Nigeria

The legal framework analysis aims to provide general knowledge of the national cooperative legislation and of its main characteristics and contents, with particular regard to those aspects of regulation regarding the identity of cooperatives and its distinction from other types of business organisations, notably the for-profit shareholder corporation.

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for Nigeria.

The legal sources for the rules and regulations for the formation, operation and dissolution of co-operative societies in Nigeria are:

The Constitution of the Federal Republic of Nigeria 1999 (as amended)

The Nigerian Cooperative Societies Act CAPN98 2004 (formerly Decree No. 90 of 1993)

States Cooperatives Societies Law and Regulations made pursuant to State laws

By-laws of individual cooperative societies

Cooperative friendliness

From the view of ICA contributing member organizations, the degree of “cooperative friendliness” of the national legislation is very limited, so much that there are very few legislative provisions promoting growth and development of cooperatives.

Notable “cooperative friendly” provisions in the Federal Act are sections 11, 12, 33 and 36. They are especially commendable as they give the cooperative the  autonomy to make its own laws (bye-laws), control the investment of its funds and exercise its discretion in the choice of an auditor to audit its accounts without any interference from the Director.

Exemption from certain taxes by both the State and Federal law is another good practice. The exemptions are geared towards the conservation of cooperative funds to encourage cooperative activities.

Key recommendations for improvement

The main recommendations for the improvement of the legal framework in place are summarized below:

• The cooperative principles should be adhered to and enshrined in both the Federal and State cooperative laws. This can be achieved by the decentralization of  the powers of the Director of Cooperatives and delegation to State and Federal Apex organizations.
• The law should allow flexibility in the provisions of the bye-laws of cooperative societies rather than the imposition of template bye-laws by the Ministry responsible for co-operative societies.
• There should be less interference of the regulatory body in the management and affairs of cooperatives.
• There is a need for collaboration between the Ministry responsible for cooperatives and the state apex bodies on such functions as promotion, registration, audit and formulation of policies.

• Cooperatives should be placed under the appropriate ministry to improve co-ordination and formulation of the right policies. In some States, cooperatives are under the Ministry of Women Affairs, the Federal Ministry of Agriculture and Rural Development, in some other States, the Ministry of Poverty Alleviation and Cooperatives or Ministry of Commerce, Industry and Rural Development.
• There is a need to establish a financial aid scheme at single digit interest rate by the government to promote cooperative business.
• Cooperative members should be protected against financial loss caused by unscrupulous management committee members to boost public confidence.
• There is a need to adopt and pass into law the draft bill of 2008 proposed at the National Assembly for the establishment of a National Co-operatives Societies Development Agency.  It is an improvement on the model law and its implementation will promote the development and growth of the cooperative movement in Nigeria.

Conclusions

In achieving the desired change, the legislation whether at the Federal or State level should not be overly prescriptive as it is presently, but create an atmosphere conducive to cooperative autonomy and development. The legal framework should curb excessive involvement by the Director of Co-operatives in virtually every sphere of cooperative endeavor and give freedom to the societies to define the parameters for their management and business activities. The role of the Director should mostly be supervisory and delegation of some of its duties to apex cooperative organizations whether at the State or Federal level be given consideration to instill confidence in the system and give the much desired sense of participation by the cooperatives in the conduct of their affairs.

_{The legal frameworks analysis is a tool developed under the ICA-EU Partnership #coops4dev. It is an overview of the national legal frameworks at the time of writing. The views expressed within are not necessarily those of the ICA, nor does a reference to any specific content constitute an explicit endorsement or recommendation by the ICA.}