IMIHLANGANO YOKUTHUTHUKISWA KWAMA CO-OPERATIVES
IMIHLANGANO YOKUTHUTHUKISWA KWAMA CO-OPERATIVES
UMasipala umema wonke amalungu ama co-operatives akhele iTheku namaphethelo ukuba ethamele lemihlangano yokucobelelana ngolwazi, ezokuba sezindaweni ezahlukene ezakhele iTheku nokuthi amalungu ama co-operatives xxx xxxxxxxx ekwakhiweni kwalolu hlelo.
Le mihlangano yokucobelelana ihleleke kanje:
USUKU | INDAWO | ISIKHATHI |
26 Januwari 2015 | Unit 6 Community Hall, Hammarsdale | 09:00 |
30 Januwari 2015 | V Section Hall, Umlazi | 09:00 |
04 Febhuwari 2015 | Xxxxxx Xxxx, Inanda | 09:00 |
05 Febhuwari 2015 | Amanzimtoti Civic Centre | 09:00 |
06 Febhuwari 2015 | Waterloo Hall, Verulam | 09:00 |
09 Febhuwari 2015 | ITRUMP Hall, Warwick Junction | 09:00 |
11 Febhuwari 2015 | Pinetown Civic Centre | 09:00 |
Amakhophi alolu hlelo ayatholakala emahhovisi akwa-SEDA aku-Xxxxxxxx Xxxxx Street, nakumaSizakala kusukela mhla ka 16 Januwari 2015, ngo 08h00 – 16h00 nakwi-website kaMasipala ethi: xxx.xxxxxx.xxx.xx ukuze afundwe amalungu ama co-operatives bese ebeka eyawo imibono.
Xxxxx imibono ingathunyelwa kwa-Business Support, Tourism and Markets Unit, ku 11th floor Dr Langalibalele Xxxx Street noma emahhovisi akwa-XXXX xxxx xxx-email ethi: Xxxxxx.Xxxxxx@xxxxxx.xxx.xx engakedluli umhla ka 10 Febhuwari 2015.
“Asibambisane senze iTheku libe ungqa phambili”
Ngolunye ulwazi ungaxhumana noNonhle Memela ku: 031-311 4500 noma ku:
CO-OPERATIVE DEVELOPMENT WORKSHOPS
The Municipality invites all members of co-operatives within eThekwini Municipal Area to attend the following workshops in their respective areas to contribute in the development of the strategy.
These workshops are scheduled as follows:
DATE | VENUE | TIME |
26 January 2015 | Unit 6 Community Hall, Hammarsdale | 09:00 |
30 January 2015 | V Section Hall, Umlazi | 09:00 |
04 February 2015 | Xxxxxx Xxxx, Inanda | 09:00 |
05 February 2015 | Amanzimtoti Civic Centre | 09:00 |
06 February 2015 | Waterloo Hall, Verulam | 09:00 |
09 February 2015 | ITRUMP Hall, Warwick Junction | 09:00 |
11 February 2015 | Pinetown Civic Centre | 09:00 |
Copies of the draft strategy are obtainable from the SEDA Office in Xxxxxxxx Xxxxx Street and Sizakala Centres from 16 January 2015 between 08h00 and 16h00 and on the Municipal website: xxx.xxxxxx.xxx.xx, for members of co-operatives to read and make their comments.
All comments may be submitted at the Business Support, Tourism and Markets Unit 11th floor, Dr Xxxxxxxxxxxxx Xxxx Street or SEDA office or emailed to Xxxxxx.Xxxxxx@xxxxxx.xxx.xx by 10 February 2015.
“Together, building eThekwini to be Africa’s most caring and liveable city.”
For more information contact Nonhle Memela on 031 311 4500 or
DRAFT ETHEKWINI CO-OPERATIVE DEVELOPMENT STRATEGY
JANUARY 2015
1
Submitted to: Submitted by
BUSINESS SUPPORT, MARKET AND TOURISM UNIT, 11TH FLOOR 0000, 00 Xx. LANGALIBALELE XXXX, DURBAN
URBAN-ECON: DEVELOPMENT ECONOMISTS
TABLE OF CONTENTS
SECTION 1 INTRODUCTION 4
00 XXXX XXXX XXXXXX
Tel: 000-000 0000 Tel: 000 000 0000
Fax: 000-000 0000 Fax: 000 000 0000
1.1 BACKGROUND 4
1.2 OBJECTIVES 5
1.3 SOURCES OF INFORMATION 5
1.4 REPORT OUTLINE 7
SECTION 2 THE CO‐OPERATIVE ENVIRONMENT 9
2.1 UNDERSTANDINGS THE CO‐OPERATIVE SECTOR 9
2.1.1 DEFINITION OF CO‐OPERATIVE 9
2.1.2 PRINCIPLES OF CO‐OPERATIVES 9
2.1.3 DIFFERENCE BETWEEN CO‐OPERATIVE AND OTHER BUSINESS 11
2.1.4 FORMS OF CO‐OPERATIVES 11
2.1.5 TYPES OF CO‐OPERATIVES 12
2.1.6 ROLES OF CO‐OPERATIVE 13
2.2 BEST CASE EXAMPLES OF COOPERATIVES 13
2.2.1 INTERNATIONAL BEST CASE EXAMPLES OF COOPERATIVES 14
2.2.2 AFRICAN BEST CASE EXAMPLES OF COOPERATIVES 19
2.2.3 SOUTH AFRICAN BEST CASE EXAMPLES OF COOPERATIVES 21
2.3 CO‐OPERATIVES POLICY FRAMEWORK 26
2.3.1 INTERNATIONAL CO‐OPERATIVE ALLIANCE BLUEPRINT FOR A CO‐OPERATIVE DECADE JANUARY 2013 26
2.3.2 NATIONAL COOPERATIVE DEVELOPMENT STRATEGY 2012‐2022 27
2.3.3 NEW GROWTH PATH (NGP) 28
2.3.4 NATIONAL DEVELOPMENT PLAN (NDP) 28
2.3.5 NATIONAL INDUSTRIAL POLICY FRAMEWORK 29
2.3.6 INDUSTRIAL POLICY ACTION PLAN (IPAP 2) 30
2.3.7 REGIONAL INDUSTRIAL DEVELOPMENT STRATEGY (RIDS) 30
2.3.8 INTEGRATED STRATEGY ON THE PROMOTION OF ENTREPRENEURSHIP AND SMALL ENTERPRISES 30
2.3.9 BROAD‐BASED BLACK ECONOMIC EMPOWERMENT STRATEGY (B‐BBEE) 30
2.3.10 NATIONAL YOUTH ENTERPRISE STRATEGY (NYES) 31
2.3.11 STRATEGIC FRAMEWORK ON GENDER AND WOMEN’S ECONOMIC EMPOWERMENT 31
2.3.12 THE COOPERATIVE AMENDMENT ACT 2013 31
2.3.13 THE CO‐OPERATIVE POLICY OF 2004. 33
2.3.14 THE NATIONAL CO‐OPERATIVE DEVELOPMENT STRATEGY (2004‐2014) 33
2.3.15 CO‐OPERATIVE BANKS ACT, NO 40 OF 2007 34
2.3.16 NATIONAL FRAMEWORK FOR LOCAL ECONOMIC DEVELOPMENT (2006) 34
2.3.17 INTEGRATED AND SUSTAINABLE RURAL DEVELOPMENT (ISRD) STRATEGY (2000) 35
2.3.18 KZN CO‐OPERATIVE DEVELOPMENT STRATEGY (2010) 35
SECTION 3 ETHEKWINI CO‐OPERATIVE TRENDS 37
3.1 CO‐OPERATIVE DURATION OF EXISTENCE 37
3.2 CO‐OPERATIVES WORKS AND SERVICES PROVIDED 38
3.3 LEVEL OF EDUCATION 39
3.4 SKILLS REQUIRED BY CO‐OPERATIVE MEMBERS 40
3.5 CO‐OPERATIVES’ SOURCE OF WORKS 41
3.6 CO‐OPERATIVES’ FUTURE MARKETS 42
3.7 UNDERSTANDING OF TENDER PROCESS 43
3.8 GROWTH STATE OF CO‐OPERATIVES 44
3.9 MAJOR BUSINESS OBSTACLES 45
3.10 KEY NEEDS OF CO‐OPERATIVES 48
3.11 CO‐OPERATIVE SUPPORT SERVICE PROVIDERS 49
3.12 SWOT ANALYSIS 51
SECTION 4 STRATEGIC FRAMEWORK 54
4.1 VISION 2020 54
4.2 MISSION 54
4.3 POLICY PRINCIPLES 55
4.4 AN HOLISTIC STRATEGY 56
4.5 TERMINOLOGY USED IN CO‐OPERATIVE ASSISTANCE PROGRAMME 70
4.6 RECAP OF CHALLENGES, PROGRAMMES AND KEY ACTIONS 73
SECTION 5 IMPLEMENTATION GUIDELINES 76
5.1 IMPLEMENTATION PLAN 76
5.2 COORDINATION AND COMMUNICATION MECHANISM 80
5.3 MONITORING AND EVALUATION FRAMEWORK 83
ANNEXURE 1: ETHEKWINI CO‐OPERATIVE QUESTIONNAIRE 87
SECTION 1 INTRODUCTION
1.1 BACKGROUND
The concept and philosophy of co‐operatives is deeply embedded in the traditional culture of many human societies, especially within African communities. There are many examples where members of communities work together in turns for mutual self‐help to improve the socio‐economic welfare of each other and the community. Modern economic and social structures may have weakened this co‐operative social fabric but it is an important foundation upon which the concept and philosophy of modern co‐operatives as economic enterprises can be successfully built and sustained.
The democratic Government of the Republic of South Africa has put in place many development programs to address the urgent need to eradicate poverty in a sustainable manner through support to development of enterprises that create employment, increase household incomes, mobilize savings, and improve the welfare of the people. These include, but are not limited to, small, medium and micro‐enterprises (SMMEs), Broad‐Based Black Economic Empowerment (BBBEE), and co‐ operatives.
In KZN Co‐operatives Development Programme started in February 2005 and has since attracted more than 60 000 individuals, who constitute approximately six thousand co‐operatives. The program is also receiving support from government departments, municipalities and the private sector by awarding contracts to some co‐operatives using their affirmative procurement policies and social responsibility/investment programmes. The previously disadvantaged communities now own co‐operative businesses and are being enabled through the programme to participate in the mainstream economy of the province.
Further, a draft KZN co‐op strategy has been developed to assist in the provision of support for co‐ operative development in the province. The overall aim of the draft strategy is to adopt a regulatory approach in the KZN Province, wherein all stakeholders can add value and support the development of social enterprises in the form of co‐operatives. Worth noting is that the draft strategy attributes the coordination of all co‐oparative activities and value chain in the province to provincial Departement of Economic Development and Tourism while the implementation of all programmes is devolved to the local governments through the formulation of their own strategies and implementation mechanisms.
The eThekwini Municipality embarked since 2001 on a programme aimed at alleviating poverty and unemployment and identified procurement as priority in the economic development field. From that perspective a mandate was given to Community Participation and Action Support Unit (CPAS) to drive and manage the co‐operative development programme. This was done in line with the key priorities aimed at eradicating poverty by empowering people who were living below the poverty line to step into the main stream of the economy. As a result, ninety six co‐operatives were formed with an average of twenty members each resulting in about 720 people employed to look after their
respective families. However, the Business Support Market and Tourism Unit (BSMTU) is the current custodian of the co‐operative development programme in the Municipality and this strategy went beyond the analysis of ninety six CPAS formed co‐operatives and included all co‐operatives existing in the eThekwini Municipality.
1.2 OBJECTIVES
The objective of co‐operative strategy is to provide an enabling environment for the development of viable and self‐sustaining co‐operatives which participate meaningfully in both the first and second economy. This is done in alignment with the NDP, the National Growth Path, the Blue Print Strategies from the International Co‐operative Alliance, National Cooperative Development Strategy 2012‐2022, National Industrial Policy Framework, the Cooperative Amendment Act 2013, etc.
Specific objectives are to:
To promote equality of co‐operatives within the Municipality;
To assist co‐operatives to participate in programmes aimed at improving their productivity;
To contribute to sustainability of co‐operatives;
To contribute to sustainable development of co‐operative members’ communities;
To enable the Municipality to develop the co‐operatives working within Durban Metropolitan Area (DMA).
The overall outcome will enable the Municipality to implement developmental programmes intended to promote economic empowerment and entrepreneurship to the indigent people.
1.3 SOURCES OF INFORMATION
Information for formulation of this study was derived from various sources. Key amongst these was a detailed desktop study, policies and legislations, co‐operative researches, consultations and stakeholders’ interviews and analysis.
1.3.1 DESKTOP RESEARCH
Desktop research was undertaken to collect national, provincial as well as local information pertaining to co‐operatives and economic development. These include
Legislation related to co‐operatives and business development and support
Publications and research documents that deal with the co‐operative development
Annual reports and strategic documents of institutions involved in small business and co‐ operative development and support
Internet correspondence with officials involved in co‐operative development
Internet websites.
1.3.2 STAKEHOLDERS’ CONSULTATION
The process of stakeholder identification and consultation has been done throughout the Municipality. A number of the stakeholders have been identified. Some of them have been interviewed and contacted either telephonically or during the formal/informal meetings. These included co‐operative members, the eThekwini Departments that use services, provide works and market opportunities to co‐operatives, and other service providers that deal with co‐operatives as presented in the following table
Table 1 Interviews Conducted with Line Departments and other stakeholders
Line Departments | Line Departments | Line Departments |
Business Support and Market Unit | City Hall | EPW |
Community Participation and Action Support | Real Estates and Shell House | ABM ‐ Rural |
eThekwini Supply Chain Management | Market ( Bulk) | ABM ‐ Itrump |
Seda eThekwini | Parks ‐ Tongaat Areas | ABM ‐ Cato Manor |
Ithala Bank | Skills Development | ABM ‐ Ink |
Parks ‐ Pinetown South | Roads and Stormwater | City Health Dept |
Parks ‐ New Germany / Pinetown / Ashley / Sarnia | Vector Control | Regional Centre |
Parks ‐ Umbilo | Durban Solid Waste | IMS Agriculture ‐ eThekwini Municipality |
1.3.3 WORKSHOPS
A successful workshop was organised with representatives from the departments that deal with co‐ operatives in the eThekwini Municipality to provide valuable inputs during the discussions. Further a series of regional workshops were organised with co‐operative members in the following regions:
Workshop with co‐operative members from Pinetown region,
Workshop with co‐operative members from Amanzimtoti region
Workshop with co‐operative members from CBD‐‐iTrump region
Workshop with co‐operative members from Verulem region
Workshop with co‐operative members from Inanda region
Participation and deliberations of the line department representatives from that workshop provided more crucial inputs to the study in terms of constraints, vision and projects identification.
1.3.4 SURVEY
To acquire the comprehensive information representing the view of all co‐operatives in the eThekwini Municipality, one of the techniques used was to collect all available databases from various stakeholders and to proceed with interviews. The database accessed from which the co‐ operatives were drawn are presented in the following table; however, it should be noted that a central database is under construction by the eThekwini Business Support and Markets Unit that will includes all co‐operatives operating in the Municipality.
Table 2 Co‐operative Databases used for survey
No | Stakeholders | Number of Co‐operatives |
1 | Department of Economic Development and Tourism Database | 401 Co‐operatives |
2 | Xxxxxx Xxxxxxx and Kwamashu ABM Database | 64 Co‐operatives |
3 | Rural ABM Database | 29 Co‐operatives |
4 | Cato Manor ABM Database | 98 Co‐operatives |
5 | Community Participation and Action Support (CPAU) and Supply Chain Management (SCM) Database | 135 Co‐operatives |
6 | Total from all databases | 727 Co‐operatives |
7 | Duplication in databases | 43 Co‐operatives |
8 | Real Total | 684 Co‐operatives |
To conduct the survey, a call centre is set up at Urban‐Econ offices for the telephone surveys with co‐operative members. Trained field workers conducted telephone survey with all the identified co‐ operatives. Throughout the survey process, local co‐operatives where asked a number of questions approved by the project steering committee members among which their business constraints and opportunities figured.
Co‐operatives interviewed are situated in the following locations: Xxxxx Mission, Bluff, Bonella, Carrington Heights, Cato Crest, Mayville, Cato Manor, Clare Estate, Clermont, Clernaville, Dassenhoek, Durban Central, Xxxx Xxxx, Xxxxxxxxx Park, Hammarsdale, Hillary, Illovu Township, Inanda, Inchanga, Klaarwater, Kwadabeka, Kwamakhutha, Kwamashu, Kwandengezi, Lamontville, Lotus Park‐Isipingo, Mayville, Merebank, Montclair, Mount Moriah, Nagina, Azareth‐Pinetown, New Germany, Newlands East, Newlands West, Newtown‐Inanda, Ntuzuma, Phoenix, Pinetown, Reservoir Hills, Seaview‐Durban, Marianhill, Umbumbulu, Umgababa, Umkomaas, Umlazi And Verulam.
Co‐operatives interviewed operate in the following sectors: Agriculture, Farming, Art and Craft, Grass cutting and more, Baking, Manufacturing, Catering services, Reconnections, Cleaning services, Renovations, Construction, Roof cleaning, Delivery, Sawing services, Environmental maintenance, Transport & communication
1.4 REPORT OUTLINE
This report has the following sections:
the first introductory section deals with the administration part of the document,
the second section presents the broad understanding of the concept co‐operative as well as the policy framework guiding co‐operatives in the country,
the third section shows the co‐operative trends in eThekwini and concludes with a SWOT analysis
the fourth section presents the strategic framework developed for co‐operatives development in eThekwini,
the fifth section presents the implementation framework, and
the Annexure.
SECTION 2 THE CO‐OPERATIVE ENVIRONMENT
2.1 UNDERSTANDINGS THE CO‐OPERATIVE SECTOR
2.1.1 DEFINITION OF CO‐OPERATIVE
In its most basic form co‐operatives refer to an autonomous association of persons united voluntarily to meet their common economic and social needs and aspirations through a jointly owned and democratically controlled enterprise organised and operated on co‐operative principles1.
Co‐operatives vary from relatively simple organisational structures to extremely complex ones. The definition above is therefore an intended as a basic statement describing the most fundamental principle of a co‐operative. The description does not cater for the most complex and extended forms of co‐operatives. It is intentionally broad in scope, recognizing that members of the various kinds of co‐operatives will be involved differently and that members must have some freedom in how they organise their affairs. This definition emphasises the following characteristics of a co‐operative:
1. The co‐operative is autonomous – it is as independent of government and private firms as possible
2. It is an association of persons. Co‐operatives are free to define ‘persons’ in any legal way they choose – individual and or legal persons
3. The persons are united ‘voluntarily’. Membership should not be compulsory. Members should be free to join or to leave
4. Members of a co‐operative ‘meet their common economic, social and cultural needs’. Indeed in the future helping to provide a better way of life – cultural, intellectual and spiritual – may become one of the most important ways in which the co‐operatives can benefit their members and contribute to their communities
5. The co‐operative is a ‘jointly‐owned and democratically‐controlled enterprise’. Within the co‐ operative control is distributed among members on a democratic basis. The dual characteristics of ownership and democratic control are particularly important in differentiating co‐operatives from other kinds of organisations.
2.1.2 PRINCIPLES OF CO‐OPERATIVES2
Many people understand principles as ironclad commandments that must be followed literally. In one sense that is true in that Principles should provide standards of measurement. In another sense, they should restrict, even prohibit, certain actions while encouraging others.
The Principles that form the heart of co‐operatives are not independent of each other. They are subtly linked; when one is ignored, all are diminished. Co‐operatives should not be judged
1 Co‐operative Act No 6 of 2013
exclusively on the basis of any one principle; rather they should be evaluated on how well they adhere to the principles as an entirety.
The first three principles essentially address the internal dynamics typical of any co‐operative; the last four affect both the internal operations and the external relationships of co‐operatives.
1st Principle: Voluntary and Open Membership
Co‐operatives are voluntary organisations; open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.
2nd Principle: Democratic Member Control
Co‐operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co‐operatives members have equal voting rights (one member, one vote) and co‐operatives at other levels are organised in a democratic manner.
3rd Principle Member Economic Participation
The most important aim of a co‐operative is to provide services to its members. The goal of a co‐ operative is to provide services to its members at affordable prices, or to create work for its members. The needs of members come first. The members of a service co‐operative may want to market their products at a good price, they may want to buy goods at a bargain, or they may want to be able to get a loan at a reasonable interest rate.
Any service provided by a co‐operative must be provided mainly to its members. Members contribute to the “capital” of their co‐operative and control the economic affairs of the co‐operative in a democratic way. Capital is the money and equipment the co‐operative uses to carry out its goals. Some (and possibly all) of the capital the co‐operative uses actually belongs to the members, usually in the form of shares and bonus shares. Each member invests some money and receives some shares in return. The shares show that the member owns some of assets (the money and property) of the co‐operative. Any other capital the co‐operative uses belongs to co‐operative as a whole.
4th Principle: Autonomy and Independence
Co‐operatives are autonomous, self‐help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co‐operative autonomy.
5th Principle: Education, Training and Information
Co‐operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co‐operatives. They
inform the general public—particularly young people and opinion leaders‐‐about the nature and benefits of co‐operation.
6th Principle: Co‐operation among Co‐operatives
Co‐operatives serve their members most effectively and strengthen the co‐operative business by working together through local, national, regional, and international structures.
7th Principle: Concern for Community
While focusing on member needs, co‐operatives work for the sustainable development of their communities through policies accepted by their members.
2.1.3 DIFFERENCE BETWEEN CO‐OPERATIVE AND OTHER BUSINESS
Co‐operative organisations differ from other businesses in three key ways:
A Different Purpose: co‐operatives have to meet the common needs of their members, whereas most investor‐owned businesses exist to maximize profit for shareholders.
A Different Control Structure: co‐operatives use a system of one‐member/one‐vote, not one‐vote‐ per‐share. This helps them to serve common interests and to ensure that people, not capital, control the organisation.
A Different Allocation of Surplus System: co‐operatives share surplus among their member‐owners on the basis of how much they use the organisation, not on how many shares they hold.
Values, principles, ethics and business competence constitute the co‐operative advantage for members and for the communities in which they operate. Co‐operatives put people first – they are member‐owned; they are controlled under democratic principles; and they are competitive enterprises which are at least as efficient in their business operations and use of capital as others in the market place.
2.1.4 FORMS OF CO‐OPERATIVES
The South African Co‐operative Act makes recognises three basic forms of co‐operatives:
Primary co‐operative: primary co‐operative means a co‐operative whose object is to provide employment or services to its members and to facilitate community development formed by a minimum of five natural persons or two juristic persons or a combination of any five persons whether natural or juristic.
Secondary co‐operative: secondary co‐operative is made of a minimum of two operational primary co‐operatives. The main function of a secondary co‐operative is to provide support services to primary co‐operatives. Secondary co‐operatives can also be deemed to be sectoral or federal bodies. Primary co‐operatives could affiliate to more than one secondary co‐operative for support services.
Tertiary co‐operative: tertiary co‐operative means a sectoral or a multi‐sectoral co‐operative whose members are secondary co‐operatives and whose objectives are to advocate and engage the organs of state, the private sector and stakeholders on behalf of its members in line with its sectoral or geographical mandate.
Apex co‐operatives: apex co‐operatives are made of a minimum of three sectoral operational tertiary co‐operatives that operate at national level; and five operational multi‐sectoral tertiary co‐ operatives that operate at the provincial level.
2.1.5 TYPES OF CO‐OPERATIVES
Many different types of co-operatives can be developed and are also found in practice. Some of the more popular types of co-operatives are listed below. This is however not an exclusive list and other types and combinations of types of co-operatives may be found.
Agricultural co‐operatives: an agricultural co‐operative produces, processes or markets agricultural products; it might also supply agricultural inputs and services to its members.
Consumer co‐operatives: a consumer co‐operative buys goods/services (for example, groceries) and sells them to its members at a special discount. These co‐operatives can also sell to non‐members to improve the viability of the enterprise. Only members, however, will benefit from any surplus that the co‐operative makes.
Marketing and supply co‐operatives: these co‐operatives supply production inputs to members and market and/or process their members' products. An example is a sewing co‐operative that provides fabric and sewing machines to its members, and then markets the items that members sew.
Housing co‐operatives: a housing co‐operative can operate as either a primary co‐operative or a secondary co‐operative. As a primary co‐operative, it would provide housing to its members. As a secondary co‐operative, it would provide technical services to primary housing co‐operatives.
Financial services co‐operatives: these are primary co‐operatives that provide financial services (such as banking, insurance or loans) to members. In a savings and loan co‐operative, for instance, members pool their savings and make loans to each other.
Social co‐operatives: a social co‐operative provides social services to its members, such as care for the elderly, children and the sick.
Burial society co‐operatives: these societies provide funeral benefits to members and their dependents, such as funeral insurance
Service co‐operatives: these are co‐operatives that solely or primarily render services (such as housing, financing, insurance, artificial breeding, electricity, or telephone) as distinguished from handling commodities.
Workers’ co‐operatives: a worker co‐operative provides employment to its members by running enterprises in which workers are both employees and decision‐makers.
2.1.6 ROLES OF CO‐OPERATIVE
According to the World Bank, co‐operatives have three major roles to contribute to development and poverty alleviation including opportunity, empowerment and xxxxxxxx0.
Opportunity means that poor people have the chance to lift themselves out of poverty and all the other forms of deprivation that go with it. On the supply side, opportunities are created when economic growth is stimulated and markets are made to work for poor people. On the demand side, poor people must have the capacity to take advantage of the opportunities, and this means building self‐confidence through education, training, and self‐organisation. Co‐operatives have a contribution to make both on the supply and demand sides. They open up markets by organising supply of inputs and marketing of outputs. They provide a means by which credit can be given when needed, and a safe form in which poor people’s savings can be invested. Because they tend, through natural extension, to federate into larger bodies, national and international markets can be opened up.
Empowerment is defined as ‘the expansion of assets and capabilities of poor people to participate in, negotiate with, influence, control, and hold accountable institutions that affect their lives’. It means expanding the freedom of choice and action to shape one’s life. In the development process, it means that wherever possible poor people should have as much control as possible over the resources being invested, and over the decision‐making process. Four elements that are usually present in successful efforts at empowerment include access to information, inclusion and participation, accountability and local organisational capacity.
Security means taking measures to reduce poor people’s vulnerability to risks. There are natural risks such as from flooding, droughts or earthquakes, health risks from epidemics, personal injuries or the effects of old age, social risks from crime, domestic violence, civil strife or war, political risks from riots and coups, and environmental risks from pollution or deforestation. They can occur at the micro or macro levels, affecting individuals, villages or entire countries.
2.2 BEST CASE EXAMPLES OF COOPERATIVES 4
3 Rediscovering the co-operative advantage, Poverty reduction through self-help, by Xxxxxxxx Xxxxxxxx International Labour Office, Geneva, Co-operative Branch, 2003
4 The DTI Integrated Strategy on the Development and Promotion of Cooperatives, Promoting an Integrated Cooperative Sector in South Africa 2012 – 2022
The cases presented here illustrate the relationship between the co‐operatives and poverty reduction. The examples used come from both developed and developing world and are selected to best illustrate how co‐operatives alleviate poverty.
2.2.1 INTERNATIONAL BEST CASE EXAMPLES OF COOPERATIVES
2.2.1.1 CANADA
The model that Canada has adopted for cooperatives development involves a strong partnership between the state and the cooperatives movement. The state provides a highly‐enabling environment for vibrant cooperatives to operate, through a legislative framework that promotes strict adherence to international cooperative principles. This has proven to be highly effective and a favourable tax regime for cooperatives. The legislative framework covers federal and provincial levels, with alignment to federal and provincial programmes, and the effective co‐ordination thereof. Co‐ordination is managed via the Cooperative Secretariat – an intergovernmental forum for all departments that have legislation, policies and strategies for cooperatives.
The Canadian model targets the entire value chain of cooperatives, including credit unions (over US$200 billion in assets; agricultural ($9,6 billion turnover in 2003), consumer ($7,3 billion in assets), housing cooperatives ($5,7 billion in assets), insurance (over $16 billion in assets), and worker cooperatives ($343 million in assets). While all the sectors are performing well, on average, the most successful co‐ operative sector is that of the credit union. The least‐performing is that of the worker sector. The sectors were established via initial government support and are now totally self‐ reliant, except for the housing and the worker sectors. In the housing sector, government still subsidises levies for low‐income families and in the worker sector, the government partners with the cooperatives movement to provide funding for the establishment of new worker cooperatives and expansion of existing ones. Success factors in this regard include the following:
Effective coordination among government departments;
Strong partnership with the cooperatives movement;
Formation of secondary cooperatives for each sector, to drive their development;
Formation of cooperative study centres at universities, to provide education and training; and
Conduct research and perform comparative studies on cooperatives.
2.2.1.2 SPAIN
The model that Spain has adopted for promoting cooperatives is one in which the state leads. Under the Spanish Constitution, the government is obliged to promote cooperatives. The lead department for cooperative development in the Spanish government is the Department of Labour. The Department works with other entities, under the auspices of a Cooperatives Advisory Council. This comprises the Presidency, representatives of the autonomous regions, cooperative associations, and the Departments of Economics, Finance, Education, Agriculture, Housing and Transport.
The Cooperative Apex Organisation represents the entire cooperatives movement in Spain, comprising 23 organisations, and representing 47 000 cooperatives and other associations. The Organisation represents two million workers and a further 10 million, who are involved in the social economy movement. The primary role of the Apex Organisation is to lobby government on policy issues, while it also receives subsidies from government on a cost‐sharing basis. Cooperatives have emerged in the consumer, credit, transport, education, production (worker) and agriculture sectors. The most successful cooperative sector is that of the worker cooperatives, due to the fact that the Spanish government has deliberately focused on growing worker cooperatives as a means of creating employment. Partial grants have been introduced to help the unemployed form cooperatives. The youth, women, disabled persons, immigrants and select minority groups receive larger grants. If a person is retrenched, and elects to join a cooperative, the government pays his/her unemployment insurance in one lump sum, which can then be invested in the cooperative. This encourages people to form cooperatives rather than rely on state grants.
State assistance to cooperatives also aims to ensure that these entities are properly managed, so as to improve their prospects for success in the long‐term. The tax regime in Spain encourages people to form cooperatives rather than private companies. All forms and types of cooperatives enjoy a complete tax holiday from corporate tax for the first 10 years, after which they are taxed at 10%, provided they invest 10% of their surplus in education, 20% in research or investment, and that worker‐owners of these cooperatives constitute 80% of all employees.
The University of Valencia manages a research centre and interdisciplinary division, which is a national school of excellence that studies and teaches courses on Spanish cooperatives. Academics at the University also consult with cooperatives to address any particular challenges they may face. Key success factors include effective co‐ordination among government and the cooperatives movement; government support, financially and non‐financially, for cooperatives; and the provision of education and training to cooperatives.
2.2.1.3 ITALY
The Italian cooperatives movement is among the most successful in the world and provides good practice for closer scrutiny and examination of this sector. The cooperatives movement in Italy began in 1854, with the formation of mutual/benevolent societies. Originally, rural credit unions, dairy‐ and wine‐producing cooperatives and consumer cooperatives, were the most prevalent but the movement quickly spread to all sectors. The Department of Labour is responsible for the promotion of cooperatives and implementation of related legislation.
The cooperative legislation provides for the creation of appropriate reserves, and helps to generate solidarity funds within cooperatives. The legislation clearly spells out how surpluses can be divided, and how members can finance their cooperatives. With regard to the creation of appropriate reserves, the legislation provides the following:
Seventy per cent (70%) must be common or indivisible reserves; and
Thirty per cent (30%) can be distributed to divisible reserves, part of which can be allocated to member share capital (and, in the case of worker cooperatives, salary increases).
These reserves are exempt from taxation. Such support measures are said to be the secret of the success and growth of the cooperatives movement in Italy. With regard to solidarity funds, the following is provided under Italian legislation: it is compulsory for each cooperative to contribute at least 3% of its surplus to a national mutual/solidarity fund, which is established by the national apex organisation, Legae Coop. Legae Coop has established Coop Fond, which finances the start‐up, capacity‐building and expansion of cooperatives.
The Department of Labour, responsible for cooperatives development in Italy, has also established an additional solidarity fund, created through special legislation called the Marcori Law, which aims to save jobs in enterprises employing more than 200 workers. The fund has been extremely successful in converting existing private enterprises facing financial difficultly into workers' cooperatives. Significant measures have been adopted for the oversight of cooperatives, on terms appropriate to their nature and functions, which respect their autonomy, and are in accordance with national law and practice.
The Italian cooperative legislation encourages members of consumer cooperatives to loan to their cooperatives. This is at the heart of the success of consumer cooperatives in Italy. It specifically prescribes both the minimum and maximum amount that each member can lend to the cooperative, at an average interest, which can be increased by 1,5% above the commercial rate. However, the total loan amount cannot exceed the assets of the cooperative that is applying for a loan. All these provisions are written into the constitution of each cooperative. Recently, new provisions have been debated for non‐members to also provide money to the consumer cooperatives, and still have one vote. Consumer cooperatives can also issue cooperative bonds.
In Italy, the social cooperatives (which are worker cooperatives in the social services sector) provide services from which the government has withdrawn, or in which private companies are incapable of investing. The promotion of social cooperatives is also enforced by legislation. Special legislation promulgated in 1991 provides for two types of ‘social cooperatives’: Types A and B. The former type provides services to individuals, and the latter, to institutions (the handicapped, elderly, children, the sick and so on). Legislation prescribes that at least 40% of social cooperative’ employees must be from vulnerable groups – for example, people with substance abuse problems, the disabled, non‐ European Union (EU) citizens, etc.; and that all public contracts must be given to social cooperatives, without the need to tender. These provisions have led to massive growth of social cooperatives that have achieved a membership of more than 250 000 in recent years. Social cooperatives in Italy have contributed revenue of more than €3 billion. During the economic crisis of the 1970s, cooperatives in Italy gained in popularity because they were often the sources of steady employment. They continue to provide the bulk of the country's social services and contribute hugely to economic development.
2.2.1.4 INDIA
The Indian cooperatives movement, to date, has become one of the largest in the world. Sixty‐seven percent (67%) of households and 99% of rural communities are involved, in one way or another, in the cooperative sector.
This success can be attributed to a series of legislative instruments on cooperatives, based on the Western model, which dates back to 1904, when a commitment to develop cooperatives began in that country. In 1904, the Cooperative Societies Act was, for the first time, introduced to enable socio‐economic transformation, particularly in underdeveloped rural areas, where subsistence farmers were at the mercy of unscrupulous moneylenders – their only source of credit. In 1912, the law was amended to include all types of cooperatives across the country – a change which empowered cooperatives to implement their own laws. At the time of independence in 1947, the government considered cooperatives to be integral to poverty alleviation and the economic growth of the country, and cooperatives continue to play an important role in development in rural India. The applicable law currently is the Multi‐State Cooperatives Societies Act of 2002, which governs the movement.
The National Cooperative Union of India is the apex body that promotes cooperatives nationally and provides education and training to boost the industry. The state provides support through tax benefits and financing schemes, and an increasingly decentralised state system has promoted development initiatives at regional level. NGOs are providers of assistance, particularly in rural areas of the country.
2.2.1.5 DAIRY COOPERATIVES IN BANGLADESH5
Background
Bangladesh is a country of small farmers, who are mostly living on or below the poverty line, and who are subject to the risk of flooding by the rivers and deltas that punctuate the country’s low‐lying but fertile flood plains. One way to increase incomes is to diversify into different farm products, especially those that can bring in a regular cash income. Dairying is ideal in these respects, because it provides a daily product that can find a ready market both for milk and other milk‐derived products such as cheese and yoghurt. The initial investment in livestock is high and a system of veterinary services to maintain it is necessary.
There is the added advantage, crucial in a situation of absolute poverty, that the farmers’ families can also consume the milk, thereby contributing to the health of their children. Milk does have some disadvantages, though. It is perishable and difficult to transport. There needs to be some means of collecting small amounts from large numbers of farms daily, and distributing it effectively to urban areas, so distribution costs can be expensive. To overcome these disadvantages, private dealers often invest in dairies and convert part of the product to less perishable commodities that also have
5 Sourced from: Rediscovering the Cooperative Advantage: Poverty reduction through self-help, by Xxxxxxxx Xxxxxxxx, Cooperative Branch, International Labour Office, Geneva 2003
added value. This puts them in a position of monopoly from which they can exploit the farmers. When the distributors are able not just to fix prices but also to lend money at high rates of interest to see farmers through the bad times, or to pay for farm inputs, then the situation becomes desperate. Only cooperation by farmers in dairy cooperatives, or a system of state‐owned dairies and marketing boards with guaranteed prices, can enable them to break out of the poverty trap.
Bulk provision of services
In Bangladesh, shortly after independence in 1974 the government set up the Bangladesh Cooperative Milk Producers’ Union, as part of its Cooperative Dairy Development Programme, with financial and technical help from United Nations Development Programme (UNDP) and Food and Agriculture Organisation (FAO), and grants in kind from the Danish International Development Agency (DANIDA). The long‐term policy objective was to raise the subsidiary agricultural income of small and poor farmers in relatively remote rural areas, to strengthen support services for livestock development and to ensure the supply of hygienic milk to urban populations.
Known by its brand name ‘Milk Vita’, the cooperative provided services for milk production, collection, processing and distribution, and a comprehensive range of technical support services, from institutional development of cooperatives and credit schemes at community level to organising milk distribution in urban centres. In other words, Milk Vita broke the buyers’ Bangladesh. It became Bangladesh’s leading supplier of fresh milk and dairy products such as butter and yoghurt to the capital city, Dhaka. While at both ends of the production chain – farming and urban milk distribution
– it set up cooperatives, the company itself was run by civil servants accountable not to the farmers but to government. The dumping of imported powdered milk also affected the market adversely. Milk Vita was only just breaking even and, when provision for depreciation and loan interest was made, was actually making a loss and in constant need of subsidy.
Training and commitment
In 1991 the government withdrew, leaving the Union to be run by an independent board of directors, elected mainly by the 390 village primary milk cooperative societies, and by a newly appointed group of professional managers. The transition to a genuine farmer‐owned cooperative was a difficult one, but it was made easier by an ongoing commitment to management training and technical help with animal health, processing and marketing from the FAO, with continued funding from DANIDA. Soon
Milk Vita was in profit. A move to a more commercial business approach helped, along with a higher throughput of milk and a steep decline in the import of powdered milk. From a modest start with a membership of only 4,300 very poor, landless households, it has become a ‘successful commercial dairy enterprise’.
Poverty reduction
In 1998, 40,000 farmer members earned a total of US$9.3m from sale of 30 million litres of milk. In 2000, dividends paid to producers totalled US$1.5m. Milk Vita is planning to expand into four new areas of Bangladesh where traditional small‐scale milk production still prevails. The evidence for poverty reduction is compelling. Farmers’ earnings have increased ten‐fold, lifting the household
earnings of around 300,000 people (including family members) to well above the poverty line. The returns from farming are reliable and constant.
Furthermore, in many households the income from milk production is managed by the women, and so has a direct impact on food security and nutrition. Savings generated from the milk sales help to cushion households against flooding, and 2,200 employment opportunities have been created in the urban areas from milk distribution (1,200 employees of the primary cooperatives, 300 city milkshaw pullers, and 700 employees of the five dairy plants and the head office). In addition, urban consumers benefit from safe, pasteurized milk products.
However, there are people who are even poorer than the farmer members of Milk Vita. Landless tribal people who were living on the equivalent of twenty US cents a day were not benefiting from the dairy cooperative system. The Grameen Fisheries and Livestock Foundation, sister organisation to the Grameen Bank, began by helping these landless people to gain an income through fish farming. Then, helped by a US$3 million grant from the UNDP and technical assistance from the FAO, it began to train user groups and created veterinary and breeding services based on the Milk Vita model. Now almost 4,000 villagers have begun to earn an income from keeping cows. They are organised into 880 groups that received micro‐credit loans to buy livestock. This demonstrates that, with the right kind of technical support, even the poorest rural communities can benefit from agricultural cooperation.
2.2.2 AFRICAN BEST CASE EXAMPLES OF COOPERATIVES
2.2.1.1 THE UGANDA SHOE‐SHINERS INDUSTRIAL COOPERATIVE SOCIETY6
Background
Most people need access to formal, regulated, waged employment in which their labour and skills are recognised and rewarded, and they are allowed to negotiate collectively with their employers through trade unions. As the ILO’s programme on decent work reminds us, this is something which many people are still hoping for and will never achieve. In the developed countries shared service cooperatives have proved successful, particularly among taxi drivers and small retailers. A good example of this kind of organisation among poor people is the Uganda Shoe‐shiners cooperative.
In 1975, five people working as shoe shiners in the capital, Kampala, decided to form the Kampala Shoe‐shiners Cooperative Savings and Credit Society Ltd. Their aim was to create jobs and defend their interests against government authorities. At that time there was a military government, and cooperatives were registered under an Act that gave government direct control over them.
6 Sourced from: Rediscovering the Cooperative Advantage: Poverty reduction through self-help, by Xxxxxxxx Xxxxxxxx, Cooperative Branch, International Labour Office, Geneva 2003
In order to operate freely, the cooperative remained unofficial until 1989, when they decided to register formally. There were several reasons for this. There was a new political and economic climate favourable to civil society organisations, informality had been looked upon by suspicion by the wider population as an excuse for dishonesty, and there was an immediate need to represent informal traders against the Kampala City Council, which at that time was trying to restrict their activities.
In 1999 the cooperative changed its name to the Uganda Shoe‐shiners Industrial Cooperative Society Ltd. It now has 370 members divided into two categories: 124 full members and 246 ‘part‐timers’ who pay a reduced membership share and do not participate in every aspect of the cooperative’s activities but may use its name.
The early history of the cooperative cannot easily be told, because its informal nature means that no records are available. What can be said is that, given the political instability and lack of support for civil society institutions, this informality was a strength rather than a weakness. Formalisation led, in 1994, to the creation of a new organisational structure, with an executive committee responsible to a general assembly, supervising three sub‐committees, and regulated by the 1991 Cooperatives Act. It exercised the ‘cooperation between cooperatives’ principle by investing in the Uganda Cooperative Alliance and the Uganda Cooperative Savings and Credit Union, thereby gaining access for its members to cooperative training programmes.
Marketing and job creation
The cooperative has tried hard to expand its range of business activities and member services. As well as providing a savings and credit service, it attempted to market shoe polish and brushes, and to rent kits, and to invest in new activities such as public transport and real estate. As one commentator sums up, ‘the majority of these projects failed due to lack of financial resources’. Profitability is still a major challenge, but it has improved the quality of life of its members, and has created jobs for a large number of young people. Since 1996 women have become members, but they only represent five per cent of current membership.
2.2.2.2 KENYA7
Cooperatives are one of the pillars supporting Kenya’s economic growth since independence. In 2007 the cooperatives mobilized 31 % of the national savings. The following figures show the significant involvement of cooperatives in Kenya’s economy:
The turnover of the cooperative sector rose from Kshs. 10.9 billion to 30 billion.
63 % of Kenyans derive their livelihoods directly/indirectly from cooperative based activities.
7Sourced from: xxxx://xxx.xxx.xxx/xxxxxx/xxxxxxx/xxxxxxxxxx/xxx/xxxx/xxxxxx/xxxxxxxxx/xxxxxxxxxx/xxxxx.xxx,
Sourced from: Rediscovering the Cooperative Advantage: Poverty reduction through self-help, by Xxxxxxxx Xxxxxxxx, Cooperative Branch, International Labour Office, Geneva 2003
250 000 people are directly employed by cooperative based institutions.
38 % of agriculture‐based cooperative societies were dealing with coffee, dairy, pyrethrum and cereals in December 2006.
As an integral part of the Government strategy of wealth creation and poverty reduction, cooperatives activity cut across all the sectors of the national economy that include agriculture, finance, housing, transport, building and construction, manufacturing and distribution trade. Cooperative activities concern mainly the financial sector (44 %) and the agricultural sector (38 %).
The cooperative movement is well structured with more than 11.000 registered Cooperative Societies in 2007. The Kenya National Federation of Cooperatives is the national apex cooperative organization and eight other National cooperative organizations/institutions are bringing together cooperatives per main activity as bank, insurance, college, etc. Cooperatives are gathering at least 7 million members in Kenya.
2.2.3 SOUTH AFRICAN BEST CASE EXAMPLES OF COOPERATIVES 8
2.2.3.1 MALETSWAI WASTE & RECYCLING CO‐OPERATIVE
The Maletswai area near Aliwal North in the Eastern Cape is a poor region with few job prospects. Seventeen unemployed residents of Maletswai decided that recycling waste could help them put food on the table – and the Maletswai Waste and Recycling Co‐operative was born. With no business skills and no capital, their prospects might have seemed bleak. But that was before they asked Xxxx for help.
We developed a business plan for the co‐op, referred them to funding institutions – and financial assistance started pouring in: R500 000 from the Department of Social Development, more than R1,7 million from the National Development Agency, and R1,8 million from Buyisa‐e‐Bag. A final injection of R4.8 million has been approved by the Department of Economic Development and Environmental Affairs (DEDEA).
These funds have been used to secure land and equipment, with the support of both the local and district Municipalities. Buyisa‐e‐Bag is also planning Buy‐Back Centres at Maletswai and four surrounding townships. With the infrastructure largely in place, Xxxx turned its attention to providing business skills, training the Maletswai Co‐op members in Financial Management, Co‐ operative Governance, Co‐operative Principles, Conflict Management, and Health and Safety. As a result of these interventions, all 17 co‐op members are employed. The project is fully operational and is separating out metal cans, cardboard, plastic, paper and glass for sale to customers. When the Buy‐Back Centres become operational, another eight jobs will be created. It all goes to show that, with the right support, communities can do it for themselves.
8 Sourced from SEDA Report together unlocking the potential of SMMEs to create jobs, 2011, xxx.xxxx.xxx.xx
Photo 1 Maletswai Waste and Recycling Co‐operative
Source: SEDA together unlocking the potential of SMMEs to create jobs
2.2.3.2 SASEKANI CO‐OPERATIVE
Sasekani Cooperative, established in 2004 in Limpopo, sells eggs. They approached Xxxx to help them grow their business. Having developed a business plan, the cooperative was successful in getting a loan of R1.7 million from Old Mutual for a 12 000 capacity layer house, stock for the layers and chicks. The National Development Agency injected an additional R1.7 million for the purchase of
a delivery truck, an extra 7 000 layers and to pay salarie of 18 workers for a year.
The remainder of the money
as used to build capacity in areas such as financial man
gement,
project management and the purchase of office equipment. Seda lso facilitated the production of
marketing material and branding for the entire business. The interventions have resulted in the
cooperative getting contracts from Pick ‘n Pay, Friendly Supermarket and Makhoma Butchery. The cooperative currently employs 23 full time employees.
Photo 2 Sasekani Cooperative
Source: SEDA together unlocking the potential of SMMEs to create jobs
2.2.3.3 RULE SLATE AND TILE COOPERATIVE
Rule Slate and Tile cooperative, established in 2007 in the North W st Province,, produces s ate tiles. The waste from the slate tiles, paving and building bricks is crushed to produce crusher stones. Seda’s help has been invaluable. They were assisted to develop a business plan, which enabled the cooperative to receive R3 million funding from NEF for purchasing land and equipment. XXX also appointed a mentor to guide them on marketing, financial guidance and adm inistration. Xxxx has also funded their Financial Provision for Rehabilitation permit to the value of R60 000, helped with
the re‐registration of the Cooperative in accordance with the Cooperative Act no.14 of 2005 and produced marketing material such as brochures, business cards and display stands.
Through Xxxx’x assistance Rule Slate was able to exhibit in Botswana. NDA also injected a grant fund of R1.2 million which will assist in improving financial gearing leverage. These interventions have resulted in the business getting off the ground. It currently has 5 members, 18 employees and 50 sub‐contracted employees.
Photo 3 Rule Slate and Tile cooperative
Source: SEDA together unlocking the potential of SMMEs to create jobs
2.2.3.4 INSIMU YAMI AGRICULTURAL CO‐OPERATIVE
Insimu
Yami Agricultural Co‐operative is
the brain
child of six
young people from
Schagen,
Mbombela Municipality in Mpumalanga. The Cooperative produces macadamia nuts, a seasonal product harvested from March to September. When Xxxxxx Xxxx was offered an opportunity to purchase a 65 xxxxxx farm, they knew that they had to approach Xxxx for help. Seda offered them cooperative pre‐incorporation training and facilitated their registration as a co‐operative with CIPC.
Furthermore, we facilitated small business startup training and helped them develop a bankable
business plan. This led to ABSA bank approving a loan of R2.65 million for the purchase of the farm. Since they needed the money quickly, the Department of Land Affairs, through the Land Bank, approved a R2.8 million grant to expedite the ABSA loan. Xxxx further helped produce marketing
and promotional material to market the business, facilitated a grant through the Co‐operative
Incentive Scheme under the dti and provided them with a mentor who provides guidance on general
business management skills. I
partnership with the
Mpumalanga Agri Skillls Development and
Training, we also assigned an accredited service provider to help on technical issues relating to
farming. Xxxxxx Xxxx has created 13 sustainable employment opportunities on top of the 6 original members of the Cooperative.
Photo 4 Xxxxxx Xxxx Agricultural Co‐operative
Source: SEDA together unlocking the potential of SMMEs to create jobs
2.2.3.5 NQABAYENSIMBI POULTRY CO‐OP
The Nqabayensimbi Poultry co‐operative started in 2002 with 30 chickens in a s all mud
room that was about 18 m². Fakazile is the chairperson of t e Nqabayensimbi Po ltry Co‐
n
n
h
e
m
u
operative in Gamalakhe, Port Shepstone. Start‐up capital of R50 was
provided
by each
foundi
g co‐op member. Te
years later, the co‐op has a joining fee of R500 per member
s
m
and consists of ten member , all neatly kitted out in orange T‐shirts e blazoned with the
o
name and slogan f their business, “Fresh and Good”.
t
Curren ly their business is based in a single broiler house with three separate rooms capable
s
n
of hou ing 600 chicks. Every two weeks the co‐op purchases 200 day‐old chicks a d raises
d
them over a six‐week period. Thereafter the chickens are taken to market and sold live. It is
o
a simple business principle
based on
supply and deman
, and demand is high. The
y
Nqaba
ensimbi P
ultry co‐operative has expanded the business and has recently completed
a second broiler house that can house 800 birds.
n
t
Chicke suited
s are big business in o support income ge
frica and as a micro enterprise a poultry co‐operative is ideally eration and job creat on. The Old Mutual Foundation invested
A
n
v
R200 000 into the Nqabayensimbi Poultry Co‐operative in a joint venture with Ezem elo KZN
e
Wildlif , towards the construction of a second broiler house.
Photo 5 Nqabayensimbi Poultry co‐operative
Source: xxxx://xxxxxxxxxxxxx.xx.xx/xxxxxxxxxx/xxxxxxxxxx/xxxxxxxxxxxxx‐poultry‐co‐op/
SYNOPSIS
This sub-section started by presenting the broad understanding of the co-operative sector. The co- operative definition was provided; its principles, forms and types also were presented; the roles and advantages of co-operatives in the economy were presented; and the difference between co- operative and other business were presented. In addition, some international and local best co- operative experiences were also presented. However, the following key remarks need to be particularly highlighted:
In its most basic form co-operatives refer to an autonomous association of persons united voluntarily to meet their common economic and social needs and aspirations through a jointly owned and democratically controlled enterprise organised and operated on co-operative principles;
Compared to other small medium and micro enterprises, co-operative organisations differ in three key ways, a different purpose, a different control structure and a different allocation of surplus system;
Further, from the best cases examples presented above, co-operatives have range of roles to contribute to development and poverty alleviation including:
o The provision of bulk services to members and communities
o The provision of training and capacity building
o The provision of job opportunities
o The provision of finance and financial services to the members and communities
o The poverty reduction
2.3 CO‐OPERATIVES POLICY FRAMEWORK
2.3.1 INTERNATIONAL CO‐OPERATIVE ALLIANCE BLUEPRINT FOR A CO‐OPERATIVE DECADE JANUARY 2013
The International Cooperative Alliance (ICA) estimates that the cooperative movement brings together over 800 million people around the world. The intention of the General Assembly is that the United Nations International Year of Co‐operatives marks the beginning of a world‐wide campaign to take the co‐operative way of doing business to a new level. The ambitious plan in this Blueprint ‐ the “2020 Vision” ‐ is for the co‐operative form of business by 2020 to become:
The acknowledged leader in economic, social and environmental sustainability
The model preferred by people
The fastest growing form of enterprise
The 2020 Vision seeks to build on the achievements of the International Year of Co‐operatives and the resilience demonstrated by the co‐operative movement since the great financial collapse.
Summary of the Blueprint strategy:
Elevate participation within membership and governance to a new level
Position co‐operatives as builders of sustainability
Build the co‐operative message and secure the co‐operative identity
Ensure supportive legal frameworks for co‐operative growth
Secure reliable co‐operative capital while guaranteeing member control
Co‐operatives are better because they give individuals participation through ownership, which makes them inherently more engaging, more productive, and both more useful and more relevant in the contemporary world. The aim is to elevate participation within membership and governance to a new level.
Co‐operatives are better because their business model creates greater economic, social and environmental sustainability.
Co‐operatives are better because they are a business model that puts people at the heart of economic decision‐making and bring a greater sense of fair play to the global economy. The objective is to develop our external identity.
Co‐operatives in every jurisdiction sit within a legal framework. This framework plays a critical role for the viability and existence of co‐operatives. The Blueprint seeks to ensure supportive legal frameworks for co‐operative growth.
Co‐operatives need access to capital if they are to be established, grow and flourish. The aim is to secure reliable co‐operative capital while guaranteeing member control.
2.3.2 NATIONAL COOPERATIVE DEVELOPMENT STRATEGY 2012‐2022
The Strategy is evidence of government’s continued commitment to the promotion of cooperatives over the next ten years, i.e. 2012 – 2022. It sets out an implementation framework for the Co‐ operatives Development Policy of 2004 and the Co‐operatives Act, No. 14 of 2005, as amended. It also ensures that government, through the utilisation of various partnership models, engages in joint initiatives with all relevant stakeholders, in an effort to holistically promote strong, viable, self‐ reliant, autonomous and self‐sustaining the co‐operatives movement in the country. The strategy targets both existing and emerging co‐operatives, covering the following market segments: survivalist, micro and small to medium co‐operatives
Objectives:
Grow all forms and types of co‐operatives and the co‐operatives movement, as well as increase its contribution to the country’s GDP growth rate, economic transformation and social impact.
Promote co‐operatives as a vehicle to assist in creating decent employment and reducing poverty through income‐generating activities;
Support co‐operatives in developing their human resource capacities; understanding co‐ operative principles and values through the provision of technical, collective entrepreneurship, management and co‐operative education and training;
Strengthen co‐operative sustainability, through the provision of access to information, access to markets, business development support services, business infrastructure and institutional finance;
Increase savings and investment, through the promotion and support cooperative banks and financial services co‐operatives;
Xxxxxx co‐operation among co‐operatives, through supporting the creation of the vertical structure of co‐operatives and conducting awareness campaigns;
Raise the profile of co‐operatives as a dynamic and effective business organisation that can be utilised by individuals and communities to empower and uplift their social and economic well‐ being through awareness campaigns
Raise the profile of co‐operatives as an institution that allows the agglomeration of small‐scale economic activities (i.e. consumer co‐operatives, co‐operative banks, etc.) into massive activities, market linkages (i.e. marketing and supply cooperatives), mobilisation of captive markets (i.e. increase membership that uses the service/product of the co‐operative), as well as the enabling of vulnerable groups to compete with big market players, via feasibility studies, market research intelligence and awareness campaigns;
Aggressively promote closed co‐operatives, which constantly attract high levels of membership as captive markets, enabling them to be highly sustainable and have huge potential to contribute towards substantial economic and social impact; and
Promote co‐operatives as an effective vehicle that contributes to the development of rural and peri‐urban areas of the economy, as well as improve primarily the economic and social well‐ being of the following targeted groups: black people, women, the youth and people with disabilities.
2.3.3 NEW GROWTH PATH (NGP)
The new growth path is a broad framework that sets out a vision and identifies key areas where jobs can be created within the South African National Economy. The new growth path is intended to address unemployment, inequality and poverty in a strategy that is principally reliant on creating a significant increase in the number of new jobs in the economy, mainly in the private sector.
The new growth path sets a target of creating five million jobs by 2020. This target is projected to reduce unemployment from 25% to 15%. Critically, this employment target can only be achieved if the social partners and government work together to address key structural challenges in the economy.
The new growth path seeks to place the economy on a production‐led trajectory with growth targeted in ten ‘jobs drivers’. As a first step, government will focus on unlocking the employment potential in six key sectors and activities. These are:
Infrastructure, through the massive expansion of transport, energy, water, communications capacity and housing, underpinned by a strong focus on domestic industry to supply the components for the build‐programmes;
The agricultural value chain, with a focus on expanding farm‐output and employment and increasing the agri‐processing sector;
The mining value chain, with a particular emphasis on mineral beneficiation as well as on increasing the rate of minerals extraction;
The green economy, with programmes in green energy, component manufacture and services;
Manufacturing sectors and;
Tourism and certain high‐level services.
2.3.4 NATIONAL DEVELOPMENT PLAN (NDP)
The recently established National Planning Commission (NPC) has developed the NDP vision for 2030 for South Africa. A Diagnostic Report was released in June 2011 and sets outs South Africa’s achievements and shortcomings since 1994. The central challenges identified are:
Too few people work;
The standard of education for most black learners is of poor quality;
Infrastructure is poorly located, under‐maintained and insufficient to xxxxxx higher growth;
Spatial patterns exclude the poor from the fruits of development;
The economy is overly and unsustainably resource intensive;
A widespread disease burden is compounded by a failing public health system;
Public services are uneven and often of poor quality;
Corruption is widespread;
South Africa remains a divided society.
The commission believes that of these elements, two are of critical importance – too few people work and the standard of education available to the majority is poor. In reaction to these fundamental challenges, the NDP 2030 Vision spells out the key development areas which require focus. These are:
Creating jobs and livelihoods;
Expanding infrastructure;
Transition to a low‐carbon economy;
Transform urban and rural spaces;
Improving education and training;
Providing quality health care;
Building a capable state;
Fighting corruption and enhancing accountability;
Transforming society and uniting the nation.
2.3.5 NATIONAL INDUSTRIAL POLICY FRAMEWORK
In January 2007, Cabinet adopted the National Industrial Policy Framework (NIPF), which sets out government’s broad approach to industrialisation. The NIPF identifies a challenge in the South African labour economy. The NIPF is written with the view to create a competitive national environment for investment, create capability in Trade and Investment South Africa for investment promotion in line with global best practices and investor after care services (which it identifies as being effective in encouraging further investment); provide input into the development of incentives which take cognisance of global best practices; and to develop an effective investment monitoring and evaluation framework. The objectives of the strategy are:
To facilitate diversification beyond our current reliance on traditional commodities and non tradeable services, which requires the promotion of increased value‐addition, characterised particularly by movement into non‐traditional tradeable goods and services that compete in export markets and also against imports;
To ensure the long‐term intensification of South Africa’s industrialisation process and movement towards a knowledge economy;
To promote a more labour‐absorbing industrialisation path, with the emphasis on tradeable labour‐absorbing goods and services, and economic linkages that create employment;
To promote industrialisation, characterised by the increased participation of historically disadvantaged people and marginalised regions in the industrial economy; and
To contribute towards industrial development in Africa, with a strong emphasis on building the continent’s productive capacity.
2.3.6 INDUSTRIAL POLICY ACTION PLAN (IPAP 2)
The upscaled IPAP 2, mapping the country’s industrial development roadmap for the period 2010/11
– 2012/13, in respect of critical sectors of production and value‐added manufacturing. It has four transversal themes around which a number of interventions are built, namely industrial financing, procurement, competition policy and developmental trade policies.
The IPAP 2 also focuses on providing the necessary support for co‐operatives, in respect of business planning; training and the application of technology upgrade incentives, among other initiatives.
2.3.7 REGIONAL INDUSTRIAL DEVELOPMENT STRATEGY (RIDS)
The RIDS, which bears relevance to co‐operatives, propose the establishment of special economic zones (SEZ) – industrial parks, logistics parks, industrial estates, innovation hubs and other measures, such as promoting regional growth coalitions and supporting industrial clustering among firms, including co‐operatives, in order to xxxxxx regional industrial development.
RIDS also proposes the establishment of a Systematic Competitiveness Facility or Thematic Fund, to support innovative regional development initiatives. A component of the Fund will be a support facility for innovative start‐ups, which include SMMEs and cooperatives.
2.3.8 INTEGRATED STRATEGY ON THE PROMOTION OF ENTREPRENEURSHIP AND SMALL ENTERPRISES
The overall objective of the strategy is to adequately and effectively xxxxxx entrepreneurship and the promotion of small enterprises. There is a strong relationship between the Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises and this strategy. The relationship is one in which all government support programmes for the small business sector, which are also relevant to co‐operatives, shall also be extended to co‐operatives taking into account the specific characteristics of and differences between such enterprises.
2.3.9 BROAD‐BASED BLACK ECONOMIC EMPOWERMENT STRATEGY (B‐BBEE)
The objectives of the B‐BBEE strategy include:
achieving a substantial increase in the number of black people who have ownership and control of existing and new enterprises (i.e. through models of ESOPS, Community Trusts/Groups, Worker Co‐operatives, Stokvels, Burial Societies, etc.);
achieving a substantial increase in the number of black people who have ownership and control of existing and new enterprises in the priority sector of the economy, which government has identified in its macro‐economic reform strategy;
achieving a significant increase in the number of new black enterprises;
increasing the proportion of ownership and management of economic activities vested in community enterprises and co‐operatives;
increasing procurement from black‐owned enterprises and to strengthen the supply capacity of black‐owned firms through preferential procurement measures; and
strengthening business capacity and coordination of financing mechanism.
B‐BBEE as a South African growth strategy can be utilised in to grow co‐operative sector through the unlocking of entrepreneurial skills of the previously disadvantaged and marginalised individuals.
2.3.10 NATIONAL YOUTH ENTERPRISE STRATEGY (NYES)
The objectives of this strategy include ensuring that entrepreneurial skills, talent and experience are nurtured among young women and men, to enhance their capacity to participate in all aspects of the country’s social, economic and community life; ensuring that young women and men are recognised as a key target group of need, and a resource in the development of cooperatives and SMMEs within national, provincial and local economies; and maximising access to financial and non‐financial resources for young women and men who are in business or planning to enter business. In a nutshell, the strategy encourages and promotes youth enterprise ownership, covering all forms of enterprises, including cooperatives.
2.3.11 STRATEGIC FRAMEWORK ON GENDER AND WOMEN’S ECONOMIC EMPOWERMENT
This strategy proposes a large number of initiatives aimed at providing various kinds of support to women‐owned businesses. These measures have an effect and influence on cooperatives development and the promotion of collective entrepreneurship. These support measures include the provision of business information to women entrepreneurs; entrepreneurial education and training; financing of women entrepreneurs; involvement of women entrepreneurs in international trade; research and statistics; science and technology for women; and support for rural women.
2.3.12 THE COOPERATIVE AMENDMENT ACT 2013
The coop amendment Act 2013 amended the coop Act 14 of 2005 so as to provide for substitution and addition of certain definitions. The general provisions of the 2005 Act included the following:
To promote the development of sustainable co‐operatives that comply with co‐operative principles, thereby increasing the number and variety of economic enterprises operating in the formal economy;
To encourage persons and groups who subscribe to values of self‐reliance and self‐help, and who choose to work together in democratically controlled enterprises, to register co‐operatives in terms of this Act;
To enable such co‐operative enterprises to register and acquire a legal status separate from their members;
To promote equity and greater participation by black persons, especially those in rural areas, women, persons with disability and youth in the formation of, and management of, co‐ operatives;
To establish a legislative framework that preserves a co‐operative as a distinct legal entity;
To facilitate the provision of support programmes that target emerging co‐operatives, specifically those co‐operatives that consist of black persons, women, youth, disabled persons or persons in the rural areas and that promote equity and greater participation by its members;
To ensure the design and implementation of the co‐operative development support programmes by all the agencies of national departments including but not limited to Khula, NEF, NPI, SEDA, IDC, SAQI, SABS, CSIR, PIC, DBSA, SALGA and SETA'S, and compliance with uniform norms and standards prescribed by this Act;
To ensure the design and implementation of the co‐operative support measures across all spheres of government, including delivery agencies, and adherence to a uniform framework of established norms and standards that reflect fairness, equity, transparency, economy, efficiency, accountability and lawfulness;
To facilitate the effective coordination and reporting mechanism across all spheres of government through the department.
The amendment would see the development of support institutions, such as the Cooperatives Development Agency, the Cooperatives Academy and the Cooperatives Tribunal. A key aspect of the Co‐operatives Amendment Act is the setting up of the co‐operative development agency.
The agency aims to:
Help with governance and management of the co‐operatives sector,
Lend support to the development of co‐operatives as an organised sector,
Provide financial and non‐financial support to the sector,
Provide business support services including pre‐registration support, business plan development, mentorship and after‐care to co‐operatives.
A co‐operatives tribunal will also be established. The tribunal will be tasked with handling disputes and conflicts as well as ensuring compliance with the provisions of the act. It will be placed within the department.
Other entities include a co‐operative academy to provide training and a co‐operative advisory council.
2.3.13 THE CO‐OPERATIVE POLICY OF 2004
Co‐operative policy outlines government’s broad guideline to develop and support co‐operatives. It outlines the government’s approach to defining the co‐operative enterprises as well as the policy instruments that will be utilized to achieve the objectives.
The purpose and objective of the co‐operative policy included the following:
Create an enabling environment for co‐operative enterprises which reduces the disparities between urban and rural businesses, and is conducive to entrepreneurship
Promote the development of economically sustainable co‐operatives that will significantly contribute to the country’s economic growth
Increase the number and variety of economic enterprises operating in the formal economy;
Increase the competitiveness of the co‐operative sector
Encourage persons and groups who subscribe to values of self‐reliance and self‐help to formalise
Enable such co‐operative enterprises to register and acquire a legal status/legal persona separate from their members;
Defines genuine co‐operatives for targeted support purposes
Promote greater participation by black persons, especially those in rural areas, women, persons with disability and youth in the formation of and management of co‐operatives.
Establish a legislative framework that will preserve the co‐operative as a distinct legal entity.
Facilitate the provision of support programmes that target co‐operatives that will create employment or benefit disadvantaged groups.
establishes a code of conduct for co‐operative promoters for basic principles to be respected
2.3.14 THE NATIONAL CO‐OPERATIVE DEVELOPMENT STRATEGY (2004‐2014)
The Co‐operative Development Strategy recognises the potential of co‐operative enterprises in creating and developing income‐generating activities and sustainable decent employment; developing human resources capacities and knowledge, strengthening competitiveness, increasing savings and investment; improving social and economic well‐being, contributing to sustainable human development; establishing and expanding a viable and dynamic distinctive sector of the economy and in contributing to broad‐based economic empowerment.
In the period from 2004 – 2014, the Co‐operative Development Strategy will pursue the following objectives:
Ensure the establishment of co‐operatives of all types in all sectors of the South Africa economy.
Ensure the implementation of effective support structures & programmes across all government institutions, departments & private sector
Ensure that co‐operatives are making a meaningful contribution to economic growth, employment creation, social & cultural development & income generation.
Ensure the existence of strong, viable, self‐reliant, autonomous & self‐sustaining co‐ operative enterprises.
Ensure a situation where co‐operatives are serving as effective vehicles for broad‐based empowerment e.g. ESOPS, TRUSTS, and Work Co‐operatives.
Create an enabling legislative environment exists that fosters the promotion & development of co‐operatives.
Ensure that emerging Black co‐operative enterprises are competing successfully on a national and global scale.
2.3.15 CO‐OPERATIVE BANKS ACT, NO 40 OF 2007
The general provisions of the Act include the following:
To promote and advance the social and economic welfare of all South Africans by enhancing access to banking services under sustainable conditions
To promote the development of sustainable and responsible co‐operative banks
To establish an appropriate regulatory framework and regulatory institutions for co‐ operative banks that protect members of co‐operative banks
To provide for the registration of deposit‐taking financial services co‐operatives as co‐ operative banks;
To establish supervisors to ensure appropriate and effective regulation and supervision of co‐operative banks, and to protect members and the public interest;
To establish a Development Agency for Co‐operative Banks to develop and enhance the sustainability of co‐operative banks
2.3.16 NATIONAL FRAMEWORK FOR LOCAL ECONOMIC DEVELOPMENT (2006)
LED is about promoting local approaches to respond to local needs and conditions, but also within the context of national and global economic trends and events. It aims to base economic activity on social conditions and local resources as well as regional capabilities and local competitive advantage.
The aims of LED are:
“To create robust and inclusive local economies that exploit local opportunities, address local needs and contribute to national development objectives, such as economic growth, jobs and equity”;
To eradicate poverty and create sustainable work opportunities, this can be achieved through the formation of co‐operatives in previously disadvantaged areas.
To integrate the first and second economies; and
Practising LED is about creating an enabling environment, building economic capability and facilitating productive networks at the local level”.
2.3.17 INTEGRATED AND SUSTAINABLE RURAL DEVELOPMENT (ISRD) STRATEGY (2000)
The South African Government, in consultation with a wide range of key stakeholders launched a new stage of concerted effort to improve opportunities and well‐being for the rural poor. The ISRD Strategy is designed to realize a vision that will attain socially cohesive and stable rural communities with viable institutions, sustainable economies and universal access to social amenities, able to attract and retain skilled and knowledgeable people, who equipped to contribute to growth and development. To fulfil the ISRDS’ vision complementary measures are necessary including in particular:
Human resource development and capacity building
Land reform: implement revised programme
Community based income generation projects including the formation of co‐operatives such as savings and credit co‐operatives (SACCOs)
Social assistance and safety‐nets
Rural Finance
2.3.18 KZN CO‐OPERATIVE DEVELOPMENT STRATEGY (2010)
The Draft KZN Co‐op Strategy has been developed to assist in the provision of support for co‐ operative development in the province. The KZN government through Co‐op Strategy seeks to address the unequal development of the province by reducing unemployment and poverty.
The overall aim of the strategy is to adopt a regulatory approach in the KZN Province, wherein all stakeholders can add value and can support the development of social enterprises in the form of co‐ operatives. However, the key objectives of this strategy include:
To promote co‐operatives that create decent work and wealth
To promote a culture of saving
To provide skills development
To provide financial and non‐financial support
To ensure the coordination of activities directed at the promotion of co‐operatives
To promote the establishment of co‐operatives as a means to transform the economy of the Province
Worth noting is that the draft strategy attributes the coordination of all co‐oparative activities and value chain in the province to DEDT while the implementation of all programmes is devolved to the local governments through the formulation of their own strategies and implementation mechanisms.
SYNOPSIS
The policies presented above are all relevant to co‐operatives economic development as they all promote job creation, poverty reduction, economic development and growth. Co‐operatives economic development in eThekwini needs to be developed with these above principles in mind, i.e: ensuring that the municipality creates a conducive environment to ensure effective promotion and growth of co‐operatives. eThekwini’s aim will be to work toward the achievement of the national long term vision of growing the economy and creating employment as well as skills development and innovation through many economic elements including co‐operative development, infrastructure provision, good governance, investment attraction, promotion and facilitation.
SECTION 3 ETHEKWINI CO‐OPERATIVE TRENDS
Currently, there is little information published about the co‐operatives in eThekwini Municipality. Hence, information and data included in this section comes from the survey conducted with local co‐ operatives as part of this study. Details of the survey’s process are presented in the following table.
Table 3 detailed Survey process
No | Survey Process | Number of Co‐operatives |
1 | Total Number of co‐operatives surveyed | 727 |
2 | Co‐operatives duplicated in more than one database | 43 |
3 | Real Total | 684 |
4 | Co‐operatives interviewed | 296 |
5 | Closed co‐operatives | 303 |
6 | Co‐operatives not willing to participate in the survey | 37 |
7 | No responses and wrong numbers | 48 |
In order to get a comprehensive profile of co‐operatives in eThekwini, the survey used a number of questions that interrogated the duration of the existence of co‐operatives, their specialisation or kind of work/services they do, the level of education for both their leadership and their ordinary members, the sources of their works or markets, their future market opportunities, their challenges as well as their expectations from eThekwini.
3.1 CO‐OPERATIVE DURATION OF EXISTENCE
As per the following figure, majority of co‐operatives in eThekwini Municipality have been operating for three to six years. This indicates and illustrates that eThekwini Municipality has a conducive environment for business stability and growth.
Figure 1 Business Durations
Source: Urban‐Econ 2014
3.2 CO‐OPERATIVES WORKS AND SERVICES PROVIDED
Co‐operatives in eThekwini Municipality, as presented in the following table, provide a variety of activities to their clients that cross cut many economic sectors.
Table 4 Co‐operative Business Focus
Services/sectors | Services/sectors |
1) Agriculture | 2) Farming |
3) Art and Craft | 4) Grass cutting and more |
5) Baking | 6) Manufacturing |
7) Catering services | 8) Reconnections |
9) Cleaning services | 10) Renovations |
11) Construction | 12) Roof cleaning |
13) Delivery, | 14) Sawing services |
15) Environmental maintenance | 16) Transport & communication |
Source: Urban‐Econ 2014
The dominant sectors include construction (24.4%), cleaning services (18.9%), catering services (12.2%) and agriculture (11.1%) as presented in the following figure. It should be indicated that construction sector here includes house building, house renovation, plumbing, roof maintenance, tilling, plastering, bricklaying, carpentry and ceiling.
Figure 2 Co‐operatives per Services/Sectors (%)
Source: Urban‐Econ 2014
3.3 LEVEL OF EDUCATION
The level of education of co‐operative members has been presented separately for both co‐ operative leaders and ordinary members. As shown in the following figure, more than half of the co‐ operative leaders in eThekwini Municipality are people who have studied and completed the secondary school level. Others have completed secondary school and have done tertiary education. A small number of them have completed the tertiary education.
Figure 3 Level of Education for co‐ops leadership
Source: Urban‐Econ 2014
However, the survey indicates that the majority of ordinary co‐operative members in eThekwini Municipality are people who have completed the primary schools and lower secondary schools as shown below.
Figure 4 Level of Education for co‐ops ordinary members
Source: Urban‐Econ 2014
Comparing the two preceding figures related to the education level, it is worth saying that co‐ operatives in eThekwini have strong and educated leadership base capable, with the help from other stakeholders, of developing co‐operative movements in the area.
3.4 SKILLS REQUIRED BY CO‐OPERATIVE MEMBERS
In eThekwini Municipality, co‐operative members have indicated the need for certain skills in order to improve and grow their co‐operatives. However, despite the general and specific skills required, there also were two extreme poles in skills need: on one side some co‐operative members exceptionally have indicated that they do not need any training at the moment, on the other side other co‐operative members pointed out that they need all sorts of trainings related to co‐operative development.
Table 5 eThekwini Co‐operative Skills Needed
General Skills Needed | Specific Skills Needed | Extreme Poles |
1) Project management skills | 1. Glass manufacturing skills | All trainings needed |
2) Marketing skills | 2. Grass cutting skills | No training is needed |
3) Tender forms and proposal writing skills | 3. Agricultural and Organic farming skills | |
4) Book keeping skills | 4. Advanced cooking skills | |
5) Business management | 5. Butchery management skills | |
6) Computer skills | 6. Baking skills | |
7) Financial management | 7. Tour guiding skills | |
8) Entrepreneurship skills | 8. Wiring skills | |
9. Plumbing and Building skills | ||
10. Craft work skills | ||
11. Events management skills | ||
12. Chemical trainings for cleaning | ||
13. Needle work skills |
Source: Urban‐Econ 2014
Presenting the skills needed in terms of the number of co‐operatives in eThekwini Municipality, the survey indicates that business management and financial skills are the most needed skills for the majority of co‐operatives.
Figure 5 Co‐ops Skills required (%)
Source: Urban‐Econ 2014
3.5 CO‐OPERATIVES’ SOURCE OF WORKS
Currently eThekwini co‐operatives receive works from a large number of stakeholders that include the national, provincial and local governments, public sector and private companies as presented in the following table.
Table 6 Source of Works for eThekwini’s Co‐operatives
Current Source of Works/Markets | Current Source of Works/Markets |
1. Community and private companies | 2. Sport and recreation |
3. Department of education | 4. National government |
5. Department of health | 6. Provincial government |
7. Department of transport | 8. Municipality |
9. Durban city hall | 10. Private sector |
11. Road maintenance | 12. Others (Not disclosed) |
Source: Urban‐Econ 2014
In terms of the number of co‐operatives per source of work, the majority of co‐operatives in eThekwini get work from the municipality’s procurement as well as from the private sector as shown in the following figure.
Figure 6 Co‐ops Sources of Works
Source: Urban‐Econ 2014
3.6 CO‐OPERATIVES’ FUTURE MARKETS
The survey has indicated that co‐operatives in eThekwini Municipality expect more work opportunities from a variety of sectors as presented in the following table.
Table 7 Future Market Opportunities
Future Source of Works/Markets | Future Source of Works/Markets |
1. Agriculture | 2. House building and plumbing |
3. Bakery | 4. Ice cream sales |
5. Catering | 6. Manufacturing |
7. Cleaning service | 8. Opening a butchery |
9. Construction and Renovations | 10. Painting |
11. Environmental maintenance | 12. Plumbing and Unblocking drains |
13. Events and Project management | 14. Sawing uniforms for schools and hospitals |
15. Electricity reconnections | 16. Supplying stationary |
17. Grass cutting, Garden maintenance and Sites clearing | 18. Government tenders |
19. Glass fitting and window repairs | 20. Transport & delivery |
21. Glass manufacturing | 22. |
Source: Urban‐Econ 2014
However, the majority of these co‐operatives indicated that their future market opportunities lies in cleaning services, construction, catering services and grass cutting as presented in the following figure
Figure 7 Co‐ops Future Market Opportunities
Source: Urban‐Econ 2014
The Local economic Development strategies developed in areas within the eThekwini Metropolitan Area indicated that the eThekwini Municipality has a number of business opportunities that co‐ operatives may grasp. These include the following:
intensive agricultural project focused on vegetables, herbs and flowers;
agricultural processing of fruits and vegetables;
manufacturing including clothing, shoes, car services, car panel beating, car security and audio systems, car seat cover sewing and furniture;
construction including tilling, house building, and plumbing;
services including cleaning, grass cutting and security services (guards);
trading including wholesaling and retail;
tourism including art and craft making and tour guiding.
3.7 UNDERSTANDING OF TENDER PROCESS
A large portion of the current as well as the future market opportunities for co‐operatives in eThekwini lies in government related tenders. That is why it was essential to verify whether co‐ operative members understand the government tender processes. However, as per the following figure, 41.2% of co‐operatives do not understand the tender procedures in eThekwini.
Figure 8 Co‐ops Understanding of the Tender Process
Source: Urban‐Econ 2014
However, despites the fact that the large number of co‐operatives understand the tender processes, an overwhelming majority (96.7%) of co‐operative members in eThekwini still want workshops and training on tender procedures as presented in the following figure.
Figure 9 Need for Tender Workshops/training
Source: Urban‐Econ 2014
3.8 GROWTH STATE OF CO‐OPERATIVES
The following figure indicates that a small number of co‐operatives (12.2%) in eThekwinin is growing and the mojority of them (54.4%) is stagnant.
Figure 10 Co‐operatives Average Growth
Source: Urban‐Econ 2014
3.9 MAJOR BUSINESS OBSTACLES
The KwaZulu‐Natal Co‐operatives Development Strategy indicated that a large number of the co‐ operatives (95%) that have been established in the Province have failed. This trend also applies to the eThekwini’s co‐operatives. The main reasons for the failure of co‐operatives may be attributed to a variety of challenges related to the management of co‐operatives, business development as well as other inopportune challenges as presented in the following table. It should be indicated that challenges presented in the table below came from the survey organised with co‐operatives in the eThekwini Municipality.
Table 8 eThekwini Co‐operatives’ Major Obstacles
Management Issues | Business Development | General/Others |
1. Lack of networking with other co‐ operatives and stakeholders | 1) Shortage and breaking of business equipment | a. Corruption and nepotism inside the municipality in terms of co‐operatives appointment and poor maintenance of their database |
2. Losing members or members giving up | 2) Not enough resources to efficiently work | b. Co‐operatives are being neglected by the Municipality mainly because officials have a bad image regarding co‐ops |
3. Lazy members who do not want to work | 3) Not getting enough profit | c. Not knowing the appropriate departments to address queries or to look for market opportunities |
4. No co‐operation between members | 4) No Business premises | d. The strikes and the world cup have disrupted co‐ operatives efficient running/functioning |
5. Members do not have time for the co‐op and are not interested in co‐operative issues | 5) Difficult to get markets and contracts | e. Red tape from government on: Tender applications and approvals Information sharing and flow Annual changes of tender application forms Delay in payment by the municipality after co‐operatives have done the job which leads to co‐op members to fight amongst each other. Loss of payment invoices within the municipality which also cause a delay in payment In most cases, it is the municipality that determines how much they will pay the co‐ ops without negotiating with them e.g. 16 cents a square meter for grass‐cutting co‐ ops Maintenance of equipment getting more |
6. Members live far from each other and cannot attend meetings | 6) Difficult access the loans from banks | |
7. Reluctance from members in paying their membership fees | 7) Do not understand how the business work | |
8. Business skills shortages (shortage of technical skilled workers) | 8) No co‐operative insurance | |
9. Limited time dedicated for meetings with co‐operative members. | 9) Some large businesses are not familiar with using co‐ operatives as sub‐contractors | |
10. High level of competition with well‐ established business, no room for co‐ops | 10) Sidelining co‐operatives or bad image attached to doing business with co‐operatives | |
11. Not knowing how to quote: co‐operatives do not have the necessary skills when it comes to quoting for the work done. | 12 Difficult to register co‐operative in various Municipal databases | |
11) Limited access to finance and financial issues: |
They under‐quote their work and not making profit to sustain the co‐operative | Co‐operative members are black‐listed and cannot access finance and other advantages, Banks want security to cover the loan when lending money to co‐operatives and lots of documents that co‐operatives do not have’ Most co‐operatives do not have the necessary skills to write an acceptable business plan, co‐operatives do not have fixed contracts in place to secure funding, co‐operatives do not have the 10% that is required by DTI before funding co‐operatives, Most co‐operatives do not have the start‐up capital required to start their co‐operatives Most co‐operatives do not know which other institutions they can approach when trying to access funding and how to fill‐in the documents required by financial institutions. | expensive e.g. price of petrol has gone up but the square meter is still 16 cents. |
Source: Urban‐Econ 2014
The preceding table has presented a large number of challenges that currently co‐operatives are faced with in eThekwini. This indicates that a solution driven and an implementable co‐operative strategy is a must if eThekwini Municipality wants indeed to adhere to its constitutional obligation of promoting socio‐economic development in its area of jurisdiction.
3.10 KEY NEEDS OF CO‐OPERATIVES
Co‐operatives in eThekwini Municipality indicated their needs as derived from the constraints that they are currently facing in running their businesses. In other words, the needs of the co‐operatives also represent the challenges that they face. These needs and challenges are grouped into managerial needs, business development needs and others as presented in the following table.
Table 9 Co‐operatives Needs for Growth
Management Needs | Business development Needs |
1. Training in: Information technology Tender process Functionality of co‐operative And other technical trainings (sawing, quoting, IT, Butchery,) | 1) Open business opportunities to all co‐ operatives |
2. Co‐operatives from same field to be grouped into a secondary co‐operative | 2) Financial assistance |
3. Mentor co‐operatives | 3) Work and business premises |
4. Establish co‐operatives forum | 4) Assist co‐ops with work material |
General/Other Needs | |
a. Record all co‐operatives in the data base | |
b. Workshop to fight corruption | |
c. Pay visits to co‐op sites and see how they struggle | |
d. Give priorities to new established co‐operatives rather than existing ones | |
e. Stop sidelining co‐operatives | |
f. Give co‐operatives an amount of money every month | |
Source: Urban‐Econ 2014
In summary, it should be noted that the eThekwini Municipality has put a great effort and resources to mobilise and form co‐operatives as a means of alleviating poverty in its area. However, the co‐ operatives’ survey has indicated that only a small number of co‐operatives (12.2%) in eThekwinin is growing and the mojority of them (54.4%) is stagnant. Therefore, more work still need to be done in
order to avoid the waste of this great effort and resources that have been spent in promoting co‐ operatives’ development.
3.11 CO‐OPERATIVE SUPPORT SERVICE PROVIDERS
Governments at all levels recognise that co‐operatives play an important role in the growth of the local economy. For this reason, governments play an important role in supporting co‐operative development and in providing them with an environment in which they can flourish. This sub‐section presents the national, provincial as well as the local service providers.
3.11.1 NATIONAL AND PROVINCIAL SERVICE PROVIDERS
The main national and provincial stakeholders that deal with co‐operative development are the following:
The Department of Social Welfare,
Department of Small business development,
South African National Apex Co‐operative (SANACO),
The National Empowerment Fund (NEF),
National Small Enterprise Financial Agency (SEFA)
The Industrial Development Corporation (IDC),
Micro‐Agricultural Financial Institute of South Africa (MAFISA),
Women Entrepreneurs Fund (WEF),
National Youth Development Agency (NYDA):
The Department of Agriculture and Environmental Affairs,
The Department of Trade and Industry,
KwaZulu‐Natal Department of Economic Development and Tourism (KZN DEDT),
Ithala Development Finance Corporation,
Small Enterprises Development Agency (SEDA),
Further Education and Training (FET) institutions,
Non‐government organisations,
Provincial Small Business Development Agency (SBDA),
Co‐operative Bank Development Agency (CBDA),
University of Zululand, faculty of Commerce, Administration & Law.
3.11.2 ETHEKWINI CO‐OPERATIVE SERVICE PROVIDERS
In eThekwini Municipality, the key co‐operative service providers include the following
Table 10 Key eThekwini’s co‐operative service providers
NO | SERVICE PROVIDER | SERVICE PROVIDED | |
1 | Business Support, Tourism | | The overall management and coordination of co‐operatives’ |
and Market Unit | development in the eThekwini Municipality, | ||
| Bridging the gap between co‐operatives and their challenges, | ||
| Bridging the gap between co‐operatives and SMMEs, | ||
| Through facilitation, liaising co‐operatives with other stakeholders | ||
to access existing services, | |||
| Empowering people and communities to form co‐operatives, | ||
| Referring co‐operatives to the Line Departments for work. | ||
2 | SEDA‐eThekwini | | Provision of training, |
| Provision of mentorship programme, | ||
| Assisting co‐operatives to access markets, | ||
| Assisting co‐operatives to access information, | ||
| to facilitate networking between co‐operatives themselves and | ||
with stakeholders, | |||
| Provision of business infrastructure including co‐operative | ||
incubators. | |||
3 | IMS Agriculture ‐ | | Provision of training, |
eThekwini Municipality | | Assisting co‐operatives with seeds for agriculture, | |
| Provision of garden tools, | ||
| Provision of advisory services, | ||
| Provision of rain water harvesting tanks. | ||
4 | Area Based Managements | | Provision of training |
| Assisting co‐operatives to register | ||
| Mentoring co‐operatives | ||
| Provision of information to co‐operative through workshops | ||
| Provision of markets by buying goods from co‐operatives | ||
| Provision of work to co‐operatives including catering services and | ||
renovation/construction work | |||
| Provision of work to co‐operatives including stream cleaning, grass | ||
cutting, pavement renovation | |||
5 | Ithala Bank | | Provision of fund |
6 | Supply Chain Management | | Provision of work to co‐operatives including cleaning, grass cutting etc. |
7 | Parks | | Provision of work to co‐operatives including grass cutting, the |
overgrown verges, and cleaning of beaches. | ||
8 | City Hall | Provision of work to co‐operatives including cleaning services, messenger/courier services and catering services |
9 | Real Estates | Provision of work to co‐operatives including cleaning services |
10 | Skills Development | Provision of Training, Provision of work including cleaning services, |
11 | Roads and Stormwater | Provision of works including cleaning services |
12 | Vector Control | Provision of work to co‐operatives including stream cleaning and storm water cleaning |
13 | Durban Solid Waste | Provision of work through waste management |
14 | Expanded Public Work Programme | Provision of training Assisting co‐operative in registration |
15 | Department of health | Provision of work to co‐operatives including cleaning of offices |
16 | Regional Centre | Provision of work to co‐operatives including cleaning and gardening |
17 | Human Settlement | Provision of work to co‐operatives including construction, plumbing, etc. |
Source: Urban‐Econ 2014
3.12 SWOT ANALYSIS
This sub‐section serves as the concluding section to the Situational Analysis report and provides a breakdown of the co‐operative sector’s Strengths, Weaknesses, Opportunities and Threats (SWOT). The strengths and weaknesses are based on the present situation while the Opportunities and Threats consider the future implications of various factors. It should be noted that SWOT analysis leads to the understanding of strengths to be worked upon as well as weaknesses to be counteracted in this co‐ operative sector.
Table 11 SWOT Analysis
STRENGTHS 1. Existence of National and Provincial Co‐operative Policy, | WEAKNESSES 1. Lack of coordination between service |
Strategy and Programme | providers has resulted in difficult access to services by emerging co‐operatives. |
The co‐operative sector has backbone policy that regulates the entire sector (Act No 14 of 2005), there is a national co‐ operative strategy and there is KZN Co‐operative Development | 2. Interference of stakeholders in the internal matters of co‐operatives. 3. Limited information flow between co‐ |
Programme at the provincial level. This co‐operative framework regulates the sector and deals with co‐operatives in terms of | operatives and stakeholders. 4. Co‐operatives own challenges: co‐ops |
financial support, training and skills development, advisory | have their own challenges such as the |
services, marketing, and BEE development. | Management and Business Challenges: Lack of access to Market, to business |
2. Existence of co‐operative financial and non‐financial stakeholders A number of departments and private stakeholders deal with | premises, to business equipment and machineries, to market opportunities, to raw materials, to business transport, to |
co‐operatives trends including the business Support and Market Unit, Small Enterprise Development Agency, Ithala, Further | quality/skilled employees, to land, to Seed capital, to government grant, to business |
Education and Training, Supply Chain Management, and Area Based Managements. | advice and mentorship. |
3. Existence of training programmes for co‐operative members, | |
OPPORTUNITIES 1. Existing business opportunities in the ten set aside products from the DTI: advertising, media and communication; interior and exterior cleaning services and cleaning product supplies; clothing and textiles; computer equipment and consumable supplies; interior and exterior furniture and décor; events co‐ordination and management; maintenance, repair, construction and office space; travel co‐ordination and shuttle services; food, perishables and supplies; and stationery supplies and printing. Opportunities exist for co‐operatives to export to sister cities such as: Leeds (United Kingdom), Curitiba (Brazil), Bremen (Germany), Bulawayo (Zimbabwe), Daejeon (South Korea), Maputo (Mozambique), Le Port (Re Union Island), Nantes (France), Alexandria (Egypt), Chicago (USA), New Orleans (USA), Guangzhou (China), Oran (Algeria), Rotterdam (Netherlands), Mombasa (Kenya), Libreville (Gabon), and Los Angeles (USA). 2. Opportunities exist for co‐operatives to export to BRICS countries including: Brazil | THREATS 1. Side‐lining Co‐operatives People in the Municipality, including some officials, think that co‐operative means a black social business or social assistance. This narrow view on co‐operatives restricts and prevents many SMME support service providers to assist co‐operatives. 2. Lack of an entrepreneurship culture and reluctance to enter into the business sphere 3. Lack of innovation by business owners 4. Red Tape and corruption 5. The strikes are threatening co‐operative development |
Russia India and China. 3. Existence of the DTI co‐operative incentive scheme (eligible for a maximum total grant of R300 000 with the minimum being R10 000). 4. Existence of the DTI co‐operative Micro‐Loan Support Through Wholesaling (financial support at the lower end of the market of co‐operatives ranging from R200 to R10 000) 5. With the establishment of the special economic zones (SEZ) in eThekwini, there will be opportunities for co‐operatives to venture in: Chemical Manufacturing Transport and logistics Automotive manufacture Air transport Electronics Finance and insurance Event tourism |
SECTION 4 STRATEGIC FRAMEWORK
This strategy framework section follows the preceding situational analysis section that assessed the existing co‐operatives’ situation and trends of the eThekwini Municipality. In the conclusion of the situational analysis section, a breakdown of the eThekwini’s co‐operatives in terms of Strengths, Weaknesses, Opportunities and Threats (SWOT) was presented.
The current section deals with the formulation of a strategic framework and interventions that are necessary to turn around the current state of co‐operatives in the eThekwini Municipality. This will be achieved through the creation of a vision, mission and strategy which take into consideration the projects within the area as well as stakeholder linkages and project implementation.
The section starts by presenting the developed vision, mission and a number of principles that will be taken into consideration in the implementation of various suggested key interventions. Then comes the holistic developed strategy.
4.1 VISION 2020
eThekwini Municipality thrives to facilitate the establishment of self‐sustained co‐operatives in variety of economic sectors that will generate income, create employments and liberate people from poverty
4.2 MISSION
To set up and implement a comprehensive co‐operative support network and mechanisms that will achieve the effective establishment and development of self‐sustainable co‐operatives capable of:
1. Elevating participation within membership and governance to a new level,
2. Positioning co‐operatives in eThekwini as builders of sustainability,
3. Building the co‐operative message and securing the co‐operative identity in the Municipality,
4. Ensuring supportive legal frameworks for co‐operative growth,
5. Securing reliable co‐operative capital while guaranteeing member control.9
9 Aligned to the strategies of the Blueprint from the international Co‐operative alliance (ICA)
It should be noted that there is a need to develop a number of guiding principles that might guide the current strategy. To this extent, following principles are the key thrusts to be carried forward in this strategy.
4.3 POLICY PRINCIPLES
Bottom up approach: although one might argue that the government tries to uplift the lives of the previously disadvantaged individuals and groups through the mobilisation of people to start co‐ operatives, there is a need to understand that mobilising co‐operative using the top down approach has produced a large number of premature co‐operatives, not yet ready for the business. Co‐operatives are poverty alleviation means that help the previously disadvantaged individuals to access the mainstream of the economy. Therefore, genuine co‐operatives need to be self‐driven and subject to certain preconditions for success.
Set aside procurement: Although it is accepted that co‐operatives are businesses like any other, the eThekwini Municipality through this strategy recognises that co‐operative is a legal and form of business organisation used as a poverty alleviation mechanisms. For this reason, the eThekwini Municipality provides a number of products that are set aside specifically for co‐operatives procurement.
Determined timeframe for co‐operative assistance: government recognises the role played by co‐ operatives in job‐creation, sustainable employment and improvement of the quality of life of their members and communities around them. Government’s role is to support these initiatives ensuring that they are viable and sustainable. However, government support and assistance need to have a limited timeframe after which co‐operatives become and are be treated as normal businesses.
Harmonisation of support to co‐operatives: co‐operatives are based in local communities and affected by the government programmes, policies, laws and regulations. Co‐operatives keep people in their communities, encouraging them to mobilise resources they have within their communities. The integration of provincial and local co‐operative development support is a crucial principle underlying the development of co‐operatives. This is consistent with the decentralisation of government services and the important roles played by local authorities in the implementation of co‐operatives programmes. In other words, provincial government and departments are required to reduce and limit their direct interferences with co‐operatives; while encouraged to assist municipalities in the implementation of co‐ operatives programmes and activities.
Good understanding of co‐operatives by officials: co‐operative principles are the universally accepted guidelines by which co‐operatives put their values into practice. This needs to be recognised by government by drawing the thin line between support and control. Extensive government interference may break the co‐operative movement but government support can help create a strong co‐operative
movement in the area. Therefore, for an efficient co‐operative movement development, municipal officials need to undergo a thorough training in the deep understanding of the functioning of co‐ operatives.
4.4 AN HOLISTIC STRATEGY
This sub‐section of the report presents a developed strategy that will fulfil the vision and mission as presented above in a comprehensive way. The strategic framework also applies all the key principles important to the development of co‐operatives and to achieve the vision. However, the sub‐section starts by revisiting the information that flows from eThekwini co‐operatives’ key considerations as reported in the situational analysis section. These include:
Inefficient preparation of co‐operatives during the formation:
Although government tries to uplift the lives of the previously disadvantaged individuals and groups by the way of calling people to start co‐operatives, there is a need to understand that co‐operative remains a business like any other and requires thorough preparation during the formation stages of the co‐ operative. E.g. some co‐operatives have members who never met; other co‐operatives have members who do not understand that at some stage co‐operative must become independent from government support; others as well have members who think that forming a co‐operative is another way of accessing the governmental social grant.
Lack of effective preparation from an early stage causes many administrating and managerial challenges and is among the key elements of the failure of co‐operatives in eThekwini Municipality, and therefore needs to be adequately addressed.
Inefficient co‐operative coordination programme
The promotion of co‐operative businesses in eThekwini as a means of addressing unemployment and poverty is among the success stories in the Municipality as there is a number of registered co‐ operatives. However, the surveys organised pointed out that from the formation of these movements (co‐operatives) to their fully‐fledged business stage, through training and access to finance, co‐ operatives do not have a well‐structured coordinating mechanism in the Municipality. As newborns in the business arena and inexperienced in entrepreneurship skills, co‐operatives found themselves in a tricky adventure to run the day‐to‐day business operations. As result, majority of them fail to sustain and collapse.
Limited business and technical skills
As with other municipalities, unemployment is high in the black residential and rural areas. This is largely due to the lack of both education and skills as a result the past political era. The process of education and training is the key to social, cultural and political participation, personal and community economic
empowerment, and national development. The output of education and training is human capital, which constitutes the nation’s primary wealth and potential for growth. Therefore, illiteracy and unemployment need to be considered as threats to personal, community as well as national development.
The co‐operative surveys organised indicates that skills shortage among majority of co‐operative members has caused many problems to the development and sustainability of co‐operatives in the eThekwini Municipality. If not well addressed today, the lack of skills will continue to threaten the further growth of this sector. Therefore, there is a need to improve the skills of co‐operative members throughout the eThekwini Municipality.
In order to address the above challenges there is a need to develop a
COOPERATIVE ASSISTANCE STRATEGY.
Aligning the co‐operative assistance strategy to the NDP, the Growth and the Path Blue print Strategies from the International Co‐operative Alliance, National Cooperative Development Strategy 2012‐2022, National Industrial Policy Framework, the Cooperative Amendment Act 2013, etc. it is believed that this strategy will:
Elevate participation within membership and governance to a new level,
Position co‐operatives as builders of sustainability,
Build the co‐operative message and secure the co‐operative identity,
Ensure supportive legal frameworks for co‐operative growth, and
Secure reliable co‐operative capital while guaranteeing member control. The co‐operative assistance strategy entails the following strategic programmes:
A co‐operative assistance programme;
Procedural methodology for the co‐operative assistance programme;
Criteria for qualification for the co‐operative assistance programme;
Roles and responsibilities of stakeholders;
Central database;
Details of the strategic thrusts are presented below
4.4.1 A CO‐OPERATIVE ASSISTANCE PROGRAMME
Support for co‐operatives is part of the eThekwini’s effort to fight poverty and give more people access to economic activities and resources. The co‐operative assistance programme in eThekwini is part of the Municipal poverty alleviation mechanisms that is driven by the Business support and Market Unit.
The overall goal of the eThekwini co‐operative assistance programme is to provide an appropriate environment for the establishment and promotion of self‐sustainable co‐operatives which participate meaningfully in both the first second economy of the Municipality.
The co-operative assistance programme is a holistic and comprehensive strategy that deals with the following:
A creation of a conducive policy and legal environment,
Building of a supportive institutional system ,
Facilitation of effective operation of co‐operatives ,
Provision of capacity building and skills development for co‐operatives,
Provision of support services for co‐operatives ,
Addressing poverty.
A creation of a conducive policy and legal environment
The eThekwini Municipality has a constitutional mandate and role to play in creating a climate that is conducive for co‐operatives to operate without being frustrated by any biased policy. It should be indicated that this conducive environment needs to have few or no legal barriers to market full participation for co‐operatives in the eThekwini’s economy.
Building of a supportive institutional system
Of most importance to indicate is that the current eThekwini co‐operative value chain provides a number of significant and needed services to co‐operatives. However, there is a limited collaboration between the municipal officials who deal with the co‐operatives. Therefore, the harmonisation and coordination of institutions and stakeholders that deal with co‐operatives in the eThekwini Municipality ought to be promoted in order to efficiently manage co‐operative sector.
Facilitation of effective operation of co‐operatives
Co‐operatives need to be encouraged to get involved themselves in various sectors including the main thriving sectors of the economy of eThekwini municipality such as:
Green economies:
Solar projects
Waste buy‐back centre,
Innovative waste management,
Hydro‐power research,
Ethanol and oil from algae,
Shisa solar and green building.
Tourism sector:
Event management,
Catering,
Accommodations,
Cultural tourism.
Transport sector,
Construction sector,
Manufacturing sector,
Financial services, and
Import and export trade.10
Co‐operatives as businesses, members have to apply all required business skills and to work intensely to sustain and survive in the business sphere. The members of co‐operatives must realise that co‐ operatives are business organisations which should not depend on government assistance. They have to explore all business areas and deals from both within and from without, they have to realise that producing quality goods and services can lead to the products being demanded by outside markets. In this way co‐operatives will become financially stable.
Provision of capacity building and skills development for co‐operatives
Certain co‐operative members and stakeholders face a skills shortage in the eThekwini Municipality; while others even associate co‐operatives with charity organisations. This makes it difficult for both co‐ operative members and service providers to run and support co‐operatives efficiently
Provision of support services for co‐operatives
Co‐operatives in the eThekwini Municipality face many challenges ranging from the lack of access to funding, lack of access to market opportunities, lack of access to information and skills development, lack of access to technical skills, lack of entrepreneurship skills, lack of managerial abilities, etc. to develop co‐operative sector in the Municipality, these challenges will need to be addressed.
Addressing poverty
Some of the serious economic challenges for eThekwini Municipality remain among others the persistent high unemployment, poverty, large wealth disparities and a high incidence of HIV/AIDS. These issues in the areas of the eThekwini economy have been addressed but still need to be addressed.
10 Sourced from the eThekwini Economic Development and Job creation Strategy 2012
Therefore co‐operative development programme will be one of the mechanisms addressing the poverty issue.
Summarising the preceding arguments, the key tasks of the co‐operative assistance programme are presented in the following table:
Table 12 The co‐operative assistance programme tasks and their descriptions
No | Task | Description | |
1 | Legal Support | | Facilitating people to form co‐operatives, |
| Legal registration of co‐operatives, | ||
| Registration of Co‐operatives in the Central Database, | ||
| Assisting in the establishment of the secondary co‐operatives, | ||
| Assisting in the establishment of the co‐operative wholesales, | ||
| Assisting in the establishment of the co‐operatives in all | ||
sectors. | |||
2 | Institutional arrangement | | Facilitating the establishment of the co‐operative |
development agency, | |||
| Training of officials on the functioning of co‐operatives, | ||
| The coordination of all co‐operatives development | ||
programmes and actions, | |||
| Facilitating the establishment of the co‐operative tribunal. | ||
3 | Provision of variety support services | of | Assisting Co‐operative to venture in export especially in BRICS countries and Sister Cities [ Leeds (United Kingdom), Curitiba (Brazil), Bremen (Germany), Bulawayo (Zimbabwe), Daejeon (South Korea), Maputo (Mozambique), Le Port (Re Union Island), Nantes (France), Alexandria (Egypt), Chicago (USA), New Orleans (USA), Guangzhou (China), Oran (Algeria), Rotterdam (Netherlands), Mombasa (Kenya), Libreville (Gabon), and Los Angeles (USA)], Assisting co‐operatives to access all set‐asides products , Assisting co‐operatives to participate in up‐coming special economic zones (SEZ), Facilitating access to finance, Provision of mentorship programme, Refer co‐operatives to the Line Departments, Provision of available business equipment, Facilitating networking sessions for co‐operatives, Train co‐operatives on: o The functioning of co‐operative business |
o SARS, VAT, UIF and CIPC compliance o Business administration and management o Financial management o Human resources management o Conflict resolution o Quality control o Customer care o Technical and specific subjects/skills o Tendering skills | ||
4 | Co‐operative infrastructure development and support | Fast track the full provision of services in the incubator, Provision of the co‐operative helpline, Rehabilitation of the underperforming co‐operatives. |
Source Urban‐Econ 2014
The following table presents the alignment of the eThekwini co‐operative assistance programme to the international Co‐operative Alliance’s Strategies:
Table 13 eThekwini Co‐operative Assistance Programme and the ICA blueprint Co‐operative Strategies
TASK | DESCRIPTION OF THE ETHEKWINI CO‐OP ASSISTANCE PROGRAMME | THE INTERNATIONAL CO‐OPERATIVE ALLIANCE BLUEPRINT STRATEGIES | ||||||
Legal Support | | Facilitating people to form co‐operatives | Build the co‐operative message and secure the co‐ operative identity | |||||
| Legal registration of co‐operatives | |||||||
| Registration of Co‐operatives in the Central Database | |||||||
| Assisting in the establishment of the secondary co‐operatives | |||||||
| Assisting in the establishment of the co‐operative wholesales | |||||||
| Assisting in the establishment of the co‐operatives in all sectors | |||||||
Institutional arrangement | | Facilitating the establishment of the co‐operative development agency, | | Ensure supportive operative growth | legal | frameworks | for | co‐ |
| Training of officials on the functioning of co‐operatives, The coordination of all co‐operatives development programmes and actions, | |||||||
| Facilitating the establishment of the co‐operative tribunal. | |||||||
Provision | of | | Assisting Co‐operative to venture in export especially in BRICS countries and Sister Cities, Assisting co‐operatives to access all set‐asides products , Assisting co‐operatives to participate in up‐coming special economic zones (SEZ), Facilitating access to finance Provision of mentorship programme Refer co‐operatives to the Line Department Provision of available business tools Facilitating networking sessions for co‐operatives Train co‐operatives on: o The functioning of co‐operative business o SARS, VAT, UIF and CIPC compliance | Secure reliable co‐operative capital while guaranteeing member control | ||||
variety support services | of | | ||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
o Business administration and management o Financial management o Human resources management o Conflict resolution o Quality control o Customer care o Technical and specific subjects/skills o Tendering skills | ||
Co‐operative infrastructure development and support | Fast track the full provision of services in the incubator, Provision of the co‐operative helpline, Rehabilitation of the underperforming co‐operatives, Management of the Central Co‐operative Database, Monitoring the progress of co‐operatives, Updating information and deciding on the set aside procurement criteria for co‐operatives. | Position co‐operatives as builders of sustainability, Elevate participation within membership and governance to a new level. |
Source Urban‐Econ 2014
The following table presents the strategic actions and projects categorised per emerging co‐operatives, existing co‐operatives and those related for both categories
Table 14 Actions related to the Emerging Co‐ops, Existing Co‐ops and for both
SCENARIOS/ CATEGORIES | ACTIONS |
EMERGING CO‐OPERATIVES | 1. Facilitating people to form co‐operatives |
2. Legal registration of co‐operatives | |
3. Facilitating networking sessions for co‐operatives | |
EXISTING CO‐OPERATIVES | 4. Assisting in the establishment of the secondary co‐operatives |
5. Rehabilitation of the underperforming co‐operatives | |
6. Assisting in the establishment of the co‐operative wholesales |
SCENARIOS/ CATEGORIES | ACTIONS |
Assisting Co‐operative to venture in export especially in BRICS countries and Sister Cities [Leeds (United Kingdom), Curitiba (Brazil), Bremen (Germany), Bulawayo (Zimbabwe), Daejeon (South Korea), Maputo (Mozambique), Le Port (Re Union Island), Nantes (France), Alexandria (Egypt), Chicago (USA), New Orleans (USA), Guangzhou (China), Oran (Algeria), Rotterdam (Netherlands), Mombasa (Kenya), Libreville (Gabon), and Los Angeles (USA)]. | |
7. Assisting co‐operatives to access all set‐asides products (advertising, media and communication; interior and exterior cleaning services and cleaning product supplies; clothing and textiles; computer equipment and consumable supplies; interior and exterior furniture and décor; events co‐ordination and management; maintenance, repair, construction and office space; travel co‐ordination and shuttle services; food, perishables and supplies; and stationery supplies and printing). | |
8. Assisting co‐operatives to participate in up‐coming special economic zones (SEZ) that target the following sectors: chemical manufacturing, transport and logistics, automotive manufacture, air transport, electronics, finance and insurance, event tourism. | |
EMERGING AND EXISTING CO‐OPERATIVES | 9. Registration of Co‐operatives in the Central Database |
10. Assisting in the establishment of the co‐operatives in all sectors | |
11. Training of officials on the functioning of co‐operatives | |
12. The coordination of co‐operatives development programmes and actions | |
13. Fast track the establishment of the co‐operative development agency | |
14. Fast track the establishment of the co‐operative tribunal | |
15. Fast track the full provision of services in the incubator | |
16. Provision of the co‐operative helpline | |
17. Facilitating access to finance | |
18. Provision of mentorship programme | |
19. Refer co‐operatives to the Line Departments | |
20. Provision of available business equipment | |
21. Train co‐operatives on: The functioning of co‐operative business, |
SCENARIOS/ CATEGORIES | ACTIONS |
SARS, VAT, UIF and CIPC compliance, Business administration and management, Financial management, Human resources management, Conflict resolution, Quality control, Customer care, Technical and specific subjects/skills, Tendering skills. |
Source Urban‐Econ 2014
4.4.2 PROCEDURAL METHODOLOGY FOR THE CO‐OPERATIVE ASSISTANCE PROGRAMME
The procedure used to implement the eThekwini co‐operative assistance programme is presented in the figure below showing the following major elements:
A process of co‐operative development from an initial identification and preparation (conception and birth) phase through an incubation phase, post incubation to eventually becoming a fully‐fledged sustainable co‐operative (grown‐up phase);
It indicates that there are ranges of support services that will be provided by the key stakeholders through the institutional structuring in each phase of the development process of the co‐operatives.
A monitoring and evaluation system at the beginning and end of each phase of the process.
Figure 11 The co‐operative assistance programme process
MEET &TALK | START | BUILD | GROW |
Phases and criteria to move from one to the other step presented in this figure has been explained in the following sub‐section
4.4.3 CRITERIA FOR QUALIFICATION FOR THE CO‐OPERATIVE ASSISTANCE PROGRAMME
Entry to the any programme and access to the business‐building services usually requires a number of factors. Co‐operative for instance needs to have a real number of members, a properly constituted legal structure, a realistic business plan and a product or service that can be taken to market. The assessment process is designed to help co‐operatives reach these entry criteria so that they can benefit fully from the programme. It should be noted that the co‐operative assistance programme has the criteria for the preparation as well as for the incubation of co‐operatives.
Preparation criteria
A number of co‐operatives fail because of the lack of effective preparation from the early stage and most of them have been formed using the top‐down approach. From this top‐down approach, the individual members often mistake such co‐operatives as being government organisations, or they can even think that forming a co‐operative is another way of accessing the government’s social grant. The result of this inefficient preparation is the current large number of weak and unsustainable co‐ operatives that the Municipality has.
Therefore the required criteria during the identification and promotion of co‐operatives include the following:
identification of workers who have a large entrepreneurial potential;
identification of group of people who have a reservoir of business skills;
identification of people who have real business acumen, creativity, dynamism and innovation.
Incubation criteria
The main objective of the stage for the emerging co‐operatives is to support them in transforming their ideas into legally constituted companies with marketable finished products. The main contribution from this process is that it guarantees that co‐operatives entering the programme are “ready to be developed”. To qualify for this phase, co‐operatives need to meet the following criteria:
A legally constituted co‐operative,
A completed feasibility study,
A duly approved coherent business plan,
A product/service ready to be offered to the market (or at least a prototype).
However, it should be noted that the programme deals also with the established co‐operatives. For these ones to qualify for the eThekwini Co‐operative assistance programme the following criteria are required:
Co‐operative size in terms of the number of members and employees,
The annual turnover of a co‐operative,
Co‐operative’s asset,
The duration or a number of years of the existence of co‐operative.
It should be noted that co‐operatives will benefit assistance from the programme for a determined period (three years). It is assumed that after this period, co‐operatives are fully‐fledged, self‐sustainable and self‐reliance contributing to the economic growth and poverty alleviation of the area, its members and the country as whole.
4.4.4 ROLES AND RESPONSIBILITIES OF STAKEHOLDERS
The roles and responsibilities of stakeholders dealing with co‐operatives development in eThekwini are presented in the following table
Table 15 Roles and responsibilities of the key stakeholders
No | Stakeholders | Roles and responsibilities | |
1 | eThekwini Business Support Market and Tourism Unit | | Overall management of co‐operative development in the Municipality Legal registration of co‐operatives Management of the Central Co‐operative Database Monitoring the progress of co‐operatives, Updating information and deciding on the preferential criteria for co‐operatives To provide opportunities for co‐operatives to showcase |
| their products and services Facilitating access to finance Refer co‐operatives to the Line Department Provision of business information Provision of business tools Facilitating co‐operatives to co‐operatives and to SMMEs networking sessions Facilitating access to local, national and international markets To facilitate and provide the infrastructure and premises for co‐operatives through an incubation and rentals programme Facilitating training on: o The functioning of co‐operative business, | ||
No | Stakeholders | Roles and responsibilities |
o SARS, VAT, UIF and CIPC compliance, o Business administration and management, o Financial management, o Human resources management, o Conflict resolution, o Quality control, o Customer care, o Tendering skills, o technical training. | ||
2 | line department including: Supply Chain Management, Parks, City Hall, Regional Centre, Roads and Stormwater, Health, Real Estates, Vector Control, Durban Solid Waste, Skills Development | Contracting co‐operatives, Provision of technical training and other supports, Tendering skills. |
3 | Expanded Public Work Programme | Facilitating co‐operative registration, Contracting co‐operatives, Provision of technical training and other supports. |
4 | Area Based Management (ABMs) | Mentorship programme, Capacity building and technical training, Contracting co‐operatives and other supports, Facilitating the compliance with CIPC, SARS and others. |
5 | IMS Agriculture ‐ eThekwini Municipality | Provision of technical training, Provision of garden’s tools, Agricultural seeds, Agricultural information and advise, Provision of the rain water tanks. |
7 | Seda eThekwini | Various business trainings, Mentorship programme, Facilitating networking sessions for co‐operatives, Facilitating access to market, Facilitating access to information. |
8 | Ithala Bank | Provision of fund. |
9 | APEX/SANACO | Raising awareness about co‐operatives, Being the voice of the co‐operative movement, Ensuring that the right policy environment exists to enable co‐operatives to grow and prosper, Providing information to co‐operatives, |
No | Stakeholders | Roles and responsibilities |
Providing technical assistance to co‐operatives through its development institution. | ||
10 | Co‐operatives | Willingness to learn, Willingness to become independent businesses, Established and grown up co‐operatives need to help emerging ones with mentorship and other business advises |
Source: Urban‐Econ 2014
4.4.5 CENTRAL DATABASE
Currently there are institutions, stakeholders and programmes that support co‐operatives in eThekwini Municipality. Unfortunately, not all co‐operatives are benefiting the support from those institutions, stakeholders, and programmes. One of the reasons is that the municipality does not have a centralised co‐operative database from which they might coordinate and closely monitor the sector’s performance, thereby strategically planning for its improvement.
It is important to capture established and emerging co‐operatives records into a structured format such as a database. This will ensure the monitoring and evaluation of the performance and contribution of the co‐operatives to the GDP and will facilitate to co‐operatives an easy access to municipal tenders, programmes and other supports. However, the business Support and Market Unit’s central database is a municipal–wide and an inclusive one; therefore it does not stop other departments to have their own databases.
Key tasks of the central database include:
Keep record of co‐operatives
Assisting and provision of support services to co‐operatives
Tracing co‐operatives through:
The verification of a number of tenders awarded,
The verification of a number of training accessed,
The verification of a number of other resources and support benefited from the programme and stakeholders,
The verification of self‐sustainable co‐operatives.
4.5 TERMINOLOGY USED IN CO‐OPERATIVE ASSISTANCE PROGRAMME
Assistance programme
Co‐operative assistance programme is an integrated approach aimed at providing an appropriate environment for the establishment and promotion of self‐sustainable co‐operatives
Legally registered co‐operative
A legally registered co‐operative is understood as a co‐operative that is registered with the Companies and Intellectual Property Commission (CIPC), captured in the central database and has a PR number.
Central database
The central database is a document to register all eThekwini’s legally registered co‐operatives that will access support services from the co‐operative assistance programme. The database will help to control all co‐operative related activities in eThekwini and will be used in the monitoring and evaluation processes.
Preferential co‐operatives
Preferential co‐operatives are those that fulfil the criteria for pre‐incubation and incubation as presented above and have access to benefit from the co‐operative assistance programme.
Incubation
After the co‐operative has been formed, the purpose of the incubation phase is to establish co‐operative as a fully‐functioning open‐source business. Incubation is a business support process that accelerates the successful development of start‐up and fledgling companies by providing entrepreneurs with an array of targeted resources and services. These services are usually developed or orchestrated by business incubator management and offered both in the business incubator and through its network of contacts. An incubator’s main goal is to produce successful firms that will leave the program financially viable and freestanding. The incubator graduates have the potential to create jobs, revitalise neighbourhoods, commercialise new technologies, and strengthen local and national economies.
Critical to the definition of a business incubator is the provision of management guidance, technical assistance and consulting tailored to young growing co‐operatives/companies. Business incubators usually also provide clients access to appropriate rental space and flexible leases, shared basic business services and equipment, technology support services and assistance in obtaining the financing necessary for co‐operative/company growth.
The preceding definition reflects some of the key elements of successful business incubation:
I: Innovation & Entrepreneurship N: Networks and collaboration C: Competitiveness
U: Understanding the Roles: Public‐Private
B: Buy‐In
A: Access to resources
T: Technologies
O: Outreach
R: Review: Monitoring and Evaluation
Fully fledged co‐operative
The fully‐fledged step is not a phase, but a stage where co‐operatives are self‐sustainable. At this stage, co‐operatives are self‐reliance and contribute to the economic growth and poverty alleviation of its members, the area, and the country as whole.
4.6 RECAP OF CHALLENGES, PROGRAMMES AND KEY ACTIONS
Table 16 recaps the vision, challenges, programmes and the interventions
VISION eThekwini Municipality thrives to establish self‐sustained co‐operatives in variety of economic sectors that will liberate people from poverty | |||||
CHALLENGES | PROGRAMMES | KEY ACTIONS | INDICATORS | ||
1. Inefficient preparation of co‐ operatives during the formation | | Facilitating people to form co‐operatives, Legal registration of co‐operatives, Registration of Co‐operatives in the Central Database, Assisting in the establishment of the secondary co‐operatives, Assisting in the establishment of the co‐ operative wholesales, Assisting in the establishment of the co‐ operatives in all sectors, Training of officials on the functioning of co‐ operatives, The coordination of co‐operatives development programmes and actions , Fast track the establishment of the co‐ operative development agency, Facilitating the establishment of the co‐ operative tribunal. | Workshops CIPC and PR Nos BSMTU tracing Nos | ||
2. Inefficient co‐operative coordination programme | Workshops and researches Researches | ||||
| A creation of a conducive policy and legal environment Building of a supportive institutional system | Workshops Training attendance | |||
3. Red Tape and corruption | |||||
BSMTU co‐operatives database analysis | |||||
4. Interference of stakeholders in the internal matters of co‐operatives | |||||
Established co‐op development agency | |||||
5. Limited information flow between co‐operatives and stakeholders 6. Co‐operatives own challenges | | Provision of capacity building and skills development for co‐ operatives | | Fast track the full provision of services in the incubator, Provision of the co‐operative helpline, Rehabilitation of the underperforming co‐ | Incubator building Co‐operative helpline Rehabilitation programme developed and rolled out |
VISION eThekwini Municipality thrives to establish self‐sustained co‐operatives in variety of economic sectors that will liberate people from poverty | |||
CHALLENGES | PROGRAMMES | KEY ACTIONS | INDICATORS |
including: Management Challenges Business Challenges General Challenges (access to finance, markets, skills shortage) | Facilitation of effective operation of co‐ operatives Provision of support services for co‐ operatives | operatives, Facilitating access to finance, Provision of mentorship programme, Refer co‐operatives to the Line Departments, Provision of available business equipment, Facilitating networking sessions for co‐ operatives, Assisting Co‐operative to venture in export especially in BRICS countries and Sister Cities; Assisting co‐operatives to access all set‐asides products including: advertising, media and communication; interior and exterior cleaning services and cleaning product supplies; clothing and textiles; computer equipment and consumable supplies; interior and exterior furniture and décor; events co‐ordination and management; maintenance, repair, construction and office space; travel co‐ordination and shuttle services; food, perishables and supplies; and stationery supplies and printing. Assisting co‐operatives to participate in up‐ | Loans approved by lenders, Mentorship programme rolled out Co‐operatives working under line departments Co‐op getting working tools Networking workshops certificates evidence for training completed |
VISION eThekwini Municipality thrives to establish self‐sustained co‐operatives in variety of economic sectors that will liberate people from poverty | |||
CHALLENGES | PROGRAMMES | KEY ACTIONS | INDICATORS |
coming special economic zones (SEZ) that target the following sectors: chemical manufacturing, transport and logistics, automotive manufacture, air transport, electronics, finance and insurance, event tourism. Train co‐operatives on: The functioning of co‐operative business, SARS, VAT, UIF and CIPC compliance, Business administration and management, Financial management, Human resources management, Conflict resolution, Quality control, Customer care, Technical and specific subjects/skills, Tendering skills. | |||
Source: Urban-Econ 2014
76
SECTION 5 IMPLEMENTATION GUIDELINES
This implementation section follows the preceding strategy formulation section that provided a strategic framework and interventions necessary to improve the current co‐operative movements in the eThekwini Municipality. The strategy formulation section developed a vision and goals taking into consideration the projects within the area; current co‐operatives’ and economic trends of the Municipality, stakeholder linkages and the municipality’s project implementation capability. This section is made of the implementation plan, the developed coordination and communication mechanism as well as the monitoring and evaluation tools.
5.1 IMPLEMENTATION PLAN
The Project Implementation Plan provides a time‐based perspective of the projects and activities related to co‐operatives’ development in the eThekwini Municipality. Table below displays the project number, the project / activity name, and the proposed start and end date. The XXXXX chart starts from 2015 as a number of projects should be initiated immediately and then the five years is broken down into blocks of six months.
It should be noted that:
Where activities did not have a defined end date the end of the five‐year term was used as the end date, i.e. 30 December 2019;
Where a project will be undertaken within a specific six‐month period and have a shorter timeframe (i.e. two months) the full six‐month block was filled up; and
A large number of projects start out in the early parts of the five‐year term and the potential for achieving this should be reconsidered based on resources, including human capacity and funds, in the eThekwini Municipality.
Table 17 The Project Implementation Plan
No | Projects/Activities | 2015 | 2016 | 2017 | 2018 | 2019 | |||||
1 | Facilitating people to form co‐operatives | ||||||||||
2 | Legal registration of co‐operatives | ||||||||||
3 | Registration of Co‐operatives in the Central Database | ||||||||||
4 | Assisting in the establishment of the secondary co‐operatives | ||||||||||
5 | Assisting in the establishment of the co‐operative wholesales | ||||||||||
6 | Assisting in the establishment of the co‐operatives in all sectors | ||||||||||
7 | Training of officials on the functioning of co‐operatives | ||||||||||
8 | The coordination of co‐operatives development programmes and actions | ||||||||||
9 | Fast track the establishment of the co‐operative development agency | ||||||||||
10 | Facilitating the establishment of the co‐operative tribunal. | ||||||||||
11 | Fast track the full provision of services in the incubator | ||||||||||
12 | Provision of the co‐operative helpline | ||||||||||
13 | Rehabilitation of the underperforming co‐operatives | ||||||||||
14 | Facilitating access to finance | ||||||||||
15 | Provision of mentorship programme | ||||||||||
16 | Refer co‐operatives to the Line Departments | ||||||||||
17 | Provision of available business equipment | ||||||||||
18 | Facilitating networking sessions for co‐operatives | ||||||||||
19 | Assisting Co‐operative to venture in export especially in BRICS countries and Sister Cities [Leeds (United Kingdom), Curitiba (Brazil), Bremen (Germany), Bulawayo (Zimbabwe), Daejeon (South Korea), Maputo (Mozambique), Le Port (Re Union Island), Nantes (France), Alexandria (Egypt), Chicago (USA), New Orleans (USA), Guangzhou (China), Oran (Algeria), Rotterdam (Netherlands), Mombasa (Kenya), Libreville (Gabon), and Los Angeles (USA)]. | ||||||||||
20 | Assisting co‐operatives to access all set‐asides products including: | ||||||||||
No | Projects/Activities | 2015 | 2016 | 2017 | 2018 | 2019 | |||||
advertising, media and communication; interior and exterior cleaning services and cleaning product supplies; clothing and textiles; computer equipment and consumable supplies; interior and exterior furniture and décor; events co‐ordination and management; maintenance, repair, construction and office space; travel co‐ordination and shuttle services; food, perishables and supplies; and stationery supplies and printing. | |||||||||||
21 | Assisting co‐operatives to participate in up‐coming special economic zones (SEZ) that target the following sectors: chemical manufacturing, transport and logistics, automotive manufacture, air transport, electronics, finance and insurance, event tourism. | ||||||||||
22 | Train co‐operatives on: The functioning of co‐operative business SARS, VAT, UIF and CIPC compliance Business administration and management Financial management Human resources management Conflict resolution | ||||||||||
No | Projects/Activities | 2015 | 2016 | 2017 | 2018 | 2019 | |||||
Quality control Customer care Technical and specific subjects/skills Tendering skills | |||||||||||
Source: Urban‐Econ 2014
5.2 COORDINATION AND COMMUNICATION MECHANISM
5.2.1 COORDINATION MECHANISM
With regard to the roles and responsibilities of the stakeholders, it should be noted that the Business Support Tourism and Market Unit is the umbrella body for the development of co‐operatives. However, once the co‐operative development agency is established as per the Co‐operative Act No 6 of 2013, the management and coordination of all programmes and activities related to co‐operatives in the eThekwini Municipality will fall under its responsibilities. During the rolling out of the co‐operative support programmes, the Business Support Market and Tourism Unit and the co‐operative development agency will need the backing of other departments as well as private sector as illustrated in the following figure to ensure the success of co‐operatives in the Municipality.
Figure 12 Coordination Mechanism
Source: Urban-Econ 2014
5.2.2 COMMUNICATION MECHANISM
In the communication and marketing model, four components take place including:
the sphere of what needs to be communicated;
the sphere of mechanisms to be used during the communication;
the sphere of to whom does it have to be communicated; and
the feedback process as shown in the Figure below.
Figure 13 Communication Plan
What needs to be communicated ?
Mechanisms of communication
To whom does it have to be communicated?
Feedback mechanisms
Source: Urban‐Econ 2014
5.2.2.1 WHAT NEEDS TO BE COMMUNICATED?
The following information needs to be communicated in order to allow this sector to achieve its full potential:
current co‐operative development strategy and all its outcomes;
standard municipal co‐operatives regulations;
national and provincial co‐operative support services;
national and provincial co‐operative support programmes;
eThekwini Municipality support services;
all market opportunities (tenders, etc).
5.2.2.2 TO WHOM DOES IT HAVE TO BE COMMUNICATED?
Information needs to be circulated and communicated to the following stakeholders:
Councillors and municipal officials;
provincial government, specifically to the Department of Economic Development and Tourism (since the DEDT is the pioneer of the provincial economic development including co‐operative development);
eThekwini line departments including Expanded Public Work Programme, Supply Chain Management, Park Department, City Hall, Regional Centre, Roads and Stormwater, City Health Department, Real Estates, Vector Control, Durban Solid Waste, Area Based Management (ABMs), IMS Agriculture, and Skills Development.
The upcoming Co‐operative development agency,
The upcoming co‐operative tribunal,
other private co‐operative stakeholders including Seda eThekwini, Ithala Bank, Community Participation and Action Support,
co‐operative members and their representatives (since they are the beneficiaries).
5.2.2.3 MECHANISMS OF COMMUNICATION
Communication between the coordinator (BSMTU), co‐operatives and other service providers has to be channelled through the following mechanisms:
letters/ distribution of documents;
training, capacity building and information distribution;
workshops;
fairs/flea markets;
road shows;
e‐mail messages;
cell‐phone SMSs.
5.2.2.4 FEEDBACK PROCESS
The feedback process on co‐operatives’ related matters is a task of the eThekwini Business Support and Market Unit. After receiving inputs from stakeholders and concerns from co‐operative members, the BSMTU will analyse and assess them and will also suggest solutions. Further, the BSMTU will communicate and give feedback to other stakeholders in the co‐operative value chain using all necessary and available means of communication presented above.
However, in the communication process, the eThekwini Business Support, tourism and Market Unit will assume the secretarial task by efficiently channelling information throughout the entire co‐operative development value chain as presented in the figure below
Figure 14 Information flow within the co‐operative development value chain
Source: Urban‐Econ 2014
5.3 MONITORING AND EVALUATION FRAMEWORK
The aims of the co‐operative monitoring and evaluation system are to:
Ensure that the correct milestones, as planned in the co‐operative assistance programme are being achieved;
Act as an early warning system in cases where targets are unlikely to be achieved;
Provide regular information to all stakeholders on progress of the co‐operative assistance programme and an informed basis for any reviews;
Ensure the continuous sharpening and focusing of co‐operative assistance programme and assist in the mobilisation of appropriate interventions.
Monitoring of co‐operatives will be a continuous review function to provide the main stakeholders with early indications of progress or lack thereof in the achievement of objectives and outputs of the co‐ operative assistance programme.
Further, to measure the impact of the provision of training and skills development to co‐operatives and their outcome, key mechanism is the ongoing dialogue and follow‐up between the trainers and trainees. In order words, after the training, the service provider will continually engage with the trained co‐ operative in order to see the implementation and outcome of the training.
The monitoring team should make use of among others, the following co‐operative specific tools and indicators:
Table 18 Monitoring and Evaluation
NO | PROGRAMME | DESCRIPTION | CRITERIA | MEANS OF VERIFICATION | ||||||
1 | A creation of a conducive policy and legal environment | Facilitating people to form co‐operatives | Number of sessions | Minutes & attendance register | ||||||
Legally registered co‐operative formed to date | Number of Co‐ops | CIPC and PR Nos | ||||||||
Assisting in the establishment of the secondary co‐ operatives | Number Co‐ops | of | secondary | CIPC and PR Nos | ||||||
Assisting in the establishment of the co‐operative wholesales | Number Co‐ops | of | wholesale | CIPC and PR Nos | ||||||
Assisting in the establishment of the co‐operatives in all sectors | Number of new Co‐ops in various sectors | CIPC and PR Nos | ||||||||
2 | Building of a supportive institutional system | Training of officials on the functioning of co‐ operatives | Number trained | of | officials | certificates and prove of training attended | ||||
The coordination of co‐operatives development programmes and actions | Level of harmonization of co‐op activities in the Municipality | Indications of collaboration among co‐op stakeholders and services providers | ||||||||
Fast track the establishment of the co‐operative development agency, | Established Co‐op development agency | Physical address of the agency and staff | ||||||||
Facilitating the establishment of the co‐operative tribunal. | Established Co‐op tribunal | Physical address of the tribunal and judges | ||||||||
Number of preferential co‐operatives registered in the database? | Number of co‐ops | BSMTU tracing Nos | ||||||||
3 | Provision of capacity building and skills development for co‐ operatives | Provision of the co‐operative helpline | Physical address of the call centre | Database of the number of calls made | ||||||
Rehabilitation operatives, | of | the | underperforming | co‐ | Number of Co‐ops on the programme | Attendance register | ||||
Organised networking sessions/workshops for co‐ operatives? | Number of Co‐ops | Attendance register for the networking workshop | ||||||||
NO | PROGRAMME | DESCRIPTION | CRITERIA | MEANS OF VERIFICATION |
4 | Facilitation of effective operation of co‐ operatives | Fast track the full provision of services in the incubator | Up running incubator | No of incubatee co‐ops |
Train co‐operatives on: The functioning of co‐operative business SARS, VAT, UIF and CIPC compliance Business administration and management Financial management Human resources management Conflict resolution Quality control Customer care Technical and specific subjects/skills Tendering skills | Number of Co‐ops | Training account of BSU&M | ||
5 | Provision of support services for co‐operatives | Co‐operatives provided with business equipment? | Number of Co‐ops | Database indicators |
Co‐operatives provided with public and private finance? | Number of Co‐ops | Total amount secured and Loans approved by lenders | ||
Co‐operatives on the mentorship programme? | Number of Co‐ops on the programme | List of mentors and their work schedules | ||
Assisting Co‐operative to venture in export especially in BRICS countries and Sister Cities including: Leeds (United Kingdom), Curitiba (Brazil), Bremen (Germany), Bulawayo (Zimbabwe), Daejeon (South Korea), Maputo (Mozambique), Le Port (Re Union Island), Nantes (France), Alexandria (Egypt), Chicago (USA), New Orleans (USA), Guangzhou (China), Oran (Algeria), Rotterdam (Netherlands), Mombasa (Kenya), Libreville (Gabon), and Los | Number of referrals | Database indicators |
NO | PROGRAMME | DESCRIPTION | CRITERIA | MEANS OF VERIFICATION |
Angeles (USA) | ||||
Assisting co‐operatives to access all set‐asides products | Number of referrals | Database indicators | ||
Co‐operatives referred to the Line Departments? | Number of referrals | Database indicators | ||
Assisting co‐operatives to participate in up‐coming special economic zones (SEZ) | Number of referrals | Database indictors |
Source: Urban-Econ 2014
ANNEXURE 1: ETHEKWINI CO‐OPERATIVE QUESTIONNAIRE
A.1 QUESTIONNAIRE FOR INTERVIEW WITH CO‐OP MEMBERS
Name of interviewer | ||
Date of interview | ||
Name of co‐operative | ||
Name of Interviewee | ||
Business contact details | Tel | |
Cell | ||
Fax | ||
No of Members | ||
Physical Address | ||
1. Yaqalanini ukusebenza i‐co‐op yakho? (How long has your co‐operative been operating for?)
< 1 year | 1 |
1 to 3 years | 2 |
4 to 6 years | 3 |
7 to 10 years | 4 |
> 10 years | 5 |
2. Ngabe i‐co‐op yakho yenza msebenzi muni? [What work/service is your co‐op doing ?(to be filled by the Interviewer)]
Sectors | Specification |
Agriculture | |
Tourism | |
Construction | |
Business trade | |
Transport and communication | |
ICT | |
Manufacturing | |
Mining | |
Catering and Accommodation | |
Finance and business services | |
Community, social and other personal services |
3. Ngabe bafunde bagcina kuliphi ibanga abantu abakhona ku i‐co‐op yakho? (What is the general level of education in your co‐op?)
Education | Leadership | Other Members |
No Schooling | ||
Primary Education | ||
Secondary Education | ||
Tertiary Education |
4. Ngabe iziphi izinsiza kufunda enizindingayo kwi i‐co‐op yakho? (What types of training does your co‐op needs the most?)
1 | |
2 | |
3 | |
4 | |
5 |
5. Ngabe i‐co‐op yakho iwuthola kubani umusebenzi wayo omuningi? (Where does your co‐op get most of its contract from?)
Clients | Specific Department |
National government | |
Provincial government | |
Municipality | |
Private Sector | |
Others |
6. Ngabe i‐co‐op yakho idinga muphi umsebenzi noma amathuba ukuze isimame? (Where does your co‐ op’s future market opportunity lie?)
1 | |
2 | |
3 | |
4 | |
5 |
7. Ngabe i‐co‐op yakho uyaqonda ngohlelo lama tender? (Does your co‐op understand the tender process?)
Yes | No |
8. Ngabe i‐co‐op yakho idinga ukuqeqeshwa ngendlela uhlelo lama tender olusebenza ngayo? (Does your co‐op needs a training on how the government tenders work?)
Yes | No |
9. Kulonyaka odlulile ngabe isimame kangakanani i‐co‐op yakho? (Over the past twelve months, what has been your co‐op general/average Growth?)
Expanding? | 1 |
Stay the same? | 2 |
Declining? | 3 |
10.Ngabe iziphi izingqinamba enihlangabezama nazo ezivimba ukuthuthuka kwe co‐op yakho? (What are your other challenges stop you from expanding your co‐op?)
1 | |
2 | |
3 | |
4 | |
5 |
11.Ngabe ikuphi okungenziwa umaSipala wakho ekusizeni ukuthuthukisa uhlelo la ma co‐op (Finally, what suggestion can you make for the municipality to improve its co‐op development programme?)
1 | |
2 | |
3 | |
4 |
Xxxxxxxxx xxxxxxx (THANK YOU FOR YOUR PARTICIPATION)
A.2 ETHEKWINI CO‐OP STRATEGY 2010, INSTITUTIONAL FACE TO FACE INTERVIEW QUESTIONNAIRE
1. What types of services are rendered by co‐ops to your department? | |||||
2. Are you happy with the service rendered? | |||||
3. If yes, what improvement? | are | the | areas | of | |
4. If no, how best | would | you | like to | see | |
things being done? | |
5. Can you recommend solutions to challenges identified? | |
6. What are policies/ strategies/ plans that are guiding your engagement with co‐ ops? | |
7. Which policies do you believe are not conducive for co‐ops development? | |
8. What are your suggestions to improve those policies? | |
9. Any other thing do you need to add with regards to co‐op development? |
Thanks for your participation
A.3 ETHEKWINI MUNICIPALITY, CO‐OPERATIVE DEVELOPMENT STRATEGY STAKEHOLDERS’ WORKSHOP
Time | Description |
10h00 | Welcome and Opening |
10h10 | Presentation Overview of the study Purpose and Objectives Project Methodology Current Related Policies and Strategies Role Players Problem Statement Co‐operatives are poverty alleviation mechanisms But their performances are not efficient Our interaction with them is not optimal Key concerns/issues What can we do to help them access markets? What can we do to help them access finance? What can we do to help them access adequate training? What regulations/bylaws stop us helping them? How can we coordinate our services to develop co‐operatives? Finally how can we change this? Questions and Comments |
10h30 | Breakaway Discussions Easier access to markets, Easier access to finance, Easier access to relevant training, Conducive regulatory framework for co‐op development, Coordination of services/activities for co‐operative development |
11h00 | Report back |
11h30 | Discussions |
12h00 | Wrap‐Up |
12h00‐13h00 | Closure |
A.4 ETHEKWINI MUNICIPALITY, CO‐OPERATIVE DEVELOPMENT STRATEGY CO‐OPERATIVE MEMBERS’ WORKSHOP
Topics for debate
1) How often do you meet with your members?
2) What problems does your co‐operative experiences in accessing market opportunities?
3) What problems does your co‐operative experiences in accessing finance?
4) What problems does your co‐operative experiences in working with the municipality/ government as a client?
5) What other challenges stop you from expanding your co‐operative?
Thank you for your participation