Project – The impact of cooperative thrift society on grassroots development.

A study of Epe local government, Lagos State.

CHAPTER ONE

INTRODUCTION

• Background to the Study

Cooperative thrift societies have been recognized as significant contributors to grassroots development. These societies, which are essentially member-owned and operated financial institutions, have been instrumental in providing financial services to individuals and communities that are often overlooked by traditional banking institutions (Birchall, 2013). They have been particularly effective in rural areas and among low-income populations, where access to financial services is often limited. By providing these services, cooperative thrift societies have been able to stimulate economic activity and promote development at the grassroots level.

The impact of cooperative thrift societies on grassroots development can be seen in several key areas. First, they have been successful in promoting savings and investment among their members. This has been achieved through the provision of savings and loan products that are tailored to the needs of their members (Birchall, 2013). By encouraging savings and investment, these societies have been able to inject capital into local economies, thereby stimulating economic activity and development.

Second, cooperative thrift societies have been instrumental in promoting financial inclusion. According to a study by the World Bank (2014), these societies have been successful in reaching individuals and communities that are often excluded from the formal financial system. This has been particularly important in developing countries, where a large proportion of the population is unbanked. By providing access to financial services, these societies have been able to empower individuals and communities, thereby promoting grassroots development.

Third, cooperative thrift societies have been recognized for their role in promoting social cohesion and community development. These societies are often deeply embedded in their communities and have a strong commitment to social and community development (Birchall, 2013). This has been reflected in their activities, which often go beyond the provision of financial services to include initiatives aimed at improving the social and economic well-being of their members and communities.

However, despite their significant contributions, cooperative thrift societies also face several challenges. These include regulatory constraints, lack of access to capital, and limited capacity (World Bank, 2014). These challenges have limited the ability of these societies to scale up their operations and increase their impact on grassroots development.

Cooperative thrift societies have had a significant impact on grassroots development. They have been successful in promoting savings and investment, financial inclusion, and social cohesion. However, they also face several challenges that need to be addressed in order to enhance their contribution to grassroots development. Further research is needed to explore ways in which these challenges can be overcome.

 1.2. Statement of the Problem

The problem of grassroots development in Nigeria is a complex one, with many factors contributing to the slow pace of progress. One such factor that has been identified is the lack of effective cooperative thrift societies. These societies, which are essentially community-based financial institutions, have been shown to play a crucial role in promoting economic development at the grassroots level in other parts of the world (Akinwumi, 2018).

However, in Nigeria, the impact of cooperative thrift societies on grassroots development appears to be limited. This is despite the fact that the country has a long history of cooperative movements, dating back to the colonial era (Okojie, 2012). The problem seems to lie in the fact that many of these societies are not functioning as effectively as they should. They are often plagued by issues such as poor management, lack of transparency, and inadequate regulatory oversight (Okojie, 2012).

Furthermore, there is a lack of access to these societies for many people at the grassroots level. This is particularly true for those living in rural areas, who often have limited access to financial services. This lack of access can hinder economic development, as it makes it more difficult for people to save, invest, and access credit (Akinwumi, 2018).

Another issue is the lack of awareness about the benefits of cooperative thrift societies. Many people at the grassroots level in Nigeria are not aware of how these societies can help them improve their economic situation. This lack of awareness can lead to low participation rates, which in turn can limit the impact of these societies on grassroots development (Okojie, 2012).

Finally, there is a lack of research on the impact of cooperative thrift societies on grassroots development in Nigeria. While there are some studies that have looked at this issue, they are often limited in scope and do not provide a comprehensive picture of the situation. This lack of research makes it difficult to develop effective strategies for improving the functioning of these societies and increasing their impact on grassroots development (Akinwumi, 2018).

Furthermore, while cooperative thrift societies have the potential to significantly contribute to grassroots development in Nigeria, there are several issues that are limiting their impact. These include poor management, lack of access, low awareness, and a lack of comprehensive research. Addressing these issues could help to enhance the role of these societies in promoting grassroots development in the country.

1.3. Aim and Objectives of the Study

The aim of the study is to examine the impact of cooperative thrift society on grassroots development. The specific objectives are:

1. To examine the role of cooperative thrift societies in promoting economic growth at the grassroots level.
2. To evaluate the impact of cooperative thrift societies on poverty reduction in rural and underprivileged areas.
3. To assess the influence of cooperative thrift societies on the financial literacy of individuals in grassroots communities.
4. To investigate the contribution of cooperative thrift societies to the creation of employment opportunities in grassroots areas.

1.4  Research Questions

The research questions are buttressed below:

1. What role do cooperative thrift societies play in promoting economic growth at the grassroots level?
2. How do cooperative thrift societies impact poverty reduction in rural and underprivileged areas?
3. How do cooperative thrift societies influence the financial literacy of individuals in grassroots communities?
4. What contribution do cooperative thrift societies make to the creation of employment opportunities in grassroots areas?

1.5. Research Hypothesis

The hypothetical statement of the study is buttressed below:

Ho: Cooperative thrift societies does not promote economic growth at the grassroots level

H₁: Cooperative thrift societies promote economic growth at the grassroots level

1.6. Significance of the Study

The study of the impact of cooperative thrift societies on grassroots development is significant as it provides an in-depth understanding of the role these societies play in promoting economic growth at the local level. These societies often serve as a financial backbone for many individuals and small businesses in grassroots communities, providing them with the necessary financial support to grow and thrive. Understanding their impact can help in formulating policies and strategies to further strengthen their role.

Secondly, this study is crucial in evaluating the effectiveness of cooperative thrift societies in poverty reduction. In many rural and underprivileged areas, these societies are a primary source of financial aid. They provide loans and other financial services to individuals who might not have access to traditional banking services. By studying their impact, we can assess how effective they are in reducing poverty and improving the living standards of these communities.

The third significance of this study lies in its potential to shed light on the influence of cooperative thrift societies on the financial literacy of individuals. Financial literacy is a key factor in personal economic growth and stability. By assessing the role of these societies in promoting financial literacy, we can gain insights into how they contribute to the overall financial well-being of individuals in grassroots communities.

Fourthly, the study is significant in investigating the contribution of cooperative thrift societies to job creation. In many grassroots areas, these societies not only provide financial services but also create employment opportunities. Understanding their role in job creation can help in devising strategies to boost employment rates in these areas.

The fifth significance of this study is its potential to provide a comprehensive understanding of the operational mechanisms of cooperative thrift societies. This can help in identifying their strengths and weaknesses, and in turn, can guide the development of interventions to improve their efficiency and effectiveness.

Lastly, the findings of this study can be used to inform policy-making. By understanding the impact of cooperative thrift societies on grassroots development, policymakers can make informed decisions about how to support and enhance the work of these societies. This can lead to more effective policies that promote economic growth and development at the grassroots level.

1.7. Scope of the Study

The study examines the impact of cooperative thrift society on grassroots development. A study of Epe local government, Lagos State.

1.8. Operational Definition of Terms

1. Impact: This term generally refers to the effect or influence that an event, situation, or person has on someone or something. In the context of business or social sciences, it often refers to the measurable outcomes or changes that can be directly attributed to a specific intervention or action.
2. Cooperative Thrift Society: This is a type of cooperative financial institution that is owned and operated by its members with the aim of providing credit at competitive rates and encouraging a culture of saving and thrift among its members. These societies are typically based on the principles of mutual self-help and are often formed by people with a common bond, such as living in the same community or working in the same profession.
3. Grassroots Development: This term refers to initiatives that originate from and are driven by the local community or population, rather than by external entities. The idea behind grassroots development is that the people who are most affected by development issues are often the best positioned to come up with solutions. This approach emphasizes local decision-making, community involvement, and bottom-up planning.

Project – The impact of cooperative thrift society on grassroots development.