The Evolution and Impact of Cooperatives in Nepal

The Evolution and Impact of Cooperatives in Nepal

Cooperatives have emerged as a cornerstone of Nepal’s economic development, playing a pivotal role in financial inclusion, employment generation, and poverty alleviation. This blog explores the historical milestones, economic contributions, and transformative impact of cooperatives across various sectors in Nepal.


Historical Milestones of Cooperatives in Nepal

The cooperative movement in Nepal has a rich history, marked by several significant milestones:

  • 1953: Establishment of the Department of Cooperatives
    The Nepalese government established the Department of Cooperatives under the Ministry of Agriculture to promote cooperative development.

  • 1956: Formation of the First Credit Cooperative
    The first credit cooperative society was formed in Chitwan District to support flood-affected communities through resettlement programs.

  • 1960: Enactment of the Cooperative Act
    This act provided a legal framework for the establishment and operation of cooperatives.

  • 1963: Establishment of the Cooperative Bank
    Savings and credit cooperative societies were consolidated into the Cooperative Bank, designed to enhance financial services.

  • 1968: Transformation into the Agricultural Development Bank of Nepal (ADBN)
    The Cooperative Bank evolved into the ADBN, focusing on agricultural development and supporting farmers with financial resources.

  • 1992: New Cooperative Act
    Following political reform, a new Cooperative Act was enacted, enabling a three-tier cooperative system and fostering more structured growth.

  • 2015: Constitutional Recognition
    The cooperative sector was enshrined in Nepal’s Constitution as one of the three pillars of the national economy, alongside public and private sectors.


Economic Contributions of Cooperatives

Cooperatives have been instrumental in driving economic growth and fostering inclusivity. Their contributions include:

  1. Gross Domestic Product (GDP):
    Cooperatives contribute approximately 3% to Nepal’s GDP.

  2. Financial Sector Impact:
    With mobilized resources of nearly USD 5 billion in share capital, reserves, and savings, cooperatives represent about 20% of Nepal’s financial sector.

  3. Employment Generation:
    Over 68,000 individuals are directly employed by cooperatives, and about 1 million people benefit indirectly.

  4. Membership and Inclusivity:
    Nepal’s cooperatives have 6.5 million members, representing nearly 22% of the population, with over 40% of board positions held by women, promoting gender equality.


Key Cooperative Initiatives and Their Impact

  1. Dairy Development Corporation (DDC):

    • Established: 1969 as a public enterprise.
    • Impact: DDC collects milk from 60,000 farmers in 33 districts, providing fair prices and a steady market. It supports rural income generation and food security through nationwide dairy distribution.

  2. Nepal Agricultural Cooperative Central Federation Ltd. (NACCFL):

    • Membership: Represents over 815,000 members from 750 cooperatives.
    • Focus: Agricultural development and enhancing the productivity of Nepal’s farming sector.

  3. National Cooperative Federation of Nepal (NCF):

    • Established: 1993 as the apex body for cooperatives in Nepal.
    • Role: Represents diverse cooperative societies at all levels, promoting collaboration and policy advocacy.

  4. Sahara Nepal Savings and Credit Cooperative Society Ltd. (Jhapa)

    • Total Assets: Approximately NPR 16.64 billion.
    • Membership:  Over 169,000 members
    • Overview: Based in Birtamode, Jhapa, Sahara Nepal is recognized as the largest cooperative in Nepal by both assets and membership. It offers a range of financial services, including savings and credit facilities, significantly contributing to the financial inclusion of its members.

  5. Nepal Multipurpose Cooperative Society Ltd. (Jhapa)

    • Total Assets: Approximately NPR 13.84 billion.
    • Membership: : Around 163,000 members.
    • Overview: Headquartered in Mechinagar, Jhapa, this cooperative operates in diverse sectors such as savings and credit, consumer goods, dairy, agriculture, and tea production, thereby supporting various economic activities within the community


Sectoral Expansion of Cooperatives

Cooperatives in Nepal are no longer confined to savings and credit. They operate across diverse sectors, including:

  • Agriculture: Enhancing food production and farmer incomes.
  • Dairy: Supporting rural livelihoods and ensuring market stability for dairy products.
  • Renewable Energy: Promoting sustainable energy solutions in rural areas.
  • Tourism: Supporting community-based tourism initiatives.
  • Housing and Healthcare: Providing affordable housing and healthcare services.


Conclusion

The cooperative movement in Nepal exemplifies the power of collective effort in driving socio-economic progress. From its humble beginnings in the 1950s to becoming a significant pillar of the national economy, cooperatives have continually adapted to meet the needs of diverse communities. With a strong foundation, inclusive practices, and sectoral diversification, cooperatives remain a vital force in shaping a prosperous and equitable future for Nepal.