Co-operatives and their Economic Importance

Cooperative is a group of like-minded people working for the same economic and social goals. So the basic meaning of cooperative is to work together in collaboration. In a broader sense, people with different purpose, careers, businesses and aspects working for social and economic development are considered a cooperative. In September 1995 at Manchester, England, the International Cooperative Federation Council defined Cooperative. A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise.

In Nepal’s context, Guthi, Dharma, Bhakari, Manka Khala, Kulayan, Dewali, Parma, Bheja, Dhukuri, etc. worked as co-operative organizations since traditional times. In Nepal, formal cooperatives were developed after the formation of Cooperative Association in 2010 B.S. Established in 2013 B.S. in Bakhanpur, Chitwan, Bakhan Credit Cooperation is considered to be Nepal’s first cooperative. The Cooperative Act, 2016 was issued to institutionalize cooperatives in Nepal. Cooperative Law in 2018 B.S. and Cooperative Bank 2020 B.S. were established. After the promulgation of the Cooperative Act in 2048 B.S., the wave of establishing cooperatives began.

Cooperative institutes have certain objectives and goals. So the membership is voluntary. Such organizations can function without external restrictions. Cooperatives are democratic organizations and are operated by the members elected or appointed by the members. The members have equal right to the profits from financial transactions.

Cooperatives have a very great importance for us as a country. The purpose of these institutions is to meet the public expectations. So the possibility of cooperative development public can’t be imagined without public participation. Developed nations have achieved much progress from cooperatives. We have to learn from experience and the progress of other countries to our advantage. Cooperatives can play a key role for the strengthening of the economic system of Nepal. The cooperative teaches farmers to be economically independent. It promotes the feelings of production pride in the rural societies. It helps the locals in improving the quality of life as well as poverty alleviation. The establishment of multi-purpose cooperatives has played an important role in credit services available to farmers involved in agriculture and easy market access to improve rural living conditions.

The presence of domestic and small industries is necessary for better rural living standards. So the capital required for the establishment of small and cottage industries are possible through cooperatives. Such organizations also contribute to the economic development in national periodic plans. The local level cooperation, coordination and investment environment has been created from these organizations. New possibilities and identifying the needs are possible because of such institutions. The economy can be improved and unemployment tackled by the means of cooperatives.

There are also problems with cooperative organizations. Giving higher loans to family members and appointing friends as members are heard from time to time. Such are illegal actions have to be ended. The chairperson using the deposit money for personal use and real estate investments are also found in some cases. Similarly, the amount collected from the public and big business financial transactions not being given in for final audit are also seen. One person being involved in many cooperatives also has damaged the reputation of some cooperatives. The effective implementation of the Cooperatives Act can benefit many cooperatives. Similarly, discouraging investment outside the working sector and actual service to the depositors will alleviate this problem. In addition, prohibiting the sale of shares to people outside the regulatory framework must be done.