briefing on the development and support programmes for cooperatives

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BRIEFING ON THE DEVELOPMENT AND SUPPORT PROGRAMMES FOR COOPERATIVES:

Empowerment and Enterprise Development Division (EEDD)

PRESENTATION TO THE SELECT COMMITTEE ON TRADE AND PRESENTATION TO THE SELECT COMMITTEE ON TRADE AND INTERNATIONAL RELATIONS, 25 August 2010 INTERNATIONAL RELATIONS, 25 August 2010

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Outline

Background InformationBackground Information

Provincial Breakdown: Status of Cooperatives Provincial Breakdown: Status of Cooperatives

National support for Cooperatives National support for Cooperatives

Status of Cooperatives in South Africa Status of Cooperatives in South Africa

Sector Breakdown: Status of cooperativesSector Breakdown: Status of cooperatives

Provincial support for Cooperatives Provincial support for Cooperatives

Contact Details Contact Details

ChallengesChallenges

Way ForwardWay Forward

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Background Information

The Development of Co-operatives has been identified by the government as one of the critical and viable means to alleviate poverty

On 05 December 2001, Cabinet approved the new mandate for cooperatives development, which was transferred from the Department of Agriculture (DoA) to the Department of Trade and Industry (the dti);

In 2002, SA became the signatory to the ILO recommendations 193;

In 2004, the National Co-operatives Development Policy was developed and adopted by the Minister of Trade and Industry, which laid the basis for the development of the co-operative legislation, strategy and other support interventions;

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In 2005, the Co-operatives Development Act, No 14 was promulgated by Cabinet and subsequently its proclamation was affected by the President of SA in 2007;

The Act provides a clear strategic approach of government with respect to cooperative development and it sees this task as a shared competency involving all tiers of government. Moreover, in terms of the Co-operatives Act No. 14 of 2005, the dti is expected play a leadership role and facilitate effective coordination as well as reporting on the development of cooperatives in the whole economy; Ensure simpler registration process and management of co-operatives;Ensure development of support programmes by all spheres of government Promote equity and greater participation of targeted groups (youth, women and rural)

Background Information, cont.

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The Co-operatives Act is being amended. The consultations on the Amendment Cooperative Bill have taken place and the bill is being submitted to Cabinet and Parliament for in principle approval.

The Co-operatives Strategy that seeks to enhance support programmes and institutional capacity aimed at developing co-operatives has been completed and approved by Nedlac and is being submitted to Cabinet for approval as well.

The dti position paper on enhancing cooperative taxation has been completed and submitted to National Treasury to take the lead in taking the process further in terms of amending the Income Tax Act with respect to Co-operatives.


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the dti, as the custodian of the cooperatives programme, established the National Interdepartmental and Provincial Coordination Committees to coordinate cooperative development activities and programmes with key national and provincial departments.

The Provincial Coordination Committee consist of all 9 departments of Economic Development, whose tasks are to promote and report on coops development in their respective provinces that meet on a quarterly basis.

12 National Departments (DOL, DPW, DSD, DAC, SARS, NT, DHED, COGTA, DAFF, DST, NYDA, DOH) participates in the Interdepartmental Committee and promotes the development of cooperatives and report progress on activities and programmes accordingly.


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Status of Cooperatives in SA

Historical Trends on Cooperatives Registration: reflected in the CIPRO

data1922 to 1994 decades: 1,444 coops new entrants (1922, 1936 &1981 Coops Acts).

1995 – 2004 decades: 3,362 coops new entrants (57% growth rate in numbers).

2005 to 2007 alone: CIPRO register reflects 12 88 new cooperatives entrants (72% growth rate).

2009 - to date: total: 22030 registered cooperatives

Factors that contributed to high Coops registration during 2005 -

2009Creation of enabling environment through promulgation of the 2005 Coops Act and policy

Provision of financial such as a grant funding from CIS and other funding from Ithala, LIBSA, MEGA, Red Door etc. to Coops.

limited provision of procurement opportunities to coops in few provinces such as KZN, Free State

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DATES REGISTSRED COOPERATIVES AS PER CIPRO DATA

•

2007 –

2009 •

Total of 22030 registered cooperatives in the CIPRO Data.

2007 –

2009: Current data Economically Operating Cooperatives as per the 2009 the dti Base

Line Study

•

The dti baseline study confirmed only approx 2644 to be economically

operating.

•

CIPRO only have 21 staff members work on registering co-operatives

•

During 2010 only 132 co-operatives complied with the requirement of submitting their financial statements to CIPRO

•

These coops are typically less than 3 years of age with the mean

age of coops being 2 years old and more than 50% of these coops are in rural areas.

•

Most coops are primary start up coops and are very weak and small.

•

The total number of membership for the aforementioned coops is 30 000.

•

Less than 10 members per each cooperative.

•

Female membership was bigger than male membership in 64% of co-operatives surveyed and mostly participate in textile, service and agricultural co-operatives.

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Youth between 16 and 34 comprise 40% of the noted membership

Status of Cooperatives in SA

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Provincial Breakdown: Status of Cooperatives

Province Current Data from CIPRO Register

National PictureNo of Surviving Co-ops

No of dead Co-ops

Survival Rate

Mortality rate

KZN 8697 1044 7653 12% 88%

EC 4124 287 3957 7% 93%

WC 1003 69 934 7% 93%

NC 798 20 778 2.5% 97.5%

Limpopo 1779 405 1474 22% 78%

Mpumalanga 1396 187 1309 12.5% 87.5%

Gauteng 2265 394 1971 17% 83%

Free State 850 71 829 8% 92%

North West 1208 167 1090 13% 87%

National Total 22030 2644 19386 12% 88%

Source : CIPRO Current Register and DTI Baseline Study

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Sector Breakdown: Status of Cooperative in SA

Coop Sector Percent

Food & Agriculture 29.71Service 14.85Construction 9.37Textile 8.7Multipurpose 9.55Manufacturing 5.01Arts & crafts 3.78Social 3.41

Home Industry/Baking 3.41

Transport 3.03

Coop Sector PercentTrading 2.18

Financial / credit services 2.08Housing 1.7

Carpentry 1.04Consumer 0.66

Burial 0.66Mining 0.57

Recycling& waste management 0.28

Trading 2.18Financial / credit

services 2.08

TotalTotal 100%100%

CIPRO data: Cooperatives contribution to the country’s GDP in 2009

GDP contribution:GDP contribution:Status of Cooperatives in SA Status of Cooperatives in SA

Sector R Value Percentage

Agriculture

Farming Requisites R 205 7771 102 16.9%

Fruit and Veg R 512962480 4.2%

General Products R 217899729 1.9%

Grain and Oil Seeds R 4266267328 35.1%

Insurance R 645 9575 0.05%

Meat R 179994646 2%

Timber R 159 865 3351 13.1%

Wine R 749655635 6.1%

Trading Co-ops

Buying Aids R 22 74191190 19%

Home Industries R 12476540 0.1%

Mutual Benefits R 27854695 0.55%

Financial Services R 10 098 208 1%

TOTAL R 12 164 976 479 100%

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Cooperatives Strategy and Bill are proposing the establishment of new institutional capacity to improve efficiency in the provision of support services to cooperatives;

Establishment of Cooperative Development Agency: provision of increased financial and non-financial support;Establishment of Cooperative Academy: provision of increased education and training support services Establishment of Cooperative Tribunal: provision of compliance and enforcement of the Coops Act, judicious management, arbitration and conflict resolution support services;Establishment of the Cooperative Council: advise the Minister, recommend policy improvement and lobby all tiers of government on cooperatives development.

Cooperatives Banks Act, No 40 build the foundation for establishment of Cooperative Banks Agency, whose tasks are to regulate and support the development of cooperative banks

New Institutional Mechanisms to New Institutional Mechanisms to assist Cooperative Development assist Cooperative Development

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Provision of Access to market to Cooperatives in SA

Access to Market for CooperativesAccess to Market for Cooperatives

Year Activity

2004 Research: Scoping report of 100 cooperatives identification of their needs

2005 Analytical report on cooperatives in 5 provinces

2008 6 cooperative seminars held in partnership with ILO including various stakeholders covering a number of topics:

3 cooperative participated in the ICA Expo in Portugal

International Cooperative Conference held successfully in Tshwane: 2300 delegates attended and international experts (i.e. Canada, Africa and EU)

Inter-Ministerial Conference on Cooperatives attended in Kenya, Nairobi

The dti hosted China Federation of Marketing and Supply Cooperatives, which established relations with cooperatives in South Africa

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Provision of Access to market to Cooperatives in SA

Access to Market for Cooperatives, cont. Access to Market for Cooperatives, cont.

Year Activity

2009 6 workshops held for secondary cooperatives in Gauteng registering a database of 300 primary cooperatives

124 workshops across all provinces covering many local municipalities providing education and training on what is cooperatives and how do going about registering it.

Exhibition and celebration of International Cooperative Day held

in KZN: 2000 delegates and 200 cooperative exhibitors from 8 provinces. 13 coops were given

procurement opportunity by providing various services relevant to the event.

Attended International Cooperative Alliance in Lesotho

National baseline study report on cooperatives produced revealing 2 644 coops operating in the economy.

2009 -

2010

46 cooperatives supported to participate in international exhibitions (i.e. 28 Portugal, 10 Italy, 8 Lesotho, 4 Kenya and 2 China)

2 cooperatives exhibited their products in Mzansi

Stores, Sandton

and 4 participated in the Decorex

exhibition that took place in JHB

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3 Provinces have finalised their co-operative strategies, which have been approved and are already implementing

Mpumalanga; Eastern Cape, Limpopo

5 provinces have drafted their co-operative strategies and awaiting final approval

Western Cape, KwaZulu Natal, Northern Cape, North West and Gauteng

1 Province has drafted Terms of Reference to appoint a service provider to assist with the development of the provincial strategy

Free State

The Cooperatives Act, No.14 of 2005 legislates that all spheres of government design and implement support measures for cooperatives. Coordination with the respective

departments rest with the dti to ensure fulfillment of these requirements

Status on the formulation of Provincial Strategies for Cooperatives

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Cooperative Incentive Scheme: Administered by TEO Cooperative Incentive Scheme: Administered by TEO

National Financial Support Programme for Cooperatives

2008/09 financial cycle– Amount disbursed to coops: R14.1 million – Beneficiaries and outcome: 93 coops have

been supported and 503 jobs created.

2009/10 financial cycle

–

Budget allocation: R 34 million

–

Amount disbursed: R 11,9 million

–

Beneficiaries and outcome: 120 coops supported and estimated 600 jobs created

: 2006 -2009: total amount disbursed: R61 million benefiting 311 cooperatives

Estimated jobs created: 1555.

16 officials employed by the CIS directorate

Budget for 2010/2011 is R41 million

2006 to 2008 financial years Amount allocated : R41.6 million Amount disbursed to Financial Services Cooperatives (FSC), R18.7milllion:

Grants: R9.6 millionLoans : R9.1million

Beneficiaries outcome : 32 FSC received capital and 6500 people benefited

2009/10 financial year Amount disbursed : R10millionBeneficiaries outcome : 40 FSC received capitalTotal to date disbursed to date : R51.6 million

South African Micro Apex Fund (SAMAF)South African Micro Apex Fund (SAMAF)

National Financial Support Programme for FSC

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Small Enterprise Development Agency (Small Enterprise Development Agency (SedaSeda) )

Business Development Support Programme for Cooperatives

Name of the programme

Financial cycle

Beneficiaries and Outcome

Coops Business Support Services

2005/06 151 Cooperatives were provided support

2006/07 580 cooperatives were provided business support Trainers from 51 FET’s were trained on the basic cooperatives concept

2008/09 2 502 were given business support Awareness Support

Service2005/08 12 Awareness workshops were carried out benefiting 275

people on cooperatives Capacity building 2006/07 About 500 officers and individuals at local level have been

trained across the provinces on the Train a Trainer cooperatives programme to enable them to assist cooperatives in their regions. 270 Community Development Workers (CDWs) have been trained on the cooperatives concept in all provinces.

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Financial and NonfinancialSupport Programme for Cooperatives

Name of the Agency

Programme Financial Period

Amount disbursed Benefits to Cooperatives

YOUTH DEVELOPMENT AGENCY (NYDA)Previously known as UMSOBOMVU YOUTH FUND

Enterprise Loans

2006/08 R 10,057,500 loans disbursed 94 youth owned cooperatives

2005/08 UYF disbursed R3,213,189 to SACCOL for lending to SACCO’s (2005 to date)

SACCO’s lended to 416 micro enterprises creating 1,021 jobs.

2009 UYF disbursed R10 mil to co-operatives

UYF lent SACCOL 1.8 mil in loans

Business Development Services provided

150 youth co-ops supported providing approx 600 jobs

450 loans provided creating approx 1350 jobs

33 businesses accessed this service

National Youth Development Agency : Supporting Coops National Youth Development Agency : Supporting Coops

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Name of the Agency

Programme Financial Period

Amount disbursed Benefits to Cooperatives

NATIONAL EMPOWERMENT FUND (NEF)

Imbewu

fund –

Loan product

2006/07

2009/2010

R2,3m disbursed

Awaiting approval on big project in Mpumalanga valued at 20 million

9 cooperatives loaned at prime rate.

National Empowerment Fund: Supporting Coops National Empowerment Fund: Supporting Coops

National Financial Support Programme for Cooperatives

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Department Financial Period

Programme Amount disbursed

Benefits to Cooperatives

Agriculture

Cooperative Directorate established

2006/07 MAFISA Loan R11m disbursed.

28 cooperatives and self-help groups supported financially and 857 jobs created. 827 primary & 30 secondary cooperatives assisted with registration

2007/08 MAFISA Loan

Cooperatives Data System

(CODAS)

R15m disbursed

33 coops and self-help groups were supported financially and 5176 jobs created

The data system assisted with profiling 1,782

2008/09 Financial Support

R38m disbursed

49 coops funded consisting of 700 farmers, creating 715 direct jobs and 459 indirect jobs.

Have registered 9 secondary coops for marketing

Provided 32 primary coops with training with 165 members

Status on the Coops: Support From Dept of Agriculture, Forestry

and Fisheries

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Agriculture

Cooperative Directorate established

2009/10 MAFISA

Financial Support

Non-Financial Support

19.7 mil in 2009

339 cooperatives and self-help groups supported

financially and 857 jobs created.

162 co-operatives assisted with registration

9 secondary co-ops facilitated for bulk buying purchasing

Special Project

Procurement Opportunity

Launch of CODAS system by the Department

Dept in the process of looking at developing programme

for procurement

Total amount disbursed R83.7m

Status on the Coops: Support From Dept of Agriculture, Forestry

and Fisheries, cont.

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Status on the Coops support from other National Departments




Department of Co-operative

Governance and Traditional

Affairs

2009/10 Awareness Programme

Encouraging each ward to have LED project and products driven and led by co-operatives

Development of a Co-operatives Strategy

No dedicated budget




Minerals & Energy

2008/09

2009/10

Beneficiation & energy

centre support

Energy Centre

Support

Financial Support

R 39m disbursed

Non Financial Support

None

Supported 10 jewellery

cooperatives coops to the tune of R9m financially and non-financially.

Supported five integrated energy centres

to the tune of R30m.

2 co-operatives assisted and reviewing strategy on IECs

Total amount disbursed R39million

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Status on the Coops support from other National Departments


Programme Amount disbursed Benefits to Cooperatives

Arts and Culture 2008/09

2009/10

Investing in culture

Financial Support

R11.5m disbursed

R12.1mil disbursed

23 coops consisting of 460 members supported financially and non-financially.

22 co-operatives assisted financially

Total amount disbursed R23.6. million assisted total of 45 cooperatives




Public Works 2008/09 EPWP Financial SupptR10m

disbursed

261 coops benefited from financial support

2009/10 EPWP R11.1mdisbursed

Contracts being awarded to 11 co-operatives in the cleaning & gardening sector, school nutrition and environment

Total amount disbursed R21.1 million

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Labour 2008 to 2009

2009/10

Skills developmentManagement and technical skills

Skills DevelopmentProgramme

Strategy and Legislation

Financial Support

R26.7m disbursed.

R32m disbursed


R400k

355 cooperatives with a total membership of 5570 co-ops assisted

367 co-ops assisted financially

Development of co-operative strategy and legislative framework


Status on the Coops supportfrom other National Departments

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National Treasury 2007/2008

2009/2010

• Developed the Cooperatives Banks Act, No.40 of 2007.

•The Board and Managing Director for the Cooperatives Bank Development Agency (CBDA) appointed.

• CBDA is in the process of designing support programmes and have started accepting applications for cooperative bank registrations.

A baseline study undertaken to look at institutional assessment of 17 co-ops. Rules and regulations published for Co-ops13 provisional applications received by the CDBA4 staff members appointed to increase capacity within organisation

Status on the Coops supportfrom other National Departments




Social Development

2008/09 Poverty Relief Project

R26 m disbursed

645 poverty relief projects converted into cooperatives.Estimated jobs created are 3225.

Total amount disbursed R26 million

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KZN Economic Development

Total staff: 15

2005/07 ITHALA Bank Loan & grant

R163 154 871.62 1175 cooperatives funded of which 823 are operational and remaining failed

6761 cooperatives trained by FET Colleges

9 404 jobs created in the following sectors: catering; furniture; textiles; services

2007/08 ITHALA Bank Loan & grant

R200m disbursed 1500 cooperatives funded

3500 cooperatives trained

450 jobs created

2009/10

2010/2011

ITHALA Bank Loan & grant

R 91m allocated

R86 m disbursed

R5m allocated for forming Coops College

Non Financial Support Procurement opportunities to the value over R21mil

Office of the premier championing the one home, one garden programme

Delegation went to Kenya for training

Total amount disbursed R454 m (five years)

Status on the Coops supportfrom Provincial Department

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departments rest with the dti to ensure fulfillment of these requirements Department Financial

PeriodProgramme Amount

disbursedBenefits to Cooperatives

GAUTENG

Total staff - DED: 1 GEP: 1

GEP : 1 with assistance of 6 officials in regions & 1 in DED

2006/07 Gauteng Economic propeller

R2mdisbursed

8 cooperatives financially supported creating 86 jobs primarily in the manufacturing sector

2007/082008/09

2009/10

Training andAssistance on Procurement


R1.25 million

R1.25 million

Procurement opportunities (to benefit cooperatives) through Chris Hani Baragwanath being negotiated

968 co-operatives assisted with training as well as facilitation of 90 co-ops with registration

Total amount disbursed R 4.5m




Northern Cape 2008/09 Facilitation None Provided facilitation support to 50 cooperatives so far (i.e. registration, business plan dev) and funding through the dti

118 jobs created in the following sectors: mining; farming; textiles; energy; creative industries

Status on the Coops supportfrom Provincial Department, cont.

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North West 2008/09

2009/2010

Financial support

Financial Support


R3m

R10m

R2.5m

Supported 1 Youth owned coops piloted to the tune of R3m

Municipalities have provided financial support to 50 coops to the tune of R10m.

Supported 2 mega projects, R2mil allocated towards the building of factory for Wild Silk Co-

op and R500k towards Madikwe

Sisal Co-op

41 co-ops were registered and 4 co-ops assisted with CIS funding

Sectors assisted were in Agriculture, Services and Clothing and Textiles

9 awareness sessions held

Total Amount Disbursed R 15.5 Million


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Eastern Cape

2008/09

2009/10

Facilitation

Imvaba

Coop Fund (50m

budget)


Procurement Opportunities

Non-

Financial Support

Financial Support

Facilitated access to funding for 2 cooperatives through the dti’s CIS.

R19 million has been disbursed to 36 co-

operatives

R600k has been used for Marketing and Communications through facilitation of workshops in the region

In the process of developing a strategic framework to look at procurement opportunities.

Total Amount Disbursed R19.6m


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Free State 2008/09

2009/2010

Facilitation of registration

Financial Support


None

R6.5 m

Facilitated the registration of 80 cooperatives and in the process of facilitating the school nutritional contract to 20 cooperatives.

3 special projects co-ops assisted,3 co-operatives assisted in Poultry, Fish breeding and bricklaying

Facilitated the registration of 102 co-operatives to assist on the nutrition programme59 information sessions held

Total funds disbursed R6.5m


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Mpumalanga 2008/09

2009/10

Financial Support

Financial Support

Procurement Opportunity

R5m disbursed

R1.7mil

Support to 20 cooperatives by various institutions and departments within the province.

2 co-ops were funded through loans through MEGA

4 co-ops were provided with procurement opportunities in catering at the value of R90k


Status on the Coops support from Provincial Department, cont.




Limpopo 2005 -

2009

LIBSA R90m disbursed

76 cooperatives funded in various sectors

2000 jobs created and sustained

More than 500 cooperatives received non-financial support.

Total amount disbursed R90m

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Western Cape 2008/09

2009/10

Financial and non-financial

Support

DBSA

R300k disbursed

R2m disbursed

R1.3 mil disbursed through voucher system


Support to 2 coops financially.

Trained 51 coops through 97 sessions.

12 co-operatives assisted financially

180 co-operatives assisted with non-

financial support and 2 articles done in Big News focusing on Co-operatives

Total amount disbursed R3.6 m

Status on the Coops support from Provincial Department, cont.

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The Department of Trade and Industry is providing support to cooperatives, albeit at insufficient levels to make a substantial required impact.National and Provincial Departments have started to seriously support cooperatives in their spheres of influence. However, the support is still at a lower base. Few municipalities have already started to also contribute to the task of supporting cooperatives. However, this areas still requires further attention and strengthening. Weak APEX movement structureOfficials at all tiers of government and private sector have a limited understanding of co-operatives as a form of business and this affects support and development of co-opsInstitutional capacity to deliver on co-ops remain inadequate and is a matter that requires urgent resolutionsConsultations and responses to requests for information from other national, provincial and local levels of government takes longer than expected impacting on deliveryInadequate human and provision of financial resources limiting implementation.

Challenges

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As from 2005 - 2009: almost a R1 billion spent on cooperatives through the fewnational Departments and Provincial Department of Economic Development. However, to have a bigger impact more is required in the future.Strengthening the capacity of the dti to lead and deliver on the development and support for cooperatives so as to increase output and impact.

Strengthen the capacity of existing coordination committees (i.e. interdepartmental; provincial committees).

Clear reporting of progress to be emphasised in committees.

Amendment of the Cooperative Act to include:The establishment of a Cooperative Development Agency, to:

provide financial and non-financial support; manage the Cooperative Development Fundassist with compliance training and registration

Way forward

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Amendment of the Cooperative Act to include:The establishment of a Cooperative Academy to deal with standards and education and training.The establishment of a Cooperative Tribunal as a unit within the dti to:

Deal with conflict resolution; investigations, pro-active inspections and enforcement with legislation;

Assist with compliance with Cooperative Act; and

Assist the registrar of cooperatives with the task of up-dating statistics, assistance with winding-up; de-registrations and liquidations.

The Provincial and local government need to take a more active role as implementing agents in the form of support and development of co-operatives

Way forward, cont.

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Name: Maria NtuliTitle: Deputy Minister of Trade and Industry Telephone Numbers; +27 12 394 1489 Fax Numbers: +27 12 394 2489E-mail address: [email protected] Department of Trade and Industry

Contact Details

mailto:[email protected]

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THANK YOUTHANK YOU

Documents

briefing on the development and support programmes for cooperatives