It’s about the people

2013-06-21 00:00

WHY are our rural co-operatives struggling? It has been a very unpopular experience for the country but we have drawn some lessons from it, although, despite a basket of incentives and institutional support for co-operatives, the experience suggests the opposite.

Many commentators have ostracised the recent co-operative programme and have refused to recognise the many opportunities associated with the model. It has been proven that co-operatives offer multiple vehicles to achieve the grand expectations of an inclusive economy. Co-operatives provide an economic-development platform that is able to galvanise co-operation between economically marginalised households and established industries.

International experience reveals that innovative financial services, including the use of guarantee funds to link co-operatives with commercial banks, are key to successful co-operatives. What antidote can we suggest to respond to the fundamental structural challenges that are associated with co-operatives?

Before suggesting some strategic adjustments to the co-operative programme, we have to appreciate that similar views have been aired, both by members of co-operatives and experienced entrepreneurs who have become frustrated with co-operatives. They all tell similar stories. It has been about a lack of commitment from some members. There has been too much focus on profits. Some co-operatives were established as quick fixes for the socioeconomic ills in our society. In some cases, service-delivery pressures facilitated the dishing out of money indiscriminately, to undeserving pseudo co-operatives. Every problem boils down to governance and management.

First, co-operatives should balance the powers and functions between governance and management. Since membership is based on communal connections, class association and/or shared economic interest, the management and governance functions should be stated clearly from the onset.

In other words, both governance and management should accept that management is about running the organisation and corporate governance is about ensuring the organisation is run properly. There should be systems in place to reward good performance and reprimand unacceptable behaviours, without fear of victimisation.

Second, it is about the competitiveness of a co-operative. Members establish a co-operative for a specific reason. The focus should be on meeting the needs and interests of the group members or users, without incurring financial losses in the process. It should be about mutual aid and the empowerment of the members and/or users. Mutual aid means the willingness of members to pool their resources so that the priority needs of members can be met. In other words, it means achieving a certain level of loyalty and commitment in order to deliver the core services and products that benefit the members.

Members should be able to use these benefits to generate profits that are proportional to the investments made.

Dairy enterprises have used the co-operative model successfully. A dairy farmer draws services and support from a co-operative, which boosts the profitability levels of his or her individual business. Any profits generated by a co-operative are usually shared at the end of each financial year.

Lastly, and most importantly, the co-operative should remain relevant to the users and members. Although the market-led capitalist economy has created multiple opportunities for co-operatives, capitalism has commercialised consumers, killing collectivism and solidarity in the process. This is a golden opportunity for co-operatives to bring back human relationships to the market place. Customers learn more about the co-operatives by walking in the door and using the product than through modern-day advertising. In other words, people are attracted to products and services that have a human factor.

The recent bitter experience can be turned around. Focus for co-operatives should be on the following priorities. There should be a strong focus on educating members on issues of governance and management that appreciates the socioeconomic pressures on the members. This should be anchored on a strong foundation that builds productive participation. Basically, such platforms should increase the opportunities that respond to the needs of the members and users. Members should appreciate that long-term relationships with value-chain actors, supporters and the users of the products or services require investments and commitment. While co-operatives require innovation and adaptation, they should not drift from the principle of creating a space for the majority of the poor to participate profitably in the value chains in their communities. Co-operatives are largely established by ordinary citizens, to meet a social, as opposed to a commercial, objective, but also to maintain a healthy balance between social and economic objectives. Basically, co-operatives are about three things: uniqueness, authenticity and reward. Initiatives that facilitate the organic development of co-ops should be established. They are more resilient and have better chances for growth in distressed communities.

• Nqe Dlamini is a rural development consultant.

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