THE INTEGRATED STRATEGY ON THE PROMOTION OF COOPERATIVES:

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THE INTEGRATED STRATEGY ON THE PROMOTION OF
COOPERATIVES PROMOTING AN INTEGRATED
COOPERATIVE SECTOR IN SOUTH AFRICA PRESENTATION
TO THE SELECT COMMITTEE ON TRADE AND
INTERNATIONAL RELATIONS, 9 FEBRUARY 2011
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Presentation Outline
Introduction and Background
Coop as a global driver of economic growth
International Best Practice Coops SA
Situational Analysis
Strategic Principles
Strategic Approach for Promoting Cooperatives in
SA
Support Programmes Institutional Arrangement
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Vision
Consistent with the Cooperative National Policy
(2004)
Towards a growing, self-sustainable and
integrated cooperative sector, supported by all
stakeholders, contributing to economic growth,
poverty reduction and employment creation as well
as assisting in bringing about economic
transformation and an equitable society
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Mission

• Strengthen the potential benefits of coops by
  raising the value and profile of coops in the
  economy and designing support programmes
  suitable for this end
• Foster human capital development with a special
  focus on coops principles, business management
  and technical skills
• Foster a culture of cooperation, self-help,
  self- reliance and solidarity among coops
  beneficiaries and beyond through raising
  awareness

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Mission cont..

• Work towards self-sustainability of the
  cooperative movement in the medium to
  long-term, which will be achieved through
  partnership models and by consistently
  capacitating all stakeholders during the
  formation years and beyond

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Objectives

• To grow all forms and types of coops and its
  movement as well as increase its contribution
  to the countrys GDP growth rate, economic
  transformation and social impact
• To promote coops as a vehicle that can assist
  in creating decent employment and reducing
  poverty through income-generating activities
  

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Objectives..

• To support coops in developing their human
  resources capacities understanding coops
  principles and values through the provision of
  technical, entrepreneurship, management skills
  and coops education and training
• To increase savings and investment through the
  promotion and support coops banks and
  financial services coops

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Objectives.

• To foster cooperation among coops through
  supporting the creation of the vertical
  structure of coops and conducting awareness
  campaigns.
• To raise the profile of cooperatives 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.

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Objectives.

• To raise the profile of cooperatives as an
  institution that allows agglomeration of small
  economic activities (i.e. consumer cooperatives,
  cooperative banks, etc) into massive activities,
  market linkages (i.e. marketing and supply
  cooperatives), mobilization of captive markets
  (i.e. increase membership that uses the
  service/product of the cooperative), as well as
  enable vulnerable groups to compete with big
  market players through conducting feasibility
  studies, market research intelligence and
  awareness campaigns.

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Objectives.

• To aggressively promote closed cooperatives that
  constantly attract high levels of membership as
  captive market, enabling them to be highly
  sustainable and have huge potential to
  contribute towards substantial economic and
  social impact.
• To promote coops as an effective vehicle that
  contributes to the development of rural and
  peri- urban areas, as well as, improve economic
  and social well being of these targeted groups
  black people, women, the youth and people with
  disabilities.

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Co-operative as a global driver of economic
growth
Co-operatives is a highly successful business
model in the global business environment and is
relevant for South Africa, here are some of the
international statistics
The Revenue of the worlds top 300 co-operatives
exceeds US 1 Trillion, equal to the worlds 10th
largest economy
International Co-operative Movements represent
800 million members, more than the total
population of the entire European continent
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Co-operative as a global driver of economic
growth
Co-operatives in Germany and France create
440,000 and 700,000 jobs respectively
Kenyan co-ops accounts for 45 of the GDP and 31
of gross national savings. The co-ops also
control markets for coffee, cotton and dairy
In the US, more than 100 million people or 40 of
the population are members of co-ops
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International best-practice
Favourable legislation Inter-governmental
coordination strong partnerships with the coop
movement formation of secondary coops coop
education and training through universities
Canada
Favourable legislation (incl. constitution)
Intergovernmental coordination financial and
non-financial support, include tax benefits
education and training through university
Spain
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International best-practice
Favourable legislation Ministry of cooperatives
(decentralized) strong partnership with the
cooperative movement Coops College Coops Bank
and conflict resolution system
Kenya
Favourable legislation full fledged Department
of Cooperatives Coops College and Coops Bank
Bangladesh
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International best-practice
Favourable legislation (incl. constitution)
strong partnerships with and self-sufficiency of
the coop movement favourable procurement
policies and emphasis on reserves and solidarity
funds on the law.
Italy
Favourable legislation (incl. constitution)
strong coops movement and financial and
non-financial support from govt.
India
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A Situational Analysis of Cooperatives in South
Africa

• 2005 2009 (Boom period) for coops growth in
  numbers
• Drivers of Growth
• Enabling environment through legislative
  framework such as the 2005 Coops Act
• Support programmes across government
• These emerging cooperatives are still weak and
  vulnerable

(Source Registrar of Cooperatives, Statistics of
Cooperatives in South Africa, 1922-2009)
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A Situational Analysis of Cooperatives in South
Africa

• The total number of cooperatives by March 2009
  was 22,619 and they were spread provincially.
• The majority of registered cooperatives was
  Kwa-Zulu/Natal with 38
• followed by the Eastern Cape, 19
• followed by Gauteng, 10 and others.

(Source Registrar of Cooperatives, Statistics of
Cooperatives in South Africa, 1922-2009)
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A Situational Analysis of Cooperatives in South
Africa

• Agri still dominates (25) followed by services
  (17) and multi-purpose(14) and others.
• Factors influencing the current sectoral growth
  of coops entrants
• Agri received massive support in the past in
  form of subsidies tax concessions and is still
  viewed as a focus traditional
• sector for coop development.
• Government support in the form of procurement
  opportunities has given rise to the emergence of
  services and multipurpose cooperatives.

(Source Registrar of Cooperatives, Statistics of
Cooperatives in South Africa, 1922-2009)
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Comparative analysis of
registered coops in CIPRO and in the dti baseline
study (mortality survival rate)
A Situational Analysis of Cooperatives in South
Africa
No. of registered cooperatives No. of registered cooperatives No. of surviving cooperatives No. of dead cooperatives Survival rate Mortality rate
Current data from the CIPRO register Current data from the CIPRO register Data from the dti baseline study, 2009 Data from the dti baseline study, 2009 Data from the dti baseline study, 2009 Data from the dti baseline study, 2009
National Picture National Picture National Picture National Picture National Picture National Picture National Picture
22,619 22,619 2,644 19,975 12 88
Provincial breakdown Provincial breakdown Provincial breakdown Provincial breakdown Provincial breakdown Provincial breakdown Provincial breakdown
KZN 8,697 1,044 1,044 7,653 12 88
EC 4224 287 287 3,957 7 93
WC 1003 69 69 934 7 93
NC 798 20 20 778 2,5 97,5
Limpopo 1879 405 405 1474 22 78 (1st)
Mpumalanga 1496 187 187 1309 12,5 87,5 (3rd)
Gauteng 2365 394 394 1971 17 83 (2nd)
Free State 900 71 71 829 8 92
North West 1257 167 167 1090 13 87
(Sources CIPRO current register and the dti
baseline study)
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A Situational Analysis of Co-operatives in South
Africa...
Sector analysis of co-operatives
Kinds of co-ops CIPRO data The dti baseline study Survival rate() No. of dead cooperatives Mortality rate ()
Food Agriculture 6086 671 11 5415 89
Service 4209 357 8.5 3852 91.5
Textile 1247 272 22 975 78
Multipurpose 3160 187 6 2973 94
Construction 1280 202 16 1078 84
Manufacturing 1093 137 12.5 956 87.5
Arts crafts 340 103 30 237 70 (1st)
Social 311 90 29 221 71 (2nd)
Other 328 89 27 239 73 (3rd)
Home Industry (Baking) 334 83 25 251 75
Transport 856 50 6 806 94
Trading 2708 47 1.8 2661 98,2
Financial / credit services 233 36 15 197 85
Housing 78 25 32 53 68
Burial 65 19 29 46 71(2nd)
Mining 78 12 15 66 85
Consumer 128 11 9 117 91
Recycling waste management 85 7 8 78 92
(Sources CIPRO current register and the dti
baseline study)
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A Situational Analysis of Cooperatives in SA...
(Source the dti
baseline study)
Contribution to GDP
2003 2004 2005 2006 2007
No. of Co-ops 212 297 137 136 100
Millions in value 000 000 000 000 000
Food, beverages tobacco 6442.2 1058.4 4026.3 2866.5 3025.27
Primary industries 2562.5 1718.8 735.5 1137.9 892.55
Secondary industries 6485.2 10646.5 4058.7 2890.3 4801.72
Tertiary industries 3251.3 2757.4 2427.5 2742.4 1435.36
Total (Rbn) 12,299 15,123 7,222 6,771 7,129.6
Percentage Contribution of Co-operatives to GDP and Contribution within each Sector Percentage Contribution of Co-operatives to GDP and Contribution within each Sector Percentage Contribution of Co-operatives to GDP and Contribution within each Sector Percentage Contribution of Co-operatives to GDP and Contribution within each Sector Percentage Contribution of Co-operatives to GDP and Contribution within each Sector Percentage Contribution of Co-operatives to GDP and Contribution within each Sector
Food, beverages tobacco 18.18 2.68 9.45 5.70 5.35
Primary industries 2.05 1.34 0.52 0.66 0.44
Secondary industries 2.34 3.59 1.26 0.80 1.15
Tertiary industries 0.44 0.33 0.27 0.27 0.12
Total 0.98 1.08 0.47 0.39 0.33

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Other Supportive Initiatives Key national
policies and strategies

• A number of supportive initiatives have emerged
  specifying various support measures for
  cooperatives within the public sector.
• This strategy is not coming in a vacuum, but it
  addresses the existing gaps and challenges still
  confronting cooperatives and it also re-enforces
  these existing initiatives with respect to
  cooperatives development. These initiatives
  include amongst others,
• ASGISA, NIPF, SMME Strategy
• Integrated Manufacturing B-BBEE Strategy
  National Youth Strategy Gender and Women
  Empowerment and Anti-Poverty Strategy

RIDS
Anti-Poverty Strategy
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A Situational Analysis Challenges facing Coops
in SA

• Government Challenges
• Inadequate economic and social impact statistics
  on cooperatives
• Coordination
• Limitation of current support from existing
  enterprise development agencies for cooperatives

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A Situational Analysis Challenges facing Coops
in SA

• Government Challenges..
• Recognition of cooperative as a unique business
  form and diversity in public and private markets
  remains very low
• Accessibility of cooperative registration to
  local communities
• Limited promotion and awareness

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A Situational Analysis Challenges facing Coops
in SA

• Government Challenges
• Avoidance of formalization of informal self-help
  groups
• Limited access to finance
• Limited access to technology
• Limited access to business infrastructure

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A Situational Analysis Challenges facing Coops
in SA

• Cooperative Management Challenges
• Poor management and technical skills
• Limited trust and social cohesion
• Democratic decision-making skills within the
  cooperatives remain low
• Limited cooperation among cooperatives

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A Situational Analysis Challenges facing
existing emerging Coops in SA, cont.

• Cooperative Management Challenges..
• Appreciation of collective interest above
  individual interest
• Embracing self-reliance as a principle within
  cooperatives
• Compliance with the Cooperative legislation among
  new cooperatives

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A Situational Analysis Challenges facing
existing emerging Coops in SA, cont.

• Market Challenges
• Undeveloped networks and economic value chains
• Limited access to markets

• Challenges on Cooperative Organisational
  Structures
• Lack of strong and viable cooperatives
  associations and organisations

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Strategy positions the development of
Cooperatives as a shared responsibility involving
all spheres of government
National, Provincial and Local Government
(including agencies) to align to one Integrated
National Co-operative Strategy aimed at
developing and growing cooperatives
National Departments will be responsible to
formulate sector-based legislation
/policies/strategies/ support programmes aimed at
enhancing the growth of a specific sector aligned
with the National Cooperatives Strategy. The dti
to lead the process of establishing the
Cooperative Development Agency (CDA) and
Cooperative Academy in partnership with provinces
and municipalities.
Provinces will be responsible to formulate
provincial coops strategies with support
programmes aimed at enhancing the growth of
cooperatives in the province aligned with the
National Cooperatives Strategy. Support for the
CDA and Coop Academy
District local Municipalities will be
responsible to develop Cooperatives
Implementation Plans to be integrated in the
IDPs LED Strategies must provide business
infrastructure and other relevant support to
develop cooperatives. Support for the CDA and
Cooperative Academy
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Strategy positions the promotion of cooperatives
as a shared responsibility involving the
following stakeholders as well, cont.

• Government aims at partnering with the
  cooperative movement organisations, CBOs and NGOs
  and possibly the private sector in growing and
  developing cooperatives

Cooperative Movement, Apex organisations, CBOs,
NGOs, labour organisations churches
Responsible for growing and develop cooperatives
They may provide research, education and
training, financial and non-financial support,
advocacy, mobilisation and awareness-raising.
International organisations ILO, DGRV
Have a role to play in assisting in providing
international expertise financial and
non-financial support
Financial Institutions banks, etc.
Have a role to play in developing funding
products tailor-made for the development of
cooperatives.
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Strategy attends to all the cooperatives
beneficiary base

• Focusing on youth, women, and people living with
  disabilities
• Focusing on special geographical areas rural,
  peri-urban and former homeland areas
• Focusing and promoting social and enterprise
  cooperatives all forms of cooperatives both
  social and enterprises form will be promoted in
  the strategy.

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Supported cooperative types and promoting the
entire value chain
Distribution
Raw Material
Agriculture Co-ops
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Strategic approach for promoting cooperatives in
South Africa
Strategic pillar 2 Creating demand for
co-operatives products services
Strategic pillar4 To increase financial support
services to co-operatives
Strategic pillar 3 To improve sustainability of
co-operatives
Strategic pillar 1 To increase non-financial
support services to cooperatives
These strategic programmes will be underpinned by
efforts aimed at improving the availability of
quality business information and knowledge
through expanded research, communication
outreach, education and training, and monitoring.
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Support Programmes Pillar1
Cooperatives Business Development Support
Programme capacity building, cooperatives
principles, technical skills, management skills,
mentoring and access to market support to be
administered by Cooperative Development Agency in
partnership with cooperative movement
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Support Programmes Strategic Pillar 1..

• Compliance Education and Training to be
• administered by Cooperative Development
• Agency in partnership with CIPRO and the
• Cooperative Tribunal
• Enforcement investigation, conflict-
  resolution, and proactive inspection Programme to
  be managed by the Cooperative Tribunal and
• Registration of Cooperatives to be
  administered by CIPRO

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Support Programmes Strategic Pillar 2..

• Bilateral and multilateral agreements to be
• administered by the dti
• Export Marketing and Investment Assistance
• (EMIA) administered by the dti co-op
• component to be moved to Agency
• Targeted products for micro, small medium
• coops administered by the dti in partnership
• with National Treasury

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Support Programmes Pillar 3

• Enterprise Network Programme vertical and
  horizontal integration to be administered by
  Cooperative Development Agency
• Business Infrastructure Support Municipalities
  to provide space for co-operatives to operate.
  DPW renovate old govt buildings to be used by
  coops
• Taxation of Cooperatives A favourable tax
  regime for coops by NT the dti to be
  administered by SARS.

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Support Programmes Pillar 4

• Micro Finance loan through wholesaling
• to be transferred from SAMAF to the Cooperative
  Development Agency
• Cooperative Incentive Scheme (CIS) to be
  transferred to the Cooperative Development
  Agency and
• Cooperative Special projects Fund (start up
  expansion) to be administered by the Cooperative
  Development Agency

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Cross-cutting programmes

• Cooperative Promotion and Awareness Support
  Programme (CPASP) to be administered by the dti
  in partnership with other govt departments,
  institutions and coop movement
• Cooperative Training Academy by the dti, DHET
  and Cooperative Movement, with support from
  provinces and municipalities and
• Research and Monitoring and Evaluation by the
  dti, CIPRO other stakeholders

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Coordination, Monitoring and Evaluation
Relevant Monitoring Evaluating Mechanisms
Relevant Coordination Bodies
Provincial Support Committee on Coops Development
Department of Trade Industry and Provincial
Departments
Inter Department Committee on Coops Development
Government Departments
Cooperative Advisory Council
Cooperative Movement and other stakeholders
Other Bodies
Cooperatives Movement, Labour Private Sector
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Coordination, Monitoring and Evaluation
Monitoring Framework

The strategy proposes three key performance
reporting mechanisms
Annual Cooperative Review Report
Three Years Mid - Term Review Report (2011)
Ten Years Comprehensive Review report (2009
2019)

• Cooperative Information Communication System
  (ICT)
• To provide information on cooperatives
  development

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Action plan for implementation

• Action plan for implementation attached as an
  appendix to the strategy outlining key activities
  and actions to be implemented by relevant
  stakeholders
• Activities not exhaustive but provide guidance
  to role players

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the dtis Contact Details

Chief Director of Cooperatives Jeffrey
Ndumo EIDD Cooperatives Business Unit 27 12
394 1631 the dti Call Centre 0861 843 384 the
dti Switchboard 27 12 394 0000
Website www.thedti.gov.za Postal
Address Private Bag X 84
Pretoria
0001 South Africa