The impact of the supervised Sajha (Cooperative) Program on the credit function of the Sajha Societies : a case study of Nepalese cooperatives

Abstract

Cooperatives in rural Nepal originated in recent years, after the enactment of the Cooperative Society Act 1959, to enable the member farmers to have access to credit, goods and inputs to improve their productive capacity and level of living. These cooperatives have been operating under different names such as Primary Agricultural Cooperative Society, Supervised Multipurpose Cooperative Society and Sajha Society. Sajha is the Nepalese word for cooperative, and is used in this study to denote those cooperatives introduced since May, 1976 under the Sajha Program, In 30 selected district s of the country as a part of the Rural Development Program to provide access to credit, agricultural input supply, marketing outlay and banking facility in rural areas. The main objective of this study is to evaluate the performance of the Sajha Program; a number of indicators have been devised and have been statistically tested according to the hypotheses proposed for the study. Non-parametric (sign test and chi- square test) and parametric (paired t-test and analysis of variance) techniques have been used to analyse the performance of the Sajha. The results suggest that the introduction of the Sajha Program has improved the credit function of the Sajha Society by reducing area coverage and providing better services to their member farmers, and has also increased the membership, share capital and current lendings. Sajhas located in the Plains differ in their efficiency with those of the Hills in area coverage, share capital and lendings due to large infrastructure. But the Sajhas In the Hills are as efficient as those of the Plains ln conducting all their business operations. The larger farmers have benefited more from the Sajha credit, their representation in the Advisory Committee is greater and default rates among them are higher than those of small farmers. Sajhas are appropriate tools for rural credit as an institution but a larger share of the benefits has gone to the larger farmers. If the small farmers are to benefit from Sajha credit, a larger percentage of agricultural lending should be allocated to these groups. Representation from these groups should be included in the decision making body. The terms and conditions of present lending procedures should be suitably modified. Loan collection in kind marketing through the Sajha with storage facilities, making Sajha free from Panchayat politics, higher interest rates for rural savlngs with banking facilities, continuous education to members and higher incentives to the staff seem to be necessary to make the Sajhas more useful.