STUDY ON INDIVIDUAL MEMBERS SHARE CONTRIBUTION TO THEIR PRIMARY COOPERATIVES: The case of Admas Farmers Cooperatives Union; Guraghe Zone, SNNPR

Abstract

Capitalization and building own equity for primary coops and unions to become independent and realize sustainable growth is crucial. Lack of internal capitalization is one of the key reasons why cooperatives in Ethiopia having hard times to survive, grow, compete and realize new business ambitions. There have been efforts by Admas union to establish a semi-oil refinery plant for Niger seeds. The investment need for the plant is 20 million birr. In order to get a bank loan the union need minimum of 30% own equity. Therefore, the union started issuing shares and collected around 3.5 million birr. Some farmers bought up to 20 additional shares, equaling 4000 birr, whereas others did not bought even one additional share. The raised capital is not as high as expected. On average if each cooperative member bought one share the union should have been able to collect 8.81 million Birr. This was an important point raise the question why some cooperative members contribute to their primary cooperatives by buying additional shares and why not others did and what factors affecting the contribution and demand for additional share were the objectives of this study. Three districts from highest additional shareholding index, from medium and from lowest shareholding index were selected then primary cooperative were stratified into good and poor performed based on shareholding index in each district and a total of 6 cooperatives and 190 members were included in the study. Descriptive statistics, analytical approach-Likert Scale model and Tobit model were employed to meet specific objective of this study. The result reveled that gender, model farmers, participation on cooperative training, non-farm income, total land size, access to mass-media, distance from coops, dividend payment, access to output marketing service, level of transparency and accountability and level of satisfactions on service provided by coops were a factors that affect the demand for additional share. Among these variables the results show that participation on training, access to mass-media, dividend payment, transparency and accountability as well as level of satisfactions on coops service were highly significant in influencing the contribution and demand for additional share and level of shareholding at primary coop level and in case of Admass Union. Therefore, concerned bodies should take into account these factors while promoting Admas union and primary cooperative found in Guraghe zone.