3. CHAPTER OBJECTIVES
At the end of this section, you will be able to:
Understand scope of cooperative
Explain different objectives of cooperative
Discuss benefits of cooperative
5. Concept and Definition of cooperative
Cooperation is the very basis of human civilization.
The interdependence and mutual help among human beings
have been the essentials of social life.
The spirit of association is essential to human progress, b/c man
cannot successfully live alone
Therefore working together is as old as human society.
6. Definition of Cooperative by International
Cooperative Alliance (ICA)
A cooperative is an autonomous
association of persons united
voluntarily to meet their common
economic, social and cultural needs
and aspirations through a jointly-
owned and democratically
7. The definition emphasizes cooperative characteristics:
A. Cooperative is autonomous: that is, it is an independent of
government and private firms as possible.
B. It is “an association of persons”. This means that cooperatives are free
to define “persons” in any legal way they choose.
C. “The persons are united voluntary”. Membership in a cooperative
should not be compulsory.
Members should be free, within the purpose and resources of the
cooperatives, to join or to leave.
D. “Members common economic, social and cultural needs”
cooperatives are organized by their members, for their members.
Member needs may be singular and limited, they may be diverse,
they may be social and cultural as well as purely economic, but,
whatever the needs, they are the central purpose for which the
The term ‘aspirations’ here denotes strong desire or ambition for
E. “jointly owned and democratically controlled enterprise”.
This phrase emphasizes that ownership is
distribute among members on democratic basis.
Each cooperative is also an “enterprise” in the
sense that it is an organized entity, normally
functioning in the market place; it must
strive/struggle or try hard its members efficiently
Another widely accepted cooperative definition is the one
adopted by the United States Department of Agriculture:
A cooperative is
that distributes benefits on the basis of use.
This definition captures what are generally considered
the three primary cooperative principles: user ownership,
user control, and proportional distribution of benefits.
11. Scope of cooperatives
requires start up capital/equity
generates revenue to cover its costs
must provide quality services
can distribute profits back to its
can retain profits for future needs
goal is financial self sufficiency
have limited liability for owners
can borrow money/sign contracts
pay business taxes
A legally incorporated business, owned by its members who
use its services.
Like other businesses a co-op:
12. What is the purpose of a cooperative?
To allow individuals to come
together and pool their resources
in order to reach common goal
which would be difficult for them
to achieve as individuals.
To help their members cooperate
together to solve problems they
13. Objectives and benefit of cooperatives
Objective of cooperative
The cooperative is a non-profit-making service enterprise whose
objective is to:
free its members from any exploitation they are suffering by
strengthening them in their economic role as:
14. Benefits of cooperatives
Benefits of cooperatives are difficult to measure.
Some are tangible as in the case of net margins or
. Others are intangible or indirect such as
cooperatives’ effect on market price levels, quality,
Most benefits are evaluated in economic terms but
some also may be social.
Some of these benefits include:
Combines the wealth and resources of many individuals and harnesses
(join) them in a united way.
Structured so that individual interest does not dominate collective
Quality products and
Some of these benefits……..
17. Chapter objectives
At the end of this chapter you will be able to
Cooperative development in the world
Cooperative development in Developed countries
Cooperative development in Developing countries
Cooperative development in Ethiopia
18. Group assignment (20%)
Form a group and review the following concepts by your group.
1. Evolution of cooperatives and the modern cooperative development in the
2. The modern cooperative development in Africa
3. The modern cooperative development in Ethiopia.
4. Role of cooperative in socio- economic development and its challenges in
Instruction on Mode of submission:
You are expected to prepare a detailed and brief discussion on each titles
The assignment report should be submitted in hard copy written by
The report should not exceed 8-10 page including title and reference page.
It is a must that to list your reference.
Assignment should be submitted on the deadline (3rd December, 2022)
Each group must be prepare a power point and expected to present in a
19. Chapter 3
Values and principles of cooperatives
3.1. The Basic Cooperative Values
The basic cooperative values as enshrined in the
definition are stated as follows:
‘Cooperatives are based on the values of:
equity and solidarity.
20. Cooperative Values and Principles
It means one should try to solve his/her problem with
his/her own effort, means and resources available.
Therefore, it needs joint- efforts with those who have the
They can pool small resources and mean, so that they
become more potential.
Self-help and mutual-help promote cooperative spirit and
key to success of cooperatives.
A cooperative can achieve its objective and progresses
only when every one individual in its functioning,
including employees, feel his accountability and
discharge his responsibility with commitment,
dedication and sincerity of purpose.
C)Democracy: - It is a basic value of cooperatives.
In the context of cooperatives, the essence of
democracy is “conscious decision” based on “freewill”.
“Conscious decision” means understanding the logic or
rationale of taking decisions and be aware of the
possible consequences of the decisions and their
impact on individual and institution.
“Freewill” means no forcing of the decision from
equal right and opportunities, right of participation,
a right to be informed, a right to be heard, a right to
be involved in decision making.
Members are to be associated as equal as possible,
without any kind of discrimination of gender,
religion; caste, creed, race, amount of share capital
contribution, deposit, political affiliation etc.
That is why one member one vote is the principle,
which establishes equality.
It refers to how members are treated within a cooperative.
treated equal in how they are rewarded for their
participation, patronage dividends, allocation to capital
reserves in their name or reduction in recharges.
Equity ensures social justice.
means that a cooperative has a responsibility for the
collective interest of its members.
It indicates that society’s financial and social assets belong
to the group, being the result of joint efforts and
cooperatives and co-operators stand together and work
together to resent a common entity before the public
24. Ethical values
It means that cooperatives are open to members of
community they serve.
They have a commitment to serve and assist individuals in
This is most important for survival of cooperatives.
Cooperatives ideal is honest dealing with members and non-
The scope of honesty is much wider in cooperatives than
what generally is understood.
not monetary honesty only, but also honesty of thoughts,
commitments, behavior and conduct, no hypocrisy or false
hood, no underhand dealings of false promises, no
dishonesty in elections.
25. Ethical values
3. Social responsibility:
It means that cooperatives should move beyond caring for
They should financially assist or organize activities
beneficial to the entire community.
However, such activities can take up when cooperatives
4. Caring for others:
It means take interest in and care about other people.
This concept stems from humanism.
Cooperatives are humane by nature through their main
concern is to achieve economic objective.
27. Cooperative principles
Open membership means that cooperative is open to
all persons who need and are able to use the service
of cooperative and willing to accept the
responsibilities of membership without any artificial
People must be given the opportunity to study and
understand the values for which cooperatives stand.
If membership is forced, such members should be
involved so that they develop voluntary attitude.