Economic Impact Of Co-operative Societies On Small Scale

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In this research work titled “the economic impact of co-operative societies on small scale business development and poverty reduction in Enugu state” With particular reference to Enugu North Local government Area of Enugu state. The researcher examined the impact of co-operative societies on the economic growth of Enugu North Local Government Area of Enugu state.  Data for the study was sourced from two main sources which include Primary and Secondary sources of data Collection. Primary data: questionnaires and oral interviews were used to collect information from the respondents. Secondary data: journals, and other relevant materials relating to the area of my investigation were reviewed. Simple tables and percentages were used in treatment of data. At the end the researcher found out that Co-operative societies has significant impact on the economic growth of Enugu North Local Government Area of Enugu state. It was also observed that co-operative societies contribute greatly to the development of small scale industries in Enugu North Local Government Area. The study shows that co-operative societies play significant role in poverty reduction in Enugu state and Nigeria at large. The research work revealed that there are so many challenges facing co-operative societies in Enugu North Local Government Area of Enugu state. Based on the findings the researcher recommends that the government should provide capital, tractors, fertilizers and seedling for farmers in Enugu State.  This will help to reduce their poverty. Government in Enugu State should try  to provide trained personnel to the farmer so that they can know more about cooperative education and modern methods of farming.  If illiteracy is not reduced, it will constitute a lot of problems to the farmers.





















Cover page                                                                                        i

Title page                                                                                          ii

Approval page                                                                                    iii

Dedication                                                                                         iv

Acknowledgment                                                                               v

Abstract                                                                                             vii

Table of contents                                                                               viii


1.0     Introduction                                                                            1

1.1     Background of the Study                                                        1

1.2     Statement of the Problem                                                        5

1.3     Objectives of the Study                                                            6

1.4     Research Questions                                                                6

1.5     Significance of the Study                                                        7

1.6     Scope of the Study                                                                  8

1.7     Limitations of the Study                                                                   8

1.8     Definition of Terms                                                                  9

References                                                                               11



2.0 Introduction                                                                                12

2.1 Background of small scale industry in Nigeria                            12

2.1.1   Types of Small and Medium Enterprise                                   17

2.1.2 Roles of Small and Medium Enterprise in Enugu State                    17

2.1.3    The contributions of Small and Medium Enterprise in to

GDP Over the Years                                                                19

2.1.4    Problems of small and medium Enterprise (SMEs) in Enugu

North                                                                                                22

2.1.5     Prospect of small and Medium Enterprise                             23

2.1.6    Challenges in facing small and medium Enterprise               25

2.1.7    Ways of Encouraging Small and Medium Enterprise to enhance

National Development in Nigeria                                            26

2.1.8    Government programmes in promoting Small and medium

enterprises.                                                                             28

2.2. Poverty: Meaning, Measurement, Causes and Consequences   29

2.3 The concept of cooperatives                                                         37

2.4 The Global Strength of Cooperatives                                           39

2.5  Cooperatives in the Nigerian economy                                                41

2.6 Ways cooperatives promote SMES                                               43

2.6.1 Role in entrepreneurship promotion                                                 43

2.6.2  Role in raising capital                                                             44

2.6. 3 Role in provision of infrastructural facilities                           45

2.6.4 Role in small scale industrialization                                        45

2.6.5 Role in developing smallholder agriculture                                       46



3.1     Research Design                                                                     60

3.2     Area of Study                                                                           61

3.3     Population of the Study                                                           61

3.4     Sample and Sampling Techniques                                          62

3.5     Sources of Data                                                                       63

3.6     Research Instrument                                                               63

3.7     Validity of the Instrument                                                       64

3.8     Method of Data Collection                                                       64

3.9     Method of Data presentation and Analysis                              65

References                                                                               66


4.0        Data Presentation, Analysis And Discussion of Result            67

4.1     Data Presentation                                                                    67

4.2     Interpretation of Result                                                           83                                                                       


5.0 Summary of Findings, Conclusion and Recommendations

5.1     Summary of Findings                                                              90

5.2     Recommendations                                                                   90

5.3     Conclusion                                                                              93     

References                                                                               94

Appendix                                                                                 99

Questionnaire                                                                          100




1.1      Background of the Study

Nigeria‘s economy is dominated by small and medium scale enterprises in agriculture, manufacturing, commerce and industry, services, etc. The historical background of small and medium scale enterprises in Nigeria can be traced back to 1946 when the essential paper No. 24 of 1945 on ―A Ten year plan of development and welfare of Nigeria was presented (Ever since, SMEs have gained prominence and mention as a seed bed of innovations, inventions and employment generation or creation (Aremu and Adeyemi, 2010). SMEs in Nigeria are seen as the backbone of all economies and are a key source of economic growth, dynamism and flexibility. A study done by the Federal Office of Statistics shows that 97% of all businesses in Nigeria employs less than 100 employees, implying that 97% of all businesses in Nigeria are, to use the umbrella term, "small businesses". The SME sector provides, on average, 50% of Nigeria‘s employment, and 50% of its industrial output.

Indeed, there appears to be an agreement that the development of SMEs in Nigeria is a step towards building a vibrant and diversified economy (Mahmoud, 2005).This explains why successive Nigerian governments have been spending an immense amount of money obtained from internal and external funding institutions for entrepreneurial and small business development programmes. Previous initiatives designed to assist SMEs in Nigeria included; Mandatory minimum credit allocation by banks to small scale enterprises; the World Bank SME I and SME II loan programmes, the Agricultural Credit Guarantee Scheme Fund (ACGSF) and the Small and Medium Industries Equity Investment Scheme (SMIEIS). The most ambitious move ever made by the government was the establishment of the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) to facilitating access to credit, technology and market for the SMEs (Ogboru 2007).

Cooperatives have been regarded as one of the main institutional machineries for empowering the economically weak members of the society.  Cooperatives are able to promote economic and social development because they are commercial organizations that follow a broader set of values than those associated purely with the profit motive. Cooperatives play an important role in job creation by directly providing self-employment to members and service provision for non-members. Enterprise development and particularly the promotion of small and medium enterprises, has been adopted as a prerequisite and a strategy for job creation and economic growth in a large number of countries (Essien, 2000).

Despite the availability of cooperative societies and efforts of government at all levels, it appears that a significant proportion of rural women are either unaware of the existence of such co-operative societies or are lacking in the basic socioeconomic characteristics that form the prerequisite for participation in such activities (Idrisa et al., 2007). In some cultures, women are restricted from conducting business independently or without their husband„s consent. This poses a serious challenge to participation in cooperative activities. Even though in some cases women’s legal rights may be stipulated in a cooperative they may not necessarily be enforced or they may be superseded by customary law. It is in line with this view that Ashanti (2002) observed that lack of social, economic and legal rights explains women's low participation in cooperative decision-making and leadership positions.

Poverty in Nigeria is rising with almost a 100m of its population living on less than $1 per day despite a strong growth in Africa’s second largest economy (Daniel, 2011). The percentage of Nigerians living in absolute poverty – those who cannot afford the bare essentials of food, shelter and clothing – rose to 60.9% in 2010 compared with 54.7% in 2004 (National Bureau of Statistics, 2011). Although Nigeria’s economy is projected to continue growing, poverty is likely to get worse as the gap between the rich and the poor has continued to widen. Little wonder Kale (2012) posited that poverty in Nigeria is a paradox – that despite the fact that Nigeria’s economy has continued to grow, yet the proportion of Nigerians living in poverty has continued to increase every year.

According to the National Bureau of Statistics recent report, 112.519 million out of an estimated 163 million of Nigeria’s population live in relative poverty. Relative poverty is the comparison of the living standard of people living in a given society within a specified period of time.

Comparing this figure with an estimated 28 million population of Uganda, then the poor in Nigeria is about four times. Apart from the relative poverty index, Nigeria failed all poverty tests using all poverty measurement standards: absolute poverty measure puts the country’s poverty profile at 60.9%; the dollar per day measure puts the poverty profile at 61.2% and the subjective measure puts the poverty profile at 93.9%. Perhaps, a factual indicator is the recent Harmonized National Living Standard Survey (HNLSS) which puts the country’s poverty profile at 69.0%.

The small holder agricultural has also not fared better and the country spends millions of dollar to import food and other vital products and services. Nigerian SMEs have not fared particularly well because of hostile operating environment among other challenges.  Aremu and Adeyemi (2010) stated that most SMEs in Nigeria die within their first five years of existence due to insufficient capital, lack of focus, inadequate market research, over-concentration on one or two markets for finished products, lack of succession plan, inexperience, lack of proper book keeping, irregular power supply, infrastructural inadequacies (water, roads etc), lack of proper records or lack of any records at all, inability to separate business and family or personal finances, lack of business strategy, inability to distinguish between revenue and profit, inability to procure the right plant and machinery, inability to engage or employ the right calibre staff, cut-throat competition.

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