1 STATUS REPORT ON ECONOMIC AND EMPOWERMENT AGENDA: COOPERATIVES PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY - 07 NOVEMBER 2007 JEFFREY NDUMO: CHIEF DIRECTOR –COOPERATIVES

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3  On 05 December 2001, cabinet approved the new mandate for cooperatives development to be transferred from the Department of Agriculture (DoA) to the Department of Trade and Industry (the dti);  Government seeks to promote cooperatives to all the sectors of the South African economy and not only in the agriculture sector, which used to be the case during the apartheid government;  Government’s perspective is that all spheres of government should actively be involved in the promotion and development of co-operatives. This view is embedded within the Cooperatives Act No. 14 of 2005 and policy; and  Co-operatives Act No. 14 of 2005, prescribes that the dti should facilitate effective coordination and reporting mechanism across all spheres of government with respect to promotion of cooperatives in the whole economy. Background Information

4  During 2004, the Co-operatives Policy that formed the basis for the development of the amended Cooperatives Act was finalised and approved;  The Cooperatives Act, No.14 of 2005 was promulgated into law on the 14 August 2005, repealing the 1981 Cooperatives Act.  The Cooperatives Regulations that ensured the proclamation of the Cooperatives Act on the 02 May 2007, were finalised, allowing for the effective implementation of the Act.  New systems were launched by CIPRO for registration of cooperatives. CIPRO is now working on the decentralisation of cooperatives registration.  The National Cooperatives Development Strategy is a major policy instrument currently being finalised by the dti. Status on the Cooperatives Act, National Policy and Strategy

5  Among others, the purpose of the Act is to: –Promote the development of sustainable co-operatives that comply with co- operative principles, thereby increasing the number and variety of economic enterprises; –Encourage persons who subscribe to values of self reliance and self help to register in terms of this Act; –Encourages simpler registration process and management of cooperatives; –Promote equity and greater participation by black persons, especially those in rural areas, women, persons with disability and youth; –Facilitate the effective co-ordination and reporting mechanism across all spheres of government through the dti; and –Ensure development of support programmes by all spheres of government. Status on the Cooperatives Act, National Policy and Strategy, cont.

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7 The dti, as the custodian of the cooperatives programme, established the Interdepartmental Committee to coordinate cooperatives development activities and programmes with key national departments. 20 national departments were invited to participate in the committee 18 departments responded to the call and are attending meetings on a quarterly basis. Environmental Affairs and Forestry and Statistics SA never responded. The coordination is aimed at ensuring that compliance with the requirements of the Act takes place from all the departments in terms of formulating strategies and programmes design to support cooperatives. The departments share experiences as well as report progress in this regard. Coordination with other National Departments

8 Status on Provincial Cooperative Strategies Name of the ProvinceStatus on Cooperatives Strategy Kwa-Zulu Natal (KZN) Co-op strategy development has just started. Gauteng Cooperative Policy and Strategy formulated still undergoing internal processes. To be aligned with the national cooperative strategy before approval. Western Cape Draft strategy already formulated and still undergoing internal processes. To be aligned with the national strategy before approval by the provincial government. Limpopo Draft strategy prepared and undergoing internal processes. North West Strategy currently being drafted. The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective departments rest with the dti to ensure fulfillment of these requirements

9 Status on the formulation of Provincial Cooperative Strategies, cont. Name of the ProvinceStatus on Cooperatives Strategy Eastern Cape Co-op strategy development has just started. Free-State Strategy being developed Northern Cape Strategy being drafted. Mpumalanga Strategy being drafted. The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective departments rest with the dti to ensure fulfillment of these requirements

10 Status on Financial Support for Cooperatives Name of the Agency Name of the Programme & Product Investment disbursedBenefits to Cooperatives SOUTH AFRICAN MICRO APEX FUND (SAMAF) Micro Enterprise Loans R5,014,435 for capacity building R5,280,000 on loans (2006/07) 20 cooperatives loaned; 3,487 individual borrowers 2,136 women borrowers 577 youth borrowers 27 disabled borrowers UMSOBOMVU YOUTH FUND Enterprise Loans R 9,520,000 loans disbursed UYF lended R2,212,288 to SACCOL for lending to SACCO’s (2005 to date) 27 youth owned cooperatives Benefited (since 2005 to date) SACCO’s lended to 395 micro enterprises creating 746 jobs. NATIONAL EMPOWERMENT FUND (NEF) Imbewu fund – Loan product R2,3m (2006/07) 9 cooperatives loaned at prime rate.

11 Status on Financial Support for Cooperatives, cont. Cooperative Incentive Scheme (CIS) –2006 to 2007: THE ENTERPRISE ORGANISATION (TEO) –90:10 matching grant for start-up; –Investment disbursed R4 million to 16 cooperatives; –303 members of cooperatives received jobs; and –CIS has been transferred to TEO to administer and rollout. Cooperative Special Project Fund (CSPF) –2006 to 2007: COOPERATIVES DEVELOPMENT UNIT –Grant and loan mixed facility; –Provide start up and expansion capital assistance –Investment disbursed R8 million to 4 small to medium cooperatives; –Substantial jobs created; and –CIS has been transferred to Khula to administer and rollout.

12 Status on Access to Markets support SMME & Cooperatives Targeted Procurement Programme (set asides) –Designated 10 products approved by cabinet to be rolled out to other departments and provinces. 30 days payment For SMMEs and Cooperatives –Measures for 30 day compliance approved by cabinet to be rolled out to other departments and provinces.

13 Status on Non-Financial Support for Cooperatives, cont. Name of the Agency/unit Name of the ServiceBenefits to co-op Businesses SMALL ENTERPRISE DEVELOPMENT AGENCY (SEDA) Business Support Service 151 Cooperatives were provided business support services (2005/06) 580 cooperatives were provided business support services (2006/07) Trainers from 51 FET’s were trained on the basic cooperatives concept (2006/07) Awareness Support Service 12 Awareness workshops were carried out benefiting 275 people on cooperatives (2005/06) 9 Awareness workshops were carried out benefiting 225 people on cooperatives (2006/07) 2006 to 2007: THE COOPERATIVES UNIT Capacity Building About 500 officers and individuals at local level have been trained across the provinces on the Train a Trainer cooperatives programme to enable them to assist cooperatives in their regions. 270 Community Development Workers (CDWs) have been trained on the cooperatives concept in all provinces.

14 Status on Non-Financial Support for Cooperatives, cont. Name of the Agency/unit Name of the ServiceBenefits to co-op Businesses UMSOBOMVU YOUTH FUND (UYF) Cooperatives governance training; access to markets; business support services; and facilitation of access to finance. 447 cooperative members were trained since 2005 to date. Training of TrainersPartnered with SEDA on training of FET Colleges on the Cooperative concept. Two (2) FET’s in KZN are being contracted to rollout a comprehensive training and mentoring programme which will focus on existing cooperatives to ensure sustainability.

15 DepartmentNo. of cooperatives assisted Other programmesAmount disbursed to Cooperatives Agriculture 28 cooperatives and self- help groups supported financially 857 jobs were created 827 primary cooperatives assisted with registration 30 secondary cooperatives assisted with registration Policy on agricultural cooperatives drafted and still undergoing internal processes within department R11 million loan amount disbursed by Micro Agricultural Financial Institute of South Africa (MAFISA) to cooperatives during 2006/07 financial year This amount form part of the total budget for MAFISA of R590 million. The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective departments rest with the dti to ensure fulfillment of these requirements Status on Support for Cooperatives from other National Departments

16 DepartmentNo. of cooperatives assisted Other programmesAmount disbursed to Cooperatives Housing 42 cooperatives supported financially and non- financially through Social Housing Foundation (SHF) and National Housing Finance Corporation (NHFC) 1311 jobs created within the 42 housing cooperatives. Members of housing cooperatives: Women Men – 2729 Disabled – 270 R10 million on loans and subsidies provided through NHFC and R2 million on technical assistance provided through SHF during 2006/07 financial year. Rooftops Canada has provided technical support. Norwegian Embassy provided support for 3 years. The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective departments rest with the dti to ensure fulfillment of these requirements Status on Support for Cooperatives from other National Departments

17 DepartmentNo. of cooperatives assisted Other programmesBudget Allocation Social Development 645 poverty relief projects owned by women have been supported financially and are about to be turned into fully fledged cooperatives. 51 women and 1 man are currently employed in the 1 st pilot of sustainable livelihoods in Dutyini. Strategy on Sustainable Livelihoods is in its third phase of rollout and is targeted at 4 learning sites starting with Dutyini in the Eastern Cape. The strategy is based on sweat equity principle R26 million has been set aside to create infrastructure development aimed at supporting the 645 poverty relief projects to be converted into cooperatives (2007/08). The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective departments rest with the dti to ensure fulfillment of these requirements Status on Support for Cooperatives from other National Departments

18 DepartmentNo. of cooperatives assisted Other programmesBudget DPSA 6 cooperatives provided the facilitation support in the Northern cape. 117 jobs were created through the noted 6 cooperatives Worked with the dti on training of 270 Community Development Workers (as trainers) in provinces. Ensured CDW’s rollout training to others and communities. CDW’s collecting data to profile poor families for introduction of the cooperatives concept to the families. No quantified budget as the department merely facilitates The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective departments rest with the dti to ensure fulfillment of these requirements Status on Support for Cooperatives from other National Departments

19 DepartmentNo. of cooperatives assisted Other programmesBudget Public Works Integrated support with provinces on Expanded Public Works Programme (EPWP). Numbers of cooperatives supported so far involve the Limpopo province reflected under Limpopo section. Research being conducted to establish current products of cooperatives in all provinces to link them to government expenditure. R 2,446, 471 spent to Limpopo on Cooperatives since 2005 until to date from EPWP Other departments Some are still in infancy stages of development of programmes on cooperatives, others have not yet submitted their reports. The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective departments rest with the dti to ensure fulfillment of these requirements Status on Support for Cooperatives from other National Departments

20 PROVINCEAMOUNT INVESTED ON CO- OPS EMPLOYMENT CREATED AND OTHER BENEFITS AGENCIES FUNDING COOPS KWAZULU NATAL R since 2005 until to date jobs created in the following sectors: catering; furniture; textiles; services 6761 cooperatives trained by FET Colleges 1175 cooperatives funded of which 823 are operational and remaining failed Ithala Bank provides loans and grants Other departments: Health; Education; Transport; Agriculture providing procurement to coops. GAUTENG R1,8 Million since 2005 until to date 8 cooperatives financially supported creating 86 jobs primarily in the manufacturing sector Gauteng Enterprise Propeller Status on Support for Cooperatives in Provinces

21 PROVINCEAMOUNT INVESTED ON CO- OPS EMPLOYMENT CREATED AND OTHER BENEFITS AGENCIES/DEPT. FUNDING COOPS LIMPOPO R20m grant from LIBSA was spent to 51 cooperatives since 2005 until to date. R 2,446, 471 from EPWP was spent to the same cooperatives since 2005 until to date. R was spent by the department on training cooperatives on cooperatives principles 51 cooperatives given financial and non-financial support creating 1171 jobs in the formal sectors: agriculture and textiles LIBSA; Department of Public Works; DoL; Municipalities NORTHERN CAPE Provided facilitation support to cooperatives so far (i.e. registration, business plan dev, application for funding, etc). 118 jobs created in the following sectors: mining; farming; textiles; energy; creative industries Other departments (Agriculture,Labour) Municipalities provide procurement opportunities FREE STATE No budget allocated to support cooperatives. Only provide for now facilitation support. 80 cooperatives given facilitation support. 300 jobs created. 55 general cooperatives 10 youth owned cooperatives 15 women owned cooperatives District municipalities, DPLG Status on Support for Cooperatives in Provinces

22 PROVINCEAMOUNT INVESTED ON CO-OPSEMPLOYMENT CREATED AND OTHER BENEFITS AGENCIES FUNDING COOPS NORTH WEST No support provided to cooperatives as yet. None yetNorth West Development Corporation. Still to provide support. WESTERN CAPE R850,000 budgeted for the pilots R2,300,000 budgeted for other cooperative programmes Sectors: agriculture, construction, retail. 3 pilot projects (to be launched in December 2007): 1 secondary cooperative (with 10 primary cooperatives) 1 construction primary cooperative 1 retail and marketing cooperative Development Bank of Southern Africa (DBSA) EASTERN CAPE No support provided as yetNone yetECDC, SAMAF, LED Funds MPUMALANGA Provide facilitation and referral support to other support agencies. No statistics developed. To be rectified moving forward. Mpumalanga Economic Growth Agency (MEGA) SAMAF Other departments (Agriculture, Education, Social Services, Health) Status on Support for Cooperatives in Provinces

23 CHALLENGES  Some provinces, national departments and institutions do not have budget dedicated or ring-fenced for cooperatives.  Some provinces, national departments and institutions do not have programmes dedicated for cooperatives  Some national departments e.g. Labour do not participate in the intergovernmental committee and report on progress has not been received. This will be corrected in the future.  Leadership challenge: coordination committees sometimes are effected by poor attendance.  Leadership challenge: Economic Development departments in provinces have not yet assumed leadership roles in coordinating for support for cooperatives in those respective provinces. To be corrected in the future.

24 WAYFORWARD  Strengthening of the existing coordination committees (i.e. interdepartmental; provincial committees).  Establishment of coordination committee with all development institutions (financial and non-financial).  Assistance of provinces in establishing their coordination committees with other departments and provincial institutions.  Clear reporting of progress to be emphasised in committees.  Finalisation of the national cooperatives strategy and implementation of proposed programmes.  Technical assistance to provinces in finalisation of their strategies.  Technical assistance to national departments in development of cooperatives sector policies/strategies/programmes.

25 THANK YOU