Monday, 6 August 2012

SACP Welcomes New Start for Co-op Movement in South Africa

There has been a strong commitment to co-operative development in South Africa since the end of apartheid. All the Tripartite Alliance partners (the ANC, COSATU & SACP) have a commitment to building co-operatives. As far back as 1998 the Alliance Summit adopted the program Unity in Action, which placed co-operatives firmly on the agenda.

It would be understandable if amongst the wider black population there was less enthusiasm for co-ops. For many years particularly in the agricultural sector they bolstered white power. Beginning in the 1910’s and 20’s, they focused on input supplies and joint marketing; and establishing processing co-ops. They became a powerful lobby holding a virtual monopoly in key agricultural sectors, backed by ready access to finance through the Land Bank, and controlling the Marketing Boards that regulated prices until this system was dismantled post-apartheid.

A classic example is KWV which came to dominate the wine and spirits industry. Formed in 1918, by growers in the Western Cape the Kooperative Wijnbouwers Vereniging van Zuid-Afrika became a giant in the industry. As apartheid collapsed so did its marketing and regulatory functions leaving behind a mistrust of the Co-operative brand amongst black farmers and wine growers that has taken a long time to change. Today there is a small inclusive co-op sector supported by fair trade and foreign co-operative organisations like the German Co-op Movement and the UK’s Co-operative Group who support the Du Toitskloof wine co-operative in the Breede River Valley.

The history of financial mutuals goes back further still. Old Mutual the South African financial giant was founded by Scotsman John Fairbairn in 1845 as the Mutual Life Assurance Society of the Cape of Good Hope it began with no initial capital other than the premiums of its first 166 policyholders. As you may expect at that time they where all white. Following demutualization in 1999 and a listing on the FTSE it has become one of the worlds leading financial businesses on the back of a dominant position in South Africa.

In its early days it enabled white farmers to build up their businesses offering insurance and savings to weather the ups and doubts of agricultural markets. What was wrong with these organisations was not their co-operative nature but their failure to adopt the key co-operative principle of open membership. The things they did to enable small producers to gain economies of scale and less affluent communities to gain access to finance are needed today more than ever. Co-operatives like trade unions are not inherently progressive. They have the capacity to be so but can be corrupted into advancing the rights of one group over another.

The concrete situation in South Africa today means that with now with the right legislation co-operatives can play a positive role in fighting unemployment and poverty. Despite the end of apartheid the economy is still dominated by largely white owned corporations and whilst Black Economic Empowerment has propelled a relatively small number of blacks into top positions in these corporations much of the black working class has been left behind.

It was a welcome move therefore in response to the UN Year of Co-operatives that last month SA Trade Minister Rob Davies addressing the International Co-op Day celebrations in Kimberley announced a new development agency would be established as a result of the Co-operatives Amendment Bill. A body for both financial and non-financial support "tailor-made for co-operatives", he said. "These will include administration of incentives, provision of training and improvement of working conditions in the co-operatives sector." He added, "The proposed institutions will then assist the government to reduce the mortality rate amongst co-operatives and ensure their sustainability."

Mangaliso Stalin Khonza, National Spokesperson for the Young Communist League said in response he hoped “That implementation will be speedy and not get delayed by bureaucracy. The co-operative agency will go a long way in ensuring that co-operatives do not remain an option only for cleaning, public school feeding schemes and other basic services. The Agency must ensure that the co-operatives are capacitated in terms of skills and resources to operate fully even in the commanding heights of the economy such as banking, mining and IT.” He went on, “It is well known fact that co-operatives can serve to curb the increasing unemployment particularly amongst the youth and will further ensure the communities are directly responsible in their own service delivery and development; unlike the corrupt entrepreneurial system which serves to illegitimately profit uncaring entrepreneurs.”

If any country needs its wealth spreading more fairly then it is South Africa. The country has a Gini Coefficient, which measures inequality, amongst the highest in the world and as the economy has grown wealth distribution has worsened. Whilst a larger and thriving co-operative sector cannot solve this problem alone it could make a significant contribution. There is an awful lot of work to do in changing attitudes and educating the people, I recently had the chance to see the work the UK’s Co-operative College is doing in training Co-operative trainers in KwaZulu Natal, the state with the highest concentration of worker co-ops in the country, this is impressive but it is a small program considering the scale of the task.

Co-operatives can make a difference in undertaking work contracted out by local government where there has been a huge problem with corruption. In his address to the SACP’s 13th Congress on July 12th Blade Nzimande, Minister for Education and Training and SACP General Secretary said that to help the sector grow, the SACP is.. “calling for effective state support for the co-operative movement, including setting aside certain functions in the state (eg. school nutrition, cleaning services, etc) exclusively for cooperatives.”

A strong commitment by the SACP means this new found commitment to co-operatives has a chance of working and I look forward to a thriving co-op sector that serves all of South Africa’s people.

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