EVALUATION OF INNOVATIVE STRATEGIES OF RAISING CAPITAL FOR MULTIPURPOSE COOPERATIVE SOCIETY IN NIGERIA (A CASE STUDY OF ONITSHA SOUTH LGA, ANAMBRA STATE)

CHAPTER ONE

INTRODUCTION

1. 1. BACKGROUND OF THE STUDY

Cooperation is an important tool in the actualization of a set objectives or goal. Without cooperation, it would be difficult if not impossible in achieving goals either financially, politically or otherwise.

Cooperation enables people to achieve heights in the level of living through their mutual and friendly association (Rochadle Pioneers, 1844). Cooperation proved to be an effective economic tool during the industrial revolution of 1947. As this idea of cooperation spread across the world, associations began to experiment it in other fields like business, politics and religion. For instance, Friedrich Wilhelm Raiffeisen (1818 – 1888) implemented the concept of cooperatives successfully on rural credit in Germany and Schulte Delitzsch (1809 – 1883) on urban credit in Germany (Ahmadu, 2005). The cooperative movement in Nigeria, the spirit of self-help and cooperation, has a long history as part of the business or corporate community. Various self-help co-operatives still exist especially in Nigeria in actualizing set economic goals and objectives.

Cooperatives can simply be said to an autonomous or independent association of persons who come together voluntarily to meet their common economic and social needs and aspiration through a jointly owned and democratically controlled enterprise (IC1A, 1995). Cooperatives are established by people of like minds to pursue mutually beneficial economic or political interest. Researchers are of the opinion that under normal circumstance Cooperative play significant role in the provision of services that enhance economic growth and development. Regular and optimal performance of these roles will accelerate the transformation and improvement of social and rural economic development.

Capital formation can be defined as the transfer of savings from households and governments to the business sector, which yields increased output and economic growth and expansion (Wikipedia).

The ever growing need for capital and access to the basic necessities of life and articles of trade led to the formation of most of the co-operative societies in Nigeria especially. Cooperatives vary in meaning with different aims and objectives but most importantly it is a voluntary association of people with a common or mutual goal.

In raising capital or credit in any cooperative society certain procedures or strategies need to be followed in successfully achieving that. There are laid down procedures for achieving capital growth and development in   a multipurpose cooperative society in Nigeria. For very business organization, raising capital Is a cardinal point in considering the growth and development of such association. Such strategies would be examined in the cause of this study with the objective of improving capital generation in cooperative association as this is a very important in reducing the poverty level in Nigeria as this would by extension improve the economy as more money would circulate in the economy.

1. 1. STATEMENT OF THE GENERAL PROBLEM

The co-operative societies are formed with the expectation of mutual co-operation. Most co-operative societies are formed to render service to its members rather than to earn profit.

Overtime is has been said that co-operative societies in Nigeria do not function efficiently due to lack of managerial talent and lack of strategies of capital generation. The members or their elected representative are not experienced enough to manage the society. As a result of limited capital they are not able to get the benefits of professional management it deserves.

The gains to the Nigerian economy during the pre-oil era were largely due to positive effects arising from general acceptance by the people of cooperative movements. Sadly, those attractions are no longer in place today as they have been long ago forgotten with the petroleum becoming the dominant commodity and the mainstream of the economy of Nigeria. Despite the benefits of the cooperative societies, many cooperators seem not to gain or reap substantially from being membership of various co-operative societies in terms of capital formation or generation and the improvement of their welfare.

1. 1. AIMS AND OBJECTIVES OF THE STUDY

The major aim of this study is to evaluate the strategies of raising capital for multipurpose cooperative society in Nigeria. Other specific objectives of the study include;

1. To examine the socio economic characteristic as cooperators in Onitsha south local government area.
2. To examine how funds are used by cooperative societies in Onitsha south local government area.
3. To determine the extent to which cooperatives have benefitted members in financing their investments in Onitsha south local government area.
4. To examine the problems militating against cooperative societies in Onitsha south local government area.
5. To recommend ways of improving cooperative societies towards enhancing the capital formation of members.
   1. RESEARCH QUESTIONS

1. What are the strategies for raising capital for multipurpose cooperative society in Onitsha south local government area?
2. What are the socio economic characteristic as cooperators in Onitsha south local government area?
3. How are funds used by cooperative societies in Onitsha south local government area?
4. To what extent do cooperatives benefit members in financing their investments in Onitsha south local government area?
5. What are the problems militating against cooperative societies in Onitsha south local government area?
   1. RESEARCH HYPOTHESIS

H0: There are no innovative strategies of raising capital for multipurpose cooperative societies in Nigeria

H1: There are innovative strategies of raising capital for multipurpose cooperative societies in Nigeria

1. 1. SIGNIFICANCE OF THE STUDY

It is no longer news that cooperators still find it difficult or almost impossible to raise capital for their respective cooperatives in Nigeria. Findings from this study would immensely be beneficial cooperative societies as it would unveil the various methods of raising capital with particular reference to co-operative society with the main intention of highlighting the prospect and trends of co-operative societies in Nigeria as it affect capital generation. It is hoped that the result or findings from this study will contribute to knowledge in the area of capital generation as well as a contribution to policy framework with respect to cooperative society in Nigeria. The study would also be important to researchers, scholars and students who are interested in the subject matter for further studies

1. 1. SCOPE OF THE STUDY

This study is restricted to the evaluation of innovative strategies of raising capital for multipurpose cooperative society in Onitsha south local government area.

1. 1. LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1. 1. DEFINITION OF TERMS

Cooperative society: A co-operative society is an association of individuals who voluntarily pool their resources and carry on the business for their own welfare and not for a profit seeking business. It is democratic form of organization in which the consumers are the owners of the business. From manager to clerk all are the owners of the business and all the management is in their hands. In this organization capitalist is not involved.

Capital: Capital refers to financial assets or the financial value of assets, such as cash and funds held in deposit accounts, as well as the tangible machinery and production equipment used in environments such as factories and other manufacturing facilities. Additionally, capital includes facilities, such as the buildings used for the production and storage of the manufactured goods. Materials used and consumed as part of the manufacturing process do not qualify.

Innovation: Innovation generally refers to changing processes or creating more effective processes, products and ideas. For businesses, this could mean implementing new ideas, creating dynamic products or improving your existing services. Innovation can be a catalyst for the growth and success of your business, and help you to adapt and grow in the marketplace.

SACCO: savings and credit cooperative society