Introduction to Co-operatives Introduction to Co-operatives September 2005 September 2005

Who owns the enterprise? Who owns the enterprise? Who controls the enterprise? Who controls the enterprise? Who uses the enterprise? Who uses the enterprise? Who gets the profits? Who gets the profits? A Type of Enterprise Dependent On

Individually Owned Business One Person Owns Owns Controls Controls Operates Operates Benefits/Profits Benefits/Profits

Private Company Investors as owners Investors as owners Profits shared among investors Profits shared among investors Voting weighted according to the number of share investment Voting weighted according to the number of share investment

What is a Cooperative?.. A cooperative is 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.

Co-operative Principles 1. voluntary and open membership; 2. democratic member control; 3. member economic participation; 4. autonomy and independence; 5. education, training and information; 6. cooperation among cooperatives; 7. concern for community.

Democratic member control The people who own and control and finance the co-operative are those who use it.

Democratic member control is exercised by: Voting at annual and membership meetings Voting at annual and membership meetings Electing Board of Directors Electing Board of Directors Making decisions on major co-operative issues Making decisions on major co-operative issues

Co-ops Principles and Practices Co-operative Principles and Practices PrinciplesPractices Voluntary and open membershipMember recruitment policy, rules of admission, equal opportunities, Democratic member controlConstitution, voting rights, role of the board, members and management Member economic participationEconomic performance, rewards to members, capitalization and how surplus is used Autonomy and independenceRelations with government, other organisations and institutions and market position, Education, training and informationMember, board and management training and public relations Co-operation among membersFederation, networks, joint enterprises, movement building Concern for communityPolicy on community development, environment and networking

Co-operative Values self-help; self-help; self-responsibility; self-responsibility; democracy; democracy; equality; equality; equity; equity; solidarity. solidarity.

Types of Co-operatives Co-operatives can be distinguished by: Co-operatives can be distinguished by: degree of formality degree of formality ownership ownership type of activity type of activity level in the « cooperative hierarchy » level in the « cooperative hierarchy » These types can be combined These types can be combined

Degree of formality Informal groups build on co-operative principles; example: stokvels Informal groups build on co-operative principles; example: stokvels Pre-co-operatives or common initiative groups Pre-co-operatives or common initiative groups Fully fledged, registered co-operatives Fully fledged, registered co-operatives

Ownership and Purpose The worker-owned co-operative: the individual members are both workers and employers of the jointly owned co- operative enterprise. Its purpose is to provide employment to its members The worker-owned co-operative: the individual members are both workers and employers of the jointly owned co- operative enterprise. Its purpose is to provide employment to its members The user-owned co-operative: members have their own enterprise or household and use the cooperative for joint supply, marketing, finance, housing etc. Its purpose is to provide services to its members. The user-owned co-operative: members have their own enterprise or household and use the cooperative for joint supply, marketing, finance, housing etc. Its purpose is to provide services to its members.

Type of activity (1) Economic activities Economic activities agricultural marketing & supply; agricultural marketing & supply; savings & credit savings & credit consumer good supply consumer good supply transport transport shared services (business) shared services (business) handicrafts and small industries handicrafts and small industries services services

Type of activity (2) Social services Social services Housing Housing Social reintegration Social reintegration HIV-AIDS care HIV-AIDS care Medical services Medical services Others Others Musician co-operatives Musician co-operatives Soccer fans co-operatives Soccer fans co-operatives

Individuals and Enterprises

Structure of co-operation (1) Co-ops can co-operative by membership form Primary Co-op Structure - Individuals are direct members Primary Co-op Structure - Individuals are direct members Secondary Co-op Structure- Primary co-ops are direct members Secondary Co-op Structure- Primary co-ops are direct members Tertiary Co-op Structure – Secondary and/or primary are both are direct members Tertiary Co-op Structure – Secondary and/or primary are both are direct members

Structure of co-operation (2) Co-ops can economically co-operation by geography. Co-ops can economically co-operation by geography. Local – organized on a municipality level Regional – organised at district or metro levels Local – organized on a municipality level Regional – organised at district or metro levels Provincial – organised by numbers districts and metros Provincial – organised by numbers districts and metros National – organised by provinces National – organised by provinces International – organised by national co-op movements International – organised by national co-op movements

Primary Co-op Structure Primary Co-op Structure Co-operative Member

Secondary Co-op Structure Secondary Co-op Structure Co-operative Primary Co-op Member Local Co-op Member

Organizational Make-Up Members Board of Directors Manager Employees

Tertiary Co-op Structure Tertiary Co-op Structure Co-operative Member Primary Co-op Secondary Co-op Secondary Co-op Primary Co-op Primary Co-op Member

Participation Roles Co-operatives operate through the roles of principal parties Members Members Directors Directors Manager Manager Employees Employees

A national Movement (1) There are currently 4,000 primary co-ops in SA There are currently 4,000 primary co-ops in SA Worker co-ops Worker co-ops Housing co-ops Housing co-ops Consumer co-ops Consumer co-ops Agricultural co-ops Agricultural co-ops Financial co-ops Financial co-ops

A National Movement There are 3 national co-operative federations There are 3 national co-operative federations Savings and Credit Co-operative Leaque of SA (SACCOL) Savings and Credit Co-operative Leaque of SA (SACCOL) South African Federation of Burial Societies (SAFOBS) South African Federation of Burial Societies (SAFOBS) South African Housing Co-op Association (SAHCA) South African Housing Co-op Association (SAHCA) There is 1 Tertiary co-op – national co-operative apex organization: There is 1 Tertiary co-op – national co-operative apex organization: National Co-operative Association of South Africa National Co-operative Association of South Africa 3 co-operative federations – representing 80,000 members 3 co-operative federations – representing 80,000 members 600 primary co-ops representing 167,000 members 600 primary co-ops representing 167,000 members

A Global Movement cooperatives cooperatives 800 million individual members – many of them women 800 million individual members – many of them women 100 million jobs created 100 million jobs created Over 50% of global agricultural output is marketed through cooperatives Over 50% of global agricultural output is marketed through cooperatives 470 billion $ of savings mobilized by credit unions 470 billion $ of savings mobilized by credit unions Cooperatives are world’s biggest health insurer Cooperatives are world’s biggest health insurer