Understanding co-operatives in Nigeria: co-operatives as a channel for enhancing financial inclusion
Innovation Forum
18 September 2012

EFInA hosted an Innovation Forum to highlight opportunities for using co-operatives as a channel for enhancing financial inclusion in Nigeria.

Traditional co-operatives are common throughout Nigeria, but these groups tend to be small, with a common bond based on membership of a kinship, societal and/or professional group. According to the Federal Department of Co-operatives, as at 2010, there were over 80,000 co-operative groups with over 1.4 million members in 605 local government areas in Nigeria. The EFInA Access to Financial Services in Nigeria 2010 survey also revealed that almost 26.0% (21.9 million) of Nigerian adults used informal groups including co-operatives; and for 17.4% (14.8 million) of the adult population, informal groups are their only means of access to financial services.

However, there has been limited systematic data on the co-operative sector in Nigeria, which hinders effective engagement with the sector.  It is therefore difficult to determine the optimal strategy for expanding and deepening financial services to and through co-operatives. To improve stakeholder understanding of the co-operatives sector and their potential for enhancing financial inclusion in Nigeria, EFInA undertook an in-depth study (qualitative and quantitative) of the sector in three states - Enugu, Kebbi and Oyo. Findings from the survey were disseminated and discussed by panellists and participants from co-operative groups, industry regulators, development finance institutions, microfinance banks and deposit money banks that attended the event.

Speaking at the innovation forum, Ms. Modupe Ladipo, Chief Executive Officer, EFInA, stated, “There is a core and dedicated following of co-operatives in the Enugu, Kebbi and Oyo states, which is probably also replicated across Nigeria. Members regularly save and have a real demand for loans. Our data revealed that the 700 members interviewed in these three states saved over N243 million annually; and that the 150 managers interviewed, managed a loan portfolio of N122 million. Therefore, there is a significant potential for co-operatives to make a bigger impact amongst those who are un-banked or under-served. If optimised, co-operatives can be a force in empowering rural communities, farmers, women and micro entrepreneurs throughout Nigeria.”

The keynote speakers at the event were the Honorable Joseph Nyagah - Minister of Co-operative Development and Marketing, Kenya, and Mr. Christian Malamsha, Dean, Faculty of Co-operative and Community Development, Moshi University College of Co-operatives and Business Studies (MUCCoBS), Tanzania. 

In his keynote address titled, “Co-operatives as Potential Channel for Enhancing Financial Inclusion”, Honorable Nyagah shared insights on how effective regulations can support the growth and development of co-operatives and maximise their impact on financial inclusion. Kenya’s Savings and Credit Cooperative (SACCO) is the most dynamic and largest in Africa. At the end of 2011, there were 14,126 registered co-operatives – serving over 10 million members in Kenya. He emphasised that, “The role of Government is to create a conducive environment for growth and development of co-operatives through effective policies, overseeing development and administration of co-operative legislation and regulations. Co-operatives remain important in providing access to finance, and in particular credit to low income individuals given the rising cost of lending by banks.”

Mr. Malamsha addressed how co-operative colleges can strengthen the competence of co-operatives and their managers, which would assist in accelerating the uptake of formal financial products in the co-operative sector. He asserted that, “Co-operative colleges should identify, develop and review programmes continuously, to ensure that the training needs of co-operatives are met.”