Cooperatives growth on a declining trend

Published On: September 21, 2016 02:31 AM NPT By: Sagar Ghimire  | @sagarghi

The government has stopped registering saving & cooveratives in municipal areas
KATHMANDU, Sept 21: The growth rate of cooperatives is on a declining trend since 2009/10.

Only 626 cooperatives were registered in the last fiscal year 2015/16 compared to 1,486 in 2014/15. The total number of cooperatives reached 33,289 at the end of 2015/16.

The registration of cooperatives started to decline from 2008/09 when an all time high number of cooperatives (4,511) were registered with the Department of Cooperatives. The number, however, has been falling in subsequent fiscal years. The growth rate of cooperatives in 2010/11 was 27.12 percent, 15.91 percent in 2010/11, 13.73 percent in 2011/12, 11.42 percent in 2012/13, 5.59 percent in 2013/14 and 4.77 percent in 2014/15.

The decline in growth of cooperatives in recent years has been attributed to a policy of the Department of Cooperatives (DoC) that tightens registration of new cooperatives.

The DoC stopped registration of saving and credit cooperatives in the municipality areas from 2012/13 due to high concentration of such cooperatives in urban areas. "We have stopped registering saving and credit cooperatives in the municipality areas as cooperatives tend to concentrate in urban areas even though their presence in rural areas is very low,” Upendra Bahadur Dhungana, deputy registrar at the DoC, told Republica.

After saving and credit cooperatives in urban areas started to land into trouble one after the other due to corporate governance problem, the DoC decided to stop registering saving and credit cooperatives which account for nearly 40 percent of the cooperatives. 

As of 2014/15, the latest data available on the breakdown of cooperatives based on their nature, 13,460 out of a total of 32,663 cooperatives were saving and credit cooperatives.
The decline in registration of cooperatives also indicate that there is less attraction toward cooperatives of other natures like multipurpose, agriculture, health and education cooperatives.

"DoC does not allow registration of saving and credit cooperatives in 217 municipalities. Even multipurpose and agro cooperatives, which also do some sort of saving and credit businesses, have not been registered. So the growth rate is on a declining trend," said Minraj Kadel, senior vice president of National Cooperative Federation of Nepal. "Even before the decision to stop registration of saving and credit cooperatives came into effect, the DoC was discouraging or tightening their registration. So the declining trend started much earlier,” he added.

To curb the over concentration of cooperatives in urban areas, the government is proposing a new measure to limit working areas of a cooperative. According to the Cooperatives Bill 2073 registered recently at the Parliament Secretariat, a cooperative established in a VDC should limit its activities within the VDC. Similarly, a cooperatives registered in a municipality can have up to three wards as its working areas. Cooperatives registered in metropolitan and sub-metropolitan cities will be able to cover one and two wards, respectively, as its working areas if the bill is approved by the parliament.

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