Introduction to Co-operatives
September 2005
A Type of Enterprise Dependent On
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Who owns the enterprise?
Who controls the enterprise?
Who uses the enterprise?
Who gets the profits?
Individually Owned Business
One Person
 Owns
 Controls
 Operates
 Benefits/Profits
Private Company
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Investors as owners
Profits shared among
investors
Voting weighted
according to the
number of share
investment
What is a Cooperative?
A cooperative is an autonomous
association of persons united
voluntarily to meet their common
economic, social and cultural
.
needs and aspirations through a
jointly owned and democratically
controlled enterprise.
Co-operative Principles
1.
2.
3.
4.
5.
6.
7.
voluntary and open membership;
democratic member control;
member economic participation;
autonomy and independence;
education, training and information;
cooperation among cooperatives;
concern for community.
Democratic member control
The people who own and control and finance
the co-operative are those who use it.
Democratic member control is
exercised by:
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Voting at annual and
membership meetings
Electing Board of
Directors
Making decisions on
major co-operative issues
Co-ops Principles and Practices
Co-operative Principles and Practices
Principles
Practices
Voluntary and open membership
Member recruitment policy, rules of
admission, equal opportunities,
Democratic member control
Constitution, voting rights, role of
the board, members and
management
Member economic participation
Economic performance, rewards to
members, capitalization and how
surplus is used
Autonomy and independence
Relations with government, other
organisations and institutions and
market position,
Education, training and information
Member, board and management
training and public relations
Co-operation among members
Federation, networks, joint
enterprises, movement building
Concern for community
Policy on community development,
environment and networking
Co-operative Values
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self-help;
self-responsibility;
democracy;
equality;
equity;
solidarity.
Types of Co-operatives
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Co-operatives can be distinguished by:
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degree of formality
ownership
type of activity
level in the « cooperative hierarchy »
These types can be combined
Degree of formality
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Informal groups build on co-operative
principles; example: stokvels
Pre-co-operatives or common initiative
groups
Fully fledged, registered co-operatives
Ownership and Purpose
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The worker-owned co-operative: the
individual members are both workers and
employers of the jointly owned cooperative enterprise. Its purpose is to
provide employment to its members
The user-owned co-operative: members
have their own enterprise or household
and use the cooperative for joint supply,
marketing, finance, housing etc. Its
purpose is to provide services to its
members.
Type of activity (1)
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Economic activities
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agricultural marketing & supply;
savings & credit
consumer good supply
transport
shared services (business)
handicrafts and small industries
services
Type of activity (2)
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Social services
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Housing
Social reintegration
HIV-AIDS care
Medical services
Others
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Musician co-operatives
Soccer fans co-operatives
Individuals and Enterprises
Member
SME
Member
SME
Member
SME
Purchasing
Consumer
cooperative
Member
SME
Member
SME
Member
SME
Structure of co-operation (1)
Co-ops can co-operative by membership form
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Primary Co-op Structure - Individuals are
direct members
Secondary Co-op Structure- Primary co-ops
are direct members
Tertiary Co-op Structure – Secondary and/or
primary are both are direct members
Structure of co-operation (2)
Co-ops can economically co-operation by
geography.
 Local – organized on a municipality level
Regional – organised at district or metro
levels
 Provincial – organised by numbers districts
and metros
 National – organised by provinces
 International – organised by national co-op
movements
Primary Co-op Structure
Co-operative
Member
Member
Member
Secondary Co-op Structure
Co-operative
Local
Co-op
Member
Member
Primary
Co-op
Member
Member
Organizational Make-Up
Members
Board of Directors
Manager
Employees
Tertiary Co-op Structure
Co-operative
Primary
Co-op
Member
Secondary
Co-op
Secondary
Co-op
Primary
Co-op
Primary
Co-op
Member
Member
Member
Participation Roles
Co-operatives operate through
the roles of principal parties
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Members
Directors
Manager
Employees
A national Movement (1)
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There are currently 4,000 primary co-ops in
SA
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Worker co-ops
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Housing co-ops
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Consumer co-ops
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Agricultural co-ops
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Financial co-ops
A National Movement
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There are 3 national co-operative federations
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Savings and Credit Co-operative Leaque of SA
(SACCOL)
South African Federation of Burial Societies
(SAFOBS)
South African Housing Co-op Association (SAHCA)
There is 1 Tertiary co-op – national co-operative
apex organization:
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National Co-operative Association of South Africa
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3 co-operative federations – representing 80,000 members
600 primary co-ops representing 167,000 members
A Global Movement
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750 000 cooperatives
800 million individual members – many of
them women
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100 million jobs created
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Over 50% of global agricultural output is
marketed through cooperatives
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470 billion $ of savings mobilized by credit
unions
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Cooperatives are world’s biggest health
insurer