Co-ops as Alternative Project Models for NGOs

Co-operatives provide an alternative model for the implementation of sustainable, community-based initiatives within South Africa. Government actively advocates the use of this model for social upliftment projects. However, the reality is that, up until now, many of these projects have failed to be sustainable in the long term.

Public Support Encumbered by Practical Limitations
According to a recent media statement released jointly by the National Development Agency (NDA) and the Department of Trade and Industry (DTI): “Cooperatives and collective ownership schemes are important vehicles to meet the economic goals of development, broad individual empowerment, and sustainable livelihoods for communities.”

However, the National Co-operative Association of South Africa (NCASA) notes that “most co-operatives in South Africa are what co-operatives in Europe and North America were more than hundred years ago or more. They mirror the broader problem of under-development that affects the majority of our people because of our specific history.” NCASA maintains that “… the current state of co-operative development reflects the limitations of the real history of South Africa.”

Thus, NCASA argues, “there are limitations on the extent in which we can model co-operative organisation on conventional European and North American practice. Learning from best international practice, our own history, realities and experiences should be the foundation on which we build a co-operative movement in South Africa.”

Why Start a Co-operative?
Within the context of a limited resource base, co-ops provide the potential for pooled resources to enhance economic clout. Their popularity lies in the fact that they provide individual members with a vehicle for collective economic action that can result in them acquiring substantial advantages when negotiating in the marketplace. 

For example, a well-run co-operative can pool its production outputs and negotiate larger contracts and discounts for members. Also, a successful co-operative provides members with a sustainable, independent source of income. It should be noted that the co-operative model is also a popular format for the collective grouping of small businesses, which stand to benefit from the enhanced economies of scale.

Advice for NGOs
NGOs wishing to embark on collaborative community projects should consider the co-operative model as a platform for the long-term ownership of a community’s sustainable activities. The main reason for this, as observed by Dr JL van der Walt¹ is that “people want to be part of a team.” The need for collective ownership on the part of the community is an integral component of any successful co-operative.

Having consulted with the community and agreed that a co-operative is worth considering as a viable vehicle for the team, it is essential for the NGO to obtain the necessary information for formally establishing a co-operative..

Co-operatives – Online Toolkits
The following online tools and resources provide invaluable background information:

The Small Enterprise Development Agency (SEDA) offers a wealth of advice about co-operatives, ranging from background information such as the history of the co-operative movement and how the movement began in SA.

The different types of co-operatives are also examined, ranging from agricultural co-operatives; consumer co-operatives; marketing and supply co-operatives; housing co-operatives; financial services co-operatives as well as social co-operatives such as co-operative burial societies; service co-operatives and worker co-operatives.

In addition, the SEDA website gives examples of countries where the co-operative model has succeeded and an outline of SA Government policy on co-operatives. Most importantly, the SEDA site provides a user friendly, simple guide to Starting a co-operative and the process for formally Registering a co-operative.

Similarly, it is useful to visit the website of the SA Companies and Intellectual Property Registration Office (CIPRO), which is a business agency established by the Department of Trade and Industry. Here you will be able to find the direct contact details of officials who should assist and advise you, free of charge, with regards to the effective governance and reporting requirements for a local co-operative as well as any changes to the current legislative framework.

CIPRO houses the Office of the Registrar of Co-operatives which is “responsible for the registration, liquidation and deregistration of co-operatives as well as amalgamation and conversions. It answers queries from the public and provides information relating to co-operatives. Furthermore, it is also responsible for analyzing the financial statements of co-operatives.”

For those NGOs interested in gaining more insights into the prevailing discourse around the establishment of co-operative structures as part of a community programme, there are a number of academic articles and research papers, some of which are listed below.

Further Online Reading
– Co-operatives in South Africa – Their Role in Job Creation and Poverty Reduction By Kate Philip for the South African Foundation, October 2003.
– Fostering Community-Driven Development – What Role for the State? by Monica Das Gupta, Helene Grandvoinnet and Mattia Romani for the World Bank, 2003.
– Creating a New Valuation Tool for South African Agricultural Co-Operatives by M Geyser and I Liebenberg, University of Pretoria, 2003.
– Agrarian reform and the ‘two economies’: transforming South Africa’s countryside by Ben Cousins – Programme for Land and Agrarian Studies (PLAAS), School of Government, University of the Western Cape, 2005.
– Developmental Microfinance in South Africa by Ted Baumann, Community Microfinance Network

– Diane Babak, SANGONeT Knowledge and Information Systems.
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Footnote: ¹ The Resuscitation of the Cooperative sector in the Limpopo Province of South Afica by Dr JL van der Walt, Potchefstroom Business School, North West University

Acknowledgement: Images sourced from Mathias Mundy’s website.