Pageno.17914.Socio-EconomicImpactsof Co-operativeSocieties:

AnEmpiricalStudyMd.RuhulAmin*

MohammedMahinUddin**

Abstract:ACo-operativeisauniqueformofbusinessusedbypeopleandbusinessesfortheirmutual benefit. Cooperatives are community-based, rooted in democracy, flexible,and have participatory involvement, whichmakes themwell suited for economicdevelopment. An economy based on one form of business organization alone isneitherdesirablenorpossibleinmoderntimes.Tojustifytheirexistenceandfulfiltheir purpose, cooperatives must make a significant and unique contribution tosolvingsomeof themassiveproblemsfacingmankindtoday.Thispaperexaminestheroleofcooperativesocietiesineconomicdevelopment.Theaimistoinvestigatetheways inwhichcooperatives canact as agents towards sustainable communitydevelopment.Keywords: Co-operative,Development,Society,Constrains,Constitution,Comilla.

Pageno.180FullText:

1.IntroductionToday, in an era when many people feel powerless to change their lives,cooperatives represent a strong, vibrant, and viable economic alternative.Cooperatives are formed to meet peoples’ mutual needs. They are based on thepowerfulideathattogether,agroupofpeoplecanachievegoalsthatnoneofthemcouldachievealone.Forover160yearsnow,cooperativeshave been aneffectivewayforpeopletoexertcontrolovertheireconomiclivelihoods(Agarwal,R.,&Gort,M.1996).Cooperativesarededicatedtothevaluesofopenness,socialresponsibilityand caring for others. Such legal entities have a range of social characteristics.Membershipisopen,meaningthatanyonewhosatisfiescertainnon-discriminatoryconditions may join. Economic benefits are distributed proportionally to eachmember's level of participation in the cooperative, for instance, by a dividend onsalesorpurchases,ratherthanaccordingtocapital invested.Cooperativesmaybeclassifiedasworker,consumer,andproducer,purchasingorhousingcooperatives.Co-operative-societies are organizations voluntarily owned and self controlled(non-governmental)aimedatsolvingthe feltneedof itsmembers. TheyprovideauniquetoolforachievingoneormoreeconomicgoalsinanincreasinglycompetitiveglobaleconomyAhammed,Dr.Tofael(2012).Therearetwosourcesofcooperativelaw such as Parliament and Presidential Order. Foremost the Indian Cooperativecredit Society Act passed in 1904 and it was rectified in 1911. In 1984, GeneralErshadgovernmentpromulgatedcooperativeordinance1984anditwasinforcetill2001.Atpresent context the cooperativeSocieties runby theCooperativeSocietyAct 2001 and Cooperative Rules, 2004. The Cooperative Society had its glorioushistory in this Subcontinent. At the outset of 19th century the visibility ofcooperative Society was seen in this subcontinent (Najamudden, G. Abukar .B.Z.,Kebbe, M.G.Magati, Ukasatu, 2012). During Pakistan Period Cooperative Societypasseditsgoldenageandmassivelycontributedonsocial-economicalaspectoflife.EarlierthreedecadesofBangladesh,CooperativeSocietiesplayedmarvelousroleinpoverty reduction, employment generation, extension of small and cottageindustriesbutinthelastdecadesthecooperativeshavelosttheirpreviousstatus&traditionforfewcauses.Eventhecooperativesocietiesareneglectedanddeniedinnational five year plans and PRSP. In spite of having a cooperative division ofgovernmentbutitsimportanceisdisappearinggradually.Sadarsouthisillustrious

Pageno.181upazila of Comilla district and here about 500 cooperative societies. Due to goodflowof foreign remittance,political andeconomical consciousness, education rate,institutional facilities, high land price etc day by day various segments ofcooperatives are being set up and functioned. These Cooperatives face variousproblems and on the contrary they have vast prospects too. In this study sadarsouth upazila was selected for study so that the upazila can represent the allupazilas of Bangladesh. The drawbacks, prospects of cooperatives of this upazilawill be seen in the light of cooperative of whole Bangladesh. The paper is adescriptive survey, which involves the collection of data for the purpose ofdescribingtheroleofcooperativesocietiesineconomicdevelopment.The study conducted keeping inmind severalwell defined objectives. The overallobjectivesofthisresearcharetoidentifytheproblemsandprospectofcooperativesocieties in Bangladesh which plays momentous role in socio-economicdevelopment of rural people. The studywas conductedNovember, 2012 at SadarsouthupazillainComilladistrict.Surveymethodwasusedinthisstudy.Wefoundliterarymorethan500cooperativesandtheirbeneficiariesofsadarsouthupazilaofComilladistrictandtookthesample100(50+50)asarandombasisandwhoarethemembersofdifferentcooperatives.2.LiteratureReviewKimberly, Z. (2002) defines Cooperative Societies as a registered voluntaryassociationofpersonswithmembershipnotlessthantenpersons,withacommoninterest formed and operated along democratic principles, for the purpose ofeconomic and social interests at least costs, to its members who contribute thecapital and manage the business so established by delegating some powers toelectedmanagement.Dr.ToffaelAhmed(2012)narratedtheexistingproblemsandrecommendationsfor theenrichmentofcooperativesector inBangladesh.But thesocial and economical aspects, the prospects of cooperative have not beendiscussed. (Kazi Khalekkuzzaman, Mohammed, 2005), they briefly discuss theobjectives, types, sources of revenue of cooperative, government assistance,problemsandsolutionhavebeen focused.On the contrary,prospects, economicalsocial impact of cooperative societies have not been discussed. Md. Shahin Reza(2012), narrate the problems & opportunities of marginal cooperative members.

Pageno.182But to the letter the contribution, problems andprospects of cooperative has notbeen reflected in this article. It is a business enterprise that aims at completeidentity of the component factors of ownership, control and use of service, threedistinct features that differentiate cooperatives from other businesses (FarukMohammed, Abul kashem, 1983). Even though co-operatives appeared in thecentury previous, Rochdale is seen as the first ‘modern’ cooperative since it waswheretheco-operativeprinciplesweredeveloped(Gibson,2005;andAbell,2004).(Hussi, P., &Murphy, J. 1993) examines the difference between cooperatives andotherbusinessesinrelationtothreemaingroupsofpeopleresponsibleforbringingthem into existence and keeping them in operation. The three groups are: thepersonswhoownthem(theshareholders, theinvestors), thepersonswhocontrolthem (the effective decision makers) and the persons who use them (thecustomers).Cooperativesarecommunity-based,rooted indemocracy, flexible,andhave participatory involvement, which makes them well suited for economicdevelopment (Ajakaiye, M. B. 1989). The process of developing and sustaining acooperativeinvolvestheprocessesofdevelopingandpromotingcommunityspirit,identityandsocialorganizationascooperativesplayanincreasinglyimportantroleworldwide in poverty reduction, facilitating job creation, economic growth andsocialdevelopment (Gibson,2005).Accordingto BottomleyT. (1989) cooperativesarespecificallyseenas significant tools for thecreationofdecent jobsandfor themobilization of resources for income generation. According to Agbo, F. U. (2000)combating exploitation, reducing disparities, improving social conditions andgender sensitivity, and helping to create a more just society with pronouncedconcernforenvironmentalprotectionandsustainableprocessesofdevelopmentalltend to make a cooperative a preferred and more socially desirable form oforganization.3.ScenarioofCooperativeSocietyinBangladesh“Co-operativeisthemid-wayhousebetweentwoendscapitalismandsocialism.”ToeradicatedistressofvillagefarmersBritishgovernmentpermittedtolaunchvillagemicro credit cooperative societies through the promulgation of cooperative Act1904.Anditwastheforemostinitiativeforcooperativeinsubcontinent.Aplentyofrectification,alternationandamplificationwasbroughtoutin1911.And intheAct1911, the non agro sectors too were bucked up to be included with cooperative

Pageno.183sectors. In 1919 cooperative was brought out under provincial government butowing to floods, inflation, war the attempts of provincial government couldn’tsucceed. Bengal cooperative Act was passed in 1940 to make dynamic thecooperative sector. Due to India separation in 1947, the cooperative movementfacedobstaclescomprehensively.TheActwasinforceinwholePakistanperiodandin this period revolution was occurred in cooperative sector. Even the act wasunchanged till1984ofBangladeshperiod.Emphasizing the cooperative sector forsocio-economical especially the agro and small business Ershad governmentpromulgatedcooperativeordinance1984.Andthiswascontinuedtill2001.After17yearsBangladesh government newly formulated the cooperative society act 2001and later in 2004 cooperative society rules 2004 was promulgated. Now thecooperativesocietyAct2001&theCooperativeSocietyRules2004isthelegalbasisforoperationandformationofcooperativesofBangladesh.Andnowvarioustypesofcooperativesarebeingsetupformultipurposegoalsbothintowns&villages.Thecooperatives finance to middle class business as well as function, land business,transformation. In spite of government less patronizing, the cooperative sector isadvancingforwardgradually(Ahammed,D,Tofael(2012).3.1ConstitutionalaspectofcooperativeinBangladeshConstitution is the apex law of the state and source of all laws, orders, acts,ordinances and base of all ideologies for development of the state. In the part offundamental principles of state policy several well defined indicators like stateoperation,economicalenrichment,developmentandphilosophyofstatehavebeencited. In article13, principles ofownership have been enlisted and three types ofownershiphavebeennarrated. According to constitution the statement regardingownershiphasbeenshowninbelow:“The people shall own or control the instruments and means of production anddistributionandwiththisendinviewownershipshallassumethefollowingform:

Pageno.184State ownership: that is ownership by the state on behalf of the peoplethrough thecreationof anefficientanddynamicnationalizedpublic sectorembracingthekeysectorsoftheeconomy;Cooperative ownership: that is ownership by cooperative on behalf of theirmemberswithinsuchlimitsasmaybeprescribedbylaw;andPrivateownership: thatisownershipbyindividualswithinsuchlimitsasmaybeprescribedbylaw.But it is a matter of repentance that the policy makers of our country had notemphasized the cooperative sector for social& economical enrichment rather thesectorhadbeenneglectedanddisregarded.Onceuponatimetheywouldpromoteonly government sector. At the outset of 1980’s the decentralization process hasemphasized and gradually the concentration of statewent to the development ofprivate sectors. In the middle, another vital sector cooperative or cooperativeownership, production, distribution consumption loses their appeal. Currency,banking,investment,micro-macroeconomicpolicyhasnotbeenformulatedfortheimprovementofcooperativesector,privatesectoraswellasstatesector.Inspiteofhavingacooperativedivisionofgovernmentaccuratecaretakingandlookingafterisnot done. That proves the realization of importance of cooperative from theconstitutionalviewisabsent.

3.2AdministrativestructureofcooperativeinBangladeshThecooperativeadministrativestructure implies twomajorparts likethe internalprofessionalmanagementofcooperativeandanotheroneisregulatorybodiessuchas cooperative division, cooperative department, BRDB, Zila and Upazilacooperativeoffices. Inspiteofhavinglargesizeofthesebodies,theycannotprovidestandard & sufficient services to cooperatives. It cannot be blamedmerely thesebodies but government has not well determined plans, policies regardingcooperative sector. Owing to indifferences and negligence of LGRD & Co, thecooperativedepartment,BRDBcannotcarryouttheirresponsibilitiesproperly.To

Pageno.185cope with present context of development of this planet, government shouldprioritizethecooperativesectorandforthattheabovereferredtwobodiesshouldberadicallychanged.Firstly, thecooperativedepartment&BRDBhavetobereconstitutedunderauniqueorganizationnotkeepthesebodiesseparatedforassistingthecooperative.Secondly, there would not have bureaucratic complexity in reconstitutedorganization rather than the body would be professional service providing. Thepersonnelsetup&functionsdesigningwouldbeconstitutedwiththecollaborationof expert, professional andmeritorious personnel. The cooperativewould not beregulatedbutwouldbeselfcontrolled.Theownerswillbeallinallandtheywillbekeenlyaccountabletotheirmembers.Governmenthastostopgrant,donationandsubsidytocooperativesandwillcreatechanceforthecooperativesothattheycanbe self reliant. On the contrary, government will not carry out any liability ofcooperatives side by side government will not impose any condition oncooperatives.Cooperativedepartmentisthecodifiedorganizationforcooperativeauditing.Butithas not required skilled & sufficient manpower for auditing. In this regard, thecooperativesocietiescanaccepttheassistanceofacodifiedauditfirm.Forinstance,NGOAffairBureauandsocialwelfaredepartmentdon’toperateaudit activitiesofNGOs. Apartformcooperativehasitsownbureaucracy.Cadremembersenterintocooperative cadre and goes to retirement as deputy secretary from service. Suchtype of cadre system is obstacle for growth & development of cooperative. Aprofessional service providing organization has to be constituted. The auditactivitiesofcooperativesectorwillbeaccomplishedbyprofessionalauditfirmsofhomeaswellasabroad(Ahammed,D,Tofael(2012).4.Findingsandanalysis

4.1Bi-dataoftherespondents

Pageno.186Table01revealedthat50%oftherespondentsfallwithintheagerangeof20-30years.Italsoshowed76%oftherespondentsweremale.Thisimpliedthatmalesdominatetheformationofcooperativeseventhoughtherewasnobarrierofentrythatpreventsfemalesfromparticipatinginthecooperativesandmajorityofthemwereengagedindifferentactivities.Table:Bi-dataoftherespondents

Parameter Frequency %Age20-25 7 1226-30 23 3831-35 16 27Above35 14 23SexMale 38 76female 12 24

TotalRespondents=50

4.2NatureofSavingsofBeneficiariesInour studywehave found that themaximumbeneficiaries chose thedailybasissavings(40%).Themainreason is thebeneficiarygroupsare involve insmallandmedium business. It’s the easiest way for them to savings. Those who havefinancially solvent could savingsweekly (20%), fortnightly (6%), quarterly (6%),fixed (8%) andmonthly (20%).Wehave found that the beneficiary groups chosetwocategoriesmostdailybasisandmonthly.Theythoughtthatitistheeasiestwayforthemtoenrichtheirsituation.

Pageno.187

4.3MonthlyIncomeofBeneficiariesWehavediscussedearlierthattheincomelevelinsistedthebeneficiarygroupsforsaving various amount of money.We found that those have earns maximum (0-5000)takapermonth(24%)&(5000-10000)takapermonth(40%)feltencouragetosavingdailybasis.Wehavealso foundthat thosewhohavetheearning level is(10,000-20,000)permonthtrytosavingtheirmoneyweeklybasis.Thosewhohavefinancially solventandearnmoneyminimum20000taka(10%)chosethemonthlysavings way. The important thing is that income status inspire the members theratioofsavings.

40%

20%

6%

20%

6%8%

Nature of Saving of BenificiariesDaily Weekly Fortnightly Monthly Quaterly Fixed

0

50

0-5000 5000-1000010000-1500015000-2000020000-Above

2440

188 10

Monthlyincomeofbeneficiaries

Pageno.1884.4AmountofLoanofBeneficiariesreceivedfromcooperativesocietiesThetableshowsthat the frequencyofmaximumdemanding loan is10000- 20000tk.Thecausesbehindisthattheborrowersareinvolvedinsmallandmediumlevelbusiness their ratio is 50%. Thosewho are involved inmultiple businesses theirborrowing level is 50000- 100000 tk. but the cooperative societies are not feelinterestedtogivenbigamountofmoney. Inourstudywefoundthat thesocietiesfeelcomforttogiventhesmallamountofloanandtheratiois10000-30000tk.andtheratioismaximum(68%).Thisishappenedonlyforthesecurityofmoney.

4.5TheinvestmentsectorsofCooperativesocietiesThe scenario of the study area is that the borrowers aremainly engaging in landbusinessbecauseit’saprofitablebusiness.Byconcerningthissocietiesareeagerlyinterestedtogiventheloanswhoareinterestedinthissectorandwearefoundthatit’sabigratioonourresearcharea(26%).Thesecondratio(20%)showsthatthepeopleswhoarealreadytakentheloansfromvarioussectorslikeNGO,Cooperativesocieties,Banksetc.arepayingtheinterestofloans.Cooperativesocietiesprovidedsmallormediumamountof loanfor themsothatbeneficiarieswouldn’t freefromtheircapture.Thecooperativesocietiesalsogivenloansinsmallscalebusinesslike:factory set up (14%), transportation business (12%), fisheries (10%) & poultry

30

20 18 1612

4

05

101520253035

Amount of loanof benificiaries

Pageno.189business (10%). But there is not remarkable scenario is identified inAgriculturalandExport-importsectors.

4.6SectorsofInvestmentofloansbythebeneficiarygroupsAsmentionedearlierthatthebeneficiarygroupsinvestedtheirloansinsmallscaleofbusinessandwefoundthatitisthebiggestportion48%.Secondlargestportion(22%) are involves in medium scale business. The characteristics of thesebusinesses are shopkeepings, tea stalls, vehicle repairs, rickshawpullers etc. Theownersof largesbusinesswouldnot interest totakingloans fromthecooperativesocieties but we found some owners of large scale business (10%) because ofexpansion of their business.We also found job seekers and unemployed personswho takenloansforselfemployment(16%)purposes.Wethinkit’sariskywaythattheyappliedbecauseiftheyfailedtoimprovementtheirconditiontheyhavetopayalot.

0

5

10

15

20

25

30 26

1214

10

4 4

10

20

Investment sectorsof Cooperativesocieties

Pageno.190

4.7CausesofpopularityofCooperativeSocietiesThe respondents answered that easy of loan getting (22%) and easy operatingsystems (20%) inspired them to borrow or lending money from cooperativesocieties.Theoperatingsystemofcooperativesocietyismoreflexiblethantheotherfinancial sectors. The field officers of the cooperative societies collect theinstallments of payable money daily/weekly/monthly basis. The borrowers feelcomfortableaboutthis.Becauseofthelesscomplexitytheborrowersbearthehighinterestratherthantheotherssector whichinterestrateislow.

48%

22%

10%

16% 4%

Investment scenarioSmall business Middle business Large scale business Self employment Other purose

88

2212

616

820

0 5 10 15 20 25

less complexity in transacton

to provide required loan

Public trust to cooperative

Easy formation

Pageno.1915.ProblemsofCooperativeSocietyfunctionsinBangladeshBangladesh is one of the poverty stricken countries of the world. Here, majoritypeople’s incomeis low.Sothecooperativemovementhereshouldhavesucceededbutfunctionallywenoticedthatthecooperativesocietiescouldnotseethelightofsuccess.Thebarriersofcooperativesocietiesherehavebeenshowninbelow:Lack of efficiency inmanagement is thementionable drawback of cooperativesocieties inBangladesh. As a result cooperative could not succeed in expectedlevel.Duetoilliteracyofmaximumpeopleofourcountrydonotrealizethenecessityofcooperativesocietiestomeetuptheirfundamentalneeds.Andtheycan’tplayeffectiveroleinoperationofcooperatives.LackoftrustamongpublicisthemajorconstraintofcooperativeinBangladeshbecause people previously were cheated on different issues. Apart from thepublicityonfavorofcooperativeisnotmentionable.Majority members of cooperatives are uneducated and unskilled. So it isinevitabletoprovidesufficient training ifweexpecteffectiveresult fromthem.Moreover, in our country numerous barriers of training of cooperatives areobserved.The co-operatives of our country could not get rid from nepotism andcorruption.Thekeypositionholdersincooperativesemphasisontheirinterestsandbetray&cheatwiththesimpleminded,uneducatedcooperativemembers.Besidesthis,theytakepartin corruptionintermsofloanproviding.To smoothly run the cooperative sector, well defined policy-plan, supervision,monitoring and cordial cooperation is needed. Rather than the cooperativesocietiesfaceobstacleforsmoothgrowth&development.Thesupervisionandmonitoringisnotheldaccuratelybyresponsiblebodiesofgovernment.Even,thefinancialauditisnoteditedbybothexternalandinternalteamsonregularbasis.Once this is done, it is hoped that cooperatives would be able to overcome theproblems and challenges facing them. It however, calls for maintaining balancebetweeneconomicandsocialpurposes,emphasizingdifferences,relatingwithother

Pageno.192cooperativesbothatnationalandinternationallevels,andmaintainingafavorablepublicimage.6.Conclusion&RecommendationsThestudyshowedthatcooperativesocietiesplayan importantrole incommunitydevelopment. They help in improving the standard of living of their members.Basicallycooperativehasbeenevolvedtomeetup the fundamentalneedsofruralpeoplebytheiraccumulatedsavings.Thereisnoalternativeofcooperativeforruraldeprived, destitute and disadvantaged people and cooperative acts as social andeconomicalweapon toprotect them frommarketeconomicexploitationand fromprivate sector. In spite of bank, insurance and share market’s collapse thecooperativesisstillaliveandactive.Itwouldbeaprospectivesectortochangethelife style of low income people if government introduces well defined policy,programs,planalongwithsupervisionandmonitoring.There is no chance to deny the role and necessity of cooperative societies inBangladeshintermsofpovertyalleviation,topushthelowearningpeople tobetterlifeandtorescuethemfromwant.Althoughthehistoryofcooperativeisenrichedherefromlongtimesbutrecentlyduetoseveralcauses,someinconsistenceinthissector is observed. In this regard, some ways have been brought forward toovercome from theses miserable circumstances. Based on the findings of theresearchthefollowingrecommendationshavebeenmade:There isneed foranationwideco-operativeawareness campaignemphasizingthe importance of forming cooperatives with appropriate socioeconomiccharacteristics to ensure that such cooperatives benefit from services ofdevelopmentagenciescreatedtoservethem.Co-operativedevelopmentagenciesshouldbesitedcloseenoughtocooperativesocieties they serve since distance was found to have affected the access ofcooperative societies in this study. In this study younger cooperatives werefoundtohavemoreaccesstoservicesofthebankthanolderones.Co-operative development agencies therefore need to pay enough attention toolderandsuccessfulcooperativesocietiesintheirdisseminationofassistancetocooperative societies. This will tackle the problem of forming emergencycooperativesocietiesdesignedtocashinonnewgovernmentschemes.

Pageno.193REFERENCES1. AHAMMED, D, TOFAEL (2012), THE DEVELOPMENT OF COOPERATIVE SECTOR OF BANGLADESH:SOMERECOMMENDATIONS,ANNUALJOURNALOFBARD,DECEMBER2009.2. AJAKAIYE, M. B. (1989), BANKING INDUSTRY AND THE DEVELOPMENT OF AGRICULTURE: ANASSESSMENTANDFUTUREPROSPECTS.THECBNBULLION13(1),PP. 50-59.3. AGARWAL, R., & GORT, M. (1996). THEEVOLUTIONOFMARKETSANDENTRY, EXITANDSURVIVALOFFIRMS. THEREVIEWOFECONOMICSANDSTATISTICS, 78(3), 489-498.4. AGBO, F. U. (2000), INCREASING THE OUTPUT OF CASSAVA THROUGH WOMEN COOPERATIVES,NIGERIANJOURNALOFCOOPERATIVESTUDIES2(1), PP. 24-38.5. BOTTOMLEY, T. (1989). FARMER-CENTRED ENTERPRISES FOR AGRICULTURAL DEVELOPMENT.ENGLAND,PLUNKETTFOUNDATION,PP.41-53.6. COOK, M. (1995). THE FUTURE OF U.S. AGRICULTURAL COOPERATIVES: A NEO-INSTITUTIONALAPPROACH.7. FARUKMOHAMMED, ABULKASHEM(1983), EASYCOOPERATIVELEARNING, COOPERATIVEACADEMY,COMILLA.8. HUSSI, P., & MURPHY, J. (1993). THE DEVELOPMENT OF COOPERATIVES AND OTHER RURALORGANIZATIONS.WORLDBANKTECHNICALPAPER.9. KHALEKKUZZAMAN, MOHAMMED (2005), BUSINESS ORGANIZATION AND MANAGEMENT, THEJAMUNAPUBLISHERS, DHAKA.10. KIMBERLY, Z, (2002). THEROLE OFCOOPERATIVES INCOMMUNITYDEVELOPMENT. COOPERATIVEBULLETINNO.3UNIVERSITYOFWISCONSIN.HTTP//WWW.WISC.EDU/UWCC11. NAJAMUDDEN, G. ABUKAR B.Z. KEBBE,M.G.MAGATI, UKASATU, (2012), ROLE OF COOPERATIVESOCIETY IN COMMUNITY DEVELOPMENT IN SOKOTO METROPOLIS, SOKOTO STATE. NIGERIA,SCIENTIFICJOURNALOFREVIEW.WWW.SJOURNALS.COM.

*Md.RuhulAmin isAssistantprofessor inthe DepartmentofPublicAdministrationatComillaUniversity, Bangladesh.

**MohammedMahinUddin ispursuinghisMaster’sin SocialScience fromtheDepartmentofPublicAdministration atComillaUniversity, Bangladesh.