As Nepal has been celebrating the International Cooperatives Year by organizing various programs, BADAL, chairman of the National Cooperatives Federation Ltd. of Nepal, spoke to NEW SPOTLIGHT on various issues regarding the recent state of cooperatives in the country. Excerpts:

As Nepal has been celebrating the International Cooperatives Year 2012, how do you assess the state of cooperatives in Nepal?

After two decades of liberal economy, the international community has realized that it cannot bring long lasting economic solutions in the world. In this context, cooperatives have provided the basis for the shift from liberal to mixed economy. Knowing the importance of cooperatives as a way for the future economy, the United Nations has also decided to celebrate the year 2012 as a year of the cooperatives. One of the aims of the year was to make the world happier through the cooperatives. The theme of the year is cooperatives as enterprises for the better world. The UN has urged the governments around the world to make cooperatives friendly legislations and create conducive environments for these organizations.

Why are cooperatives important?

Cooperatives are essential for world peace, prosperity and social justice. This is the reason even the International Cooperatives Federation has pushed the related UN agenda. Nepal government has set up a committee under the chairmanship of Minister of Cooperatives and Poverty Alleviation to celebrate the international year of the cooperatives.  We have started our program with inauguration of a library and holding of a big mass rally in Tundikhel in January 2012. Besides these, various programs were held throughout the country and over 6,000 pints of bloods have already been donated.  Cooperatives programs received enthusiastic participation during the International Cooperative Year 2012.

How do you look at the criticisms heaped against cooperatives?

Despite certain criticism about the activities, a majority of cooperatives have been working properly.  A few bad incidents travel like fire but the good ones rarely make the news.  Frankly speaking, the cooperatives, which have been in recent controversies, do not have anything to do with us. Out of 25,000 cooperatives, only fewer than one percent cooperatives have been facing problems.  I know that 99 percent cooperatives are functioning properly.  Cooperatives have been making a lot of efforts to transform the livelihood of people. Their contributions and their role are very important.

How about your organization?

It is an umbrella organization of the cooperatives. Over 225 district associations, 15 central associations and the National Cooperative Bank are associated with the National Cooperatives Federation Ltd. There are 3.6 million shareholders. A recently published report of the Department of Cooperatives has shown that there are 4.6 million shareholder members of the cooperatives.  Almost all districts have cooperatives. However, we are yet to reach all the VDCs.  Even districts like Taplejung and Darchula have their cooperatives functioning normally.  In Surkhet, there are cooperatives in all villages. The Village Development Committees in southern bordering towns are yet to have cooperatives. The remote VDCs of Karnali Zone too don't have cooperatives.  

What is the contribution of cooperatives?

The total contribution of the cooperatives in terms of the GDP is over 3 percent. In financial sector, they have 18 percent contribution.  They have provided employment to over 75,000 and, indirectly, they provide employment to over 700,000 people.  There are about 250,000 involved as managers, operators and members of the committees. Out of this, 80 percent are working on voluntary basis. Most of the cooperatives have been working for social justice. With the country’s diversity in language, ethnicity and culture, cooperatives have been functioning as models.  The cooperatives have accommodated all the elements together.  They have played a very important role in different areas.  Cooperatives have been carrying out various activities in the country. 

But there are criticisms as well. What do you say?

We have also seen certain problems during the period. Cooperatives have not been working as per the motto of cooperatives. I have to accept the fact that there are problems in those cooperatives which have not operated as per the principles of cooperatives. These cooperatives, which have been facing the crisis now, are not affiliated with the Cooperatives Federation.  Our federation has summoned them from time to time, but they never attended the meetings.  Nepal government has registers such cooperatives, but they do not actually meet the standards to run as cooperatives. When cooperatives function like commercial banks, it is natural for them to face problems. We have already invited them and suggested them to make corrections. I have already told them that they should to delink themselves with the cooperatives movement.

How diverse are the cooperatives?

According to the data of the last year, the total share price of cooperatives, which include cooperatives formed around themes of vegetable, poultry, milk, fruits, tea, coffee and sugar cane, is over rupees 24 billion in share equity, with the total transaction at rupees 200 billion. There are fluctuations in the transactions. It depends upon the situation.  Out of total, half of them are saving and credit cooperatives. Some 1,500 such cooperatives are directly affiliated to the National Credit and Saving Cooperatives Federation. In total, 5,400 cooperatives are under the network of National Cooperatives Federation Ltd. Nepal. Remaining cooperatives are not affiliated anywhere.  I would like to call all the persons involved in the cooperative movement, be they share members or promoters or operators or managers, to follow the basic principles of cooperatives.  If they don't want to abide by the basic principles, it is better for them to leave the movement.  One needs to be affiliated with district level cooperative federations once they get registered.  There is the need to exchange opinions.

Are your members also facing crisis?

The recent crisis prone cooperatives are neither our members, nor are they running with any commitment to the cooperative principles.  Some of them are even cheating the people intentionally. Such promoters and cooperatives need to be punished in accordance with the law of the land.  Some cooperatives are operated by those who don't have basic knowledge about cooperatives.  They have been unknowingly committing mistakes. Either these people need to correct themselves or they have to quit this sector.

How are the recent rumors affecting the cooperatives?

Due to rumors even the well-functioning cooperatives are facing crisis as depositors and shareholders seek their money back. When all knock the door of cooperatives demanding their refund, nobody will be in a position to return the funds because the money is normally lent to lenders. 

How much money do the cooperatives have in their safety net?

On an average, every cooperative places 15 percent of the deposit in the safety valve and invests eighty five percent of the money.  In rumor driven situations, honest people get in trouble. The government needs to punish those who intentionally and unknowingly discredit the cooperatives movement. We have demanded cooperative divisions in all 75 districts to monitor the activities of cooperatives, train manpower and set up training centers and hostels.

Cooperatives have over 58 years of history. What needs to be done now?

Yes, they have a long history. After twenty-two months of homework, we have prepared a draft of the National Cooperatives Policy and handed it over to the government.  We want to see the implementation of this policy.  The draft of National Cooperative Policy presented by a working group led by vice chairman of the National Planning Commission has included all the necessary arrangements to promote cooperatives in Nepal. The members of the working group include myself, governor of Nepal Rastra Bank, secretary of the Ministry of Finance and experts and registrar at the Department of Cooperatives. We want the execution of that policy as soon as possible.  The existing Cooperatives Act was promulgated in 1991 when there were just over 720 cooperatives. In the last two decades, everything has changed, but the act remains same. There is the need to amendment the act in line with the government’s three pillar financial policy, one of which is cooperatives. There are problems but they need to be sorted out. I cannot say there is no problem but the cooperatives have been transforming the life of rural people.