REPORT ON THE PROVINCIAL

CO-OPERATIVES INDABA

“UNLEASHING ECONOMIC

POTENTIAL THROUGH

CO-OPERATIVES”

27 T0 29 0CTOBER 2010

BORDER CONFERENCE CENTRE,

EAST LONDON, SOUTH AFRICA.

© Professor Sipho Buthelezi

Institute for Co-operatives Development

University of Fort Hare

Independence Avenue

Bhisho, South Africa, 5600

Telephone: 040 608 3407

Telefax: 040 608 3408

Mobile: 082 412 3715

Email: sbuthelezi@ufh.ac.za

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EXECUTIVE SUMMARY

The Eastern Cape Provincial Government (ECPG) has embarked on an ambitious

initiative to encourage and develop co-operatives as an alternative form of enterprise

and social organization that will gradually grow to become a significant component of

the province’s development programme. To facilitate the success of these co-

operatives the Department of economic Development and Environmental Affairs

(DEDEA) has sponsored the Institute of Co-operatives Development to address the

establishment, support and growth of co-operatives in the province; and proactively

identify viable markets, product and service niches for the co-operatives. One of the

most important outlets will be negotiating the preferential service provider agreement

for provisioning commitments of government, such a market with preferential service

agreements would afford co-operatives the start they need.

Envisaged in the Province’s Strategy for the Support and Development of Co-

operatives in the Eastern Cape (2008) was an Institute for Co-operatives Development

that will play a key role in:

building the requisite knowledge and institutional base to enable the launch

and sustainability of the community and co-operative enterprises as well as

the institutional infrastructure that supports them;

will establish its secretariat at the University of Fort Hare (UFH), while also

establishing satellite offices in participating institutions that will manifest its

shared identity;

NB: A comprehensive report including the presentations on the Co-operative

Indaba is being developed and will be distributed in the near future.

the Institute is intended to be grown into a flagship project through which the

investment of the Provincial Government budget can also yield learning and

resources that can be shared widely across South Africa, illuminating and

animating our shared quest for a vibrant, inclusive economy anchored around

organised, capable, productive and self-sustaining communities;

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participating institutions and organisations in the envisaged network of

centres will comprise universities, further education and training (FET)

colleges;

adult education centres, municipality co-operatives development and support

centres, and other related organizations; and

a number of select institutions with primary responsibility for the knowledge

development needs of the initiative; this to include curriculum development,

research, and the training of a cadre of knowledge-workers who will anchor

the co-operatives movement in this province and the broader South Africa.

the Institute for Co-operatives Development will be developed to become a

centre of excellence in the field.

The core purpose of the Institute will be to build and support the human resource and

knowledge capabilities, the support systems of learning and research institutions, co-

operatives and other community enterprises, as well as other organisations working to

build co-operatives as an important component of the local, provincial, national and

regional political economy.

The Advisory Council for the Institute will consist of: politicians, Department

representatives, FETC’s and ATI’s representatives, in addition to LED managers from

the municipalities.

The key objectives of the Institute are the following:

to assist in the establishment of democratic sustainable co-operatives

movement;

to lend material, technical and intellectual support to existing co-

operatives;

to establish the Institute for Co-operatives Development;

to train co-operatives managers and operators as well as supporting

emerging and existing co-operatives to ensure sustainability; and

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conducting training of members of the co-operatives, both existing and

emerging ones.

The Importance and Rationale for Establishing and Supporting Co-operatives.

The socio-economic challenges bedeviling the Eastern Cape Province highlighted the

need for the establishment of a co-operatives project as a social and economic vehicle

in the province and subsequently, nationally. Co-operatives have been identified as

part of the local economic development mainstream for job creation in South Africa

by the Presidential Growth and Development Summit held in July 2003. The summit

called for a vibrant co-operative movement for socio-economic development in the

country. The Co-operatives Act 14 of 2005 is the legal framework for co-operatives in

South Africa.

The co-operatives are seen as having the ability to bridge the gap between the so-

called first and second economies in the South African society, as seen in the rural

and urban divide and even in difference between. The goal is to establish sustainable

co-operatives geared at promoting wealth accumulation by those at the margins of

society and establish an Institute for Co-operative development that will ensure the

sustainability of the co-operatives through the training and development of their

members. The co-operatives range from agricultural (beef and dairy, vegetable

production and poultry production), educational and crafting, youth development and

technical or vocational training. Sustainable co-operatives have the ability to make a

huge contribution to the communities in which they are located. Historical evidence

bears witness through facts that indicates that co-operatives worldwide have

contributed to the socio-economic development of their members and their country.

Strategic Objectives of the Institute for Co-operatives Development

facilitating strategic and institutional development for learning and

research institutions, as well as other organizations focused on

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developing and supporting co-operatives and other community

enterprises;

developing quality learning and information resources on co-operatives

and community enterprises, that are easily accessible in the public

domain;

producing quality research on co-operatives and related

issues/concerns;

facilitating a developmental dialogue on co-operatives and community

economics as a critical feature of an inclusive, productive and

democratic that is economy accommodative of a culturally collectivist

consciousness; and

working with government, communities and other stakeholders to

directly facilitate the development of community enterprises at a

number of sites specifically targeted for focused experiments in this

regard. In this task the Institute will be pragmatic in its engagement of

community enterprise initiated locally.

Key Outcomes for the Institute

The Institute will pursue the following key outcomes linked to each other:

Strategic Objective and Result Area 1:

Learning and research institutions, and other relevant organisations developed to

provide quality training and advisory support to co-operatives, community enterprises

and other critical stakeholders. Outcomes will include the following:

formal commitment from institutions partnering in the co-operatives

development endeavour.

curricula for co-operatives that can be adapted into accredited and other

programmes offered by any number of interested institutions.

the Institute will inform curricula at participating higher education institutions

and FET colleges in the province. These would be for programmes intended to

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train co-operatives development workers and others. Included in this group

will also be co-operative development workers attached to independent NGOs.

institutional support systems reconfigured to accommodate co-operatives

support programmes and personnel.

capable human resources – educators and others – providing training and other

related services to co-operatives development workers and members of co-

operatives.

As a minimum, it is envisaged that through the programme the Institute will over the

first three years of its operation train between 250 and 300 accredited co-operatives

development facilitators working in institutions, trade unions and other organisations

across the province. They will in turn provide training and support to thousands of

community members in all districts of the province to establish and/or run effective

co-operatives.

Strategic Objective and Result Area 2:

Quality learning and information resources on co-operatives placed in the public

domain. Outcomes will include the following:-

learning materials for independent study and/or the facilitation of others’

learning produced to a high standard;

systems development guidelines, manuals and reference material, and other

information on co-operatives provided by the Institute;

an Online Information, Learning & Development Support System (OLIDSS)

of the institute readily available to enquirers.

Strategic Objective and Result Area 3:

Quality research on co-operatives and related issues. The research programme of the

Institute is envisaged to take two related forms, namely, applied research and basic

research.

Applied research

Of first importance is the development of a better understanding on the existence,

state and impact of the co-operatives sector in the province and South Africa. Work is

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currently underway by institutions such as the DTI and Co-operative Policy and

Alternatives Centre (COPAC) towards determining this. The Institute will be

developed to become an authoritative information-provider on co-operatives.

Secondly, the Institute will produce research that addresses practical challenges

pertaining to issues such as policy reform, organisation and systems development, as

well as macro and micro-economic analyses: the latter to include looking into public

and development finance regimes, market analyses, regulatory mechanisms, local and

trans-regional economic policy, and so on. There does not exist much hard research

on these issues in relation to co-operatives in this region or even nationally, so that we

generally have little to go on beyond a commonsense appeal to the felt ‘goodness’ and

historic-cultural appropriateness of co-operatives as justification for their promotion.

Basic research

The purpose of this research will be to push out the frontiers in the theorisation and

practice of alternative ways of organising social life and public systems so that the

prospect of democratically owned and controlled enterprises is developed as a worthy

and viable proposition. This aspect of the Institute’s research programme will concern

itself with knowledge domains relevant to the economics, politics, organisation, and

culture of co-operative forms of enterprise, especially as counter-posed to the

dominant non-collectivist form. The outcomes of such research will be most

beneficial applied to curriculum, academic discourse, as well as stakeholder

mobilization and advocacy activity. The Institute will also develop and disseminate its

own publications such as occasional papers and other research publications on the

above topics.

Strategic Objective and Result Area 4:

Dialogue facilitation for conscientisation of communities, the public and private

sectors on co-operatives and other community enterprises.

This will take the form of seminars, other reflective dialogue series, related

publications and a range of media interventions. The Institute will also facilitate a bi-

annual Convention on Co-operative Economics, where participants will include local

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and international co-operatives practitioners and scholars, knitting the province into a

more global movement working in the field of Co-operatives Development.

Strategic Objective and Result Area 5:

Facilitation of model community enterprise through co-operatives in selected rural

economic development hubs.

The Institute will participate in closely nurturing and supporting a number of practical

local economic development endeavours experimenting with the co-operative model.

These will provide applied lessons which will be factored into the further

consolidation of the work of the Institute. This on the ground engagement and action-

research with co-operatives will be done with partner institutions in the provincial

network of collaborating organisations.

KEY SPEECHES BY POLITICAL LEADERS

A SITUATIONAL ANALYSIS OF CO-OPERATIVES IN SOUTH AFRICA

The South African government has taken major strides to create an enabling

environment for the growth and development of the co-operative sector through the

policy and legislative processes and other support measures both financial and non-

financial. The chronology of the key policy and legislative measures is enumerated

hereunder:

on 05 December 2000, the national cabinet decide that the mandate for co-

operatives development be transferred from the national Department of

Agriculture to the Department of Trade and Industry (DTI).

in 2002, South Africa because of the signatories of the International Labour

Organisation (ILO) Recommendation No. 193 on the Promotion of Co-

operatives.

in 2003, it was agreed that a fully-fledged Co-operatives Unit be established

within the DTI.

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on 29 July 2004, the first inclusive co-operatives policy was approved by the

Development of Trade and Industry. This policy formed the basis for the

development of new legislation.

on 14 August 2005, the Co-operatives Act, No. 14 of 2005 was promulgated,

repealing the then existing Co-operatives Act, No.91 of 1981.

during 2006, regulations on the new Co-operatives Act were drafted to enable

the implementation of the 2005 Co-operatives Act, and they were approved by

the DTI Minister in April 2007. The State President signed the Proclamation

of the Act effective as of the 2nd of May, 2007.

a Co-operative Development Strategy was debated and finalized at the

National (NEDLAC) in February 2010 and was subsequently submitted to the

national cabinet for approval, together with the Co-operatives Amendment Bill

in December 2010. The creation of an enabling environment through the

legislative process serve as a strong catalyst to the 2005-2010 boom period in

co-operatives growth in numbers ( See Figure 1)

FIGURE 1

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Trends in coop registrations and deregistrations

1,444

31,898

0 0 220 69 126 200 157 589 7431,444

13,92017,154

22,619

7,355

4,6524,210

13,72016,997

22,030

31,155

7,2294,583

3,990

3,911

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

No.of coops

Perio

d Total registered

Deregistrations

Total Active perregister

Source: Registrar of Cooperatives, Statistics of Cooperatives in South Africa, 1922-2010)

As Figure 1 illustrates the co-operative movement has grown phenomenally since

2005, but it remains weak and vulnerable. The total number of co-operatives by

March 2010 mushroomed to 31,898 and the current spread on a provincial basis. The

majority of registered co-operatives are in Kwa-Zulu Natal(KZN) at 38 percent,

followed by the Eastern Cape at 19 percent, whilst Gauteng’s figure stands at 10

percent (See Figure 2).

FIGURE 2

Overall Provincial Picture of registered cooperatives

WC, 1003, 4%

EC, 4224, 19%

NC, 798, 4%

FS, 900, 4%

KZN, 8697, 38%

NW, 1257, 6%

GAU, 2365, 10%

MPU, 1496, 7%

LIMP, 1879, 8%

Source: Registrar of Cooperatives, Statistics of Cooperatives in South Africa, 1922-2010)

Agriculture still dominates the co-operatives sector ( 29 percent), followed by services

(17 percent), and multi-purpose at 14 percent (See Figure 3)

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FIGURE 3

Sector spread of registered cooperatives

consumer, 128, 1%

agriculture, 5580, 25%

agroprocessing, 369, 2%

arts and culture, 340, 2%

bakery, 334, 1%

burial, 65, 0%

clothing and textile, 1247, 6%

construction, 1280, 6%

environmental, 85, 0%

financial, 233, 1%

fishing, 46, 0%

food and bev, 91, 0%

housing, 78, 0%

ICT, 193, 1%

manufacturing, 1093, 5%

marketing and supply, 177, 1%

medical, 77, 0%

mining, 78, 0%

multipurpose, 3160, 14%

retail, 117, 1%

services, 3762, 17%

social, 311, 1%

tourism, 211, 1%

trading, 2708, 12%

transport, 856, 4%

Source: Registrar of Cooperatives, Statistics of Cooperatives in South Africa, 1922-2010)

As indicated previously, the Eastern Cape province is home to 19 percent of the co-

operatives movement. In his welcoming address at the Provincial Co-operatives

Indaba on 27th October 2010, Alderman Sakhumzi Somyo, the current Mayor of

Amathole District Municipality had this to say:

“Our key role as government is basically to create a conducive environment for

businesses to thrive and to provide platform for constructive engagement. We are

proud that our partnership with the University of Fort Hare, and other Universities in

the Eastern Cape will speedily assist to realize this dream,”

Since the ADM adopted its Amathole Regional Economic Development Strategy for

2007 to 2014, the economic development agency has progressed in leaps and bounds.

During the reviewal process it was resolved that the economic development agency,

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Aspire, would work together with the local municipalities to speed up implementation

and service delivery and to ensure that economic decisions could be better influenced.

This has heralded the renewed role of Aspire to act as both a project manager on

behalf of the ADM and as a partner in the implementation of projects at local

municipalities. Notably Aspire today is working hand-in-glove with communities to

resurrect our small towns within the district, and implementing catalyst projects that

are designed to attract further investment and development to build the local economy

along the ADM’s development corridors.

The Amathole District Municipality adopted its SMME strategy for the district which

highlighted a number of challenges that are facing enterprises within the district.

Among these challenges is the lack of marketing skills hence in the past year we

supported approximately 64 SMME-enterprises to participate and exhibit in a number

of different marketing platforms such as the Business Unlimited Expo, the Easter

Rand show in Gauteng, the Grahamstown National Arts Festival, the Macufe

Exhibition in Bloemfontein and the ADM’s Tourism Indaba and Imbizo. These

marketing platforms were accompanied by the procurement of machinery and

equipment and various training and capacity building programmes such as company

registration, product development, financial management, business planning

development and marketing skills. These co-operatives are located in the sectors of

tourism, agriculture, the performing arts and crafts, and manufacturing.

The Amathole District Municipality commissioned research into the district’s

cooperatives which was undertaken by the team from Co-operative and Policy

Alternative Centre or COPAC and published a booklet. All co-operatives in the case

study booklet were classified as either marginal, self-developing, or commercially

viable. Recommended interventions were set out for all three types of co-operatives.

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The recommendations for the marginal co-operatives include the following:

the development of a pre-registration toolkit such as a checklist of crucial

tasks for aspirant co-operators and co-operatives. Such a tool to assist will

feasibility assessment and business planning of a co-operative concept.

education about the importance of registration and making registration

accessible in the municipality. This might mean asking the registrar of co-

operatives to devolve registration powers under the 2005 Act, down to the

district municipality to assist the registration process.

government funding streams like grants needed to build in exit strategies.

the municipality needs to revisit procurement practices for co-operatives to

encourage capacity building and diversification.

municipality needs to develop a training assessment tool and support network

for co-operatives. This should take from of an annual survey to assess the

training needs of co-operatives.

co-operatives need to be given training in three crucial areas as a matter of

urgency: firstly how to ensure organizational and financial reporting on

activities to members and to the registrar of co-operatives as required by the

Act. Secondly, financial management training, and thirdly strategic planning

as it relates to linking income generation, working capital and the development

of co-operative.

encourage learning by utilising research reports and other available resources.

empowering co-operatives by more effectively utilising public spaces and

infrastructure provided by the municipality for office-use and co-operative

meetings.

the municipality to consider developing a directory of co-operative support

organisations, mentors and trainers in the Eastern Cape and online training

resources available for co-operative self training. Such directory to be shared

with the co-operatives which can also use the information to strengthen their

webs of support.

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The recommendations for self-developing co-operatives include the following:

member-based education on the basics of co-operatives such as values,

principles, forms and types. Consider institutionalizing education and training

inside the co-operative for such education and training in every forum of the

co-operative. This should also include structured study circles to engage in

collective learning about co-operatives.

educations on the Co-operatives Act to ensure legal requirements are adhered

to.

municipality to consider providing preferential municipal rates for services

like water and electricity for co-operatives. This would assist in bringing down

operating costs and creating a conducive enabling environment for self-

developing co-operatives.

a dedicated mechanism for operating capital needs to be developed and linked

with proper co-operative business and strategic planning.

encourage all local municipalities to create consumer co-operatives that can

host bi-weekly town or city co-operative markets in a central public space with

potential to capture passing trade. Such markets should be open to all co-

operatives to bring in their products and services for sale. The municipalities

to market such markets and actively encourage community support.

Recommendations for the Commercially Viable Co-operatives include the

following:

the diversification into commercial markets and the public sector market to be

encouraged through tender agreements with co-operatives. In other words, co-

operatives need to be given tenders with “sunset clauses” placing a

compulsion on the co-operative to organize beyond the immediate tender

opportunity.

building and strengthening strategic planning in commercially viable co-

operatives. There is a need to develop tools for a planning cycle for annual and

medium term plans which are directly linked to planning capitalization.

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ongoing strategic planning through annual and medium term co-operatives

business plans. These plans have to be implemented and constantly evaluated

to assess progress.

the diversification through different strategies for different markets such as

household, community, commercial, commodity and the public to ensure

viability.

At the Co-operatives Indaba, the Vice Chancellor of the University of Fort Hare, Dr

Mvuyo Tom, explained that the vision of establishing the Institute “ is that of creating

a vibrant centre of learning and innovation, to build an entrepreneurial, sustainable

and caring South African economic system”.

The Member of the Executive Council (MEC), Mcebisi Jonas ,the political head of

the provincial Department of Economic Development and Environmental Affairs

(DEDEA) exhorted the Indaba participants to note the resolutions of the African

National Congress (ANC), “the manifesto of Polokwane, all those resolutions and

positions, the talk about South Africa’s mixed economy where the State, private

capital co-operatives and other forms of social ownership complement each other in

an integrated effort to fight poverty and foster “shared “growth. The MEC also

observed that the social reality is more complex, and that “apart from agricultural co-

operatives that were established during the apartheid era, most of the co-operative

activity today largely remains confined to survivalist micro projects.” As MEC Jonas

puts it:

Part of the central pillar of these debates is a concern about how we deal with

poverty, how do we deal with underdevelopment, how do we deal with

unemployment and we know now that labour income is probably the main

source of income for poor households, but we also know there is a growing

consensus across the globe in intellectual circles that poverty reduction

programmes, in broad terms, should consist of some of the following: a

compilation of fast and sustained growth (generating jobs), stable consumer

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prices, and targeted redistribution, subsidies to support the poor linked to

better jobs, more economic opportunities, issues of equity, lowering social risk

and less gender and race discrimination. (Speech delivered by MEC Jonas at

the Co-ops Indaba)

MEC Jonas also observed that words have not been matched by the necessary actions

to make co-operatives a core feature of the South African economy. As he aptly put it:

It is important to locate the discussions on co-operatives that will take place

over the next two days within the broader debates on our growth path. The

ruling party has recognised that our growth path has not yielded the necessary

outcomes, especially relating to structural transformation, income

redistribution, and job creation. We are still one of, if not the most unequal

economy in the world, and are one of the worst performers with respect to job

creation. Our economy is still highly monopolized and dominated by mining

and finance interests. Our growth path to date has reproduced many o f the

features of the apartheid spatial economy, with an ongoing concentration of

economic activity in Gauteng (increasingly extending to Durban). Levels of

investment by state-owned entities in strategic infrastructure in the province

have been sub-optimal. We need a new growth path that is more labour

absorptive and redistribution focused, and more able to integrate the Eastern

Cape into the national economy (Ibid).

At the provincial level, the economy remains insufficiently transformed and

dominated by finances, government services, the retail trade and the automotive

sector. This process of de-industrialisation and job losses has been exacerbated by the

recent global recession. Statistics reveal that the Eastern Cape has been the most

heavily affected province, with 119000 jobs lost year-on-year by the 4 th Quarter of

2009. Of these, 95,000 jobs were lost in the formal sector, mostly in manufacturing

and 24 000 jobs in the informal sector. While the recession is formally over and the

automotive sector (especially VW and Mercedes Benz) showing good recovery, the

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effect of the crisis has been to expedite the collapse of industries that have been

increasingly experiencing challenges of competitiveness and profitability.

At the heart of the strategic thrust of the new growth path is industrial policy. The

government has committed some R3, 6 billion for the Industrial Policy Action Plan 2

over the MTEF. The shift to Industrial Policy is characteristic of the new strategic

intent to build an interventionist, development state. Areas of the economy where the

state has intervened and provided dedicated state support, such as the auto sector,

have yielded huge results. There is a need to do this in other strategic sectors.

At the provincial level, government has developed a Provincial Industrial

Development Strategy that is aligned to the IPAP2 and aimed at transforming the

structure of the provincial economy, diversifying the economy to reduce the

dependence on the auto sector, and creating some 500, 000 jobs by 2014. Sectors that

are being targeted include capital goods, the automotive and components sector,

renewable and the green industries, agro-processing including timber processing,

petro-chemicals linked to the PetroSA investment, and tourism. The job is then to

align and mobilize the various efforts of the government departments, state agencies

and entities, and other role-players such as private industry and universities, in

support of these sectors. This must include the development of strategic transport and

logistics infrastructure, skills development, development finance, non-financial

business support, R&D and innovation, etc. Importantly, we need close synergies with

the Rural Development Strategy is to optimize the efforts at building productive

capacity in the rural economy.

Turning to the co-operatives, the MEC urged that it is critical that the efforts at

building sustainable co-ops are linked to the new growth path, the IPAP2 and the

Provincial Industrial Development Strategy. The baseline study on co-ops done by

ECSECC in 2008 showed that most of the 1100 co-ops surveyed in the province were

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in the marginal or survivalist category. Only a handful was found to be commercially

viable and sustainable. This is not an acceptable situation. Clearly government’s

words and actions at prioritizing co-ops development are not adding up.

MEC Jonas also argued that government’s approach to co-operatives development

“has been wrong”. The current tendency has been to view co-operatives “as a panacea

to job creation and redistribution, without linking co-operative development to other

industrial policy measures”. MEC Jonas had this to say:

We have wrongly viewed co-ops as a business model that is easy to set up and

sustain. We have failed to acknowledge that co-ops function in a competitive

market environment, and that the state cannot just establish co-ops. Like any

business form, co-ops will only be successful if they are driven by self-

motivated, innovative and entrepreneurial groups of individuals. Even more

complex is the fact that co-ops are underpinned by a certain moral, political

and ideological value system. If members do not share values, the co-op will

fail. The development of co-ops must therefore be linked to a broader political

co-ops movement that is able to mobilise society behind the idea of co-ops.

This must of necessity be driven outside the state, although it may be strongly

supported by state agencies. (Ibid)

Furthermore, the political head of DEDEA argued for a co-operative movement that is

self-motivated, innovative and is constituted by entrepreneurial groups of individuals

who have internalized the moral political value system, that is, praxis, by the co-

operatives movement globally.

The sum-total of MEC Jonas’ speech enlisted the following:

government should provide the instruments: financial, technical, strategic and

a policy environment that allows for the growth and development of the co-

operative movement;

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government intervention should promote an entrepreneurial culture that

negates the development of the culture of dependency;

the urgent need to develop a strategy and implementation plan that are aimed

at the mobilisation and co-ordination of all the State and non-State actors

behind a coherent programme for the co-operative sector; and

to galvanise new intellectual energies of the University of Fort Hare and other

tertiary institutions in the province, (including further education and training

entities-FETs) to do research and training as well provide development

support to the co-operative movement.

MEC Jonas concluded his speech with this appeal to all social partners to the co-

operative movement.

In conclusion, I would like to repeat the point that we need to change our

mindset to co-ops development. We need to change from only seeing co-ops

as marginal micro-projects linked either to state procurement or livelihood

projects. Co-ops need to be a central feature of our industrial policy. If we do

not make this mind-set shift, we will forever condemn co-ops to the margins of

our society.

CO-OPERATIVES AND INTERNATIONAL EXPERIENCE

GLOBAL PERSPECTIVE OF THE CO-OPERATIVES DEVELOPMENT

AND REGIONAL PERSPECTIVES

Chris Gilmore

Gilmore’s opening remarks was that currently the viable model of co-operatives are

exemplified by white agricultural co-ops who had the early massive start-up financial

and infrastructural resources whilst the young co-ops set up after 2005 are still at the

micro level and are barely sustainable. Accordingly, Gilmore urged the co-operatives

to work harder as enterprises and that if one looks at the global situation the co-

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operatives are “a very vibrant section of the economy in many countries and represent

more than 800 million individuals worldwide”. (Some Considerations of Global and

Regional Perspective of Co-operative Development and International Best Practices:

Institutions, Principles and Instruments for Governance)

According to this paper, the International Co-operatives Alliance (IAC) has some 222

member organisations from 85 countries, active in all sectors of the national

economies and representing more than 800 million individuals worldwide. Gilmore

observes that there is a difference between members of the co-operatives and

employees of co-operatives, and the membership often is much larger. On a

worldwide level, co-operatives have over 100 million employees, and that is 20

percent more than the multinational co-corporations.

In Canada, co-operatives and credit unions employ over 155,000 people, whilst the

Desjardins movement (savings and credit co-operatives) is the largest employer in the

province of Quebec. Meanwhile, in Columbia, the co-operative movement provides

109,000 jobs and an additional 379,000 as owner-workers in worker-co-operatives.

They provide 23 percent of the jobs in the health sector, 18 percent in transport sector,

13 percent in the worker/industrial sector, 11 percent in the finance sector and nine

percent in agriculture(Source: CONFECOOP, Sector Co-operative Colombians,

2005).

Also in France 21,000 co-operatives provide over four (4) million jobs, whilst in

Germany 8,106 co-ops provide jobs for 440,000. In Indonesia, co-operatives provide

jobs to 288,589 individuals. Meanwhile, in Italy 70,400 co-operative societies

employed nearly one million people in 2006, whilst in Kenya 250,000 people are

employed by the sector.

The figures cited previously provide a glimpse of the global co-operatives

phenomena. In the meantime, Gilmore noted the distinct identity of co-operatives, as

well as their principles and system of values. As he succinctly put it:

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When we talk about the co-operative difference, one is not saying that Co-

operatives must be unproductive or uncompetitive. A Co-operative is an

enterprise that puts people at the centre of their being, and not capital, and

defined by three basic interests-ownership, control and the beneficiary. All

three interests are vested directly in the hands of the user or the worker or the

member. They follow a broader set of values than those associated purely with

the aim of making a profit. (Ibid.)

Because co-operatives are owned and democratically controlled by their members,

individuals or groups, the decisions taken are balanced by the need for profitability to

the needs of their members and the wider interest of the community. Co-operatives

follow a set of principles and values. Gilmore continued to highlight the principles of

co-operatives as an enterprise versus that of a company.

The co-operative model enterprise can be applied to any business activity. They exist

in traditional economic sectors such as agriculture, fisheries, consumer and financial

services, housing and production, workers Co-operatives. Moreover, co-operative

activity spans a large number of sectors and activities including even some co-

operatives based on car-sharing, child care, health and social care, funeral societies,

schools, sports, orchestras and philhamics, tourism utilities and transport.

The co-operatives belonging to the APEX body do so voluntarily and freely. A

fundamental objective of the APEX body is to provide cooperation based on

mutuality and without private speculated ends, to advocate the ideas of the co-

operative experience, to represent and protect co-operatives and bodies belonging to it

and allow them, to consolidate and develop. The APEX body works to ensure the co-

ops and bodies affiliated to it carry out the role foreseen by law or by constitution

without discrimination regarding the political, religious, ethnic, racial, or sexual

opinions of those who are members. Dr Gilmore further highlighted the

responsibilities pertaining to the APEX body.

21

He stated that the APEX body on a provincial or even local national level have a key

role to play. One needs to protect their autonomy. Efforts where government tries to

play the role of the APEX body, never really works. It worked mainly, but we have a

certain problem in South Africa because so often, co-operatives have built up and

solidified their existence in a sort of opposition to government.

In its terms of reference, Gilmore suggested that the APEX body should carry on the

following tasks:

to promote the values, culture and practice of co-operativism, with particular

attention to those areas of the country where co-ops are least present;

to support co-operative entrepreneurship, the social qualities of the co-ops and

to ensure a good visibility and standing of co-ops and their members in the

community;to ensure the conscious participation of the membership in the

choices and decision made by the co-op which is a fundamental element co-

operative practices;

to ensure a constant and growing contribution of the APEX body and the co-

ops and their sectoral and territorial organisations, to the great social and

economic questions of the nation, such as the operational and functioning of

the market itself, social cohesion, gender parity, the rights of all citizens and

immigrants, respect for the value of labour, the protection and improvement

of the environment, and the development of skills and training; and

spearheading the lessons and experiences of the co-operative movement

around the world, specially with regard to underdeveloped countries.

In order to carry out its work of advocacy and best represent the needs and

contribution of the co-operative movement and its members, the APEX body needs to

organize its work in a way that it can interact and respond to the national, provincial

and local institutions of the country. The APEX body also needs to have sectoral

structures to have the necessary weight and interaction in the economic sphere, and it

22

needs to have territorial structures in order to carry out the tasks above, and to

promote and support the co-operative family in local society.

In many countries, the status and rules of co-operatives contain obligations on the part

of the member co-ops to pay a percentage (three percent of five percent) of their

annual surplus to fund co-operatives in financial trouble. In Italy, for instance,

members’ loans to consumer co-ops form a big part of the members’ savings, and the

law allows a lower tax rate on interest from these loans than if the savings were in

regular bank deposits.

In conclusion, Gilmore states that the Italian Republic has, since its foundation,

recognised the social function of the co-operative movement. Article 45 of the 1947

Italian Constitution states the following:

The Italian Republic recognises the social role of co-operatives characterised

by their mutuality and absence of individualised profits. The legislation must

promote and favour its development by the most suitable means and assure,

through appropriate controls, its features and aims.

A BRIEF ABOUT UGANDA ON CO-OPERATIVE EDUCATION AND

TRAINING AT THE EASTERN CAPE PROVINCIAL CO-OPERATIVE

IDABA, EXPO AND LAUNCH OF THE INSTITUTE FOR CO-OPERATIVES

DEVELOPMENT

by SAMUEL KYALILIGOZA

(Principal Uganda Co-operative College)

INTRODUCTION

Co-operative Education, Training and Information is one of the seven co-operative

principles that the ICA congress adopted in 1995 and are being practiced the world

23

over by the member co-operative movements. Cooperative education and training is a

cardinal principle as it is the vessel through which the cooperators may learn and

appreciate the other six principles and also a tool for empowering the members.

In Uganda, cooperative education and training involve, inter alia:

sensitizing communities about the need for them to use the cooperative approach to

improve their livelihoods;

• sensitizing and educating members about the principles, ideals and values of

cooperation;

• educating and training committed/Board Members about their roles and

functioning of the cooperative organizations in order to give strategic direction

and policy guidance to the cooperative organisations; and

• training employees and management team of the cooperative organizations.

While the cooperative enterprise in Uganda started in 1913 when the first indigenous

farmers formed a cooperative association, cooperative education and training did not

take root until around 1947. This followed the starting of the Cooperative Department

after the Cooperative Ordinance of 1946 that allowed cooperatives to do business.

The initial training for the Uganda Cooperative Extension workers was done in

Kabete in neighbouring Kenya in 1951.

Cooperative studies were introduced in Uganda in 1954 at Nsamizi Community

Development Training Centre, near Entebbe. At this centre the graduates were

imparted with skills to enable them “grow cooperatives”.

With the growing demand for cooperative extension workers, the government

decentralized the training and set up cooperative training wings at the District Farm

Institutes. The graduates of these cooperative wings worked as cooperative extension

workers at the Sub-County level and were responsible for formation, promotion and

supervision of primary cooperative societies at the community level.

The providers of co-operative education and training are the following:

24

the department of cooperative development;

district cooperative unions by cooperative Education and publicity offices

(CEPOS);

national cooperative unions;

the cooperative Apex organizations; and

non- governmental organizations (NGOs).

In Uganda, the cooperative college is the major provider of cooperative education and

training and has been granted the status of centre of competence for cooperative

Education and training by the ILO. It offers a formal cooperative management

training to the school leavers and non-formal education and training to the members,

officials and management of cooperative organizations and other private sector

organizations.

However, other organizations do also provide cooperative education that involve

sensitization, workshops, seminars albeit on a small scale and in most cases with the

cooperative college giving a hand. They include:

The sources of funding for co-operative, education and training in Uganda are listed

therein:

one percent net surplus by co-operative organisations;

government;

donors (bilateral and multilateral);

individual members and staff;

non-governmental organisations; and

international development agencies.

With more primary and secondary cooperative societies being formed country wide

after independence in 1962, there was now need to set up a fully- fledged cooperative

training institution to offer formal and non-formal courses in cooperative development

and management related studies. In 1963,the Uganda, Cooperative College – was

established as a fully-fledged college but sharing the campus with Bukalasa

25

Agricultural College – 50 km away from the capital city, Kampala. A new and

independent campus was set up in 1974 at the present location – Kigumba 200 kms

away from the capital city on the Kampala-Sudan highway.

Owing to the economic and political upheavals of the 1970s where the Cooperative

Sector performance declined, the Cooperative Wings closed down. UCCK remained

afloat with two other campuses namely Bukalasa and Tororo. The country’s adoption

of the Structural Adjustment Programmes (SAPS) in the 1980s, which came with new

economic policies, particularly trade liberalization, resulted in the loss of monopoly to

market traditional cash crops by cooperatives and decreased direct support from

government. This led to decline in business handled by cooperatives.

 Consequently, the college had to adjust and tune to the new changes and challenges

in order to remain relevant. Up to 1998, the college was a departmental training

institution under and supervised-by, the Department for Cooperative Development.

Along with other departmental training institutions and in the country, it was

transferred to the Ministry of Education and placed in the Department of Business,

Technical, Vocational Education and Training. The college is a tertiary training

institution owned and funded by the Government of Uganda. For policy matters,

guidance, planning and governance, the college has a Governing Council appointed

by the Minister of Education and sports. The Council performs these functions on

behalf of the Minister. The college’s Chief Executive is the Principal appointed by the

Education Service Commission (ESC).

The college’s main campus is at Kigumba in Kiryandongo District and another

campus is at Tororo in Eastern Uganda. The third campus at Bukalasa in Central

Uganda was closed in 1999 as a result of restructuring and rationalization by the

Ministry of Education and Sports. The staff and students were transferred to the main

Campus- Kigumba.

The College’s vision is:

26

to have the college develop into a centre excellence in Cooperative and

Private Sector Development and Management Training.

The College’s mission is stated as:

to contribute to the efficient management, sustainable development of the

cooperative movement and private sector by providing skilled manpower,

enlightened membership through research, education and training.

The strategic objectives of the college include:

providing relevant education and training that addresses the cooperative

challenges of the time and government development programmes;

produce graduates who can be self employed and are also more competitive in

the job market;

optimizing the use of existing resources and developing opportunities for the

generation of income for self sustenance;

promote outreach programmes by setting up regional centres in the county; and

enhance and promote linkage and collaboration with other organizations

involved in cooperative research, education and training.

The college as a tertiary training institution is governed by a 16 member Governing

Council appointed by the Minister of Education. The Council is responsible for giving

strategic direction and policy guidance to the college.

In order to take care of the key stakeholders in the affairs of the college, the governing

Council is constituted as follows:

two persons (one male, one female) who have made great contribution

towards cooperative development in Uganda;

one person from a cooperative apex organization;

one person representing the department of cooperative development;

one person representing the ministry responsible for higher education;

one district councillor from the area.

one person representing the alumni;

27

one person representing public universities ;

the Principal;

the deputy principal;

two members of the academic staff (male and female);

one member of the non- academic staff;

three student leaders (at least one female); and

the day today running of the College is done by the Principal and his team

all appointed by the Education Service Commission;

FIGURE 4:

The college offers two courses on full time and residential basis:

two year Diploma Course in Cooperative and Business Administration

(DCBA) tenable at the main campus – Kigumba; and

a one year Certificate Course in Cooperative and Business

Administration (CCBA) tenable at Tororo Campus(This course is

28

popular among the “A” level leavers who fail to join the Diploma

course directly for lack of two Principal Passes.)

In order to cope with the demands of the economy and improve the competitiveness

of the college graduates in the job market, the college has introduced the following

courses conducted in the evenings for the full time students and weekends for other

interested members in the community:

a three-months Certificate Course in Project Planning and management

(PPM);

a six-months Certificate Course in SACCO and Microfinance

Management;

a twelve-months Diploma Course in Project Planning and

Entrepreneurship development (PPED); and

a twelve-months Diploma Course in SACCO and Microfinance

Management.

The college conducts demand driven short courses, seminars and workshops on

request by the clients. The content and duration of these programmes is agreed upon

with the clients. With cooperatives (especially the financial cooperatives) taking

centre stage in the Uganda development agenda, the demand for cooperative

education is on the increase. So the college has started outreach training centres

beginning with the Capital City Kampala to have the training accessible by many.

The college curriculum embraces a wide range of Business, management and

Development related fields and imparts vocational and practical skills to the graduates

such that they can:

work as Assistant Accountant /Auditors in:

cooperative and other business organisation;

local government structures;

non- governmental organisations;

audit and accounting Firms;

29

insurance and banking institutions;

micro- finance organisations; and

educational institutions.

Also they are able to work as:

cooperative extension workers, inspectors and supervisors

credit/ loan officers in SACCO and other Non- Cooperative Microfinance

Institutions.

change agents in development organizations

community development mobilizers in Local Government Structures.

job creators for themselves and others by designing and implementing

projects.

The Ugandan college has good working relationship with the Department of

Cooperative Development of the Ministry of Trade, Tourism and Industry;

Microfinance of the Ministry of Finance and economic Development and the

Cooperative Movement generally especially the Uganda Cooperative Alliance (UCA),

the Uganda Cooperative Transport Union (UCTU), the Uganda Savings and Credit

Union (UCSCU) and the district Unions, and Primary Cooperative Societies.

Internationally, the College is collaborating with:

swiss contact that helped to review and enhance the SACCO and Microfinance

course;

co-operative colleges of Kenya and Tanzania;

co-operative college of the United Kingdom that has trained our staff in active

learning methods and research methodology;

ILO Co-op Africa project for funding the college training programme for

cooperative leaders in mid-western region with the theme, “organizational

development and capacity strengthening of co-operative leaders”;

ministry of co-operatives and rural development of the government of

Southern Sudan to train their staff; and

30

the Norwegian Peoples Aid (NPA) – we have trained their field staff both at

the college and in Sudan.

The college does not get adequate funds to carry out all the planned activities. Many

times the college has not been represented at international fora like this due to lack of

funds. Research is an important aspect of training and development.However, the

current level of funding cannot support research. But we are making appeals to well-

wishers to support us in this endeavour. In a training institution, a library is an

important source of training and reading material. Our library is not well stocked with

books, journals, magazines etc. With the computer age now, we hope to set up a

virtual library. Due to inadequate funding, the college cannot sponsor her staff for

further studies. However the staff has attained higher qualification through external

sources or personal savings.

GERMAN CO-OPERATIVE AND RAIFFEISEN CONFEDERATION

(DGRV – Deutscher Genossenschafts- und Raiffeisenverband e.V.)

Sabine Fitzner

The confederation of cooperatives whose origins go back to F.W. Raiffeisen and H.

Schulze-Delitzsch was founded in 1972 by uniting the Raiffeisen organisation with

the Schulze-Delitzsch organisation. Top-level association and legal auditing

federation of the German cooperative organisation (with about 18 Million members

and 650,000 employees the largest business organisation in Germany).

The DGRV has 146 members and are constituted by the following entities:

national federations (BVR, DRV, ZGV, ZdK);

regional and auditing federations;

regional and national centres; and

central and specialised companies.

FIGURE 5:

31

FIGURE 6:

The Basic Statutory Tasks of DGRV are the following:

32

the promotion and strengthening of the cooperative movement and of the

cooperative auditing system;

representation of members‘ interests in economic, legal and tax-related issues;

the coordination of training services and education policy;

auditing of the financial statements and special auditing; and

cooperative development and consulting activities abroad.

The core services of the DGRV are:

auditing

accounting

legal advice

tax advice

promotion of cooperative systems abroad

human resource development

lobbying

The human resource development is done through promotion of education and

training services for members.

In close cooperation with the national Academy of German Cooperatives (ADG):

• the coordination of curricula and HRD activities for cooperatives in all

sectors; and

• training of cooperative auditors.

The International Activities of the DGRV is inter alia the following:

support of German and foreign cooperative enterprises in international

activities;

exchange of information with cooperative organisations in other countries and

international cooperative organisations; and

advisory and development projects (international programs) in cooperation

with Federal Ministry for Economic Cooperation and Development (BMZ) as

33

well as GTZ , KfW and various Federal Ministries, EU, World Bank,, Inter

American Development Bank, Asian Development Bank.

The current focus of the DGRV is inter alia:

empowering large sections of the population to take part in the economic and

social development of their country;

removing the causes and consequences of economic and social

marginalization for good;

strengthening the readiness for self-help and the capacity to assume personal

responsibility; and

creating structures for a sustainable economic development.

The DGRV offers various forms of development support, specially:

cooperatives and cooperative networks in the financial, crafts, and agricultural

sectors;

the establishment of centralized institutions such as cooperative central banks;

the development of training and advanced training systems;

the building-up of auditing systems in cooperation with national banking

supervisory authorities and central banks; and

meaningful framework conditions which are conducive to cooperatives, such

as banking, supervision, banking law, cooperative law.

34

FIGURE7 7:

The key elements of German Cooperatives success hinges on these factors:

the legal mandate for promotion of members’ economy through joint business

cooperative as an enterprise;

adequate legal basis;

structured as decentralised, multilevel network system;

compulsory audit (by cooperative federations);

regulation and supervision of coop. financial institutes;

institutional protection scheme (incl. savings guarantee system); and

well-structured training/qualification.

The general structural problems of co-ops in Germany include, inter alia, the

following:

global and national structural problems induce negative effects mainly

in rural regions:

35

they cause poverty of broad groups of population (migration into cities,

urban bias etc.)

they cause problems particularly for micro and small enterprises, due

to insufficient resources and lacking access to

financial services;

working equipment and sales;

new technologies; and

know-how.

CO-OPERATIVE EDUCATION AND TRAINING IN TANZANIA.

PROFESSOR S.A CHAMBO

(MOSHI UNIVERSITY COLLEGE OF CO-OPERATIVE AND BUSINESS

STUDIES)

The Historical Context of Co-operatives:

Tanzania has a long history of the co-operative movement, and all started with the

first ordinance in 1932. Tradable commodities (97 percent) by 1967 the movement

faced challenges of internal policy conflict, the erosion of good governance and lack

of conceptual understanding of the co-operative principles and values. Between 1976

and 1984, the co-operative movement was dysfunctional and revival and resurgence

only occurred during 1984. In 1991, the Co-operatives Act was promulgated and was

anchored on membership ownership and principles.

In terms of capacity development, the Tanzanians felt there was an urgent need for

co-operative education. Historically, the Moshi University College of Co-operative

and Business Studies (MUCCoBS) because the critical platform and foundation of

membership empowerment, as well as “general knowledge of norms and behaviours

as bases for further vocational education” (Ibid). Co-operative education in Tanzania,

according Professor Chambo was conceptualised inter alia in these terms:

36

general knowledge and the awareness of how, why, who and when co-ops are

formulated;

knowledge of business values and principles of co-operation;

knowing the social and power base of the organisation;

education must be guided by member empowerment for emancipation,

knowing the reasons by some people join co-ops. The critical analysis of the

constitution, co-operative policy co-operative law, rules and by –laws; and

the acquisition of general and specific skills for running and managing co-

operative organisations.

The challenges faced by the co-operative movement, Chambo concluded are the

following:

inadequate inter-university collaboration on co-operative education, training

and research;

the efficiency of decentralised structures for education and training; and

membership empowerment and entrepreneurship as bases for human capital

development in Africa.

BUILDING, CAPACITATING AND CONSOLIDATING THE TANZANIA

CO-OPERATIVES MOVEMENT

Agnes Namuhisa

Tanzania covers area of 945,000 sq kms that is gifted with a vast agro-ecological

diversity which dictates the pattern of economic activities. According to the census of

2002, the country has total population of 34.6 mill growing at a rate of 2.9% annually.

Majority of population depend on agriculture (70%).

37

FIGURE 8:

Co-operatives in Tanzania have been in operational since 1924 and started informal

(unregistered) co-operatives.The first cooperative union in the country was the

famous Kilimanjaro Native Cooperative Union (KNCU) which was registered with its

eleven affiliated primary cooperative societies on 1st January 1933.

38

FIGURE 9 :

Most of the earlier co-operatives were on marketing of cash crops like Coffee,

Tobacco, Cotton, and cashew nuts. Then after several cooperatives were established

all over the country. During colonial Era, Co-ops had firm support from the colonial

government. Although the government had a different aim of collect raw materials

Cooperatives to make their aim achieved easily. That is why during this era

Agricultural marketing cooperatives were dominant, but different types of

cooperatives were encouraged by the government. Cooperatives increased rapidly in

the country. After independence, Tanganyika government inherited the cooperatives,

and they enjoyed the support from the government. Cooperative law was amended to

accommodate the country politics. The ruling part by then, TANU and Tanganyika

government propagated and promoted the establishment of cooperatives in the

country. In the end of 1961, 108 cooperatives societies were registered. The higher

39

number of registered per year ever reached before, and the highest was achieved in

1963 which was 225. The increase in number of cooperatives was also catalyzed by

registration of coop village as coop societies.

The Cooperative Bank of Tanganyika was launched in 1962 to be replaced by the

National Cooperative Bank (NCB) in 1964. The latter provided loans to cooperatives

for purchasing crops. By 1970 the National Cooperative Bank had a share capital of

Tshs. 4,500,000.00 and it made a profit of Tshs 5,000,000.00 . The national union of

cooperatives was established which was called the Cooperative Union of Tanganyika

(CUT), which had the following objectives:

unite all registered coops;

advocacy;

plan for auditing and supervision of members under the direction of permanent

secretary;

prompt of coops information and news;

collect and disseminate info concerning audited of account of coop;

educate members and plan for training to members;

advice and help members on legal matters;

promote the establishment of new members insurance, printing banks etc; and

building national cooperative centre in Dares Salaam.

Many of the cooperatives formed after independence was started in a hurry and no

enough preparation was done. Many people equated independence with economic

development and there was political expediency to open many cooperatives, some of

which were not feasible. All these time cooperative was enjoying the government

support and was part of organs of the ruling party CCM and was known as

WASHIRIKA. At that time there was monopoly and cooperatives were run politically

and did not follow the rules of cooperatives.

Coops under Multiparty system soon after the introduction of multipart system,

cooperative had to change. Cooperatives were enjoying the political atmosphere and

were among organs of the ruling party (CCM). Due to failure to follow rules of

40

cooperatives, Tanzania was no longer a member of International Cooperative Alliance

(ICA).The main challenges faced by coops were:

shortage of the appropriate manpower;

presence of an uniformed membership;

lack of democracy at union level;

lack of skilled manpower; and

susceptibility of the cooperative movement to political interference.

Co-ops Under Trade Liberalization (CUT) had to try stand on its own with its

members, and at the same time the monopoly system was no longer in place. The

main constraint has been the inability of cooperatives to operate under a liberalized

economy. Cooperatives were in a weak structural and financial position at the start of

the trade reform process. Trade liberalization in the was introduced without giving

them any breathing space to adjust to the vagaries of the new economic order. Hence

cooperative could not stand.

In 2000, the President appointed a special Committee to look at the cooperative

movement. The Presidential Special Committee on the Revival, Strengthening and

Development of Cooperatives in Tanzania identified a number of constraints which

were hampering the progress of Cooperatives and suggested strategies to solve them.

One of the key outcomes of that effort is the promulgation of the new Cooperative

Development Policy of 2002 with the general vision of “improved and sustainable

cooperatives that are capable of fulfilling members’ economic and social needs”.

Following the new, it was essential to revisit the existing legislation so that it is

reoriented towards the implementation of the new policy. Thus the enactment of the

new Cooperative Societies Act of 2003 is a step into that direction. The need to

interpret the Cooperative Development Policy and the supporting law into workable

strategies and plans has necessitated the preparation of a Cooperative Reform and

Modernization Program (CRMP). Ten years program (2005 – 2015). The CRMP

translates in practical terms how the overall vision can be achieved, and the role of

41

various stakeholders in the implementation. CRMP has been guided by the country’s

long term vision of attaining sustained growth (as spelled out in Tanzania’s

Development Vision 2025 and the National Poverty Eradication Strategy (NPES).

The CRMP is also closely linked with the National Strategy for Growth and

Reduction of Poverty NSGRP whose implementation started in 2005. CRMP is also

linked closely with the Agricultural Sector Development Program (ASDP). CRMP is

stakeholder’s joint effort in dealing with the chronic problems confronting

Tanzanians’ Cooperatives which include the following:

inflexible structures;

poor management systems;

inability to cope and compete in a liberalized market economy;

lack of adequate working capital;

the problem of indebtedness;

lack of cooperative education;

weakness in supporting institutions;

limited spread of cooperatives;

weak cooperative leadership and management; and

unfavorable environment for free independent coops to grow.

The general objective of the CRMP is to initiate a comprehensive transformation of

Cooperatives to become organizations which are member owned and controlled,

competitive, viable, sustainable and with capability of fulfilling members’ economic

and social needs. The CRMP is intended to be the main source of information and

guidelines in dealing with the chronic problems confronting Tanzania’s Cooperatives.

Such chronic problems were also clearly pointed out in the report by the Presidential

Committee of 2000 formed to advise on how to revamp the cooperative societies. The

CRMP spells out a number of key problematic issues to be addressed, proposes the

necessary interventions for the relevant problematic issues. Major CRMP

42

Stakeholders are: MUCCoBS, Ministry responsible for Coops, TFC, SCCULT and

COASCO.

Capacity building is a necessary intervention to speed up and effect the envisaged

transformation of Tanzania’s cooperatives. Priority areas for capacity building include

Human resource development; strengthening of training; consultancy and research;

improving quality of audit and supervision; acquisition and use of appropriate ICT

hardware and software; acquisition of transport and other facilities for change agents;

and creation of pools (clusters) of cooperative experts (lawyers, planners etc). The

Tanzania Federation of Cooperatives (TFC), in consultation with other stakeholders,

has already proposed the establishment of a National Cooperative Advisory Council.

It is proposed that when established, the National Cooperative Advisory Council will

be an autonomous institution mandated to advise cooperatives, the government,

organizations promoting Cooperatives and other stakeholders in the revival,

strengthening and development of Cooperatives in the country.

Some of the key intervention activities in this area include:

human resource development and strengthening at the CDD and other support

institutions;

provision of adequate working facilities for the key players;

improvement of communication and working interface between the Central

Ministry LGAs to enable Cooperative Officers and other change agents

perform their core functions effectively;

adequate capacity building and other support for training, research and

consultancy related to cooperatives;

support of special programs geared towards improving audit and supervision

of cooperative societies;

facilitate positive linkages between cooperatives and other service providers;

and

promote the establishment of a National Cooperative Advisory Council to be

hub for troubleshooting for cooperative constraints and advocacy.

43

In general, women have limited involvement in co-operatives. The limited

involvement makes it difficult for women to participate as equal partners in

membership and leadership positions in the Cooperatives. The CRMP intervention in

this regard is to ensure that Women play a greater role in Cooperative activities so

that co-operatives are truly member driven democratic institutions, and indeed this is

important for sustainable co-operative development.

The increase of individual members from 750,000 (2005)to 2.2m (2009)and co-op

societies from 5,730 (2005)to 9,501(2009) including primary to the tertiary level s of

different sectors. SACCOS are rapidly increasing in numbers compared to other types

of co-ops, that is May, 2005 (1,875) whereby May, 2009 which is equivalent to 184.5

percent. The number societies increased to 5,344 with total member of 911,873.

The National initiatives are the following:

introduction of warehouse receipt system;

strengthening of SACCOS and National Cooperative bank;

restructuring of co-ops support institutions; and

introduction of National Cooperative Development Commission for

Cooperatives.

Tanzania Federation of Cooperatives (TFC) is the national umbrella of co-ops and

was registered on 8th December, 1994. TFC objectives are the following:

to promote the prosperity of societies affiliated to it in accordance with co-

operative principles;

to unite all registered co-operative organizations;

to collect, analyze and disseminate information and statistics relating to or of

particular relevance to co-operative societies operations;

to initiate participatory education and training programs amongst its members

and arrange for courses and seminars;

to represent the member societies in national and international for a;

to give publicity of all Co-operative activities in the country;

44

to conduct research and consultancy for member cooperatives in the area of

making, business development and financing;

to arrange for the audit and supervision of member societies; and

to coordinate nationally Cooperative development plans for members .

TFC initiatives are the following:

provide access to the market like inviting them to the exhibitions & trade fairs

like ICD exhibition, farmers day etc ;

collection of disaggregated data through CODAS; and

CODAS aims at creating a data management tool for co-operative sector in

Tanzania on which the status of the cooperative will be based and use the

System as a tool for Cooperative Monitoring and Evaluation.

PROVINCIAL CO-OPERATIVE INDABA, AND EXPO: BORDER

CONFERENCE CENTRE, EAST LONDON, 27-29 OCTOBER 2010

The Provincial Co-operatives Indaba sought to provide a platform for discussion

among state institutions, government departments, legislature, state owned

enterprises, development finance institutions and other development agencies, the co-

operatives movement, higher education institutions, non-governmental organisations

and community-based organizations, social movements, on the development of the

co-operative sector in the Eastern Cape. The expectations were that co-operative

formations would exchange ideas and experiences with their counterparts from other

regions of the continent and from across the globe.

The co-operatives Indaba set up four commissions to deliberate in depth on the

following themes:

building a sustainable co-operative movement;

unified Standards of education and training, anchored on co-operative

principles and values;

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the research agenda for the growth and development of the co-operative

sector; and

co-operative financing models.

The Commission’s report on Building a Sustainable Co-operative Movement

catalogued numerous issues associated with difficulties faced by the co-operative

movement, and amongst others, listed the following:

registration of co-operatives as legal entities;

the recurrent incidence of “bogus ” co-operatives established by government

departments or municipalities motivated by the pressing need to meet

expenditure targets;

lack of transparency among local municipalities on budgets for co-operative

development;

governments lack of understanding of the co-operative concept, including

municipal officials;

lack of recognition of co-operatives;

some co-ops have easy access to govt jobs through connections; and

the role of govt in the process to support rebuilding the co-op movement is not

sufficient enough.

This commission resolved, inter alia, that:

it is imperative to build the co-operative movements capacity for sustainability

instead of working towards an unviable apex structure;

employing knowledge-based activity to build solidarity links and networks

along sect oral lines;

legal reform to be encouraged to develop an effective regulatory system in

support of the co-operative sector;

the use of computer and information technologies in the growth and

development of the co-operative sector; and

building strong and mutual international solidarity across the co-operative

movement.

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The Commission identified the following as key areas that need immediate attention:

systematic engagement with NGOs and other progressive organizations

involved in this area;

campaigning for the appropriate amendments to legislation dealing with co-

operatives in order to cater for the establishment, resourcing and support to

mass based co-operatives;

effective engagement with Department of Trade and Industry, Provincial

and Local Government in this regard ;

campaign for realignment of policy frameworks in the context of a number

of policy delivery frameworks, in order to facilitate governmental support to

such initiatives. This should include public works, restructuring of state

assets, industrial policy, housing development and the state tender system,

just to mention a few;

improve area of communication with co-operatives by departments and

municipalities

co-operatives to have access to the local forums

DCFs to promote sector identity among co-operatives

DCFs to organise dialogues as a form of information sharing and further

engage in addressing the movement building aspect

DCFs to facilitate a workshop on institutional development linked to the

amended version of the co-operatives act.

The Commission on Unified Standards of Education and training anchored on Co-

operative Principles and Values identified, inter-alia, the following as priority:

Education and training needs:

conflict management in co-operatives;

financial management;

risk management;

business planning and management;

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communication skills; and

production management.

The commission resolved that, there is a constant need for the monitoring and

evaluation of all education and training programmes as well as quality control.

The commission on the Research Agenda for the Growth and Development of the Co-

operative Sector identified the following as priority research issues:

creating a co-operative database

appropriate skills development and training needs

marketing and market access

product diversification

knowledge management

roles and definitions of stakeholders

global experiences and the South African experience

Co-operative Database and Statistics

Co-operative members proposed the creation of a provincial, full registration database

that contains the following information: a list of co-operatives, their location,

registration date, and record of collapse/closing of co-operatives, as well as products

and services provided. This database should provide a linkage between co-operatives

in the province. Furthermore, the database should be linked to the economic potential

of each area to enable co-operatives to identify opportunities in their province. This

database should be easily accessible to co-operatives and their members. The database

should be updated on an annual basis.

Skills development and training

Assessing the skills and training needs of co-operative members will be an essential

component of the research agenda. Skills development and training needs expressed

by co-operative members include technical skills, business skills, management and

administration, budgeting and bookkeeping, as well as marketing skills. Technical

skills are required for production and processing needs. These skills are necessary for

the production of quality products and services which will enable co-operative

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members to produce products and services that meet the criteria for standards of

accreditation. Computer literacy skills are necessary for daily operation as well as

administration and management of co-operatives.

Furthermore, communication, presentation and negotiation skills are necessary for

deal making. Also included are budgeting, costing, accounting and bookkeeping skills

for beneficiation and auditing needs of co-operatives. In addition skills needs should

be defined in relation to the needs of the area. Moreover, members of co-operatives

should have access to technical skills colleges in each municipality. Such colleges

should have a complete curriculum to provide members with all the necessary skills.

Moreover, members have outlined the need for rural research centres. These units

should be established in rural areas to conduct research and generate indigenous

knowledge for use by co-operative members, relevant stakeholders, as well as the

general public.

Members also expressed the need for awareness of legislation and regulations which

should come from informed and knowledgeable officials in government as support

structures of co-operatives. Other skills requirements that were expressed included the

need for marketing skills and market access, as well as the need for product

diversification.

Marketing and market access

Aligned to skills development and training is market research and markets access for

co-operative growth and development. Members need to know challenges in terms of

market constraints as well as where there are opportunities in the market. The

aforementioned database as well as the skills development and training will help in

this regard; however, research needs to be undertaken with regard to value chain

analysis, product development as well as feasibility studies to identify opportunities

per geographic area. This information must be accessible to co-operative members to

enable members to understand the situation in their own communities and to respond

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effectively. This will assist co-operative members in production planning and

marketing. Knowledge of markets will ensure the stability and competitiveness of co-

operatives.

Product diversification

Related to marketing and market access is product diversification. Research needs to

be conducted to identify gaps and to avoid duplication of products and services. This

information will also form part of the database so as to inform co-operative members

about market constraints as well as opportunities. This information will also assist

members to know where there are underutilised resources such as indigenous products

for product development or where there is a gap or saturation of products or services

in a particular location.

Knowledge management

Knowledge management includes issues around the warehousing of information,

duplication of research, as well as dissemination of information. Co-operative

members suggest that the principle custodian of co-operative knowledge should be the

Institute for Co-operatives Development, supported by the Eastern Cape Department

of Economic Development and Environmental Affairs as well as the affiliated

universities. However, the institute should be directly responsible for storing,

managing, administering, distributing as well as driving co-operative research. The

storing of information and research in one unit will assist in the identifying existing

research, eliminate the duplication of research, as well as help pinpoint new research

needs for the future. This strategy will enable effective and efficient knowledge

generation for the growth and development of the co-operative sector. Knowledge

generated by all stakeholders, including government and universities should be

filtered to co-operative members as well as the general public through the Institute for

Co-operatives Development.

Roles and definitions of stakeholders

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Members of co-operatives also expressed the need for the clarification of roles

between the different stakeholders. This is to avoid duplication of roles and to ensure

that co-operative members know the relevant people to approach should they have

any queries. Moreover, research should be conducted to clarify the roles between

different stakeholders so as to also ensure the effectiveness and competence of

stakeholders in their fields of expertise. This defining of roles will also create synergy

among the stakeholders which will in turn ensure efficiency among the stakeholders

as support structures of co-operatives. A comprehensive profile containing the roles

and definitions of all stakeholders should be made accessible to co-operative

members, stakeholders, as well as to the general public.

Global Experiences and the South African experience

Lastly, participants argued that research needs to be conducted about the experiences

of co-operatives globally. This research should also include the history and

experiences of co-operatives in South Africa. The study of the experiences of co-

operatives in the continent as well as abroad will bring the necessary knowledge and

information about the challenges and successes of other co-operatives around the

world. This will strengthen co-operative growth and development in South Africa.

Furthermore, a study of the literature on models of co-operatives used in other parts of

the world will broaden the scope of co-operative movement in South Africa. In

addition documenting South Africa’s co-operative history and experiences to date

will also provide co-operatives and other relevant stakeholders with knowledge

regarding the progression of co-operatives in South Africa.

The Commission on Financing Models for the Sustained Growth of the Co-operatives

Sector identified about five possible financing models. The members of the

commission chose the following models.

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Integrated Finance Model

The commission proposed an integrated finance model as opposed to a piecemeal

approach to the funding of co-operatives. A holistic model that should be able to see

the co-operative through from its infancy to maturity. Members agreed that it would

be better to focus on sustainability of few co-operatives than having many co-

operatives that will end up failing. The integrated model comprises of six identified

element, namely, training of members, assets mobilization, infrastructural

development, markets, phased funding approach and extension services. Each one of

the element is going to be explained below.

Elements of the Integrated Model

Training of Members

Training is one of the central aspects for business start-ups. Co-operative members

need to be trained so as to gain business skills in finance, business planning,

marketing, human resources management, project planning and conflict management.

The members narrated that some found themselves wanting when it came to executing

business skills. All the commission members agreed that lack of training was the main

cause of incompetence in business.

Assets Mobilization

Co-operative members possess some of the livelihoods assets or capitals from the ‘big

five’ of assets. These are human, natural, financial, physical and social assets or

capitals. An integrated funding model should target to make sure that these assets are

identified and strengthened. Contemporary discussions have also added political

capital to the traditional list of five assets explained in the sustainable livelihoods

framework (DFID, 2007). The figure below demonstrates the sustainable livelihoods

framework, showing the assets and other contexts necessary for the achievement of

livelihood strategies.

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Figure 9: Sustainable Livelihoods Approach

Source: DFID(2007:10)

A holistic approach to co-operative funding should take into cognizance the human,

natural, financial, physical, social and political assets that improve the capabilities of

members hence promoting the sustainability of their businesses.

Human capital (H): This relates to human capital development through training and

skills transfer. Co-operative members who may, in the majority of cases , not

educated would need to undergo some form of business training so that their skills

are built. The need for training and development can never be overemphasized. The

finance strategies should target co-operative members to train them so as enhance

their skills.

Natural Capital (N): This refers to all God given resources such as land, water, trees,

grass, rocks and many more. These resources are at the disposal of co-operative

members. They need to be harnessed so as to strengthen their operations. A funding

model that takes natural resources into consideration has a greater potential to address

the needs of the co-operatives.

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Financial Capital: This refers to pecuniary resources, that is, capital for business

start-ups or for business progression. Access to capital enables cooperators to work

effectively towards achieving their business ventures.

Physical capital: This includes the infrastructures that enhance business processes

such as buildings, roads, transport (i.e. vehicles), ICTs (Information and

Communications Technology) and production equipment. Policy on the development

of physical infrastructure should promote the business efforts of co-operatives.

Social capital: This entails social cohesion, networking, teamwork and other socio-

cultural aspects that enhance co-operative development. Financiers should be able to

identify social capital which is abundant among co-operative members such that their

support can be meaningful. Social capital facilitates good relationship among co-

operative members and other stakeholders. A well developed social capital will inhibit

defaults in the repayment of loans and will also reduce or eliminate ‘fungibility’

(using capital in areas not originally planned) of capital.

Political Capital: ‘Political will’ refers to policymakers’ clear understanding of the

role of co-operatives and strengthening it by developing a financial window that

accommodates them into the broader business sector. Strategic priorities are hinged

upon institutional and political will. A re-thinking of the regulatory environment in

the co-operatives sector is also needed with the special characteristics of these

organisations in mind. A lot still needs to be done in South Africa to realise a

sustained growth of co-operatives. However members appreciated the progressive

South African Co-operatives Act No. 14 of 2005.

Table 1 below summarizes the capitals

Assets (Capital) Examples

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Financial Savings, Credit, Remittances, Pensions.

Human Skills, Knowledge, Information, Ability to work, Health.

Social Networks, Groups, Trust and reciprocity, Access to wider institutions of society

(an intangible asset).

Natural Land, Water, Wildlife, Biodiversity, Environment (stocks of environmentally

provided assets-God given resources).

Physical

Political

Transport, Shelter, Water, Energy, communication and production equipment

(also known as produced or man-made capital).

Political will, political maturity to support development, transparency etc.

Source: Rakodi (2008:11); DFID (2007)

Infrastructural Development

Support needed to make sure that the co-operatives have productive equipment i.e.

buildings, transport, fencing, irrigation equipment etc. The commission members

called for the review of the IMVABA funding system. According to them, the fund is

too selective such that does not support agricultural co-operatives. The fund considers

the agricultural sector risky due to weather conditions. Members argued that this

exacerbates the financial marginalization of agricultural activities in the province. A

suggestion was put forward to have an integrated agricultural funding model so as to

eliminate environmental challenges through supporting the set-up of irrigation

facilities. If co-operatives are supported to install irrigation equipment on the farms,

then the risky factor of dryness in the region would have been solved. According to

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the commission members, the funding models should be able to respond to

comprehensive business plans and avoid a piecemeal approach.

Markets

Commission members identified another crucial challenge in the development of their

co-operatives in the Eastern Cape Province as the development of markets. Jara and

Satgar (2009:35) also concur that demand driven development of co-operatives is not

sustainable. It was discussed that an important aspect is for co-operatives to be helped

to find other channels for their products. Because of globalization the markets have

become fierce with competition such that co-operatives have hurdles to penetrate the

markets. This has left the majority of them in precarious positions with regards to

their business operations. Therefore, co-operatives seek government support in this

area through:

Legislation-creating captive markets for their businesses.

Tenders-co-operatives to receive preferential treatment in this area e.g.

supplying cabbages and other vegetables to prisons. Annual demand for

vegetables by the correctional services department is very high and such

tenders could be given to co-operatives so as to provide a ready market for

them. It would be helpful for them to take advantage of a market that has less

competition for them to grow. This follows the ‘infant industry argument’ in

international trade. Countries protect their local infant industries from outside

competition through import barriers. The same analogy could be adopted for

the protection of infant organisations such as co-operatives.

Phased Funding Approach

Sustainable growth of co-operative can be encouraged by providing phase funding.

This augurs well with the integrated model. Co-operatives need to get continuous

financing from the start to maturity. This will help co-operatives to receive

progressive assistance for them to grow steadily and sustainably. All businesses,

including co-operatives go through a business life cycle. In the case of co-operatives,

they need to be followed (through the life cycle) so as to support their endeavours

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hence the call for phased funding. Figure 2 below shows the growth to decline path of

businesses. Co-operatives need to be jump-started or frog jumped so that they do not

face distress and collapse.

Figure 10: Cooperative Business Life Cycle

Source: http://www.google.co.za/#hl=en&source=hp&q=Business+life+cycle

(accessed 10 November, 2010)

Extension Services

Continued government support is needed at all levels for the sustainability of co-

operatives.

Macro-level: national government programmes. e.g. Tax Holidays & other

incentives.

Meso-level: Provincial and District level support programmes.

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Micro-level: Local level support.

NB: Members also noted that in a number of cases there is ‘competition’ among funders.

A proposal was given to have these support mechanisms coordinated to avoid

unnecessary competition and politicking.

Savings /Co-operative Banks Model

Co-operatives Bank Model

In line with the Co-operative Banks Act, No 40 of 2007, the members proposed the

establishment of a co-operative bank in the Eastern Cape Province. The Act defines a co-

operative bank as a co-operative registered as a co-operative bank in terms of the Act

whose members –

are of similar occupation or profession or who are employed by a common

employer or who are employed within the same business district; or

have common membership in an association or organisation, including a

business, religious, social, co-operative, labour or educational group; or

reside within the same defined community or geographical area.( National

Treasury, accessed from http://www.treasury.gov.za/coopbank/ on 11 November,

2010).

The parallel commission on sustainable financing models agreed to the fact that

cooperatives need to receive comprehensive and holistic funding for them to grow to

maturity. A piece-meal approach to funding was denied since cooperatives fail to

continue if part of the ‘pieces’ comes late during the growth of their businesses.

Financial support should see the cooperatives through the cooperatives business cycle

and then help them to avoid the decline phase of their growth. A cooperative bank

was also suggested and members agreed that the cooperative bank project is very

urgent. Cooperative banks have been successful in India, Brazil, Kenya, Bangladesh,

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Germany, France, the United Kingdom, hence the need to follow the model for the

growth of solid cooperatives.

In concluding this progress report, it is probably pertinent to state that the Indaba was

hugely successful, and the average attendance was 250 delegates from the province,

the rest of the country as well as a handful of international guests from Uganda,

Tanzania, Germany and Italy. The total financial cost of the Indaba is R554 132.22

(see annexure 1).

EDUCATION AND TRAINING IN THE POST-CO-OPERATIVE INDABA

PERIOD

One of the key objectives of the Institute for Co-operatives Development is the

building of requisite knowledge and institutional base to enable a take-off and

sustenance of the desired community and co-operative enterprises, as well as the

institutional infrastructure that supports them. This means that in the current

conjuncture, education and training are key priorities for the Institute and the

province of the Eastern Cape. There is, therefore, the urgent need to build capacity to

meet these identified priorities at the Institute, in the Department of economic

Development and Environmental Affairs, and across the length and breadth of the

Eastern Cape.

As indicated in the commission’s report on education and Training, conflict

management in co-operatives tops the list of menu for capacity development. In

response to this the need the Institute for Co-operatives Development enlisted three

University of Fort hare staff and Academics (one of them a Senior Lecturer in the

Law Faculty) to undertake a training course in Managing Conflict in Co-operatives.

The training course was offered and conducted by the German Co-operative and

Raiffeisen Confederation (DGRV) between the 29th of November and 3rd of

December at their head quarters in Pretoria. The colleagues who attended the course

will provide the intellectual base for the extension of their experience to all our social

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partners and the co-operative sector as a whole (see annexure 2 for a certificate

copy).

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