Dr Godwin Ehigiamusoe is an accomplished entrepreneur who founded Lift Above Poverty Organisation (LAPO) Microfinance Bank; a financial expert whose opinions are highly respected. In this interview with TELIAT SULE and ONOSETALE OMOIKE, Dr Ehigiamusoe examines the development of cooperative societies in Nigeria, their decline, challenges and how reviving the movement is a prerequisite for eradicating poverty in Nigeria. Excerpts:
What are the unique features of cooperative society and how can we make cooperative movements relevant to society?
I think first of all, let’s look at how cooperative societies originated. During the industrial revolution in the UK, the owners of industries were making a lot of wealth as a result of improved production mode. But on the other hand, the ordinary people were actually in misery. They had to work long hours; they live in conditions that were deplorable, child labour was common and the wages were low. And so, the ordinary people were therefore in a perpetual state of poverty. Of course, the store owners, those who owned stores, were exploitative. Then it came to a point where twenty-eight ordinary people, workers, decided to come together and establish a store. And that store was owned by them, and they were also the buyers/customers.
And of course, the prices were low. They were able to take the price low because it was their own property. So, that was the beginning of cooperatives with what we call today as the Rochdale Pioneers who first of all set the first cooperative society in a town, Rochdale in the UK, but thereafter it spread across Europe.
In Germany in particular, they decided to set up cooperative societies that provided opportunities for members to save and for their members to also borrow. And that is what we call the thrift and credit cooperative society. So, it spread speedily.
By 1935, the colonial master in Nigeria decided that cooperative groups could be used to effectively exploit our resources, especially cocoa and others. So, they promoted the cooperative society in Nigeria.
The cooperative movements in Nigeria did not start to address poverty as it was in Europe. It was basically for the colonial master to be able to explore our produce. So, the first cooperative societies that were in Nigeria were the produce and marketing cooperative societies.
But eventually, little after independence, the regional government massively promoted cooperative movement. And you therefore had a cooperative society, you had cooperative union, you had cooperative farmers. And above all, for the first time in western region, you know, they created what we call the cooperative bank.
The cooperative bank was primarily owned by the cooperators and they were also the key bankers or the cooperatives. So, that gave them a sort of a background on how cooperative movement started and how it was in Nigeria, especially in the fifties and in the sixties.
The cooperatives have been very useful in addressing socio-economic challenges. It started with the cooperative movement, actually started in England when the economic situation of ordinary people arising from poverty, that the ordinary people decided to start what today we call as cooperative society. So, cooperative therefore has been applied to address the issue of poverty, applied to address the challenge of hunger. It has also been applied to address the challenge of restricted access to financial services or credit.
Cooperatives are generally a collection of people who pull their resources together to create a pool, if it is a credit corporate society. And from that pool, the cooperative individuals will access financial services to meet their respective needs. Essentially, it is an economic society. It’s an economic association that is put together for people who are cooperating to meet their respective socio-economic needs.
So, what is the state of cooperative society in Nigeria today?
The production of crude oil in commercial quantities had a significant impact on the cooperative movement because most of the cooperative movements were produce and marketing, cooperating unions, farmers unions. When attention started to be drifting away from agriculture as a result of the oil boom, the cooperative movements also went down. But in the past few years, two variants of the cooperatives have come up. There was a time we had the commodity board where people banded together and they assessed, you know, what we call commercial commodities. Recently, the thrift and credit cooperative societies have become very relevant and popular.
I know that most establishment workers in most companies or organisations have their respective cooperative societies, but it generally believes that the cooperatives, and the potential of the cooperatives as instruments for economic development and of course, human development has not been sufficiently explored.
What are the main features of these cooperative societies?
The first thing is that it is a cooperative society. As an organization, it is anti-exploitation. Members that join the cooperative society are treated as equal; they have equal say and of course they also benefit from that cooperative society. So, that in a way is able to elicit the commitment of members to the society.
The second feature of cooperative society is that it can be applied to any economic activity. You can have the health cooperatives that enable people to put some money aside and they are able to address their health needs. So, it is something that can be applied to any business, like agriculture and all that.
I also feel that the cooperatives provide opportunities for the training and development of the individual. So, cooperative society therefore as a movement is not just sort of an economic movement, but it also provides some social services to their members.
What are the major challenges that most of these cooperative societies in the country face currently?
It is like asking, what are those things that have led to the decline in the cooperative movement, specifically in Nigeria? The first reason for me is the diversion of attention, that is, the neglect of agriculture.
The second thing is that the cooperative laws in Nigeria have not been sufficiently amended to be responsive to the emerging trend in that sector. For instance, you will be surprised that most of the cooperative laws in Nigeria today, in states across the country, are not significantly different from the provisions of the cooperative ordinance of 1935.
And the implication for that is that there is so much in terms of government intervention in the management of the cooperative society in the sense that the government agencies, government officials have huge, you know, sort of impact in the management of cooperative society.
For instance, the government would ensure that the promotion of cooperative society, organizing the registration of cooperative society, supervision of cooperative society or deeds of the cooperative society and various activities.
And in a way in this country, the implication is that many people, many cooperative members do not think and behave towards their society as if it is their own. And this was even more prevalent in the eighties and the nineties where many cooperative societies were formed or the formation of corporate society were prompted by government agency or government quasi agency, for instance the Better life for Rural Women. And when you have that, it affects the commitment of many cooperatives.
There is also the decline in cooperative education when the cooperative was at its peak, including in Bendel, where we used to have a very functional cooperative college that trained government officials, the cooperators themselves. So, these are for me, some of the challenges that affected the development of cooperative societies.
It is also important to note that at one point, most of the cooperative banks across the country transformed into commercial banks. For instance, the cooperative bank in Ibadan. The cooperative bank in Ibadan was the first cooperative bank in Africa but it eventually became a commercial bank and was later consolidated with others to become another commercial bank. So, what it is today is that the cooperative societies do not have a dedicated central financing institution like a cooperative bank.
Immediately those cooperative banks transformed into commercial banks, they therefore applied the rules and procedures of commercial banks. And that went a long way to exclude cooperators from assessing the financial services for credit from the cooperative banks like when they considered the banks as their own.
Unfortunately for us, in this part of Nigeria, they fought in 1985 to set up Bendel Cooperative Bank, but that move was not successful. A building was donated by the government. I think it’s still on the first building when you enter Forestry Road by the right.
If those cooperative banks had stayed, what difference would that have made?
Of course, if they were sustained, they would continue, first of all, being capitalized, owned in most cases by the cooperative members who organized into cooperative societies or cooperative federations. And that would also enable them to assess credit from the cooperative bank relatively, maybe relatively cheaper in the sense that they are the main, you know, owners and patrons of the banks. But what we have today is that we do not have that.
See how it works. The cooperative union can approach a bank, a cooperative bank. This is our bank. They can approach a bank and can assess a bulk fund, say about, say N1 billion. And then, they lend the money to the cooperative societies and the corporate societies loan it to their members. So, you see that the level of guarantee goes down and so it makes it easier. But, when those cooperative banks were transformed, they became commercial cooperative societies, not having a dedicated central financing institution.
What are the prospects for cooperative societies given the model they operate?
In terms of cooperative principles, we call it cooperative principle due to the fact that it’s a democratically controlled society as it is managed by the members. Members obviously are free. You are free to enter, you are also free to exit if you like, ensuring that a premium is placed on your patronage of the society. That is the model that makes it, first of all, attractive and being able to also serve the people.
But what are the prescriptions to ensure that the cooperative movement is back again? I think there are a number of things. The first thing is for us to look at the cooperative laws, you know, the cooperative laws and regulations to see how they can be made to be relevant to the current need. For instance, how do we deal with the issue of supervision? I said, or how do we create a law that enables the cooperators to begin to see their cooperative society as their own? That for me is very important.
The second thing is to also emphasise cooperative education training. What we therefore have today is that there are key issues. There are specific issues; there are specific rules, values in the cooperative movement.
These are not properly passed on to cooperatives today. And the cooperators, the supervisors, that is, the government officials, would equally also need a lot of education. I remember in my time when I was in the cooperative movement, you must, for instance, go for, even as a graduate, you have to go for one year at the Federal Cooperative College. And that was very helpful for me to be able to operate in that movement. So, cooperative education will pay attention to cooperative education.
Of course, there is a need for us to address the issue of central financing institutions. It may not necessarily be a cooperative bank. It could actually be a central financing cooperative society, a society that is set up, capitalized by the cooperative society, if possible. If the government wants to use this as an instrument for economic development to address the challenges of the people, the government could also help to capitalize that central financing institution.
And from that central financing institution, cooperative societies would therefore provide affordable credit for cooperative societies for on-lending to their members on affordable terms, not just on interest rate, but ensuring that the condition of security and others are also addressed.
Then, we need to also create, promote specific cooperative types that address specific issues. For instance, there is a need to promote farmers’ cooperative society, which, first of all, we enable the farmers to assess not just credit farming, inputs, and also have access to markets. And that can be promoted, to a large extent, can address the food insecurity that we have today. In all, cooperative societies are crucial to addressing poverty in Nigeria.
Profile of Dr Godwin Ehigiamusoe
Dr Godwin Ehigiamusoe is an accomplished social entrepreneur and a foremost microfinance practitioner who has applied the concept of social enterprise to successfully build a number of enterprises which address the needs of persons and businesses at the bottom end of the society.
In 2006, he led LAPO to win the prestigious Grameen Foundation Award for Excellence in Microfinance. He won the Model Entrepreneur Award – Nigeria of the FATE Foundation in 2008 and the Professor Schwab Foundation’s ‘Outstanding Social Entrepreneur for Africa 2010 Award’.
In 2014, Dr Ehigiamusoe won, along with former Governor Peter Obi, the Lagos Business School’s Distinguished Alumni Award. In 2012, the Rotary Club of Benin City honoured him for his outstanding contributions to human development while the University of Benin, Benin City also conferred on him Doctor of Science degree (Honoris Causa) in 2016.
He has authored many books and published many thought-provoking articles in newspapers across the country. Some of his books include Understanding NGOs (1998), Poverty and Microfinance in Nigeria (2000), Issues in Microfinance: Enhancing Financial Inclusion (2011), It Can Be Done (The Mind Behind LAPO) and Touching Lives: My LAPO Journey (2021).
He has a doctorate degree in Policy and Development Studies, a Master’s degree in Development Studies, Bachelor’s degree in Sociology, and a diploma in Cooperative Thrift and Credit Management. He has attended several capacity enhancement and development programmes at the Harvard Kennedy School (2005); Lagos Business School (2010); IESE Business School, Barcelona (2010) and ISEAD Business School, Singapore Campus (2010).
