Factors That Can Influence the Establishment of Cooperative in Anambra State. A Case Study of Awka North Anambra State
Chapter One
OBJECTIVES OF THE STUDY
This academic exercise is meant to appraise the feasibility of the factors that can influence the establishment of cooperatives and the socio-economic standard of cooperative members and the society at large in Awka North Anambra State. These factors are as follows;
- To know how these factors have helped cooperatives its members and generally the public at large.
- To know how these factors have led to the establishment of cooperatives in Awka North Anambra State.
- To know the number of cooperatives that have failed in Awka North Anambra State.
- To ascertain the number of cooperatives that are still in existence in Awka North Anambra State.
- To ascertain the achievement of cooperatives in the economy of Awka North Anambra State.
- To bring forward how much cooperatives have helped to reduce unemployment in Awka North Anambra State.
- To find out the problems militating against the establishment of cooperatives in Awka North Anambra State.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
There are several contributing factors that lead to cooperatives’ performance. Strategic planning, members’ participation, human capital, structural and relational capital are among the identified factors by past literatures. Past and present literatures agree that strategic planning is one of the factors contribute towards firms’ performance. Strategic planning is a process of carrying out the firms’ mission, vision, objectives and goals of the organisation. Every board of directors must understand the strategic planning they have in their organisation to ensure that their business runs, moves toward achieving their objectives. A survey conducted among the 200 general managers and board presidents of agricultural cooperatives in Minnesota and Wisconsin reported that all Board agreed that cooperative should had well defined missions, objectives and goals but disagreed that their cooperative had a well developed and written strategic planning (University of Wisconsin Centre for Cooperatives, 2000). Past study had found a positive significant influence of the strategic planning on cooperatives’ performances. This is supported by a tentative framework developed in study conducted that having a long term plan for cooperative will influence the performance of cooperatives in Malaysia (Sushila, Nurizah, Mohd Shahron, Rafedah and Farahaini, 2009). Moreover, a study conducted among the 250 board of directors of cooperatives in Malaysia also reveals that cooperative that has a strategic plan for at least 3 years significantly contribute towards the success of cooperatives (Sushila, et. al., 2010). On the other hand, Falshaw, Glaister and Tatoglu (2005) in their study of 113 UK companies found that there is no relationship between strategic planning and company performance. The importance of strategic planning in cooperatives cannot be denied as Pathak and Kumar (2008) in a study conducted in Fiji on factors contributing towards cooperatives’ successful performance demonstrated the main reason that cooperatives were unsuccessful in Fiji was due to inadequate planning. Therefore, these studies incorporate strategic planning as one of the important factors to determine cooperatives performance. Besides having a good strategic planning, the goals and objectives of the organization can be achieved if there is a contribution from its members. Participation is defined as the involvement or state of participating of the members in the activities in the organization. Member participation in cooperatives activities especially in the cooperative governance is very important for the long run survival of a cooperative. According to report produced by United States Department of Agriculture (2011), active member participation would help the management in carrying out
Performance of Cooperatives
According to the international cooperative alliance (ICA, 1995), a cooperative can be defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprise. Cooperatives have been recommended by many agencies of development. These include FAO WFP, UNDP, and ILO (ILO, 2012). Moreover the United Nations (UN) declared the year 2012 to be the International Year of Cooperatives (IYC) (UN, 2012). Globally the origin of formal cooperative movements is believed to be the Rochdale society in England in 1844 (Kimberly &Cropp, 2004 and Andreou, 1977).They were formed to serve a multipurpose interest of the members including storage provision and acquisition of houses. The cooperative movements in Kenya have been in existence from time immemorial. The history of cooperatives among the Kenyan people can be traced to the traditional society before the colonial period where people cooperated in social and economic ways including hunting, farming, caring for livestock, building houses and in many other important social activities during that early period. It is evident that the cooperatives in the traditional societies were not based on the financial gains but were carried out for mutual benefits. This can be seen as an informal type of cooperatives since no publication indicates presence of by-laws or any strict guideline to such form of cooperation. People are also endowed differently and with different resources and skills. In fact the term Harambee as used today by many communities in Kenya bears its origin from 10 the early traditional cooperatives. According to Widstrand (1970), cooperatives have their roots and origin in the traditional indigenous society for reciprocity and mutual benefits. He argues that the traditional cooperatives developed gradually to the modern cooperatives. Hyden (1973, p.3) says that cooperatives were considered in history as a tool to realize African socialism. Chepkwony (2008) in his research indicates that this term Harambee was used to mean ‘let us pull together’’. He also says that different communities in Kenya have a different word which means the same as Harambee. In essence communities cooperated in some way during difficult times. The term Harambee therefore calls Kenyans to form cooperatives for their economic and social gains. Indeed this term is used widely in political arena and forms a basis for social economic pillar in the Kenyan vision 2030 (GOK, 2007). Hyden (1973) indicates that the first cooperative ordinance in Kenya was in 1931.He states that in 1946 Africans were allowed to form their own cooperatives. Moreover he shows that during the period of independence in 1963-64 there were many cooperatives formed by smallholder peasant farmers. According to Kobia (2011) the history of the modern cooperatives in Kenya begins in the 20thcentury. He states that the first cooperative was established by the white in 1908 during the era when Africans were not allowed to form cooperative movements. The first cooperative ordinance was enacted in 1931 to govern the registration of cooperatives. A second cooperative ordinance was enacted in the year 1945 which allowed Africans to form their own cooperatives. After the Kenyan independence in 1963, the government gave emphasis and supported cooperative development as development strategy. There is a record of a tremendous increase in cooperative membership by 1980s. The first cooperatives including KCC, KFA and KPCU served the interests of the white settlers. The same have been adopted and supported by the Kenyan government up to date. The Kenyan government gradually established and developed departments and ministries to cater for the affairs of the cooperative movements. Sessional papers and acts have continuously been prepared and passed to cater for rising needs of the cooperatives. For instance the Cooperatives Society Act No 12 of 1997 which led to the formation Kenya Rural Savings and Credit Cooperatives Societies Unions (KERUSSU) was registered to respond to the needs of rural SACCOs. Today these SACCOs take a larger portion of cooperatives in Mbeere north district (GOK, 2012). Over time there has been the Ministry of cooperatives followed by incorporation of cooperative department in the Ministry of Agriculture and rural development. In the year 2003 the MoCDM was formed to revive the MoCD. In 2007, the Vision 2030 that was published gave emphasis and recognized the importance of the cooperative sector in the reduction of social exclusion and in strengthening of the agriculture sector and so the reduction of poverty. Cooperatives were seen as a community development tool. In the year 2008, SACCO Societies Act was enacted and provided for the formation of SACCO Societies Regulatory Authority (SASRA) which was geared towards to strengthen the formation and survival of cooperatives (MoCDM, 2012).In the year 2013, the MoCDM was converted to and incorporated Cooperative development under the Ministry of Industrialization and Enterprise Development (MIED).There has been a constant evolution of cooperatives in Kenya before independence and after independence. Cooperatives have been transformed from rather simple to complex and highly commercialized cooperatives. The traditional cooperation gave way into the spirit of Harambee that has been considered one of the pillars of Kenya’s socio – economic development and the politics. It is important to note that this traditional cooperation contributed strongly to the later embracing of the cooperative movement. Cooperatives can categorized in many way depending on ownership structure, activities undertaken, and the level of engagement among other distinguishing features and factors considered in the formation of each type of cooperative ( GOK,1986).The objective of the people in the formation of any cooperative society mainly defines the type of cooperative that they form. Therefore there can be as many types of cooperatives as the diversity of the needs of different groups of people may be. However all types of cooperative societies are bound by almost common rules and principles set by the members. Widstrand (1973, p.18) categorizes cooperatives broadly into primary, secondary and tertiary cooperatives based on the level of engagement in the line of production of a particular good. The main types of cooperatives in Kenya includes Agricultural and marketing, Consumer cooperatives, Housing cooperatives, SACCOs, Artisan and handicraft, Service cooperatives and Multipurpose cooperatives.(GOK, 2010).Globally the common types of cooperatives are categorized as the following. To start with are the Producer Cooperatives. According to Miami (1972, p.10-18), these are the types of cooperatives engaged mainly in the primary level of 12 production. Members in these types of cooperatives in many instances are engaged in agricultural activities. However other enterprises such as crafts, artists, fishing and mining are also forms of primary level of production (GOK, 1986). The members of this type of cooperative may join hands in several ways as need be or may arise. For instance, farmers my buy farm inputs together in large scale so as to benefit from the economies of scale. They may also process some products, access extension services or market their produce together in a cooperative among other needs. Other forms of production may require similar services and inputs which warrants member cooperation. In Kenya such cooperatives as KACCU represents producer cooperatives in the agricultural sector. Secondly are the Worker Cooperatives. These are cooperatives formed by members drawn from mainly the same working organization or from the same region. A worker cooperative can also be defined as a business entity that is owned and controlled by the people who work in it (Artz and Kim, 2011) These have featured mainly where workers come together for a particular investment. Initial capital outlay is designed and members acquire shares based on some agreed conditions and the members ability to buy shares in the company. This dictates member’s ownership in the business and the extent of decision making in the same organization. The methods of sharing profits and losses are also designed at the initial stages. They can lead to the formation of SACCOs if engaged in saving and loaning to the members. Moreover worker cooperatives are formed by working people to improve their working conditions and welfare (Thornly, 1981) Thirdly are the Consumer Cooperatives.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to Factors that can influence the establishment of cooperative in Anambra state. A case study of Awka North Anambra state
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on Factors that can influence the establishment of cooperative in Anambra state. A case study of Awka North Anambra state. 200 selected cooperative in Awka North of Anambra state was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain Factors that can influence the establishment of cooperative in Anambra state. A case study of Awka North Anambra state
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of influence the establishment of cooperative
Summary
This study was on Factors that can influence the establishment of cooperative in Anambra state. A case study of Awka North Anambra state. Seven objectives were raised which included; To know how these factors has helped cooperatives its members and generally the public at large, to know how these factors have led to the establishment of cooperatives in Awka North Anambra State, to know the number of cooperatives that has failed in Awka North Anambra State, to ascertain the number of cooperatives that are still in existence in Awka North Anambra State, to ascertain the achievement of cooperatives in the economy of Awka North Anambra State, to bring foreword how much cooperatives has helped to reduce unemployment in Awka North Anambra State and to find on the problems militating against the establishment of cooperatives in Awka North Anambra State. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 members of selected cooperatives were selected randomly. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up chairmen, secretaries, cashiers and members were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Overall, this study shows that cooperatives’ strategic planning and participation from their members are the identified factors that contribute to their overall success and performance. The result confirmed the hypothesis developed as it shows that there is a relationship between the variables involved. Nevertheless, these two factors are not considered as the major factors affecting the cooperatives’ performance as the results indicated the weak positive relationship between the variables. Even though most of the cooperatives developed their strategic planning in guiding their business, but it is very profound that strategic planning is not significantly affecting the direction of their cooperatives.
Recommendation
First, cooperatives may develop their strategic planning that can strengthen their cooperatives’ activities. In addition, it is highly suggested that these cooperatives need to have their own mission and vision and focus on the long-term planning which reflected from their vision and mission. In terms of members, the cooperatives need to regularly communicate with them regarding any updated information, activities and also increased their involvement in cooperatives’ decision making so that this third economic contributor can help the government effort in becoming the high-income country. This study revealed that it is importance for the cooperatives to have adequate planning and encourage the participation from its members in their administration. This is because, when their performance is improved, indirectly it can boost the economics of the country as well as promoting job creations as a strategy in reducing poverty. Since their establishment aims to help its members, it is vital to ensure their success.
References
- Amini, A. M. & Ramezani, M. (2008). Investigating the Success Factors of Poultry Growers’ Cooperatives in Iran’s Western Provinces. In World Applied Sciences Journal,5(1). Retrieved from http://idosi.org/wasj/
- Falshaw, R.J., Glaister, K.W. and Tatoglu, E. (2005), “Evidence on formal strategic planning and Company performance”, Management Decision, Vol. 44 No. 1, pp. 9-30. Member Participation in Agricultural Cooperatives: A Regression and Scale Analysis (2011). RBS Research Report. Retrieved from http://www.rurdev.usda.gov/rbs/pub.
- Najib Tun Razak (2010). Speech on Cooperatives’ Movement at SMIDEX Opening Ceremony, Kuala Lumpur. National Cooperatives Policy (2011-2020). Retrieved from http://www.skm.gov.my/
- Pathak, Raghuvar Dutt & Kumar, Nirmala D. (2008) The key factors contributing to successful performance of cooperatives in Fiji for building a harmonious society. International Journal of Public Administration, 31(6), pp. 690-706. Report on Strategic Planning and Cooperatives Performance (2010). University of Wisconsin Centre for Cooperatives Web site: http://www.uwcc.wisc.edu/info
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- Sushila Devi, R., Nurizah, N., Mohd. Shahron, A. S., Rafedah, J., & Farahaini, M.H. (2009). Factors influencing the performance of cooperatives in Malaysia: A tentative framework. Malaysian Journal of Co-operative Management, 5, 43-62.
- Sushila Devi, R., Nurizah, N., Mohd. Shahron, A. S., Rafedah, J., & Farahaini, M.H. (2010). Success factors of cooperatives in Malaysia: An exploratory investigation. Malaysian Journal of Co-operative Studies, 6, 1-24
