Co-Operative Society in Nigeria – Registration, Rules, Regulations and Advantages



A co-operative society as an organization of people of common interest whose aim is to cater for the general good and interest of its members. People wonder why co-operatives are formed, its contribution to the economic problem of masses.

This now gives rise to the answer which recommends co-operative as a speedy vehicle for economic and social transformation of the economies.

Many developing countries have embraced the co-operative form of enterprise while others are embracing it at a past rate that is based on the achievement of past rate of economic growth to enhance the living standard of their people. The distinctive gesture of the co-operative organization appears to make it suitable for the promotion of high standard of living in countries that possess the endowment of the present day developing economies.

Historically, co-operative have developed in response to some different situations and its solution should be the aims of the formation of any co-operative society. The birth of co-operative is associated with the people who experienced some hardships and were under privileged as compared with other people.

The present developing countries are under privileged as compared to advanced countries. Their people are I poorer condition and they experience low standard of living. Secondly, even within anyone of these countries, there are two major groups, urban format enjoy modern amenities like tarred road, pipe born water, electricity, etc. The later lacks most of the materials, it would therefore be expected that co-operative spirit would be developed in these countries especially among the under privileged rural dwellers, it is because of the benefits which these area can derive from co-operative that lead many government in developing co-operative societies in the rural area of these countries.

These include agricultural co-operative and these are responsible for marketing as well as distribution of essential consumer goods, also commerce, industry and technology among others.

Despite all these government support and early origin owned by Nigeria, it has not contributed enough progress to the rural co-operative especially to so many problems faced by Nigeria co-operative societies.


a) Inadequate funding.

b) Problem of poor administration.

c) Lack of education among the rank file membership.

d) Apathy in the management of co-operative matter, etc.

But before this problems arise, solid foundation must have been laid. This concerns the viable formation of co-operative societies. It is therefore against this background that the write wishes to examine the fine turnings entailed in organizing to viable co-operative societies in Nigeria.


A co-operative society before formation must be borned-out through a source which the golden rate should not set up a society too hastily. Some steps should be known and studied to follow the formation of co-operative through an external officer who is either a government worker, co-operative area be supervised, a non-practitioner or would be co-operative society. The person (organization or organizer) must be able to convince the prospective society that the solution to their problem and not a business enterprise only made to maximize profit for its share holders in as much as a co-operative are not formed to loose after their contribution in to the capital.

Both organizers and prospective members should not allow themselves to set formation of co-operative societies as a difficult task because co-operative organization in developing countries poses a lot of problems when it comes to the formation especially when it lacks some fine turning entailed in organization of a co-operative successfully, to solve the economic problem of the societies and also modernize it to meet the standard of elements that determined the structure of co-operative form of organization according to the international labour conference of 1966.

A co-operative society is an association of persons who have voluntarily formed together to achieve a common and through the formation of a democratically controlled organization making equitable contribution to the capital required and benefit of the undertaking in which members actively participate.

Based on these features of the above definition, many of the institution that are christened co-operative societies particularly in the developing countries are not in real sense of word suggest.

The author in the course of this work will examine in full detail how a viable co-operative society will be formed especially to improve the Nigeria co-operative society.

Finding will be analyzed and possible recommendations will be given for improvement made so far in the already formed co-operative and government assistance. It will be the wish of the author to give suggestions for further research in this work as these are aburous limitation in this work.


Nigeria as a developing country is expected to tackle these problems which face a developing country concerning the formation of a co-operative society and as the potentiality of the co-operative movement in transformation of poor communities into prosperous one. Efforts should be made to study where the problems lie, in most cases the following are suggested as problems:

a) Ignorance of the steps among organizers and prospective members. Their motive may be shy or philantrophy love of fellow, many political advantage or financial reward (if he get paid for it.)

b) Lack of co-operative Education among the rang and file of membership. This causes poor management and administration in newly formed co-operative.

Both ignorance of steps in formation and poor co-operative education have been a significant problem that faces co-operative, e.g, “Isusu” as called by the “Yorubas” have nor made co-operative as successful as supposed despite its early origin.

However, this problems as long as they are existing affects other parts of procedures in the co-operative societies as its difficult for such members to understand the procedures.

The problem in this study therefore has given rise to close examination of how a developing country like Nigeria will set up an organization of co-operative to be successful and solve the economic felt need for their members.

Therefore either the confirms of this will be looking at the following:

a) Major principles of the co-operative societies which led to the meaning of co-operative.

b) The steps to be performed by members and organizers in newly formed co-operative to avoid failure.



Nigeria co-operative society is known to have owned their origin I the middle of Igbo’s which includes some encouraging efforts by the government on revision of laws and regulations that governs the organization in 1976 – 1993. in which the law includes the generally accepted steps guides – the formation of co-operative organization, others included are the establishment of federal owned co-operative also in federal and state apexes and the three co-operative colleges amongst others.

But despite all these efforts, Nigerians have not really gained what we had hoped for co-operative societies. So this study will go a long way to expose those who had just a little knowledge of co-operative formation especially amongst the rural co-operative and help more others who will want to write on this topic to know the efficient step to learn concerning co-operative society. It also goes beyond the use made it by student and brightening the existing step of knowledge, so in this case the purpose of this study is therefore:

a) To find out what has been the problem of co-operative formation in Nigeria despite all efforts made.

b) To teach the rural co-operative who have been ignorant of the meaning of co-operative and also how to run co-operative society to achieve aim of formation and to meet the standard.

c) To avoid political influence and business men exploitation in co-operative societies not organization to gain names among politicians or first ladles.


There is the need to organize viable co-operative society in the country to extend the industry and technology. Co-operative department and most especially to business men purpose co-operative societies limited.

This study will go a long way to improve the industries and companies. This may result to improved countries as well as may improve the standard of living. Loan re-payment may also be facilitated and improved through and adoption of the various forms of credit recovery measures indicated in this study.

Both policy makers involved in co-operative business, government, student and other researchers who will be interested in business will benefit from the outcome of the study.


This study is on the effectiveness of a viable co-operative practice in ministry of commerce. The study covered on a viable co-operative activities of ministry of commerce and industry and technology co-operative department within Nigeria metropolis.


Some factors were threats of this study. Thus, the main limitation of this study is the sampling techniques. The researcher were able to cover only Enugu, Port-Harcourt and Umuahia ministry of commerce respectively due to time and financial constraint. Although it is our believe that whatever result obtained from those areas will be generalized. Also the use of non-random sample limits the generalization of the result hence placing a limitation on the results.


PUBLIC: Any group that has actually a company to achieve its objectives. Kotter (1988) 141).

OPINIONS AND ATTITUDE: Belief of judgement not founded as a complete knowledge. What the people feels, think or believe about something.

IMAGE: Mental picture or idea, view opinion of something such as service or product held by the public.

CO-OPERATIVE: This is an organization of people of common interestwhose aim is to cater for their members.



This chapter looks at the various works and opinions expressed by different societies since co-operative have been credited to one of the action vehicle, for speed solution to economical felt need of the poor masses. Endeavour to spell out the “fine funny” entailed in organizing a co-operative society successfully. None particularly to Enugu state.

According to I C A definition of the co-operative principle of 1995, it defines co-operative as an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and as operators through democratically controlled enterprise. (I C A 1995 P.3)

This definition gives the highest and the most pure important characteristics of a genus co-operative namely:

1. A co-operative is an autonomous body means that it is been free from governmental or external control and domination.

2. Members acquired a new awareness through education of the benefits of co-operatives. They should not be forced or tactically manipulated to join.

3. A co-operative is an association of persons not of capital. The interest of the members must come before those of capital. The group of persons is the social element.

4. The objective of the group is to meet members needs in the economic field as well as their aspiration in the social and cultural fields. Religious and criminal objective are however excluded.

5. The means of achieving these objectives is a business enterprise which they set up this economic element.

6. This enterprise must be jointly owned. There must be a pooling of resource co-operation which begins where common ownership begins, common funds, common assets, common service and common concerns.

7. The enterprise must be democratically controlled. This is the most important attribute, democratic member, one man one vote, irrespective of financial considerations.

8. The benefits of the enterprise, must be equitably shared. Bob C.C Igwe states that co-operative society must be open to all whom it can be of service. Open membership is necessary for the progress in the co-operative ideal and also a co-operative must be democratic in structure, in practice and in spirit. The co-operative society as a self help organization must enjoy self government, self administration, independence autonomy and self reliance.

I C A report of 1966 states the individual decision to apply for membership should normally be the result of this unfiltered appreciation of co-operative value and consideration of his economic advantage or merits including that of his dependent. Also should be free to withdraw cannot to absolute, however, a person accepted certain obligations of membership which should not be overthrown with reckless abandon.

Onuoha (1991 P.14) state on how to organize a co-operative business enterprises:-

1. The initiative.

2. Creation of public awareness.

3. Preliminary of a government office.

4. Drawing of the co-operative by law.

5. The co-operative books to be kept.

6. The co-operative man power used.

7. The application for registration.

8. The inaugural meeting of members.

9. The launching of the co-operative.


Bob Igwe (19 P.28) Co-operative business enterprise state that the provision of the education to the co-operative members, officers and employees and the general public in the principles and techniques of co-operative both economic and democratic. It states that co-operative education is absolutely essential for the success of the co-operative movement anywhere. A co-operative cannot rise for above the level for understanding of its through the radio, T.V, Audio visual Aids techniques, etc.

According to “I C A Report” of 1966 which stated that individual decision to apply for membership that should normally be the result of this unfiltered appreciation of the co-operative value and consideration of his economics advantages including that of his dependent.

Then the International Co-operative alliance (I C A), The highest Apex in Co-operative Organization World Wide, in 1996 involved principles of co-operation as follows:

1. Open and voluntary membership.

2. Democratic management controlled.

3. Limitation interest on share capital.

4. Equitable distribution of surpluses.

5. Co-operative Education.

6. Co-operative among co-operative.

Open and Voluntary Membership: This allows free choice to join or to remain in a co-operative society. The entrance into the society should be free from coersion, “FREE ENTRY.” No one should be a member of the co-operative society because of the information he already has about the society or because of benefit he will derive by being a members. He should be free to do so on the hand. Members should be allowed to leave the society when they wish “FREE EXIT.”

The society provide for the withdrawal of members under reasonable terms so that they do not distrust the financial position of the society. For instance, sudden withdrawal of share capital might have an effect on the capital structure, so members are always advised to give notice to the society before drawing their share capital.

Democratic Management and Control: Co-operative and democratic organization controlled by their members, who actively participate and women serving as elected representatives are accountable to be members. In primary co-operative, members have equal voting right (one man one vote) and co-operative at otherwise in a democratic manner.

Co-operation Among Co-operatives: Co-operation serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structure.

Limited Interest on Capital: This means that share capital contribution in a co-operative society is like an advance payment rather than an investment made for profit. The returns on the share capital contributed in co-operative societies are to be considered as a form of interest rather than dividend.

“J. P Okonkwo” in his book, “Hints Co-operative Field Work” stated that co-operative education simply means knowledge of the co-operative society. The duties of the members and the committee and the knowledge of the societies bye-law and relevant section of the co-operative law.

“The Education can be impacted by formal and informal ways.” Co-operative education is not the study of physical sciences like physics or social sciences like politics. Its simply means knowledge of the meaning objective and running of the co-operative society duties of the society’s bye laws and the relevant sections of the co-operative law. Members can arrange a study for the co-operative law, and certain sections of the societies bye laws.

This method is formal. It will be a good thing if any time the inspector attends a co-operative society meeting and spends about fifteen minutes teaching the members certain section of their bye law. Informally the co-operative inspector members or answers their questions and also discuss matters with the members. Okonkwo (1977 P. 12).

It is essential that every member to the co-operative society should receive this co-operative education. They are expected to know what the objective of the organization are. A member should be taught his duties and responsibilities to his society, as well as his rights and privileges arising there from. He is expected to know also certain provisions of the co-operative law and the society’s bye-laws. Distinction should be down between the traditional type of co-operation which emphasizes service to the community and the modern type of co-operation with emphasis on service and profitability.

The business aspect of co-operation should be emphasized for co-operation is first and foremost a business. The members of the committee as well need to receive co-operative education. They should be taught the duties of the committee as clearly stipulated in the co-operative law. It must be brought home to them that they are servant rather than masters of the general members. The general meeting is the supreme authority in every co-operative society and that is where the real power lies.


The members must come first, they went to set a business and form a co-operative. They must have given the matter some thought, to make the point brief, the first basic steps must be to bring together peoples’ ideas and the aim to join co-operative society lie to practice self help through mutual help. For such groups, the next necessary step should be:

1. To understand what brings in co-operative society.

2. To do a feasibility study to see if their idea can become viable or bankable proposal.

3. To facilitate the development of economic and other mutually beneficial relation between its members organization.

4. To promote the world co-operative movements, based upon mutual self-help and democracy.

In this statement, the co-operative values are divided into two groups. The first, equity and solidarity, directly underlie the organization structure of co-operative while the second set, honesty upon social responsibility and caring for others are concerned with moral behaviour.


The problems of co-operative society in Nigeria are as follows:

1. Limited area of Operation: Its because the operation area there is based on the geographic areas, all their functions cannot be failed by when you compared them to business establishments that have branches nation wide. Roles they perform are just seen and known within the geographical area.

2. Moral Education of Members: Education of members in any co-operative societies is necessary. Therefore for the co-operative to succeed in life, there must be a good training and education of members. Education is the life wire of any society, therefore it must be maintained.

3. Small Regular Saving: The co-operative society in their bid toward getting fund, the fund they acquired through individual contribution, e.g, payment of registration fees by individuals by the society, payment of fines. Therefore they have low sources of getting money and also not selling their shares to the members can cause the small regular saving into the society.

4. Voluntary Unpaid Management: The management of co-operative society voluntary, i.e, to say that the due not reserve any salary or wages compared to business establishment. The manager of the co-operative society are the members, therefore, its just a service they pay to themselves.

5. Unlimited Liability: Unlike business establishment which has a limited liability.

The co-operative society members are reliable. The co-operative society members are reliable for indebtedness of the society. This means that the co-operative society are progressing or widening. They are induced that the members of the co-operative society must contribute in the saving of the society debt.

In the above statement, are the major problems facing the co-operative societies in Nigeria. In order to achieve goals, the principles must be observed, people must join co-operative voluntarily, that is without external compulsion. They must manage the business democratically, having equal voting power. They must share the benefits accruing from the enterprise equitably, that in proportion of patronage.

They must educate their members in the secret of business management. The people’s movement must rest on a solid education foundation. Co-operative societies must seek the help with them to solve joint problems. Lastly, they must show concern for the community and the environment in which they operate so as to ensure a sustainable development. There are the principles in summary.

A co-operative society does not follow the principles will soon disintegrated it people are forced into membership, their will, their work of the co-operative not be done deligently. The members will not put their mind into it if the business is managed autocratically by the chairman or the managers. The members will quickly lost interest and pull out. The same thing will happen if amount siden ever. If it is a government co-operative officer, interferes too much in the running of the enterprise. The members will no longer feel that the co-operative is theirs. (Yeo 1989, 15). They will develop a cydical and empathic attitude towards it. Co-operative must therefore be both autonomous and democratic.


Economic survey report is another report that must be written on the society. This report is essential for the registration of the society. Report takes into consideration economic factors available to the society, which can enable the director of co-operatives decides whether to register the society or not. If the director is satisfied that the society is a promising one, he will register the society. Even after the society might have been registered by the co-operative, assistant must write ‘A’ and ‘B’ reports on the society and submit to the area officer regularly.

To get a co-operative society registered, the members have to ensure that they not only meet regularly but a good number of them being in attendance.

They have to buy all the necessary books for the running of the co-operative business, have a competence secretary, choose competent officers from the members. Members are to make their financial contributions regularly. Also important is regular co-operative education for officers committee and other members. At this stage the co-operative Assistant will be happy to recommend yes to the area office with other necessary documents including the application for registration form completed by the members.

The area officer will to through the application and endorses before further recommendation to the zonal officer. The zonal officer will then send this application to the director of co-operatives, who may register the society.

In an auxiliary primary co-operative societies, at least ten individuals are needed to enable the society apply for registration while that of primary products or industrial co-operative is six members. Each of these members must have attained sixteen (16) years of age and must be resident or in occupation of land in the society’s are of operation. Any time the number of members falls below the legal minimum, the director can immediately dissolve the society.

Secondly, societies must have a minimum of five registered societies as members while a federal apex society must have a membership of at least five registered state apexes.

Primary co-operative societies when they are formed operate for some months before they are registered. The condition for registration of primary and secondary societies are generally the same except in a few cases.

For a society to be registered it must be a bonafide society. In other words, its objective must be the promotion of the economic interest or the provision of services for the members in accordance with the co-operative principles.

The word “co-operative” or its vernacular equivalent shall form part of the society’s name.

The word “Limited” or its equivalent shall be the last word in the society’s name.

The word “bank” shall not form part of its name unless it is a co-operative bank, central financing society or co-operative financing agency.

A registration fee of one hundred naira (N100) or such other sum as may be prescribed by the appropriate authority shall be paid to the director of co-operatives.

The society shall be economically viable though not applicable to all the societies. Thus, auxiliary societies do not have to be viable before they can be registered. Industrial societies must be viable.

The application form, which is obtainable from the office of the director of co-operatives is signed by the minimum membership. In the case of a secondary society the signing shall be done by a duly authorized person on behalf . Every registered society are not registered societies by ten other members and where there are less than ten other members, by all of them.

The Director of co-operative in a state is empowered to register all co-operative in a state, primary, secondary and apex levels in the state except co-operative societies that that are national in nature which irrespective of their location shall be registered by the federal director of co-operatives. Such co-operative that are national in nature include co-operative federation of Nigeria (C F N), National Association of Co-operative Credit Union of Nigeria (NACCUN), etc.



1. It becomes a body corporate – there is perpetual succession and a common seal.

2. Tax privilege and stamp duties. Some states ask their co-operatives to py for stamp duties. Co-operatives are exempted from paying taxes on the surpluses.

3. Free inspection of their book and records.

4. Financial privilege that is loans from financial institutions and grants from the government.

5. Free training programmes: That is, free training programmes from the government, her agencies, non-government co-operative consultants, etc.



Some of the problem that might result as a result of registration include:

1. Bureaucracy: When a society is registered, certain decision affecting a co-operative society cannot be taken except with the approval of the director of co-operative. A lot of time is wasted in the process.

2. Relaxation of efficiency: In most cases, as soon as a society is registered and the certificate has been issued, members relax unlike before registration.

3. Less freedom of Decisions: The presence of both the co-operative Assistant and the area officer usually reduces the freedom of members to take decisions.

4. Tie to the Government: Tie to the government usually increases with registration as societies are affiliated to the government system.

5. Conflicts with customs and tradition: Certain aspects of the co-operative society’s bye laws conflicts with the members customs and tradition.



In conclusion to this research work on formation of a viable co-operative society in Nigeria it can be easily seen that organizing of a co-operative dose not need to be a very difficult task, as assumed by most people.

Hence the fine turnings of formation the properly studies and followed.

1. In co-operative society in Enugu state shows that the registered once are more than the none registered society and it also indicates that there are more members in the registered society than none registered ones.

2. It proves that the officers of the co-operative are performing well and above expectation and that officers that are not performing effectively and efficiently are not much.

3. According to the members of co-operative Enugu state, they said that their books of record, are inspected half yearly by the co-operative Inspector.

4. The co-operative society members said that they are been govern by democratic system of leadership; in other words members can contribute in decision making.

5. The majority of the members said that the co-operative as an organization has help them in their economic needs that the movement has so much impact in socialism.

Finally, these will enable us to know the facts how Enugu state co-operative movement are performing their duties.