Today, cooperatives around the world are increasingly seen as effective players, organising farmers and small businesses, providing the much-needed financial support, and empowering the poor to create jobs and generate income-generating activities
A cooperative is a business done by a community, and its shareholders are both its owners and customers. Cooperatives are responsible for financial as well as social development and environmental protection. The founders, directors and employees of the organisation are the local people, and its members, not the capital, are important. The organisation prepares the policy, rules and regulations, and its activities are conducted based on them. A certain percentage of its savings is kept with the organisation as liquidity while the remaining amount is loaned to its members.
A cooperative should be run in a democratic manner and move forward in accordance with the spirit and principles of cooperatives.
The organisation should have a strong social base, not run after cheap popularity. The organisation should have sufficient share capital and other funds.
As per the rules, savings can be collected only from the members, and loans have to be invested only in the members shortly after becoming a member.
Cooperatives in Nepal offer a wide range of services, including savings and credit, insurance and non-financial services.
They also operate in the dairy, agriculture, fruits and vegetables, beekeeping, tea, coffee, consumer, science and technology, and energy sectors. Their achievements in the field of socio-economic development of the members indicate that they can grow as cooperative players in the development of Nepal. This proves that if the cooperatives operating in the different villages are strengthened, they can make a significant contribution to improving financial access of the members.
There are about 34,000 cooperatives in Nepal at present. Of them, about 14,000 are savings and credit cooperatives. The rest are multi-purpose, regional and agriculture cooperatives.
There are those who think that savings and credit cooperatives operating in the urban areas have acted against the values and norms of cooperatives.
Therefore, the attitude towards the overall cooperative sector is bad. Nepal has a long cultural tradition of informal community-based cooperatives, including savings and credit unions, known as "dhukuti", and the grain saving and labour exchange system, traditionally known as "dharma bhakari". Similarly, the Guthi provided a forum for the smooth running of various socio-cultural practices. Many of these traditional support systems are still in operation in rural Nepal.
The first Cooperatives Act was enacted by the government in 1960, which after the Agricultural Cooperatives Act (Common Cooperatives) turned the savings and credit cooperative capital into a cooperative bank in 1963, and in 1968 it was transformed into the Agriculture Development Bank (ADBN). And in 1975, the Cooperatives Act was amended again for the third time to give the government more control. By this time, the savings and credit movement had spread across the country, and the need for a top coordination body was evident.
The Nepali cooperative movement has seen many socio-economic as well as political changes. In 2008, Nepal was declared a Federal Democratic Republic of Nepal. In 2015, the Constituent Assembly promulgated Nepal's new constitution, which recognised the cooperative sector as one of the three pillars of the national economy. The new constitution has decentralised and empowered the local and provincial governments to pass laws and enforce them.
Today, cooperatives around the world are increasing seen as effective players, organising farmers and small businesses, providing the much-needed financial support, and empowering the poor to create jobs and generate income-generating activities.
It is, therefore, not surprising that the Nepal government has embraced the public and private sectors as well as the cooperatives as the three main pillars of the economy.
This year, International Cooperatives Day was celebrated with the slogan "Building back together again". Cooperatives around the world are demonstrating solidarity and resilience in coping with the COVID epidemic and providing communities people-centred and environment-friendly recovery.
Indeed, we will rebuild better together and see that the cooperative movement helps many communities hit by the pandemic reap success stories in health, agriculture, manufacturing, retail, finance, housing, employment, education, social services and other areas.
The Nepal government has taken initiatives to control the epidemic through nationwide lockdowns and prohibitory orders. As a result, restaurants, hotels and markets remained shut in urban areas.
Due to the epidemic, farmers are unable to bring their produce to the market, while urban dwellers are denied access to vegetables and fruits due to the lockdowns. The agricultural sector has, therefore, been facing many challenges, and the small farmers involved in the agriculture sector have been badly affected.
The Central Federation of Cooperatives of Nepal (NACCFL), an umbrella organisation of agricultural cooperatives, is involved in the marketing of vegetables grown in the rural areas.
The sector provides direct employment to more than 50,000 people while indirectly providing additional employment opportunities to 100,000 people in various sectors.
People are attracted to cooperatives because the returns are higher, and they provide a higher level of service at the customer's doorsteps. The interest rate is so high that it is difficult for one to get such a return in other investments. The development of cooperatives in Nepal is, however, not satisfactory. The reasons being lack of clarity about the mission, national outlook and inadequate monitoring by the government of the cooperative movement.
The government has a plan to carry out cashless transactions through cooperatives.
The government is encouraging mergers between cooperatives with the aim of enhancing quality by reducing the number of cooperatives. Some cooperatives have already merged.
A version of this article appears in the print on July 22 2021, of The Himalayan Times.