Topic: Cooperatives
Introduction
A large number of people in South Africa who live in rural and peri-urban areas are part of the informal economy or are otherwise socially, economically and politically excluded from the benefits of development. Cooperatives play an increasing significant role in helping these people to find solutions on how to cooperate out of poverty by tapping their own resources, knowledge and strengths. Cooperatives contribute to develop the the local economies where the poor live through their unique and strong linkages with the community. They enable poor people to have their voices heard in addition to improving their daily working and living conditions. Because co-operatives are democratic organisations and owned by those who use their services cooperatives are an ideal instrument to empower the poor. They are participatory, responsive to local needs and able to mobilize communities and help particulary vulnerable groups of people.
What isn't possible for the individual is possible for many persons acting together!
National and provincial government promote cooperatives as a type of business entity and a means to get informal economic actors involved in and benefitting from the formal economy. In local economic development (LED) the focus is to develop cooperatives that aggregate buying power and generate oportunities for collective marketing.
Definition
The International Co-operative Alliance (2007) defines a cooperative as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democraticallycontrolled enterprise. Co-operatives are usually understood to be either an agricultural form of business or a state-driven welfare intervention.
Key Issues
For small actors to survive in a world dominated by capital and globalised markets.
e.g. for farmers to market their products; for bakers to buy their ingredients at reduced prices and for those excluded from classical (commercial) financial systems to secure their savings and to obtain credit in best conditions.
Co-operatives build locally rooted organisations and a network of such organizations
Co-operatives encourage and promote local development with local resources for local benefit.
Among all business organisations co-operative are the type of formalised business organisation reaching down to the relatively poor, because they
Are mainly based on human endeavour, desciplin and organized collaboration
Requiere little or no initial capital
Generate social capital both in terms of skills and money over a period of time and
Operate with own resources without depending on external help
Cooperation is a learning process in which members of co-operatives have to understand co-operative values and to know and to apply co-operative principles for joint economic activities.
Co-operatives usually start small from locally rooted groups that may take years ot even decades to grow into strong, user-driven enterprises.
Cooperation cannot be created by transfer of assets or externatl aid. Co-operatives are created by teaching new ways and forms of economic and social collaboration.
Critical Success Factors
In order to be successful co-operatives need the following internal fundamental conditions:
A group of people must have the desire to solve a common problem
There must be a least one person with leadership abilities in the group
The co-operative should produce tangible benefits for the members
The co-operative should have dynamic managers who can implement business policies.A management structure that reflects the capabilities of the members should be in place
The advantages of membership must outweigh the cost of duties of membership
In order for successful co-operatives to work one needs the following
external fundamental conditions:
There must be a favourable climate for co-operative work
Enabling legislation must be in place granting autonomy to adjust the by-laws of each co-operative society to the wishes and needs of its members
A tax regime for co-operatives should be provided which takes their particularities into account
Patience is essential. Trying to speed up the development process artificially by injecting external funds usually leads to short lived growth followed by collapse after external aid comes to an end
