Why You Should Join A Cooperative Today
At Riby, we have a simple goal: Empowering cooperatives, associations and communities. Everyone (we hope) knows what associations and communities are. But not many people fully grasp what cooperatives are, how they function and why they are important in the grand scheme of things.
A cooperative is an organization voluntarily formed by people who have a common goal. This goal could be economic, social or cultural. All members of a cooperative are part owners of the organization and they all have equal shares.
An association of hair dressers in Ibadan, Oyo state, Nigeria, who were able to purchase hair washing equipment in bulk through Riby CoBanking
Cooperatives are not formed to maximize profit like other forms of business organizations. The main purpose of a Cooperative is to provide service to its members. For example, in a Consumer Cooperative Store, goods are sold to its members at a reasonable price by retaining a small margin of profit.
To protect the interests of members, cooperatives are placed under state control through registration. While getting registered, a cooperative has to submit details about the members and the business it wants to run. It has to maintain books of accounts, which are to be audited by government auditors.
Cooperatives raise capital for their businesses from their members, and also through state and government funding. This funding may be in the form of capital contribution, loans at low rates of interest, tax exemptions, subsidies in repayment of loans and more.
Did you know?: Cooperatives can invest and get access to external loans when they use Riby CoBanking.
The various types of cooperatives that exist include producer cooperatives (groups of people engaged in the agricultural sector like farming and fishing), credit unions (consumer-owned financial services cooperatives where every depositor becomes a member-owner), and housing cooperatives (when an organization forms and decides to combine their assets to build the housing units).
Tidbit: The Co-Op City in Bronx, New York, is the world’s largest housing cooperative and houses over 43,000 people.
Why should you join a cooperative?
The primary reason why many people join cooperatives is wealth creation. Joining forces with other people provides access to larger pools of capital, the ability to invest larger sums to get larger returns, and access to loans at very low rates.
Members of cooperatives also get to buy products at cheaper prices because the cooperative buys them in bulk and sells to the members at cheaper unit prices. Members of a producer cooperative can collectively buy equipment that they would individually not be able to afford.
Because many cooperatives are local, they improve their immediate economy since profits are distributed locally. Expertise and capital are reinvested in the community, thus empowering citizens and helping them create a better standard of life.
As we move on in this class (hehe) we’d continue to share more articles about cooperatives, and how you can improve their efficiency and transparency. Follow our blog so you don’t miss them!
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