperatives in one form or the other. So, there is no restriction as to who can form a cooperative. But after its establishment, each cooperative has the right to determine procedures or rules of membership that must be met by anyone that wants to join the group.

The second appeal cooperatives have is that they manage their own affairs. Unlike collective investment scheme, where the day-to-day affairs of the scheme is entrusted to a fund manager, who may not be a contributor, and is paid to do the job, those who manage  the affairs of a cooperative are  members, elected to do so by other members. Note that the managers are elected. Every member participates in the election of the managers.

This reflects one of the Rochdale Principles of cooperatives i.e. democracy. Cooperatives are governed through democracy.  The managers are elected to serve for a fixed period of time, after which they can seek re-election if the rules allow. This compels the managers to run the affairs of the cooperative transparently and profitably. It also means that any member has the chance of being elected to manage the affairs of the cooperative.

Thirdly, to a large extent, there are no restrictions to the businesses or projects a cooperative can embark on. They can embark on any venture or project considered beneficial to the welfare of the members and progress of the cooperative. Also they can partner with anybody, group of other cooperatives considered worthwhile for this purpose.

All these imply that you and anybody that wants to can come together and form a cooperative. Set the rules and procedures for membership and how the affairs of the cooperative would be conducted. You can also determine the kind of business you want to do. You may choose to go to the farmlands, buy farm produce to resell in the city, as against investment in shares and bonds, which you know nothing about and which you have to give your money to other people to manage.

However take note that, while any group of people can form a cooperative and determine how to manage its affairs and the business it can engage in, there are laws that generally govern establishment and operations of cooperatives in every country. Why?  To prevent abuses and excesses by the cooperatives and their members and to also ensure fairness and equity among the members of each cooperative society. Anything can be abused, and anything can be used for negative purposes.

Cooperatives are not an exception. So, in every country, the governments enact laws that serve as guidelines for cooperatives. Such laws define what a cooperative is, who are members of a cooperatives, rights and obligations of cooperatives, and its members, as constituents of the larger society. Such laws make it mandatory for cooperatives to be registered with government, and they must render account and pay taxes like every other member of the society.