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Cooperatives

Motors of prosperity

by Gerrit Wiesmann

In brief

Members of a women’s cooperative that produces shea butter from nuts in Burkina Faso.

Members of a women’s cooperative that produces shea butter from nuts in Burkina Faso.

Cooperatives are underrated agents of economic change. As organisations owned and controlled by the people who work for them, they deserve more attention. Promoting them should be high on the international development agenda.

Groups as diverse as the International Labour Organisation (ILO), Germany’s Cooperative and Raiffeisen Confederation (DGRV) and the International Cooperative Alliance (ICA) want the UN to anchor the role of cooperatives in the Sustainable Development Goals (SDGs) that are to be defined in 2015. 

According to a report by ILO and ICA, about one billion people around the world are involved with cooperatives as members, customers, employees or participants. The 300 largest cooperative enterprises have annual revenues of $ 1,600 billion, roughly the size of Spain’s economy. The survey revealed, moreover, that 85 % of the cooperatives polled felt they could contribute substantially to promoting jobs and decent working conditions.

Coops stand for voluntary and open membership, democratic control by and economic participation of members, and responsibilities for education, training and the community. By their very nature, they are familiar with ordinary people’s needs and concerns. Rodrigo Gouveia of the ICA insists: “If you really believe in sustainable development, you should look to the coops as your principal way to implement.”

Cooperatives were long seen as “the third way” between state-owned and private enterprises, according to Manfred Öhm of the Friedrich-Ebert-Stiftung (FES), which is close to Germany’s Social-Democratic Party. However, the history of cooperatives in the developing world does have blemishes. Their economic and social success encouraged governments – especially in Africa – to exert more control. Such misuse was common from the 1960s to the 1980s and turned them into “instruments of the state, not of their stakeholders”, Öhm recently argued in Berlin during an FES conference dealing with African cooperatives.

Economic liberalisation and deregulation saw state influence pushed back in the late 1980s and 1990s. However, the possible benefits of cooperative business models only reached global prominence again after the global financial crisis started in 2008. In hard-hit Spain and Italy, for instance, coops have made a difference. According to the International Organisation of Industrial, Artisanal and Service Producers’ Cooperatives (CICOPA), coops created 13,336 service-sector jobs in Spain in 2011, and 36,000 jobs in Italy in 2012.

Cooperatives also matter in the developing world of course. Jürgen Schwettmann of the ILO sees African credit unions “growing spectacularly”. Membership of the banking cooperatives jumped from around 2.5 million in 2000 to 17 million in 2013, when, he said, 22,385 credit unions in 24 African countries held $ 7.2 billion in assets.

ILO research shows that the share of the people involved with coops has remained stable in spite of the reputational problems of the past. Basically, the rapid spread of cooperative banks has made up for the decline of farming cooperatives. 

In spite of their success, coops tend not to have much influence on policy making. Fredrick Wanyama of Kenya’s Maseno University knows why: “Coops are not conspicuous, they are not very active in public debate, because they’re doing the actual work on the ground.”

Another issue is insufficient data. The size and impact of the cooperative movement are not well understood in many parts of the world, laments Markus Hanisch from Berlin’s Humboldt University. Many national umbrella organisations simply did not keep sufficient records to help build a case for coops. “We need some real impact analyses,” says Hanisch. “We need more empirical work.”

Gerrit Wiesmann 

 

Print Edition no. 10 2014, 2014/10, Page 358