Challenges of Cooperative Savings Among Smallholders

by Toluwalemi Oluwadare on 21 Feb 2019 • 0 comments
3 min read

In our previous article, we discussed a traditional approach to encourage a savings culture among Nigeria’s smallholders. 

Cooperatives play a crucial role in improving food security and generating employment opportunities. But there are impediments to cooperative savings among smallholder farmers in Nigeria. 

Here is a handful of challenges...

  • Discrimination

Cooperative societies are voluntary organizations that offer services to people willing to accept the responsibilities and benefits of membership. But gender, social, political or religious discrimination may arise which leads to exclusion and may cause smallholders to lose out on opportunities to get access to credit or benefit from ‎‎training and extension services. For example, in Nigeria, widows constitute just 6.7% of cooperative members.[2]

Although cooperatives work on a democratic platform, the autonomous system is not possible at all times because factors such as consistency of savings may call for members being addressed in a way he or she may not like. Members with the most consistent savings may disrespect other members based on their financial status.

  • Sustainability

The ability to maintain cooperative societies at a good rate or level is quite challenging. Problems from mistrust between members and external agents may arise if the cooperative is created by external actors and not by farmers themselves. Certain agreements or activities which are not based on the farmers' terms may be carried out and this will affect their sense of belonging and responsibility, hence, threatening the sustainability of the cooperative.

The inability to withdraw from their savings when in financial need, except on cessation of membership also threatens sustainability. The cooperative has no provision for emergency loan³ during helpless situations such as illness, accidents, burial rites, etc, of the farmer's immediate and extended family members.

  • Poor Management

Another challenge to cooperative savings among smallholder farmers in Nigeria is poor management. Funds misappropriation, embezzlement, bribery and corruption among others, is a significant challenge to cooperative savings among smallholder farmers in Nigeria. 

Furthermore, leaders of cooperative groups may not be committed to providing financial education to their members and to the community at large. Farmers lose out on the opportunity to understand concepts like budgeting basics, retirement planning and how credit works. As a result, not only does the cooperative suffer losses, but also the farmers who are meant to benefit from the cooperative also suffer losses.

In response to the significant challenges posed by cooperative savings, Crop2Cash has digitized the supply chain of agro-processors of crops like rice and maize. This makes it easy for them to record and find information, manage their supply relationship with farmers and cooperatives and make strategic business decisions driven by data. All the while, providing the farmers with basic financial services without needing to visit a bank and easy access to farm inputs which will increase their harvests and profits.

We will be rolling out a pilot of our products with some smallholder farmers in the Northern region of Nigeria in the next few weeks. Stay connected to learn more about our solutions and impact in the agricultural ecosystem of Africa. Subscribe here.

Related Articles

  1. Agriculture for Impact (A4I) 2015, Agricultural Cooperatives. Available at: <> [Accessed 14 February 2019]

  1. Innocent, Y & Adefila, JO 2014, ‘Farmers cooperatives and agricultural development in Kawli Area Council Federal Capital Territory Abuja, NigeriaInternational Journal of Humanities and Social Science, vol. 4, no. 7, pp. 161-169.
  1. Oluyombo, Onafowokan. (2013). Impact of Cooperative Societies Savings Scheme in Rural Finance: Some Evidence from Nigeria. Economic Review – Journal of Economics and Business,. XI. 77-88. 10.2139/ssrn.2885353.
  2. Cover image by Allison Shelly for CGAP

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