A Cooperative Society Limited is one of the most practical business models for Nigerians – especially traders, farmers, salary earners, and artisans.
It’s not charity, it’s not NGO. It’s a business owned and controlled by its own members for their mutual benefit.
What Is It?
A Cooperative Society Limited is a voluntary association of persons with common economic needs who come together to form a business enterprise, jointly own it, democratically control it, and share its benefits.
The word “Limited” means the liability of each member is limited to the amount of shares or capital they contributed.
If the cooperative fails or owes debt, creditors cannot come after your personal house or car.
They can only take what you put into the cooperative.
It is registered under the Nigerian Cooperative Societies Act and regulated at state level by the State Ministry of Commerce and Cooperatives.
Core Principles – The ICA 7 Principles
Every real cooperative worldwide follows these:
Voluntary and Open Membership: Anyone who can use its services and is willing to accept responsibility can join. No discrimination.
Democratic Member Control: One member, one vote. Not one share, one vote like a company. Even if you have N1 million and I have N10,000, we have equal voting power.
Member Economic Participation: Members contribute capital equitably and share in the surplus. Part of profit goes to reserve, part is shared as patronage bonus based on how much you patronized the coop.
Autonomy and Independence: It is self-help. Even if government helps, members remain in control.
Education, Training and Information: The coop must train its members and staff.
Cooperation Among Cooperatives: Coops work together – forming unions, federations.
Concern for Community: It must work for the sustainable development of its community.
Types of cooperative societies in Nigeria
Multipurpose Cooperative Society: The most common. Does savings, loans, and supply of goods. Most staff coops and community coops are this.
Thrift and Credit Society – Cooperative Thrift and Credit Society (CTCS): Members save regularly, then borrow at low interest. Better than ajo or bank.
Agricultural Cooperative: Farmers pool resources to buy inputs cheap, share tractor, store produce, and sell together for higher price.
Consumer Cooperative: Members buy goods in bulk directly from manufacturers and sell to members at fair price to fight inflation.
Producers / Artisans Cooperative: Tailors, carpenters, welders, market women pool tools and get contracts.
Housing Cooperative: Members contribute to acquire land and build houses cheaper.
Marketing Cooperative: Helps members find better market and negotiate prices.
Key Features of Limited
Separate Legal Entity: Once registered, it can own property, sue, be sued, open a bank account in its own name.
Limited Liability: As explained above.
Perpetual Succession: It continues even if members die or leave. It doesn’t die like a sole proprietorship.
Minimum Members: For primary society, you need at least 10 persons above 18 years in Nigeria.
Democratic Control: Leadership is elected – President, Vice, Secretary, Treasurer, and Committee members.
Profit Distribution: Profit is not shared based on capital alone. It’s shared based on patronage plus a limited dividend on share capital. Most coops pay max 10-20% dividend.
State Supervision: Must file annual returns, audited accounts, and hold AGM. The Director of Cooperatives can audit you.
How to Form One in State – Practical Steps
Gather 10+ persons with common interest – e.g., 15 shop owners in Market who want bulk buying and low-interest loans.
Hold Pre-registration meeting: Agree on name, objectives, share value (e.g., N5,000 per share), minimum savings.
Write Bye-Laws: This is your constitution. It states name, address, objectives, membership qualification, rights, duties, meeting procedures, loan conditions, sharing formula.
Apply to Area Cooperative Officer: At your Local Government. You submit 4 copies of bye-laws, list of members, feasibility report, and application form.
Registration: If approved, you get Certificate of Registration and you become Cooperative Society Limited.
Open Bank Account and Start Operations: Start with savings collection, issue membership certificates and passbooks.
Management Structure –
A cooperative fails mainly due to bad management, not lack of money.
General Body – All Members: Highest authority. They set objectives and elect leaders at AGM.
Management Committee: The business managers. President provides leading, Secretary does planning and coordination, Treasurer does forecasting and financial control.
Their roles are – Planning, Directing, Forecasting, Organization, Workflow, etc.
Paid Staff – Manager / Secretary, Cashier, Accountant: For daily running.
Supervisory Committee: Checks the Management Committee to prevent fraud.
Advantages
Easy to form and low capital to start
Loan at 5-10% interest vs bank 25-35%
Democratic – no one can hijack it
Government support, grants, and tax exemptions
Strong bargaining power – buying cheaper, selling higher
Encourages savings culture
Disadvantages / Why Many Fail in Nigeria
Poor leadership and corruption: Leaders give loans to friends without collateral
Lack of business knowledge: Members see it as dash, not business
Political interference
Members not participating: They don’t attend meetings but want loans
Limited capital: Because members are often low-income
Conflict due to one-member-one-vote: Active members feel cheated when inactive members have same vote
How to Make Yours Succeed
If you are planning one, do these:
Don’t start with loans.
Start with 6 months of compulsory savings to build discipline
70% of loans must have guarantors who are members.
Audit every year, even if small. Publish accounts to all members.
Train your committee in those management roles.
Keep bye-laws strict – e.g., “No member can borrow more than 3 times his savings unless he has been a member for 1 year.
– Benjamin Ibrahim writes from Lokoja, Kogi state.
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