Govt investment in co-ops at risk

KATHMANDU, JAN 23 -

A government investment worth Rs 437 million in cooperatives appears to have gone down the drain as most of the cooperative shops have failed to continue their business.  

Although the Department of Cooperative (DoC) does not have specific data on the status of such cooperatives, the department’s Director General, Kedar Neupane, said that he had informal information suggesting that only half of those cooperatives are currently in operation.

After funding the shops for two years since the programme started in fiscal year 2008-09, the DoC has stopped distributing funds to such cooperatives and has hardly monitored them after that.

The government’s concept of distributing funds to the cooperative shops was aimed at providing essential goods at reasonable prices, particularly to the poor. The existing cooperative shops and those that opened after the government announcement were each provided cash incentive worth Rs 100,000.

The budget for the fiscal year 2008-09 had planned to open cooperative run subsidised grocery shops in each of the VDCs, while in the case of municipalities, a cooperative shop was proposed in an area with 30,000 residents.

Although the government initially had planned to open a total of 4,000 cooperative shops, only 3,570 of them were provided with the grant. There were accusations that the government provided cash incentives to the cooperatives without proper assessment of their business plan. A majority of the cooperatives that received government incentive are located in Saptari (116) and Dhanusha (104).

“Many shops in the border areas of Tarai and hilly region have been closed,” said Neupane. As of 2010-11, only eight of the cooperatives that failed to operate the shops paid back the grant money for failing to operate shops, according to the DoC. A provision in the guideline states that those receiving the grant should return the money if they fail to operate  cooperative.

The DoC’s annual report 2011-12 states the supply constraint, lack of training to the operators, lack of cooperation from the private traders and lack of monitoring of the cooperative were major reasons for the plan’s failure to yield desired result.

The report says the cooperative shops failed to operate well as they could not get supply from the government entities—Nepal Food Corporation, Salt Trading Corporation and National Trading—on regular basis.

Apart from assigning its cooperative offices in 38 districts, the DoC also formed separate monitoring committees for the cross checking of the shops. “However, the lack of budget and proper directives have impeded the effective monitoring of the cooperative shops,” said Neupane.

Although many cooperatives have already shut the shops without paying back the grant amount, the department has no proper mechanism to supervise and penalise them. “We won’t let the cooperatives go without facing penalty for closing the shops without informing the DoC,” said Neupane.

Source: The Kathmandu Post