Cooperatives are classified as one of the business organizations but operate in a special way different from all other forms of business enterprises. The distributive nature of cooperative provided that they must be owned, used and controlled by their members. In view of this, cooperatives are organized and managed through the system of large or small, multipurpose or single purpose and central or federal. All these systems put together are under direct coordination and supervision of the cooperative federation.
Yahaya, (2001) notes the cooperative federation is an organization where there are basic units at each level that determine on their own initiative. The relationship between the federation which is a higher organ and the secondary societies which are lower organs is that there is a dividing line where the lower organs reserve to themselves certain functions and delegate others to the higher organs. Though the cooperative federation controls the activities of cooperative to ensure efficiency, it has by the affiliated societies since such affiliated societies do not surrender their autonomy to the cooperative federation.