There is no secret that Savings and Credit Co-operative Societies (Saccos) across the world have been developed to meet the fundamental human need of finding a way of saving and borrowing methods to promote the economic interest of their members.
They achieve this co-operative principle through the co-operative business model savings culture among members.
The culture encourages the promotion of thrift among co-operative members by allowing them to accumulate savings and pay reasonable interest without risk on such savings.
Co-operatives model a savings culture, and Mobilization serves as members’ insurance against emergencies, for social obligations and future investments.
This model confirms that one of the objectives of Saccos is to promote a saving culture amongst their members since savings have a close relationship with wealth creation.
Sacco members must embrace a saving culture so as to increase their low incomes, leading to improved quality of living standards.
Unlike in commercial banks, under the saccos’ co-operative model business savings culture, members are taught how to handle their finances in a responsible manner when they effectively and economically patronise their saccos.
The primary purpose of a co-operative is to serve the community in which it operates. It is important to note that co-operatives s are not-for-profit enterprises, since the majority of the returns go back to fulfilling the social, economic and cultural needs of the community in which they operate.
Naturally, when a co-operative does well, it benefits the community as a whole. A successful cooperative business savings model can provide employment, investment opportunities, collaborative growth and even distribution of wealth, among other things.
Co-operatives s are exclusively controlled by members themselves who patronise the business regularly, so it will always exist to better its community. Since members of the community own and operate a co-operative business, they will always have the incentive to benefit one another.
The members will always want the co-operative to help the community because they are a part of it, and by extension, the community will always want to support the co-operative because it invests in the betterment of the community.
The Sacco’s principle of a co-operative business model savings culture has numerous benefits to the members, which include encouraging members to save since Saccos are readily accessible; interest rates on savings and lending are better compared to commercial banks.
In this case, there are several advantages of a cooperative business, especially considering all the good it does for the community, employees and members. In case you’re not already convinced, here’s a list of cooperative advantages:
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Equal Status
One of the critical strengths of a co-operative business model’s savings culture is that each member holds equal power. When a member joins, they get the same amount of control over the decisions of the co-operatives, no matter how much capital they contribute.
Additionally, in the traditional business model, a small group of shareholders would make decisions about the company because they own the most shares, and this is not the case in a co-operative business savings model.
Open Membership
Naturally, the only criteria one has to meet to join a co-operative enterprise is that they benefit from the service or product the co-operative offers.
In essence, anyone can join a co-operative, regardless of class, economic status, race or gender. As long as they can contribute to the co-operative in line with the provisions of the co-operative’s By-laws and Rules and Regulations, whether it be in the form of capital or labour, they are eligible to join.
Product and Service Access
A co-operative business model focuses on access, rather than profit. And one way they accomplish this is by providing access to goods or services in communities that wouldn’t otherwise have access.
Co-operatives sometimes offer a new product or service to their community, while on the other hand, they strive to offer one that is simply of higher quality or more affordable.
Co-operatives have always ensured that the profit realised from their business investments gets invested back into the community and its members, rather than ending up in the pockets of a few shareholders.
Social Benefit
The primary purpose of a co-op is to serve the community in which it exists and operates. And in addition to providing goods and services, co-operatives also serve as a beacon of good business.
In economic terms, when a community invests, participates and supports a co-operative business, the rest of the community becomes stronger and equitably wealthier.
Co-operatives also often provide education and instruction for their members, employees and representatives so they can successfully contribute to the co-operative and encourage them to spread information about their co-operative beyond their communities.
Business Sustainability
A major benefit of co-operatives to the community is their business stability and sustainability. The structural formation of a co-operative is inherently more stable and resistant to common business setbacks.
This is on the understanding that there are more people making decisions in a co-operative, meaning they are less likely to make an impulsive decision that could potentially harm the co-operative enterprise.
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Easy Formation
It is much easier to form a co-operative business than it is to develop a traditional company. To start one, you only identify and mobilise members to form a steering committee, make sure your co-operative incorporates under the correct state statute, create a business plan, recruit some members, secure financing and open the doors.
Limited Liability
In a co-operative enterprise, members are liable only for the money they have invested in the co-operative. They are not responsible for any debts or other liabilities of the company unless in the case of fraud or negligence. Even if the co-operative were to collapse, its members would only lose what they have already put into the co-operative. They would not be responsible for paying any of the co-operatives’ debts.
Less Taxation
It is critical to note that some of the largest co-operative benefits lie within the tax code. Since co-operatives are considered not-for-profit businesses, they receive several tax exemptions and concessions. A traditional business is double-taxed, meaning both the corporation has to pay taxes on its net earnings and its shareholders have to pay taxes on any income or dividends they receive from the company. While the members of a co-operative enterprise still have to pay taxes on their dividends, the co-operative itself can take those dividends off their taxes as deductions.
By Ben Oroko
The Writer is a Communications Practitioner and Correspondent based in Kisii.benoroko2000@yahoo.com
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