THE SOURCES AND USES OF FUNDS IN CO-OPERATIVE BUSINESS ENTERPRISES- THE NIGERIAN SITUATION
CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
Cooperative Societies have grown to be recognized as a powerful tool for fostering economic empowerment, particularly among women and other vulnerable and marginalized groups. They have continued to play important roles in the economies of many countries. In the Republic of Kenya, for example, cooperatives account for 45 percent of GDP and 31 percent of National Savings and Deposits. They control 70% of the coffee market, 76% of the dairy market, 90% of the pyrethrum market, and 95% of the cotton market. Cooperatives directly and indirectly employ almost a quarter of a million people in the country. Agricultural cooperatives in South Korea have approximately two million farmers as members, accounting for around nine-tenths of all farmers in the country, with an annual production of USD 11 billion (Todaro, & Smith, 2019). Approximately one billion individuals are active in cooperatives in some capacity, either as members/customers, employees/participants, or both. Globally, cooperatives employ at least 100 million people. Cooperative societies are expected to provide a living for roughly half of the world’s population. The combined earnings of the world’s 300 largest cooperative societies are USD 1.6 trillion, which is similar to the GDP of Spain, the world’s ninth largest country (Todaro, & Smith, 2019).
A cooperative society is the voluntary gathering of persons with similar interests with the goal of meeting members’ mutual economic or social needs. Members benefit from one another’s ideas, abilities, skills, and energy by combining their efforts. In this way, they are able to do things that they could not do as well (or at all) on their own in areas like as production, marketing, distribution, thrift, education, and so on. According to the International Cooperative Alliance, a cooperative society is an independent organization of people who have come together freely to achieve their shared economic, social, and cultural needs and goals through a jointly owned and democratically controlled company (Skipper, 2017).
Prior research has concentrated on determining the worth of cooperativism in regions. Cooperatives are seen to be crucial for the development and expansion of territories because they have an influence on the creation of jobs in underserved areas, on meeting new social demands that react to groups at risk of social exclusion, and, in short, on the promotion of social capital. In the same manner, the cooperative-related institutions and groups, always contain references to this component in their reports. Following the release of the most recent report of the Federal Government of Nigeria, cooperatives are emphasized as essential local private sector actors under the following concepts: “Cooperative companies are a wonderful match with the EU2020 agenda, which aspires for a sustainable economy that prioritizes people and responsibility while fighting exclusion and transitioning to a green economy hence the need for funds for cooperative firms (Otto, & Ukpere, 2015).
Both governmental and non governmental have driven financial sustainability and integrated community development among funds in Nigeria. in the process the study examined the extent to which sources and uses of funds in cooperative business enterprises have resulted in an economic, social and political empowerment. Funds are generally considered to be at the lowest rung of the poverty ladder in Nigeria, the study extrapolated the effects of funds on the mitigation of poverty. This helps us to know the implication of financing cooperative capital in an economic activities and enterprises. The theoretical bases of analyzing funds is because of the low economic status in Nigeria society. There is a general likelihood that the financing approach is targeted at women. This approach from the Nigerian perspective was realized and tested and selected in three micro finance (1) Non – organization (2) Government assisted micro finance organization: Country Women Association of Nigeria (COWAN), the Peoples Bank of Nigeria and Family Economic Assistance Programmes. The latter two are both federally operated institutions of the government of Nigeria aimed at providing credit to those who ordinarily would not get them and by so doing raise their economic status and help to eliminate poverty. The proposition of funds are:
There a direct relationship between microcredit availability and economic development
1. There is a direct relationship between microcredit and women empowerment in Nigeria
2. The availability of microcredit facilitates income generating activities among people and contributes to their increased standard of living.
3. There is an association between microfinancial institutions and the development of financial sustainability among Nigeria women and
4. That microfinancial institutions are directly associated with women leadership development in Nigerian.
It has been reported that at an international conference in 1998, “donors and governments renewed their commitments to advancing women regenerating environmental resources and providing sustainable livelihood for all”. The contention is that micrfinance is at the core of each of these three goals. This is because microfinance provides the means to generates income that eventually leads to a sustainable development. Funds constitute and provide the drive to develop a “broad access” to the financial resources to the poor in order to provide the basic requirements for sustainable development.
1.2 STATEMENT OF RESEARCH PROBLEM
The importance of funds to any business enterprise, be it private or public, cannot be overemphasized. Co-operative societies need funds to finance their fixed and working capital, to pay for services and for making interest-yielding investments. Lack of funds has featured prominently among the key constraints to co-operative business enterprise in Nigeria even at normal times. We can then imagine, or rather, we are all aware of, the situation under the prevailing excruciating business climate in Nigeria. Other scholars and policy analysts have identified the inhibiting factors that make micrfinance enterprises unsuccessful. Yaron identified “high risk” “heavy