THE INTEGRATED STRATEGY ON THE PROMOTION OF COOPERATIVES: PROMOTING AN INTEGRATED COOPERATIVE SECTOR IN SOUTH AFRICA

1. 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

2. 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

3. 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

4. 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;

5. 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

6. 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 activities;

7. 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;

8. 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.

9. 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.

10. 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.

11. 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 co-operatives 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

12. Co-operative as a global driver of economic growth Co-operatives in Germany and France create 440,000 and 700,000 jobsrespectively 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

13. 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

14. 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

15. 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

16. 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)

17. 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)

18. 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)

19. Comparative analysis of registered coops in CIPRO and in the dti baseline study (mortality & survival rate) A Situational Analysis of Cooperatives in South Africa… (Sources: CIPRO current register and the dti baseline study)

20. A Situational Analysis of Co-operatives in South Africa... Sector analysis of co-operatives (Sources: CIPRO current register and the dti baseline study)

21. A Situational Analysis of Cooperatives in SA... (Source: the dti baseline study) Contribution to GDP

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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 IDP’s & LED Strategies – must provide business infrastructure and other relevant support to develop cooperatives. Support for the CDA and Cooperative Academy

30. 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.

31. 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.

32. Storage Consumer Co-ops Marketing and Supply Coops Processing Worker Co-operatives- Labour intensive e.g. mining; construction; textiles; and arts and craft Financial Co-operatives Manufacturing Supported cooperative types and promoting the entire value chain Distribution Raw Material Agriculture Co-ops

33. Strategic approach for promoting cooperatives in South Africa Strategic pillar 2: Creating demand for co-operatives products & services Strategic pillar 3: To improve sustainability of co-operatives Strategic pillar4: To increase financial support services to 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.

34. 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

35. 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

36. Support Programmes: Strategic Pillar 2.. • Bilateral andmultilateral agreements to be • administered by the dti • Export Marketing and Investment Assistance • (EMIA) administeredby the dti – co-op • componentto be moved to Agency • Targeted products for micro, small & medium • coops administered by the dti in partnership • with National Treasury

37. 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.

38. 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

39. 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

40. 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

41. 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

42. 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

43. 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