Nepal | November 18, 2019

Co-ops mobilising resources in non-productive sector

Himalayan News Service

Kathmandu, September 17

The cooperative sector has mobilised a huge amount of savings, however the resources are largely being used in the non-productive sector, according to researchers and analysts.

There are 34,512 cooperatives in operation in the country that includes savings and credit, multipurpose and production-based cooperatives that have reportedly mobilised savings worth Rs 295.73 billion and the promoters’ share investment stands at Rs 71.36 billion.

However, the resources that the cooperatives have been mobilising have not had a significant impact in the production sector, according to Gokul Pyakurel, an expert in micro enterprise development.

A total of around 6.7 million people are members of the various cooperatives based across the country, however half of them are associated with savings and credit cooperatives. Also, most of the multipurpose cooperatives are being operated in a similar manner to savings and credit cooperatives. After a series of scams involving cooperatives came to light some five years back, almost all of them were found to be investing in sectors like real estate and automobiles to generate high profits.

Mobilisation of resources by the cooperatives is concentrated in the less productive areas. This can be ascertained by the large chunk of savings, which amounts to Rs 214.23 billion — 72.4 per cent of the total — that is mobilised by savings and credit cooperatives in non-productive
sectors. Similarly, multipurpose cooperatives have also mobilised Rs 60.87 billion — 20.6 per cent of the total — in such sectors.

Most of the cooperatives in the country are being operated in a system that is beyond the principles, values and ethics of cooperatives, according to Gopi Nath Mainali, secretary at the Ministry of Land Management, Cooperatives and Poverty Alleviation.

“The recent Cooperative Act is expected to streamline the regulatory challenges of cooperative sector and will compel them to operate in a prudent manner,” said Mainali.

The federal government has said that out of the 34,512 cooperatives in the country, the local governments will be responsible for regulating 29,000 cooperatives after the formulation of a law based on the National Cooperative Act.

There are a number of production-based cooperatives like agriculture, fishery, milk, seed, vegetables and fruits, tea and coffee, bee-keeping, sugarcane and sweet oranges, among others. But, mobilisation of savings by members in these cooperatives is low.

According to Deependra Bahadur Kshetry, former governor of Nepal Rastra Bank, these production-based cooperatives should be encouraged by integrating their production with large-scale commercial or industrial entities. He further stated that the government should also enable them to develop a market for their production by providing necessary facilities in the initial stages.


A version of this article appears in print on September 18, 2018 of The Himalayan Times.


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