Introduction to Co-operativesIntroduction to Co-operatives

September 2005September 2005

Who Who owns the enterprise?owns the enterprise? Who controlsWho controls the enterprise? the enterprise? Who uses the enterprise?Who uses the enterprise? Who gets the profits?Who gets the profits?

A Type of Enterprise Dependent OnA Type of Enterprise Dependent On

Individually Owned BusinessIndividually Owned Business

One PersonOne Person OwnsOwns ControlsControls OperatesOperates Benefits/ProfitsBenefits/Profits

Private CompanyPrivate Company

Investors as ownersInvestors as owners Profits shared among Profits shared among

investorsinvestors Voting weighted Voting weighted

according to the according to the number of share number of share investmentinvestment

What is a Cooperative?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 PrinciplesCo-operative Principles

1.1. voluntary and open membershipvoluntary and open membership;;

2.2. democratic member controldemocratic member control;;

3.3. member economic participationmember economic participation;;

4.4. autonomy and independenceautonomy and independence;;

5.5. education, training and informationeducation, training and information;;

6.6. cooperation among cooperativescooperation among cooperatives;;

7.7. concern for communityconcern for community..

Democratic member controlDemocratic member control

The people who own and control and finance the co-operative are those who use it.

Democratic member control is Democratic member control is exercised by:exercised by:

Voting at annual and Voting at annual and membership meetingsmembership meetings

Electing Board of DirectorsElecting Board of Directors Making decisions on major Making decisions on major

co-operative issuesco-operative issues

Co-ops Principles and PracticesCo-ops Principles and PracticesCo-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 ValuesCo-operative Values

self-helpself-help;; self-responsibilityself-responsibility;; democracydemocracy;; equalityequality;; equityequity;; solidaritysolidarity..

Types of Co-operativesTypes of Co-operatives

Co-operatives can be distinguished by:Co-operatives can be distinguished by: degree of formalitydegree of formality ownershipownership type of activitytype of activity level in the « cooperative hierarchy »level in the « cooperative hierarchy »

These types can be combinedThese types can be combined

Degree of formalityDegree of formality

Informal groups build on co-operative Informal groups build on co-operative principles; example: stokvelsprinciples; example: stokvels

Pre-co-operatives or common initiative Pre-co-operatives or common initiative groupsgroups

Fully fledged, registered co-operativesFully fledged, registered co-operatives

Ownership and PurposeOwnership and Purpose

The worker-owned co-operativeThe worker-owned co-operative: the : the individual members are both workers and individual members are both workers and employers of the jointly owned co-employers of the jointly owned co-operative enterprise. Its purpose is to operative enterprise. Its purpose is to provide employment to its membersprovide employment to its members

The user-owned co-operativeThe user-owned co-operative: members : members have their own enterprise or household have their own enterprise or household and use the cooperative for joint supply, and use the cooperative for joint supply, marketing, finance, housing etc. Its marketing, finance, housing etc. Its purpose is to provide services to its purpose is to provide services to its membersmembers..

Type of activity (1)Type of activity (1)

Economic activitiesEconomic activities agricultural marketing & supply;agricultural marketing & supply; savings & creditsavings & credit consumer good supplyconsumer good supply transporttransport shared services (business)shared services (business) handicrafts and small industrieshandicrafts and small industries servicesservices

Type of activity (2)Type of activity (2)

Social servicesSocial services HousingHousing Social reintegrationSocial reintegration HIV-AIDS careHIV-AIDS care Medical servicesMedical services

OthersOthers Musician co-operativesMusician co-operatives Soccer fans co-operativesSoccer fans co-operatives

ConsumerConsumercooperativecooperative

Individuals and EnterprisesIndividuals and Enterprises

MemberMember

MemberMember

MemberMember MemberMember

MemberMember

MemberMemberPurchasingPurchasingcooperativecooperative

SMESME

SMESME

SMESME SMESME

SMESME

SMESME

Structure of co-operation (1)Structure of co-operation (1)

Co-ops can co-operative by membership formCo-ops can co-operative by membership form Primary Co-op StructurePrimary Co-op Structure - Individuals are - Individuals are

direct membersdirect members Secondary Co-op StructureSecondary Co-op Structure- Primary co-ops - Primary co-ops

are direct membersare direct members Tertiary Co-op StructureTertiary Co-op Structure – Secondary and/or – Secondary and/or

primary are both are direct membersprimary are both are direct members

Structure of co-operation (2)Structure of co-operation (2) Co-ops can economically co-operation by Co-ops can economically co-operation by

geographygeography.. LocalLocal – organized on a municipality level – organized on a municipality level RegionalRegional – –

organised at district or metro levelsorganised at district or metro levels ProvincialProvincial – organised by numbers districts and – organised by numbers districts and

metrosmetros National – organised by provincesNational – organised by provinces InternationalInternational – organised by national co-op – organised by national co-op

movementsmovements

Primary Co-op StructurePrimary Co-op Structure

Co-operative

Member MemberMember

Secondary Co-op StructureSecondary Co-op Structure

Co-operative

PrimaryCo-op

MemberMember

LocalCo-op

Member Member

Organizational Make-UpOrganizational Make-Up

Members

Board of Directors

Manager

Employees

Tertiary Co-op StructureTertiary Co-op Structure

Co-operative

MemberMember

PrimaryCo-op

SecondaryCo-op

SecondaryCo-op

PrimaryCo-op

PrimaryCo-op

MemberMember

Participation RolesParticipation Roles

Co-operatives operate through Co-operatives operate through the roles of principal partiesthe roles of principal parties

MembersMembers DirectorsDirectors ManagerManager EmployeesEmployees

A national Movement (1)A national Movement (1) There are currently 4,000 primary co-ops in There are currently 4,000 primary co-ops in

SASA Worker co-opsWorker co-ops Housing co-opsHousing co-ops Consumer co-opsConsumer co-ops Agricultural co-opsAgricultural co-ops Financial co-opsFinancial co-ops

A National MovementA National Movement There are 3 national co-operative federationsThere are 3 national co-operative federations

Savings and Credit Co-operative Leaque of SA Savings and Credit Co-operative Leaque of SA (SACCOL)(SACCOL)

South African Federation of Burial Societies South African Federation of Burial Societies (SAFOBS)(SAFOBS)

South African Housing Co-op Association (SAHCA)South African Housing Co-op Association (SAHCA) There is 1 Tertiary co-op – national co-operative There is 1 Tertiary co-op – national co-operative

apex organization:apex organization: National Co-operative Association of South AfricaNational Co-operative Association of South Africa

3 co-operative federations – representing 80,000 members3 co-operative federations – representing 80,000 members 600 primary co-ops representing 167,000 members600 primary co-ops representing 167,000 members

A Global MovementA Global Movement 750 000 cooperatives750 000 cooperatives 800 million individual members – many of them 800 million individual members – many of them

womenwomen 100 million jobs created100 million jobs created Over 50% of global agricultural output is marketed Over 50% of global agricultural output is marketed

through cooperativesthrough cooperatives 470 billion $ of savings mobilized by credit unions470 billion $ of savings mobilized by credit unions Cooperatives are world’s biggest health insurerCooperatives are world’s biggest health insurer