Co-operative development approaches in South Africa - what are prospects? Tebogo Phadu 7 November, 2018

Co-op Identity What are co-operatives? “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise, organised and operated according to co-operative principles” (Co-operatives Act of 2005 as amended) Co-operative Principles: voluntary and open membership, democratic member control, members’ economic participation, autonomy and independence, training, education and information, cooperation among cooperatives, and concern for the community

Co-ops and development Co-ops are about development, sustainable development: They address social needs and aspirations (employment, housing, food etc) through an enterprise model, but they are not a panacea to all social/economic problems. They must be understood in context of a mixed economy – where public, private and social sectors play their appropriate roles. Co-ops belongs to the latter. They are about collective-self empowernment (for example education and training) of communities and workers. They collectively ownership and democratically control their enterprises: those who own and also those who control the co-op to address their common needs are same persons. They are about community-and worker based development. Linking enterprise with a territory and people working in a locality (not run-away investors)

Mondragon – Some key Lessons Consider co-operative development strategy as a system approach – not as isolated enterprises, but linked economically to each other (not just representation linkages). Self-supporting institutions (education, training and technical support services) of the sector based on co-op model ( as opposed to externally driven support institutions (donor or state); Central and active role of Co-op finance ( banking and insurance) playing central role – financially backing development of worker-owned co-op enterprises, but in turn these co-ops backing their financial institutions.

Food for thought General strategy and legislative development Are we getting basic things right? Sectoral strategies are lacking – for instance, there is no specific strategy for worker co-ops – co-ops formed to address unemployed – making up 95% of all co-ops that are operational

Evolution of Post-1994 Co-op Development policy, legislation, strategy Co-ops Act of 2005 Co-op Banks Act of 2007 Integrated strategy for dev. and promotion of co-ops (2012) Co-ops Act amended (2013)

Triple crisis facing co-ops A crisis of identity: Most co-operatives exist in name only, not by nature and purpose. The various country co-operative registries are yet to clean out this mess. A crisis of environment: the legal, institutional and administrative context continues to prevent, not support, the emergence of genuine, self-managed growth-oriented co-operatives. A crisis of management: Most of the existing co-operatives are unable to survive without subsidies or grants.

Yet the potential remains great development of industry and services to provide employment to the unemployed/under employed youth and marginalized (that worker co-operatives and social co-ops); produce by small-holder farmers – producer co-ops; processing of produce to ensure marketing and supply agricultural marketing, supply and process co-operatives); capital formation in promotion of a savings and investment culture (co-operative banking and co-operative insurance, and indeed burial societies and stokvels); distribution of goods and services at fair prices ( consumer co-ops) and provision of housing for those in need (housing co-ops)

There is therefore a need to establish the status of co-operatives through a national mapping exercise a first step for census of co-operatives, establishing a knowledge-base on the movement institutionalising (and digitalising) data management and application, and formalising all types of co-operatives in national accounting. facilitate the development of co-operatives in different sectors. (more on this in the next slide)

But what are the entry points? Whilst co-op development strategy should apply to all types of co-operatives… each country applies its own catalytic entry points In Mondragon – it was worker co-ops that shaped the development of co-operative movement In the United Kingdom – it was the consumer co-ops, other playing less signficant role, until recently. In Germany and United States – it was financial co-operatives (co-operative banks, credit unions) and also agricultural co-ops In Kenya – agricultural marketing and supply and financial co-operatives. Must not be isolated from overall national development strategies (but rather integrated into them), yet still maintain dedicated and concentrated support for co-op development (too much fragmentation = disaster) Movement-building (or co-op system) approach (that is to say a bottom-up approach) in co-op development strategy (see NEXT SLIDE)

Three levels of co-op development strategy 1. Micro-level (Basic support System in a given territory) Meeting places for information gathering and ideas about organising co-operatives; Education and training for start-up development Advisory services through a network of experts and follow through Financing system provided by meso-level co-op institutions.

Three levels of co-op development strategy 2. Meso-level (corresponds to co-operation amongst co-ops) Enterprise support institutions – co-op development centres; training centres, non-banking financial instruments, research and development etc; Clustering of co-ops engaged in common activities or share their resources to achieve their common goals (consortia); Regional, provincial national federations, depending of the needs of the co-op movement, to represent the voice of the sector.

Three levels of co-op development strategy 3. National and International level (Coherent system of representation) Advocacy and negotiations - helping to transform local, regional experience into national public policies and legislation. to promote international co-operation – including trade amongst co-ops; Building national and global networks of co-operatives. Support chains of production and distribution

CO-OPS CLUSTER APROACH (consortia, secondary co-ops) Each cluster (organised either as a consortia or secondary co-op) and located either provincial or regional level, will consist of primary co-operatives involved in similar economic activity. Its objectives include: to increase the number of people with entrepreneurial characteristics and business skills; to identify and evaluate market gaps, available resources, raw materials and worker co-op business opportunities in the communities or regions; to perform joint marketing activities, conduct feasibility studies and carry out other tasks associated with co-operative development and incubation etc. Second level co-op formed by primary co-ops Second level co-op formed by primary co-ops First level co-operation (primary co-ops) established by communities Worker co-ops Consumer co-ops Housing co-ops Agri-co-ops Financial co-ops Needs of the communities and workers Creating and saving jobs access to quality consumer goods and services (especially) at fair prices and local ownership of stores access of housing reduce cost of buying inputs and selling produce, including processing. access to finance Communities /workers Communities /workers Communities /workers

Govt approach to Co-op Development (as stated in Policy) giving a clear, legal definition of a genuine co-operative enterprise; reforming the co-operatives administration; ensuring that the legal framework does not hinder the development and growth of cooperative enterprises; making a clear distinction between technical support services to co-operatives and the regulatory functions of the state; facilitating the formation of co-operatives with the objective of encouraging instead of replacing self-help; allowing co-operatives to set up their own support service institutions; and coordinating and orienting external assistance to co-operatives and self-help groups.

Where are we now? So, 14 years since Co-op Policy was adopted by Cabinet, ownership of the economy is as follows: Private Public Social

An economy we want in the future? How will ownership and control of the economy looks like in next 14 years?: ? ? ?

Towards a review of co-op strategy? Yes! Must be supported by assessment of the status quo. Must be inclusive, and participatory (and bottom-up!), involving key sectors and types of co-ops. Must support 2030 Vision

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