Topic:
“Mainstreaming coops in the SMME
strategy in SA”
13 October 2011: Johannesburg
POLICY & LEGISLATIVE BACKGROUND FOR CO-OPS IN SA
The Co-operatives Policy of 2004
 One of the objectives is “to increase the number of enterprises in the SA economy”
 Sets out SA government intention about promoting co-operatives
The Co-operatives Act of 2005
 Provides a legal framework for co-operatives in SA
 Recognises other types of co-operatives, and not only agricultural co-operatives
The Co-operatives Regulations of 2007
 Outlines the registration processes, forms, costs and governance of co-operatives
The Co-operatives Strategy of 2011
 Articulates programmes that should be in place to support the development of an
independent co-operatives movement.
The Office of the Registrar of Co-operatives within CIPC
 Responsible for all registrations and de-registration of Co-operatives in SA
 Currently holding a database of about 35 000 registered co-operatives
MORTALITY / SURVIVAL RATE OF COOPS: CIPRO 2010
BACKGROUND TO EC CO-OPERATIVES FUND
 Provincial Co-operatives Strategy adopted in 2009
 Strategy informed by a detailed Baseline Survey conducted in 2008
 R63 million committed in 2011/2012 to create a Fund that supports cooperatives
 The ECDC appointed to administer the Fund in 2010
 Governance of the Fund:
 A specific Funding Policy, Funding Committee, Criteria and Guidelines within the ECDC
 Application Processes for the Fund:
 Applications are received, assessed against criteria, due diligence and site visit conducted,
Funding Committee Submission developed and presented in the Funding Committee that
then makes a decision.
 Mentorship and Technical Skills Training:
 All co-operatives approved for funding are entered into an intensive technical skills and
training programme in order to enhance the skills of members
SERVICES NEEDED BY COOPS IN EC – Order of Priority!
54.70%
Training Support
80.80%
Financial Support
80.80%
Materials and Assets
87.20%
Mentorship
96.10%
Access to Markets
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
RESPONDING TO NEEDS ABOVE: ALLOCATION OF FUNDS
Term Loans – R40 million
 Long term loans, linked to prime and repayable over a period of up to 5 years
Seed Capital – R10 million
 Purchasing of basic equipment, certification for quality and standards in
order to enhance competitiveness
Technical Skills and Mentorship – R4.5 million
 Providing access to technical skills training, access to markets and
mentorship on bookkeeping and administration
Governance Training – R4.5 million
 Assisting members of co-operatives in understanding their constitutions and
enhancing compliance with the requirements of the Co-operatives Act No.14
of 2005
Marketing and Communications – R4 million
 Outreach programmes, information brochures, website, branding, etc
Economic Distribution of Funded Co-operatives
1
Hospitality
5
Transport
1
Catering
3
Retail
1
Bakery
12
Manufacturing
20
Agriculture
0
5
10
15
20
PROGRESS ON THE USE OF FUNDS TO DATE…….
42 Co-operatives have been approved under the Co-operatives Fund since
July 2010 – September 2011
R26 million has been committed for Term Loans to the approved cooperatives
R1.8 million has already been committed to Technical Skills and Quality
Improvement of Products of Co-operatives
Approved Agricultural Co-operatives include:
 Piggery Producers – slaughtering, packaging and selling to the market (local
supermarkets)
 Vegetable and Crop Producers – planting, packaging and selling to the
market (local supermarkets)
 Poultry Producers – growing, slaughtering, packaging and selling to the
market (local supermarkets)
 Dairy Producing – milking, packaging and market (local supermarkets)
……..PROGRESS ON THE USE OF FUNDS TO DATE
Approved Manufacturing Co-operatives include:
 Brickmaking co-operatives – producing and selling to local contractors
 School Furniture – making desks and chairs for local schools
 Bread making – baking bread and selling within communities, local
supermarkets and other spaza shops
 Sewing and textile – mainly producing uniforms for schools
 Honey Production – harvesting honey directly from bees, packaging it and
selling to local supermarkets
These 42 Co-operatives are creating new jobs for approximately 674
people within their communities, over and above about 210 members that
are also working in the co-operatives
Our approach is strictly BUSINESS and we implement proper credit
guidelines in granting loans. It is possible!
WHAT NEXT FOR THE ECDC
ECDC will be signing formal Memorandum of Agreement with the SABS
 Quality Assessment of co-operatives products
 Training and Certification (SABS stamp on products)
 Improved market access
ECDC to engage Woolworths, Spar, Pick n Pay, Shoprite, Boxer, etc
 Supply vegetables
 Supply chickens and pork meat
 Supply honey
ECDC to engage Dept. of Health, Education, Clothing stores, etc
 Supply of school uniforms, hospital linen, patience pyjamas, other garments
These efforts are to improve access to markets whilst improving product
quality for co-operatives.
ECDC will now introduce bookkeeping and governance mentorship
LONGTERM VISION
- ECDC seeks to ensure the loans are repaid,
- Co-operatives sustain jobs that they create
- Co-operatives conduct business in a sustainable manner
- Co-operative grow their businesses by supplying the right quality
products on time, all the time.
Qualifying Criteria for the Co-operatives Fund
The following criteria needs to be satisfied in full in order for an application to be
considered under Imvaba Co-operative Fund:
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A Registered Co-operative under the Act No.14 of 2005
A formal business plan;
A fully completed application form;
Resolution by members to apply for the funds;
Certified copy of the Registration Certificate signed by the Registrar;
Certified copies of the Constitution of the co-operative;
Certified ID copies of the founding members;
Tax Clearance Certificate of the Co-operative;
Proof of Bank Account
Short CV’s of founding members;
Lease Agreements (where applicable)
Letters of intent from the potential market for the products
ENKOSI KAKHULU!
THANK YOU VERY MUCH!
BAAIE DANKIE!