FREQUENTLY ASKED QUESTIONS

Question 1:  What is a cooperative society?   A cooperative society is an entity that is owned by it's members: it operates for the benefit of its members and it is controlled by these members. The main criterion for membership of such cooperatives is to be a direct or indirect staff or employee of the umbrella organisation.       Question 2:  What are the benefits of a workplace cooperative to its members?   It enables members save in a convenient and consistent way. It provides a pool of funds from which members can take loans at very cheap rates and convenient terms. It gives members a platform on which they can engage sellers of relevant goods and services and negotiate better bargains than they can obtain as individuals. The pool of funds created can be invested in various money market instruments for better returns than their individual contributions can generate. Due to economies of size and scale, the cooperative will be able to invest in several business opportunities to generate profits. The cooperative is essentially a business entity with its members as owners and are therefore entitled to dividends at the end of the year. Being a business entity there is no limit to the opportunities that the cooperative can take advantage of.       Question 3:  Is it mandatory to join the cooperative?   No, it is not. A cooperative society is a voluntary organisation and members have freedom to join and leave at any time subject to following laid down rules and meeting pre-set requirements.       Question 4:  Some of us already do isusu. Why do we need a cooperative?   Isusu is good and creates a foundation for the cooperative. But because there is no firm structure around it, it is prone to abuse and default. It also cannot grow so much. The cooperative on the other hand is registered and regulated by laws which protect the interests of the members. In addition, the work place cooperative ensures that cooperative dues are deducted at source (payroll) which reduces the risk of default to the barest minimum. Majority of the blue chip companies in Nigeria have thriving cooperatives for example, Mobil, Shell, Chevron, Agip, NLNG, Nigerian Breweries PLC, Guinness PLC, MTN, Etisalat, Airtel, etc just to name a few.       Question 5:  Is there an entry fee?   There is an entry fee of N5,000. One of the reasons for charging an entry fee is that it symbolises a member’s freewill decision and commitment to join the cooperative as membership is voluntary. Another reason is that it is a source of immediate income for the cooperative and enables it to meet some expenses while it is yet to start making money.       Question 6:  What are the other cost implications of joining the cooperative?   The only real cost of becoming a member of a cooperative is the entry fee. Every other money you put into the cooperative is an investment which earns a dividend at the end of the year and which can be withdrawn whenever the member chooses to leave the cooperative.       Question 7:  What is the minimum contribution and what is the required frequency?   Minimum contribution is N5000 monthly. It should however be noted that the benefits that members derive from the cooperative are proportional to their contributions to it.       Question 8:  What type of investments can cooperative societies go into?   There is no limit or restriction to the investments a cooperative can go into. It depends on the size of the funds available per time and the risk appetite of the management committee. It is however advisable that in addition to flexibility, cooperatives considers safety over returns in their investment decisions. This is because the funds used are short term funds and members can ask for their money back at any time. But broadly speaking loans and advances to members, money market investments and simple trading activities are the most common types of investments.       Question 9:  What is the interest rate on loans and when can I get one?   Interest on any loan to members shall be charged at a rate determined by the Management Committee but shall at all times be equal to or less than the benchmark interest rate set by the Central Bank of Nigeria (CBN). Members are eligible for loans after 6 months of membership.       Question 10:  How are profits from the activities of a cooperative society shared?   Just like any other business organisation, dividends are paid out of profits every year. The portion of the profits to be declared as dividend and the mode of distribution is a decision for the members to make. However, it is important to ensure that members reap from the profits in proportion to their contribution towards the realisation of those profits.       Question 11:  Can I withdraw money from my contributions or savings?   There are usually two main types of savings. The compulsory savings (or Contribution) is a mandatory regular contribution to the funds of the cooperative which acts as equity or share capital. Withdrawals are usually not allowed from this savings unless a member is withdrawing his or her membership. The cooperative may however also set up other types of savings schemes which may allow withdrawals based on whatever criteria that may be set.       Question 12:  How do I leave the cooperative if I choose to?   The basic process for exiting the cooperative entails notifying the General Secretary via email of completion of a form about the decision. It may however take some time (usually around 4 – 6 weeks, depending on the cash position of the cooperative) to work out and pay back the balance due to you after deduction of all indebtedness, if any.       Question 13:  Who regulates cooperative societies?   Cooperative societies in Nigeria are regulated on a State by State basis. In Lagos, they are regulated by the Directorate of Cooperative Services which is under the Ministry of Commerce, Industry and Cooperatives. It should also be noted that although the cooperative operates within the sponsoring organization, it is a statutorily registered and separate legal entity with its own rights and responsibilities and is totally separate from its sponsoring organization. In this case therefore, the ipNX Staff Cooperative is distinct from ipNX Nigeria Ltd. and will be managed by its members.