Positioning Co-ops to Combat Poverty & Unemployment in South Africa

1. The National Co-operatives Alliance of South Africa Strategic Plan 2010 – 2013 ‘Positioning the co-op movement to combat poverty and unemployment’

2. OVERVIEW • The paper provides a basis to interrogate service delivery in South Africa. • Service delivery in South Africa still remains a challenge despite existing aggressive policy and administrative reforms. • Historically, cooperatives exist to respond to harsh realities of the second economy which is characterized by abject poverty, unemployment and the burden of diseases. • The concept cooperative is fundamentally and developmentally focused • It matches with developmental context of local government and the aspirations of the developmental state • Co-operatives are seriously met with ideological,organizational and operational problems and challenges. • This paper unpacks the exposition of these three pronged issues and thereby attempts to bring a resolve to the problems and challenges posed. 2 Cooperative paper-Prof Kanyane

3. CONCEPTUAL • The concept is clearly understood in theory but poorly understood in practice • Others see cooperatives loosely as: • Government extensions whereas others as • Non-governmental organization, • and some as projects, • self-help groups or associations. • Once these paradoxical interpretations are still used, they pose terminological problem to understand what exactly this cooperative phenomenon is all about? 3 Cooperative paper-Prof Kanyane

4. CONCEPTUALCONT’ • The word cooperation is derived from the Latin word cooperari, meaning to work together. • Cooperative Act, 2005 (Act 14 of 2005) derives the concept cooperatives from International Cooperative Alliance (ICA) as “an association of persons united voluntarily to meet their common economic, social and cultural aspirations through a jointly-owned and democratically controlled enterprise”. • Cooperatives differ from other business enterprises because members in this case are both owners and clients. • The conventional cooperative theorists amongst others; Saint Simon, Fourier and Owen agree that cooperative movement is an alternative to capitalist system. • Overall, cooperatives exist as an alternative model to respond to market failures, to provide needed goods and services at affordable prices and affordable quality. • It should never be seen to fulfill capitalist aspirations but socialist fundamentalism. 4 Cooperative paper-Prof Kanyane

5. HISTORICAL AND IDEOLOGICAL CONCERNS • Cooperatives have the historical root. • Despite racialised Afrikaner empowerment in the 20th century, the empowerment did not just happen through the logic of capital accumulation but had to also coexist with a logic that met human needs through cooperative forms production and consumption. • In principle, the Apartheid government utilized cooperatives as a platform of human survival for their own people. • In today’s democracy, cooperatives have compelling reasons to exist to advance the developmental agenda of the state. • The state is jealously guarding against cooperatives to thrive in favourable and unfavourable market conditions, • Whilst they enjoy this comfort, they are absorbed into stringent bureaucratic behaviours which have a tendency to slow down service delivery. 5

6. Domicile • Across the universe, cooperatives are legislated and regulated by the state. • However, there is no clarity or the best model to be followed to locate the domicile of the cooperatives. • Spain and Italy for example, provide exceptional cooperative case studies including that of Tanzania and Kenya. • Spain and Italy operate in the Department of Labour environment whilst that of Tanzania and Kenya operate under the specialized Ministry of Cooperatives and Marketing environment. • This poses a big problem as here in South Africa, cooperatives have migrated from the homage of the Ministry of Agriculture to that of the Trade and Industry environment. • The environment is full of neoliberal dictates compared to the case studies referred to earlier. 6

7. Business case • Cooperatives do have a competitive edge of job creation advantage over other types of enterprises. • However, bordering cooperatives on the fence of Broad Based Black Economic Empowerment (BBBEE) Act, 2003 (Act No.53 of 2003) is a fatal mistake. • It has to a certain extent compromised the socio-economic thrust of the cooperatives, • The get-rich-quick logic of BBBEE and the SME has short-changed and weakened cooperatives. • They are reduced and obsessed to bidding to survive as cooperatives. 7

8. ORGANIZATIONAL CHALLENGES • The proclamation of the 2005 Act set NCASA to a technical moribund, because the emphasis was now on incorporated Secondary and Tertiary (Apex) whilst it remained a primary. • Resolutions of the 2008 co-operative conference paved a way to the launch of the worker co-op sector leader (Sanaco) with hope that when combined with other sectors an Apex of Apexes would be achieved. We even handed the Co-operatives representation baton at Nedlac • When contrary happens we resolved to amend the Act to set the tone for a properly legislated single Apex co-op, and defined powers. • The new Act was proclaimed in 2013.   • Instead of building strong functional sectors we witnessed contestation of power around the word Apex organisation. 8

9. STATISTICAL CHALLENGES • Today, cooperatives are receiving technical support from the Department of Small Business Development by setting apart, Cooperative Development Unit (CDU) to keep an eye to cooperatives and the Registrar of Cooperatives. • However, from 2005 to date, the Registrar of Cooperatives does not have reliable statistics about the formation of the cooperativesbroken down by sectoral representation. • Many cooperatives membership exist on paper and are in practice dysfunctional, and without the comprehensive list its difficult to point to how cooperatives have created employments, improved community livelihoods or improved quality of lives and contribution to the GDP. • The Department chose to award Sanaco a tertiary co-op and Nacsa an NGO the Apex status to be leaders of the movement 9 Cooperative paper-Prof Kanyane

10. OPERATIONAL CHALLENGES • Generally, cooperatives in South Africa were in the past even today especially black owned, left to be run by the elderly folks who barely have any skills • Cooperatives and group enterprises are started by unemployed people, often with little or no technical capacity levels to manage businesses with no prior experience in the economically competitive space, hence their chance of success is reduced to absolute minimal. • One of the hindrances facing cooperatives in South Africa is that they are highly politicized and funded by the government on a political ticket. 10 Cooperative paper-Prof Kanyane

11. OPERATIONAL CHALLENGES • The ICA’s study measured the success of a cooperative based on turnover. • The impact and success of cooperatives is better measured based on its social impact, rather than simply turnover. • For instance, the ICA study does not look at the success of a small bakery in a poor township selling bread 50 cents cheaper than the market price. • The turnover of the bakery is not large, but the social impact on the community is significant. • It is on this basis that cooperatives are not simply economic institutions, but are also profoundly social ones. 11 Cooperative paper-Prof Kanyane

12. POSSIBLE SOLUTIONS • Firstly, NCASA as the mother body should be resuscitated to fight for the interest of the cooperatives as one of the civil society formation. • This time around, it must exist free from party political gimmicks. • Secondly, The Registrar of Cooperative should provide comprehensive and credible database of cooperatives as opposed to current paper membership which does not add up or tally with the reality on the ground. • Thirdly, the debate around establishing Cooperatives Ministry as opposed to Dsbd should be revisited and compared with the feasibility of the current institutional arrangements. • Currently, cooperatives are more biased to economic returns than to social transformation and development. The two, economic and social mainstreams should be practically brought to a balance 12 Cooperative paper-Prof Kanyane

13. VISION STATEMENT’ Prosperous South Africa without social, economic and gender inequalities in which co-operatives play a central role in the economic and social life of society and are organized in a united, diverse, strong, vibrant, progressive, independent and autonomous co-operative movement

14. MISSION STATEMENT’ Fostering the values of co-operation in society, and to seek, strive for, and facilitate the consolidation, building, and development of co-operatives as autonomous, democratic, self-reliant and member-based organizational and enterprise forms.

15. MANDATE’ • NCASA assumes the responsibility of being the leading agency of all co-operatives in different sectors of economy in the country. • It would be the main embodiment and collective identity of the co-operative movement. • Its operations shall be governed by the provisions of the Co-operative Act of 2005. • It would provide technical, education and support services to the members and prospective members, including facilitating their vertical and horizontal integration (provincial structures and co-operative federal structures). To build sectors,

16. NCASA STRUCTURE’

17. CO-OPERATIVE DEVELOPMENT SYSTEM 1 Feasibility Study 2 Training & Development 5 Technical Expertise & Database NCASA Admin Proj Mgmt Gov Finance Member Services 4 Financial Admin Services 3 Sectoral Coop Fund

18. CO-OPERATIVE SECTORS Financial Coops NACFISA Housing Coops SAHCA Insurance Coops SAFOBS 1 Feasibility Study 5 Technical Expertise 2 Training Transport Coops Mostly NACSA Other Coops – 1, Arts 2. Energy 3. Mining 4. Professional 5. Social 6. Sports 7. Consumer 4 Financial Admin Services 3 Central Coop Fund Worker Coops SANACO Agriculture & Marketing Coops AFASA

20. STRATEGIC OBJECTIVES

21. STRATEGIC OBJECTIVES Cont.

22. Cooperative paper-Prof Kanyane THANK YOU!