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
1
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
2
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
3
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, selfreliance and solidarity among coops beneficiaries
and beyond through raising awareness;
4
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
5
Objectives
• To grow all forms and types of coops and its
movement as well as increase its
contribution to the country’s 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
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activities;
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;
7
Objectives….
• To foster cooperation among coops through
supporting the creation of
the
structure of coops and conducting
campaigns.
vertical
awareness
• 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.
8
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
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awareness campaigns.
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 periurban areas, as well as, improve economic and
social well being of these targeted groups:
black people, women, the youth and people with
10
disabilities.
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 world’s top 300 cooperatives exceeds US$ 1 Trillion, equal to the
world’s 10th largest economy
International Co-operative Movements represent 800
million members, more than the total population of the
entire European continent
11
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
12
International best-practice
Canada
Spain
Favourable legislation; Inter-governmental
coordination; strong partnerships with the
coop movement; formation of secondary
coops; coop education and training through
universities
Favourable legislation (incl. constitution);
Intergovernmental coordination; financial
and non-financial support, include tax
benefits; education and training through
university
13
International best-practice…
Kenya
Bangladesh
Favourable legislation; Ministry of
cooperatives (decentralized); strong
partnership with the cooperative
movement; Coops College; Coops Bank
and conflict resolution system
Favourable legislation; full fledged
Department of Cooperatives; Coops
College and Coops Bank
14
International best-practice…
Italy
India
Favourable legislation (incl. constitution);
strong partnerships with and selfsufficiency of the coop movement;
favourable procurement policies; and
emphasis on reserves and solidarity
funds on the law.
Favourable legislation (incl. constitution)
strong coops movement; and financial
and non-financial support from govt.
15
A Situational Analysis of
Cooperatives in South Africa
Trends in cooperative registrations & deregistrations
25000
17,154 22,030
13,920 16,997
20000
15000
589
• Support programmes across
government
These emerging cooperatives are still
weak and vulnerable
20
08
/9
157
/8
200
07
06
/6
126
05
/5
20
04
20
03
20
02
-2
0
94
95
-1
9
69
• Enabling environment through
legislative framework such as the 2005
Coops Act
19
22
220
/4
1,444
0
0
0
Total Active per the
Register
20
3,911 3,990
Total Registered
4,583
20
5000
7,355
7,229
4,652
/7
3,911 4,210
Drivers of Growth
Deregistration
13,720
10000
19
No. of coops
2005 – 2009 (Boom period) for
coops growth in numbers
22,619
Period
(Source: Registrar of Cooperatives, Statistics of Cooperatives in South Africa, 19222009)
16
A Situational Analysis of
Cooperatives in South Africa…
Overall Provincial Picture of registered cooperatives
• The total number of
cooperatives by March 2009
was 22,619 and they were
LIMP, 1879, 8%
spread provincially.
WC, 1003, 4%
MPU, 1496, 7%
EC, 4224, 19%
•The majority of registered
cooperatives was Kwa-
GAU, 2365, 10%
Zulu/Natal with 38%;
NC, 798, 4%
NW, 1257, 6%
FS, 900, 4%
• followed by the Eastern
Cape, 19%;
KZN, 8697, 38%
(Source: Registrar of Cooperatives, Statistics of Cooperatives in South Africa, 1922-2009)
•followed by Gauteng, 10%
and others.
17
A Situational Analysis of Cooperatives
in South Africa…
• Agri still dominates (25%);
Sector spread of registered cooperatives
followed by services (17%) and
multi-purpose(14%) and others.
Factors influencing the current
sectoral growth of coops entrants
consumer, 128, 1%
transport, 856, 4%
trading, 2708, 12%
agriculture, 5580, 25%
•Agri received massive support in
the past in form of subsidies & tax
concessions and is still viewed as a
tourism, 211, 1%
social, 311, 1%
focus traditional
agroprocessing, 369, 2%
services, 3762, 17%
sector for coop development.
arts and culture, 340, 2%
bakery, 334, 1%
burial, 65, 0%
clothing and textile, 1247, 6%
retail, 117, 1%
construction, 1280, 6%
multipurpose, 3160, 14%
mining, 78, 0%
medical, 77, 0%
environmental, 85, 0%
financial, 233, 1%
fishing, 46, 0%
food and bev, 91, 0%
• Government support in the form
of procurement opportunities has
given rise to the emergence of
services and multipurpose
cooperatives.
housing, 78, 0%
ICT, 193, 1%
1093, 5%
(Source: Registrar of Cooperatives, Statistics ofmanufacturing,
Cooperatives
in South Africa,
marketing and supply, 177, 1%
1922-2009)
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A Situational Analysis of
Cooperatives in South Africa…
Comparative analysis of registered coops in CIPRO and in the dti baseline study (mortality & survival rate)
No.
of
cooperatives
No. of registered cooperatives
Current data from the CIPRO
register
surviving
No. of dead cooperatives
Survival rate
Mortality rate
12%
88%
Data from the dti baseline study, 2009
National Picture
22,619
2,644
19,975
Provincial breakdown
KZN
8,697
1,044
7,653
12%
88%
EC
4224
287
3,957
7%
93%
WC
1003
69
934
7%
93%
NC
798
20
778
2,5%
97,5%
Limpopo
1879
405
1474
22%
78% (1st)
Mpumalanga
1496
187
1309
12,5%
87,5% (3rd)
Gauteng
2365
394
1971
17%
83% (2nd)
Free State
900
71
829
8%
92%
North West
1257
167
1090
13%
87%
(Sources: CIPRO current register and the dti baseline study)
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A Situational Analysis of Cooperatives in South Africa...
Sector analysis of co-operatives
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%
7
8%
78
92%
Kinds of co-ops
(Sources:
CIPRO
current register and the
Recycling
& waste
management
85 dti baseline study)
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A Situational Analysis of
Cooperatives in SA...
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
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
21
(Source: the dti baseline study)
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.
RIDS
Anti-Poverty
Strategy
• 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
22
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
23
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
24
A Situational Analysis:
Challenges facing Coops in SA
Government Challenges…:
• Avoidance of formalization of informal selfhelp groups
• Limited access to finance
• Limited access to technology
• Limited access to business infrastructure
25
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
26
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
27
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
Provincial
Local
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 IDP’s & LED
Strategies – must provide business infrastructure and other relevant
support to develop cooperatives. Support for the CDA and Cooperative
29
Academy
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
International organisations: ILO,
DGRV
Financial Institutions: banks, etc.
Responsible for growing and develop cooperatives: They may provide
research, education and training, financial and non-financial support,
advocacy, mobilisation and awareness-raising.
Have a role to play in assisting in providing international expertise; financial
and non-financial support
Have a role to play in developing funding products tailor-made for the
development of cooperatives.
30
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.
31
Supported cooperative types and
promoting the entire value chain
Raw
Material
Processing
Manufacturing
Storage
Distribution
Marketing and Supply Coops
Agriculture Co-ops
Consumer Co-ops
Financial Co-operatives
Worker Co-operatives- Labour intensive e.g.
mining; construction; textiles; and arts and craft
32
Strategic approach for promoting
cooperatives in South Africa
Strategic pillar 1:
To increase nonfinancial support
services to
cooperatives
Strategic pillar
2:
Creating demand
for co-operatives
products &
services
Strategic pillar 3:
To improve
sustainability of cooperatives
Strategic pillar4:
To increase
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.
33
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
34
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,
conflictresolution, and proactive inspection Programme
to be managed by the Cooperative Tribunal;
and
• Registration
of
Cooperatives
to
be
35
administered by CIPRO
Support Programmes:
Strategic Pillar 2..
• Bilateral andmultilateral 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
36
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.
37
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
38
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
39
Coordination, Monitoring and
Evaluation
Relevant Coordination
Bodies
Relevant Monitoring &
Evaluating Mechanisms
Department of Trade & Industry and
Provincial Departments
Provincial Support Committee on Coops
Development
Government Departments
Inter – Department Committee on Coops
Development
Cooperative Movement and other
stakeholders
Other Bodies
Cooperative Advisory Council
Cooperatives Movement, Labour &
Private Sector
40
Coordination,
MonitoringMonitoring
Framework and
Evaluation
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
41
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 dti’s 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
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