Cooperatives in Nepal

(a) Development of Cooperatives in Nepal:

It is believed that the practice of working collectively in Nepal has developed since ancient times, according to the spirit of cooperation. Social activities such as Dharma Bhakari (religious granary), Parma (reciprocal work exchange), Guthi (community trust), and Dhikuri (rotating credit association) can be taken as examples of cooperation.

In this way, it is found that there was a practice of providing necessary assistance to each other when people were in need and working together collectively.

The development of the cooperative sector in Nepal started after the establishment of the Cooperative Department in 2011 BS (1954 AD). The first cooperative, 'Saving Credit Cooperative Society,' was established in Chitwan district on Chaitra 20, 2013 BS (April 2, 1957 AD). The first Cooperative Act was promulgated in Nepal in 2016 BS (1959 AD).

Until 2046 BS (1989 AD), the cooperative sector could not develop as expected due to the unfavorable political environment. After the restoration of democracy, the Cooperative Act, 2048 (1991 AD) was promulgated based on the internationally recognized values and principles of cooperatives, and the environment was created for the smooth development and expansion of cooperative organizations across the country. The Cooperative Act, 2048 (1991 AD) and the Cooperative Rules, 2049 (1992 AD) are in force for the formation, operation, and regulation of cooperative organizations.

Similarly, the National Cooperative Development Board Act, 2049 (1992 AD) has also been enacted to play a facilitating role in the development of the cooperative sector, including policy support, study and research, promotion, and coordination, and the National Cooperative Development Board has been formed accordingly.

In addition to this, the National Agricultural Policy, 2061 (2004 AD) and the Agricultural Business Promotion Policy, 2063 (2006 AD) have also emphasized the use and development of the cooperative system for the development of the agricultural sector.

(b) Current Situation of Cooperatives in Nepal:

Article 51 (3) (1) of the Constitution of Nepal states that the policy of "strengthening the national economy through the participation and independent development of the public, private, and cooperative sectors" is in place.

As of now, about 27,000 primary cooperative organizations, 66 district cooperative unions, 157 subject-based district cooperative unions, 16 subject-based central unions, one national cooperative bank with 20 branches, and the National Cooperative Federation as the apex body have been established in the country. More than 3.8 million Nepali citizens are affiliated as members of cooperatives. 

With the participation of women being more than 40% in the membership of cooperatives, the contribution made by cooperatives in women's empowerment is significant.

Cooperative Office:

The Government of Nepal has also established the Ministry of Cooperatives and Poverty Alleviation on Jestha 5, 2068 (May 19, 2011) to play an effective role in the development, expansion, and promotion of the cooperative sector. 

The Cooperative Department has issued standards to make the operation and management of cooperative organizations effective, and monitoring and regulation are being done on that basis, albeit in a limited manner.

Various programs related to cooperatives have been formulated and implemented with the aim of developing cooperatives as an important means of the country's economic, social, and cultural development by increasing the circulation and investment of capital through cooperatives, and to advance cooperatives with priority in poverty alleviation, employment creation, and rural development.

Problems of Cooperatives in Nepal

Despite many efforts being made in the past for the development of the cooperative sector in Nepal, the expected achievements have not been realized. 

The problems currently seen in the cooperative sector are as follows:

(a) Due to the inability to formulate a national cooperative policy, there is a lack of a clear roadmap for the multi-dimensional development of the cooperative sector.

(b) The current Cooperative Act has not been amended according to the times, so effectiveness could not be brought in the work related to the registration, operation, monitoring, and regulation of cooperative organizations.

(c) The current arrangements for the practice of self-governance are not effective, so good governance could not be ensured in cooperatives.

(d) Due to the lack of clear legal provisions for cooperative organizations and cooperative banks engaged in financial transactions, it has been difficult to make financial transactions through cooperatives organized, safe, and reliable.

(e) The appropriate development of formal cooperative education, training, and organized cooperative information system required for the promotion of cooperatives in the country has not been possible.

(f) There is a lack of policy clarity on the subject of grants, loans, and tax exemptions provided to the cooperative sector. Due to the inability to increase the contribution of cooperatives in productive sectors, an environment conducive to self-employment could not be created, and the process of labor force and talents being wasted could not be stopped.

(g) Due to the lack of sectoral policies and programs, the use of the cooperative system in industries and businesses with comparative advantages has not been possible.

(h) The institutional strengthening of the Cooperative Department, which bears the administrative responsibility for the development and expansion of the cooperative sector, has not been possible.

(i) The various levels of cooperative unions have not been able to play an effective role in promoting the development, management, and operation of the cooperative sector.

Solutions to the Problems of Cooperatives in Nepal

Various types of cooperatives are in operation in Nepal. Despite the important role of cooperatives, various problems exist in this sector. 

For the resolution of the problems of cooperatives, or to make cooperatives effective, the following measures can be adopted:

(a) Developing institutional capacity of cooperatives through education, training, and information, and increasing public awareness related to cooperatives.

(b) Making cooperatives active in all types of businesses based on production and services, including the agricultural sector.

(c) Increasing the access of cooperatives to improve the living standards of women, the poor, marginalized, disabled, landless, and backward groups and communities, as well as ordinary citizens.

(d) Making the cooperative sector effective, competitive, and quality by developing and expanding cooperative-promoted industries and businesses.

(e) Establishing good governance in the cooperative sector through the adoption of effective management techniques and regulations, while practicing the basic values and principles of cooperatives.

(f) Promoting cooperation and collaboration between the government, cooperatives, private sector, and development partners to develop, expand, and promote cooperative industries and businesses.

(g) Formulating long-term plans, developing human resources, constructing necessary organizational structures, and making legal arrangements for the development, expansion, and promotion of cooperatives.

(h) Formulating and implementing standards for the inspection of cooperative unions and organizations.