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All about co-operatives

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Co-operatives are enterprises that are owned, controlled, and managed by and for their members. The co-operatives are operated for the members to uplift their socio-economic and cultural needs.  The major distinction for the co-operatives is the ‘one member, one vote’ rule. Therefore, they are democratically managed, and members have equal voting rights irrespective of their capital injection. Today there are more than 1 billion members in 3 million co-operatives in the world [1]. According to the report from, World Cooperative Monitor, the largest 300 co-operatives report a total turnover of 2.1 billion [2].  Moreover, co-operatives provide jobs to 280 million people across the globe.

The co-operatives have several advantages compared to other corporations. Fundamentally, the co-operatives are member-owned, member-run, and member-serving business entities, therefore, co-operatives empower members to collectively realize their economic dreams and at the same time strengthens their social needs. As the co-operatives are not owned by shareholders, the co-operatives can play a significant role in the economic and social benefit of the communities. The profits generated are reinvested in the co-operatives or returned to the members. 

The International Co-operative Alliance (ICA), founded in 1895 which is a non-governmental co-operative federation lists the following co-operative principles:

  1. Voluntary and Open Membership

Co-operatives are open to all persons who are willing to use their services and willing to accept the responsibilities of membership without regard to their gender, race, religion, or political belief.

  1. Democratic Member Control

The cooperatives have equal voting rights (one member, one vote) and are democratic organizations. The members actively participate in setting the policies and making decisions. 

  1. Member Economic Participation

The members of the cooperative equally and democratically control the capital of their cooperative. 

  1. Autonomy and Independence 

Co-operatives are autonomous and controlled by their members. Co-operatives maintain their co-operative autonomy and are democratically controlled by their members while having an agreement with other organizations, government, or raising capital from external sources. 

  1. Education, Training, and Information

Co-operatives provide education and training for their members, the public, and other elected representatives, and employees.

  1. Co-operation among co-operatives

Co-operatives strengthen their movement by working with local, national, and international structures to serve their members effectively.

  1. Concern for Community

The policies approved by the members are used for the sustainable development of the community by co-operatives.

Co-operatives in Nepal

The first cooperative in Nepal was Bakhan Multi-purpose cooperative institute established in Chitwan in 1957 [3]. The government has been regulating the co-operatives with the co-operatives act, the first was enacted in 1960, followed by the Co-operative Act and the Co-operative Regulations in 1992 and 1993. The constitution of Nepal 2015 recognizes co-operatives as one of the three pillars of the national economy. There was an enactment of a new co-operative act and regulation in 2018 and 2019 [4]. According to the data published by the Department of Co-operatives of Nepal in December 2018, 34512 co-operatives are operating in Nepal which are employing 60517 people directly [5]. The details of co-operatives in Nepal are given in the table below:

TypeNo of co-operativesNo of DirectorsNo of membersNo of employeesShare Capital (in millions)
Saving and Credit135789775334455543544754385
Multipurpose43713160512737771208510754
Agriculture1092176204109226566835086
Dairy1658128531058931653331
Consumer1423953170725671324
Electricity463378081370418198
Vegetables and Fruits19315472026713343
Tea1088561196344119
Coffee1551166759312212
Herbs1861487113058764
Bee Farming937494341539
Communication143116517053556292
Health128106914453880579
Sugarcane48362295416
Sweet Orange453692123112
Others99973311439451673975
Total3451224782763055816051773179

The pie chart below shows the proportion of different types of co-operatives operating in Nepal. It is observed that saving & credit co-operatives are operating most in number followed by agriculture co-operatives in Nepal. The share of saving & credit, agriculture, and multipurpose co-operatives is around 83% of the total co-operatives in Nepal.

Co-operative Unions and Bank in Nepal

Nepal Federation of Savings and Credit Cooperative Unions (NEFSCUN) founded in 1988 is the apex organization of Savings and Credit Co-operatives Societies (SACCOS) and their District Unions (DUs). The National Co-operative Federation of Nepal (NCF) founded in 1993 is the apex body of all types of co-operatives in Nepal. NCF has been leading the cooperative movement in Nepal and is acting as the bridge between the co-operatives and government at the national and international levels. NCF is also an active member of the International Co-operative Alliance.

Nepal Multipurpose Central Cooperative Union Limited (NEMCCU) is the apex organization of multipurpose co-operative operating in Nepal. There are more than 4300 multi-purpose co-operatives that are members of NEMCCU [6]. Moreover, there are other unions of co-operatives like Central Dairy Cooperative Association Limited (CDCAN) which is working as an apex organization for dairy co-operatives in Nepal. 

National Cooperative Bank Limited (NCBL) established in 2003 is the only bank for the cooperatives of Nepal and is providing banking and financial services to all its members. The government of Nepal, National Co-operative Development Board, National Co-operative Federation, Central Co-operative Unions, District Co-operative Unions, Sectoral Co-operative Unions, Primary Co-operatives of various types are affiliated to NCBL. NCBL has been providing a range of services in Nepal to its members like deposit, loan, bank guarantee, remittance, utility payment, and digital banking. At present, the bank has, 12283 members cooperatives covering all 77 districts of Nepal [7]

Role of Co-operatives in Nepal

Nepal has a history of informal community-based co-operatives including savings and credit associations which are popularly known as Dhikuti, and Dharma Bhakari (which means ‘store for good’). Similarly, ‘Guthi’ provided the platform to work together for running different cultural practices.  Such traditional systems are still operating in Nepal.

Co-operatives are significant at the grassroots levels and help farmers and small businesses, by providing financial support and training. Co-operatives empower the poor people and create jobs and support with income generation. The government of Nepal has been actively supporting the co-operatives and regards it as the three main pillars of the economy along with public and private sectors. The contribution of co-operatives to the Gross Domestic Product (GDP) of Nepal is around 4 percent which is equal to that of the tourism industry [8]

The co-operatives in Nepal have given special emphasis on the microcredit, agricultural and dairy credit to the deprived sector. This has benefitted the local people to start their business. The economically challenged groups have been generating income through such loans as well as generating jobs. With the active role of co-operatives in agriculture and dairy, also helps in ending hunger and improving food security.

Recently, not only a small business, but also larger business such as hotels, agriculture farms, petrol pumps have been benefitting from co-operatives.  The co-operatives today have been also focused on digital banking and providing facilities like online banking, mobile banking, QR based payment. The co-operatives are also actively participating in Corporate Social Responsibilities (CSR) by organizing various activities like blood donation camps, tree plantation events, support for elderly care and orphans, educational scholarships.  

To conclude, co-operatives have been playing a pivotal role in poverty reduction, good governance, social equality, and service delivery. Co-operatives are more democratic with their one member, one vote policy, and will have a significant impact socially and economically in the future.  

References:

  1. https://www.ica.coop/en/cooperatives/facts-and-figures
  2. https://monitor.coop/en
  3. https://thehimalayantimes.com/opinion/cooperative-movement-in-nepal-still-going-strong
  4. https://nefscun.org.np/about-us/cooperatives-in-nepal/
  5. https://www.deoc.gov.np/english/
  6. https://www.nemccu.com.np/ng/en
  7. https://ncbl.coop/html/about.html
  8. https://www.np.undp.org/content/nepal/en/home/presscenter/articles/2019/Development-Advocate-strength-in-numbers.html
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