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EASTERN AFRICA FARMERS FEDERATION
VALIDATION WORKSHOP
ANALYSIS OF
THE CO-OPERATIVE ACTS OF EASTERN AFRICA
AND
EXPERIENCES FROM
THE EUROPEAN CO-OPERATIVE MOVEMENT
MARCH 10TH – 11TH 2010
NAIROBI, KENYA
WORKSHOP REPORT
PREPARED BY GACOKI KIPRUTO
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TABLE OF CONTENT
1 GLOSSARY OF ACRONYMS ........................................................................................................... 3
2 SUMMARY OF MAIN FINDINGS .................................................................................................... 4
3 WORKSHOP OBJECTIVES .............................................................................................................. 5
WORKSHOP PROCEEDINGS .................................................................................................................. 6
DAY 1 ....................................................................................................................................................... 6
A OPENING REMARKS .................................................................................................................. 7
B WELCOME NOTE - PHILIP KIRIRO, EAFF President ................................................................. 7
C REPORT ON AN ANALYTICAL STUDY OF THE CO-OPERATIVE ACTS OF EASTERN AFRICA
(ETHIOPIA, KENYA AND UGANDA) BY JOSEPH NKANDU, CONSULTANT ..................................... 9
D DISCUSSION ON COUNTRY PRESENTATIONS ....................................................................... 33
E DISCUSSION OF RECOMMENDATIONS FROM THE REPORT ................................................ 36
WORKSHOP PROCEEDINGS ................................................................................................................ 39
DAY 2 .................................................................................................................................................... 39
A THE MOVIE: BLACK GOLD ....................................................................................................... 40
B KEY NOTE PRESENTATION BY GEZA VARGA ......................................................................... 41
C DISCUSSION ON CO-OPERATIVE POLICY RECOMMENDATIONS FOR EASTERN AFRICA ... 49
D CONCLUDING REMARKS ......................................................................................................... 55
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1 ACRONYMS
ACTESA ALLIANCE FOR COMMON TRADE IN EASTERN AND SOUTHERN AFRICA
AU AFRICAN UNION
CAADP COMPREHENSIVE AFRICA AGRICULTURAL DEVELOPMENT PROGRAMME
CAK CO-OPERATIVE ALLIANCE OF KENYA
COMESA COMMON MARKET FOR EASTER AND SOUTHERN AFRICA
EAC EAST AFRICA COMMUNITY
EAFF EASTERN AFRICA FEDERATION OF AGRICULTURAL PRODUCERS
ICA INTERNATIONAL CO-OPERATIVE ALLIANCE
KENFAP KENYA NATIONAL FEDERATION OF AGRICULTURAL PRODUCERS
KNFC KENYAN NATIONAL FEDERATION OF CO-OPERATIVES
TFC TANZANIA FEDERATION OF CO-OPERATIVES
UCA UGANDA CO-OPERATIVE ALLIANCE
WFP WORLD FOOD PROGRAMME
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2 SUMMARY OF MAIN FINDINGS
Eastern African Farmers’ Co-operative carried out a study on the co-operative acts in use in the
region with a view to understanding how well placed co-operatives are as a tool of regional
development. The Acts studied were those of Kenya, Ethiopia and Uganda. There was also a
presentation by Tanzania Federation of Co-operatives on the law in Tanzania.
Key findings were that:
- Heavy government involvement in co-operative formation and management
- Laws have been ineffective without the co-operative policy. Co-operatives and stakeholders
have been seeking to develop policies in each of the countries in the region.
- Poor co-operative development has seen co-operators unable to participate in national
development. This includes lack of professionalism in running co-operatives in the region, as
well as a focus primarily on business and not on both business and social development.
- Co-operatives suffer image problems because of the abuse they have undergone over the
years beginning with the colonial times, to socialism and autocratic times in some cases, to
times of co-operative disenchantment because of the introduction of Structural Adjustment
Programmes by international donors who wanted to accelerate development on their terms
which were unfavourable to the very ones that needed the development. These and other
factor such as urbanization has led to reduced interest in co-operatives by youth and women
who do not own land. Overall, this reduced effectiveness of co-operatives on development
- The Ethiopian Act is a good benchmark that the region can use as it was developed bottom-
up by co-operators who then sought it to be passed by the government. It includes youth,
and is also translated in the commonly used language
- The rigidity of the co-operative movement structure creates ambiguity in membership and
overlapping functions of the members. Accountability and transparency are key challenges
as opposed to the case with limited liability companies.
- Entrepreneurship and innovation are increasingly becoming key ingredients in enhancing the
role of the co-operative societies as seen in the case of Ethiopia’s Oromia Coffee Farmers Co-
operative Union.
After receiving the report, participants got a key note presentation on the development and
current status of co-operatives in the European Union from Mr Geza Varga the founder President
of the First Hungarian Organic Farmers Co-operative.
This was then followed by a discussion on the way forward on developing a regional policy
framework for co-operatives so that they can be effective development catalyst.
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3 WORKSHOP OBJECTIVES
The objective of this workshop was to receive and review the report on the study of the co-
operative Acts in Kenya, Ethiopia and Uganda.
Following the reporting session, the participants were to discuss and provide policy
recommendations to improve the regulatory framework for the co-operatives in the three
countries studied as well as for the Eastern African region.
The workshop therefore was a validation workshop whose output will be used by EAFF in making
proposals on a regional co-operative policy.
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WORKSHOP PROCEEDINGS
DAY 1
The programme began at 9.40 a.m.
PRESENT
1. Mr. Philip Kiriro –President, EAFF
2. Harriet Ssali – Vice President, EAFF
3. Stephen Muchiri - Chief Executive Officer, EAFF
4. Mainza Mugoya – Programme Officer (Policy) EAFF
5. Mrs. Grace Ngambi- Treasurer, KENFAP
6. Mr. Joseph Nkandu-Consultant
7. Tadesse Meskela – Chief Executive Officer, Oromia Coffee Co-operative Union
8. Mr. Geza Varga – President, Galgafarm, First Hungarian Co-operative
9. Mrs Varga – Galgafarm First Hungarian Co-operative
10. Mrs. Mary Mungai – Senior Assistant Commissioner for Co-operatives, Ministry of Co-
operatives
11. Mr. Francis Kamande – Board Member, Co-operative Alliance of Kenya (former KNFC)
12. Mr. Leonard Msemakweli – Secretary General, Uganda Co-operative Alliance
13. Ms. Gloria Mazoko, Policy and PR officer, Tanzania Federation of Co-operatives
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A OPENING REMARKS
The workshop was opened by EAFF CEO, Mr. Stephen Muchiri who pointed out that this
validation workshop was to discuss co-operative policy within the Eastern African region, with a
view to having EAFF develop a policy framework.
The first day of this validation workshop was to review the findings of the study EAFF conducted
on the regional Co-operative Acts. Ethiopian, Kenyan and Uganda Acts were included in the
presentation for discussions. The Co-operative Act of Tanzania was not captured in the report
due to funding but TFC was represented an opportunity for a depth interview to gather insights.
The Ethiopian Act seemed superior and offered opportunities for benchmarking while crafting a
regional framework for Co-operative Acts and policies.
The second day of the workshop focused on advice from Europe with Mr. Geza Varga speaking
on the Hungarian experience. The EAFF President, Mr. Philip Kiriro was to chair a panel discussion
and respond to questions on the strategy to adopt for lobbying for Co-operative Acts and policies
existing both at the National and Regional levels. The President would also guide the discussion
on the way forward, which may also include seeking partnership opportunities with the European
Co-operative Movement. Mr. Muchiri also led the introductions session.
B WELCOME NOTE - PHILIP KIRIRO, EAFF PRESIDENT
The President welcomed participants to the validation workshop; the Hungarian representatives,
the CEOs of the National Member Organizations, The EAFF secretariat, the Deputy Chair of EAFF,
the consultant who carried out the study, and the rapporteur.
The President restated the objective of this workshop: A team discussion aimed at developing a
way forward for Co-operative policies for EAC.
The President gave a brief history of the Co-operative movement in the region. He noted out that
there were several co-operatives in the region, but whose effectiveness had began to dwindle.
due to: influence by politicians, reduction/discontinuation of government funding, reduction of
donor funding after the aid-pegged structural adjustment programmes of a decade ago. The lack
of funds and a favourable regulatory environment weakened co-operatives as producers left.
The President acknowledged the presence of KENFAP National Treasurer, Mrs. Grace Ngambi,
who had been instrumental in setting up the Co-operative Bank of Kenya. The establishment of
the Bank, which has grown tremendously, has added proof that the co-operative model is the
most viable way of moving forward to market success for the small scale producer and the
economy as a whole.
While attending a meeting on Co-operatives in Europe, The President picked up models on
building powerful co-operatives that participate across the value chain. Co-operation is less about
lobbying and advocacy, and more about self-sustenance and viable business. At present,
farmers’ organizations are more lobbying-oriented than business-oriented, creating a gap for Co-
operatives. Currently, the global discussion on economic development is on ‘the
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commercialization of agriculture’, which requires that the small scale farmer succeeds. Successful
commercial agriculture is a factor of both inputs and outputs.
COMESA has put together the Alliance for Commodity Trade in Eastern and Southern Africa
(ACTESA), of which The EAFF President is also the First Chair. This agency of COMESA seeks to
make small-scale agriculture competitive by focussing on selected commodities (see appendix).
The President indicated that the opportunities for co-operatives lie in:
Offering market access as well as marketing skill, a gap currently being filled by middlemen
will. There is a Common Market for EAC and forecasts indicate that by 2030 the most
important markets will be the regional markets, as is also being seen with the European
market. The value of exports in the Eastern Africa region is projected to be at about US $ 160
Billion.
Organizing producers for Food Trade and Food Aid. In the Comprehensive Africa Agricultural
Development Programme (CAADP) small scale organizations are part of development
infrastructure. Co-operatives can therefore link to service providers. The President also
indicated that though in that workshop, participants were taught from the Hungary case,
organization of small scale farmers has worked leading to business worth billions of US
dollars being transacted.
The co-operatives also have an opportunity to strengthen lobbying.
The President expressed his hopes that the workshop participants would meet their
expectations, if would have to see ourselves as a resource group.
Response by Session Moderator- Mr. Leonard Msemakweli Uganda Co-operative
Alliance
Mr. Msemakweli thanked the President for his remarks, acknowledged his understanding of the
role available for co-operatives and for his willingness to be part of that endeavour. He also
congratulated him for the being elected ACTESA chairman.
Msemakweli, also took that opportunity to introduce Mr. Joseph Nkandu, the consultant who
reviewed the Co-operative Acts. In addition to being a researcher, Nkandu is the Executive
Director of National Association of Coffee Farmers in Uganda. He is a specialist in agriculture,
lobbying and Advocacy. He also has experience in building commodity value chains and has
participated in revamping coffee farming in Uganda, where he resides. His consultancy work has
seen him carry out projects in Africa, Europe and Central America. He is also a coffee farmer.
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C PRESENTATION OF STUDY REPORT
The Consultant, Mr. Joseph Nkandu, began by expressing his gratitude for the opportunity to
carry out this consultancy assignment as it was a learning experience for him too. He also
thanked the EAFF President for providing background information on co-operatives in the region.
He then went straight into the report of the study titled, “Analytical study of the Co-operative
Acts of Eastern Africa- Uganda, Kenya and Ethiopia”. He began with definitions so that
participants would understand the terminology used:
- A Law is an obligatory rule of conduct imposed by the sovereign who has coercive power.
Law can also refer to pre-existing custom, providing positive law outside of a judge or
lawyer.
- A policy is an officially adopted Government guide to actions under provided to guide
actions under given circumstances to seek operational consistency and fairness towards
a desired end.
The words Act, Statute, Proclamation and Law will be used interchangeably for the purposes of
this report, as different countries studied use either of these words to describe their Co-operative
law.
A DESCRIPTIVE OVERVIEW OF THE CO-OPERATIVE LAWS OF EASTERN AFRICA
AREA ETHIOPIA UGANDA KENYA
NAME Proclamation Statute Act
CREATION AND
AMENDMENT
1998 amended 2004 1991 Revised 2005
Law provides for
establishment of a
regulator body for
Savings and Credit Co-
operative societies
(SACCOs).
This is a new
development in Kenya
for a very specialized
sector. Care must be
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taken to ensure co-
operative principles are
upheld.
OBJECTIVES AND
PURPOSE
Self- reliance
Business-oriented;
must have a business
plan
Cannot be used for
political purposes
A necessary clause,
given the Eastern
African history of abuse
of co-operatives
Only one broad
objective; “promotion
of the welfare and
economic interests of
the members.”
Not be adequate in
orientating co-operators
towards what they
should strive to achieve.
The ideal would be well
elaborated three to five
objectives.
Provides broadly the
universal co-operative
guiding principles for
national adaptation.
Fund raising Shares can be sold to
non-co-operators but
only within the locality
Minimum
Registration
requirements
Provided Not clearly stated,
leaving it to the
discretion of the registrar
No criteria or minimum
requirements for
registration have been
provided. Discretion is
the Commissioner’s.
Certificate of
Registration
Appropriate local
authority can grant a
temporary certificate
once basic
requirements have
been met, on the basis
of whether all other
requirements will be
met within a year.
Provisional
registration for 24
months can be
granted and can
also be extended.
Statute is silent on the
period of time within
which the applicant
should get full
registration.
Government Decentralization of Appointment of Act gives power to
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involvement powers and
responsibilities
Places emphasis on
primary societies
and broadly talks
about societies
above the primary
society level
without
entrenching in the
law.
Proclamation was
assented by the
Federation leader,
not by the
Ethiopian Prime
Minister
auditors by the
General Meeting
and subsequent
approval of
appointed auditors
by the Registrar
undermines the
General Meeting.
If the society is not
audited, the
committee shall be
deemed to have
relinquished office
and a special
General Meting will
be held to elect a
new committee.
Circumstances
surrounding failure
to audit within the
provided for times
have not been
provided for.
Before a General
Meeting, the
income and
expenditure
statements shall be
sent to the Registrar
for an opinion.
the Minister of Co-
operatives at the
outset.
A commissioner
may convene the
General Meeting of
the society and
direct the matters
to be discussed.”
Gives power to an
individual – the Position
of the Commissioner of
Co-operatives rather
than to the institutions.
The powers of the
commissioner must not
extend to management
and governance of the
co-operative societies.
Commissioner
approves
appointment of
auditors in
consultation with
Institute of
Certified Public
Accountants of
Kenya. The auditor
is selected by the
General Meeting
Minister may
prescribe the
formation of the
co-operative
development fund.
The Minister does not
need to be involved.
The Act was
assented by the
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President of the
Republic of Kenya
Legal Redress
for co-operators
On refusal of
registration, the
government has 15
days to respond to
aggrieved co-operators
denied registration
Statute provides for
appeal to the Board
of Uganda Co-
operative Alliance
when a society is
aggrieved with
amendment of its
by- laws by the
Registrar.
Registrar
(Commissioner) is
conferred upon a lot of
powers more than the
Board of Uganda
Cooperative Alliance. It is
therefore difficult to
appeal to the Board
against the Registrar’s
decision. The possible
alternative would be to
appeal to the High Court.
On refusal of
registration, the
commissioner has
60 days to respond
to the applicant in
writing.
This presents some
degree of inefficiency in
handling society
matters.
The Commissioner
may for good cause
cancel the
provisional
registration. The
person aggrieved
may appeal to the
Minister on paying
a filing fee of Kenya
Shillings one
thousand shillings
If on appealing to
the minister a co-
operative gets
aggrieved, they can
appeal to the high
court.
This makes it hard, time
consuming and very
expensive. Then
therefore justice gets
delayed
Members’
liability
All co-operatives are
limited liability
organizations
Primary Co-
operative may be a
limited or unlimited
liability institution
but the Apex body
must be a limited
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liability body.
The statute should not
encourage registration
of unlimited liability
bodies where there are
several members
involved.
Maximum share
ownership
Not more than 10% for
any individual member
Not more than 33%
for any individual
member - very large
and influential
Not more than 20%
ownership by any
individual, though the
society itself can own
20%
Fines The Statute includes
fines- this shouldn’t be:
Compliance with
registration
requirements
If the society does
not provide full
compliance within
the 24 month period
and its extensions, a
fine of Uganda
Shillings Ten
Thousand applies.
If there is a
continuing offence,
another Uganda
Shillings One
thousand per day is
payable.
The circumstances
surrounding such
failure to meet the
compliance
requirements have
not been provided
for.
In case of an offence,
fines not exceeding
Kenya Shillings 10,000
apply.
Charges and fines are
stipulated in the law but
they should be in the
regulations
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Income and Expenditure
reporting
If a society does not
report its income
and expenditure to
the registrar for an
opinion before the
General meeting,
they will be fined
Uganda Shillings
five thousand
shillings and an
additional Uganda
Shillings five
hundred shillings
per day, for each
day that the offence
is continued.
Court fees In case of legal dispute,
co-operatives are free
of court fees
Co-operators whose
provisional registration
is revoked by he
Commissioner may
appeal to the Minister
on paying a filing fee of
Kenya Shillings one
thousand shillings.
Reserve Funds
and dividends
Mandatory savings of
30% of all co-operative
profits. These savings
must be deposited in a
reserve fund
Proclamation silent on
situations of making
losses
An educational fund
in addition to
reserve and
provident fund will
be retained by the
co-operative
society.
The practicability and
sustainability of such
funds while allowing
development at an
individual member level
of the society needs to
be considered.
Payment of
dividends is
recommended by
management
committee and
approved by the
General Meeting
Reserve fund-no
specific amount has
been provided for
in the law and the
proportion of funds
to be reserved is
decided by rules (or
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by-laws).
Business licenses Co-operatives can
get into any other
business without
additional trade
licence.
However, it is not clear
whether that business
is confined within the
society or whether the
co-operative can get
into business with non-
members.
If the society makes
more money outside of
the membership, do
they then move away
from the core objective
of why they were set
up?
Amalgamation
and division
Co-operatives can
be amalgamated
or divided.
The law does not
provide the option of
internal re-organization
and re-structuring.
Voluntary division of
the society should
be approved by 2/3
of the members
present at the
meeting providing
for the division.
This provision does not
seem to take into
consideration the rules
of quorum for a general
meeting.
Dissolution of the
society requires a
liquidator and a
tribunal. Appeal is
to the high court if
one is aggrieved by
the co-operative
tribunal
Immunity for
chairman and
members of the co-
operative tribunal-
they shall not be
liable to be sued in
a civil court
provided that they
in good faith
believe that they
had the jurisdiction
to do or order the
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act complained of.
This can lead to
malpractices depending
on the status of those in
the suit.
Minimum
membership age
14 years- a large youth
and child population
necessitates this
18 years is minimum age
Membership
numbers
Minimum of 10
members
Primary Society -30
Secondary society- 2
primary societies;
Tertiary society- 2
secondary societies;
Apex society- 2 or
more secondary
societies
Minimum of ten
members.
Loans Provides restrictions
on loans. Only
members can be
loaned by a co-
operative society.
General or special
sanctions may
provide for giving
loans to others-
This seems like
government involvement
A registered society
may stand surety for
a loan to be granted
to an employee of
the society where
such a loan is for the
benefit of the
society.
It is questionable why an
employee of a society
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may take a loan for the
society-possibly to get
around the statute’s
restrictions on loans?
A co-operative
cannot receive
deposits and loans
from non-members
unless there is
written
authorization by the
registrar.
Management/
Leadership
terms
Management
committee has a
maximum of two
terms but exit of
committee has to
be rotational to
ensure learning for
new committee
members
A control
committee with a
maximum 2-term
limit.
The two committees
may conflict roles and it
is not clear which one is
more powerful as they
both report to the
General Meeting
Government
support
No tax on
dividends
Government
support with
acquisition of land
Training of co-
operators from
designated
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government
institutions
Among other
incentives
Handling
agricultural
produce
A society can
dispose agricultural
produce through by
laws or through
another separate
document, with a
provision for a
specific
payment/sum.
Once members provide
the society with their
produce, they lose title
and it becomes the
society’s-thus benefits of
value addition become
the society’s benefit and
not the individual
directly
Financial
Management
No co-operative
society shall pay a
dividend or bonus or
distribute any part
of its accumulated
funds without the
prior written
consent of the
Registrar.
No co-operator shall
receive any
remuneration from
the co-operative
without registrar
consent
Training and
research
An institute should be
retained for this
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Dispute
resolution
Reconciliation should
be pursued before
arbitration
The General
Secretary of Uganda
Cooperative Alliance
may take
administrative steps
to cause a society
indebted to the
cooperative Bank
limited to pay
without recourse to
the court.
Unenforceable
1. Conflict of
interest as the
UCA is also a
membership
organization-not
all co-operatives
may be members
2. The Co-operative
bank no longer
exists in Uganda.
Gender Inclusive using he/she Not inclusive-uses he
ignoring she
Not inclusive-uses he
ignoring she
Language Available in Amharic
and English
Available only in English Available in English.
Not clear if Swahili
versions are available
Structure Current Proclamation
Provision
2 levels: primary level
and co-operative union
level
Ideal structure
provided by the
regulations
Level 1 – primary
Level 1 – Primary
Level 2 – Secondary
Level 3 – Tertiary
Level 4 – Apex
The structure of the co-
operative is embedded
in the law; so no matter
how good the primary
co-operative society is,
they must move up to
the apex society which
creates new challenges.
This should not have
been in the law but the
regulations
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Level 2 – Union
Level 3 – Federation
Level 4 – Co-operative
league
An analysis of
the Law
Is it a law or a
policy? It has
elements of both
There is a draft
policy whose
objectives and
principles were not
very clear
Conventional law of
dos and don’ts. It
however has many
impractical
colonially oriented
provisions
A draft co-operative
development policy
framework was
developed in
February 2009,
pursued by Uganda
Co-operative
Alliance.
The law amended in
1991 clearly
elaborates its vision,
mission and
objective though
principles were left
out. It is not clear
what the value add
of the policy would
be.
UCA needs to
ensure that the
principles are either
enshrined in the
policy or
innovatively made
part of the Statute.
This helps to
commit government
by co-adapting the
principles which
were ratified at
Silent on term
limits for
governance and
management of co-
operatives
Not clear whether
it is a law or a policy
An attempt to
integrate some
policy elements
into the Act,
though the draft
policy had all the
universal co-
operative guiding
principles.
Objectives of the
draft policy are
missing.
Principles
ambiguously placed
under ‘the
registration of co-
operative society’
they may not be
easily identified
Act stipulates one
broad objective-
promotion of the
welfare and
economic interests
of the members.
Objectives should
be in the policy and
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international level
with the aim of
enhancing
partnership
between
government and co-
operatives for
enhanced collective
social and economic
development of the
country.
Relevance
challenge-A number
of areas mentioned
in the Statute work
very differently on
the ground.
not in the Act
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C2 DISCUSSION ON EMERGING ISSUES - LESSONS LEARNT OR GAPS
1. The co-operative laws in each of the three countries studied seem not be effective
without the co-operative policy. Co-operatives and stakeholders have been seeking to
develop policies in the three countries.
2. Member ownership over the co-operative societies is an important principle that co-
operatives are seeking to restore by developing policy and by lobbying for more effective
co-operative laws. The member of the producer co-operative must retain ownership of
their product all through the value chain.
3. In addition to owning the product as it continues to be added value, the member must
exercise control over the running of their co-operative. In many cases, Registrars or
Commissioners or Ministers have powers that seem to exceed or conflict those of the
General Meetings.
4. Co-operative professionalism in running the affairs of the co-operative movement is an
important catalyst in fostering the development of the co-operative movement. There
seems to be lack of professionalism in running co-operatives in the region, which would
be an impediment to development.
5. The rigidity of the co-operative movement structure creates ambiguity in membership
and overlapping functions of the members.
6. Rethinking of the role of the co-operative movement as the facilitator rather than in
trading, enables the societies to stay focussed to providing services to members. Thinking
of trade limits co-operator to thinking that business can only be through movement of
goods. Co-operatives need to realise that they can be in the service business. Buying from
members and then selling at a profit makes the co-operative a middle-man, no different
from any other. A genuine co-operative is one that enhances the value of the product
while the individual retains ownership of the product. The corporate world accuses the
co-operative movement of not enhancing the ownership of the members and rightly so.
A case in point is in Ethiopia. Starbucks in Ethiopia for example is buying coffee at US
$1.80 per kilo, while the co-operatives buy it at US $2.50. Multinationals are seeking to
maximise value by buying the cheapest price for best quality but by assuring the producer
of a market. Co-operatives have helped Ethiopian coffee farmers as Specialty Coffee
buyers pay better than Starbucks. The farmer cannot access these specialty coffee buyers
on their own but with a co-operative such as Oromia Coffee Farmers Co-operative Union,
they have accessed the Specialty Coffee market.
7. A simple, effective co-operative law enacted with the co-operators effective participation
enhances partnership between government and the co-operative movement. In Ethiopia
for example the registrar/government has offices at every level for teaching farmers and
checking books of accounts. There is no political imposition though there is consultation
in developing the law. The Co-operative Bank in Ethiopia has also grown and now has 38
branches.
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8. There is emerging integration of policy pillars into the co-operative laws in the three
countries
9. Co-operatives are seeking to balance co-operative principles of social welfare as well as
business principles of maximising profits and are thus entering into dual registration.
They get registered under the Companies Act alongside the Co-operative Acts. This poses
a legal challenge; what law would apply in the case of legal redress? Co-operative
societies should therefore focus on the principles of the co-operative movement. The
members will eventually make the profit through the opportunities the co-operative
provides.
10. Emerging specialization of co-operatives based on commodities and on specific sections
of the value chains
11. Co-operatives expanding their activities beyond their members.
12. The co-operative movement needs to agree on what should be embedded in the law and
what should remain as regulations and this should be uniform regionally.
13. Laws are not keen on natural environment conservation yet they have the
capacity/positioning to ensure that environmental conservation is part of every co-
operative since they are community based.
14. Entrepreneurship and innovation are increasingly becoming key ingredients in enhancing
the role of the co-operative societies as seen in the case of Ethiopia’s Oromia Coffee
Farmers Co-operative Union.
15. In each of the three countries, co-operatives are a closed system where accountability
and transparency are key challenges as opposed to the case with limited liability
companies.
16. The re-organization and co-ordination of all different types of co-operatives under one
institute with decentralized services at different levels; regional, federal, city, and bureau
has enabled effective delivery of services in Ethiopia.
17. In Ethiopia the use of the main local dialect has enhanced understanding and effective
participation of society members during the law making process.
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C3 RECOMMENDATIONS FROM THE STUDY
1. Co-operative societies should be left freely to exercise the highest degree of member
ownership in the governance and management of their own affairs. This should be
backed both by policy and by law
2. They should not trade (buying and selling) like middlemen, but should be facilitators
(service providers) to maximize their members’ profits. Trade profits will not be
significant because of competition. It is wiser to focus on service where one can
differentiate the benefits between the member and the non-member.
3. Continuous education is needed for co-operative members to assist them on issues of
governance, management and law and any other areas that will improve the quality of
the co-operative
4. EAFF is in a position to promote a regional co-operative policy to be embraced by heads
of state for EAC and AU so that all national co-operative policies of member states are
pegged on this one as regional markets are gaining importance over local or global
markets
5. There should be provisions on term limits, with rotation of members’ exits to promote
continuity and avoid a leadership vacuum
6. Dual registration of co-operative societies should be avoided so that the profit motive
does not over-ride the social and economic development of members. This will avoid
contests on the legal status of the society, which can potentially lead to dissolution in
courts of law.
7. Governance and Management should be separated. The use of, “management
committee” to mean the Board should be avoided because the two have different roles
and responsibilities. A management committee runs and manages the day-to-day affairs
of the society and implements policies formulated by the Board. Where there is low
maturity in the development of the co-op movement this can lead to various challenges
and reduce the effectiveness of the co-operative as a development catalyst.
8. Primary societies are not allowed to directly participate at commodity exchanges in each
of three countries’ laws though not explicitly stated as such. Different levels of co-
operative societies should be left to decide freely at what level of the value chain they
would want to participate in.
9. The hierarchy of appeal can be a frustration that can reduce the effectiveness of co-
operatives. It should be improved and shortened to reduce time and costs; keeping in
mind that these co-operatives are mainly not as efficient as corporate bodies because of
their nature, where they exist and the objectives for which they exit.
10. Professionalism is needed in co-operatives beginning with the drafting of the laws; it
should be done by a co-operative lawyer who can see the total effect better than the co-
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operators themselves. The structure of the co-operative movement should not be in the
law because organizational structures evolve quite rapidly. Articles dealing with
amalgzamation and division should be remodeled to read ‘reorganization and
restructuring’ which are more likely to happen than amalgamation and division.
11. The Laws should be drafted in simple language
12. Some articles of the laws in each of the three countries are misplaced thus making it
difficult to read and understand as different sections may be dealing the same/similar
issues. There should be a thorough legal review aimed at sorting and placing of different
articles in these laws.
13. In the absence of a co-operative policy, a law which is objective oriented and guided with
principles will enable co-operative societies, individual members and regulators to remain
focused. Shift away from the dos and don’ts.
14. A model Act should be one that freely enhances the individual members of the co-
operative society to have ownership over their society in terms of governance,
management and the products they deal with as enterprises along the commodity value
chain. The Ethiopian Co-operative law has made some important steps in this direction
and provides a very good example for other countries in the region to emulate.
C4 ETHIOPIA CASE STUDY - THE OROMIA COFFEE FARMERS CO-OPERATIVE
UNION
Oromia Coffee Farmers Co-operative Union of Ethiopia has positioned itself as an organization
that markets to the Specialty coffee market. Membership growth is at least double every four
years and their revenues have grown 19 times since inception. These supernormal profits and
growth are a testament to the power of co-operating.
Tadesse Meskala of Oromia Coffee Co-operative Union
Tadesse Meskala gave a response on the success of the Ethiopian case. He started with a history
of co-operatives in Ethiopia. In the 1960s, during the time of Emperor Haile Selassie, co-
operatives began to emerge. Landlords owned everything and tenants were not allowed to do
anything.
Following the era of the landlord was socialism, a concept borrowed from Russia which seemed
to be succeeding at the time. The socialist approach increased productivity in Ethiopia but there
was an underlying problem; membership in the co-operatives was forced. There were no
consultations with members and everything was communal and enforced.
When the new government took over power through a guerrilla approach, they abandoned all
former government initiatives –including co-operatives; this is because money from co-operatives
was part of the funds used to fight the guerrilla warriors. In addition to co-operatives being
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abandoned, the new operatives and existing government operatives then began to loot the
existing co-operatives.
Later on, funding was provided by the ICA and co-operators interested in sustaining the
movement began to borrow best practice from Kenya and Tanzania. Policy mechanisms were
brought in to help farmers begin to see that co-operatives work. 99% of rural Ethiopia was
generally uneducated and therefore this was a challenge. Another challenge is that when
Ethiopians retire, they do not return to the village but retire in the cities, so skills were never
reaching the rural market. District co-operative promoters embarked on a lot of awareness
programmes.
The Proclamation (Law/Act) was then developed by co-operative activists. It borrowed a lot from
international best practice, using the Tanzanian law as the template. Once the laws were made,
they were reviewed by lawyers, then presented to MPs then for debate then passed as law by
the Federal Government.
The Ethiopian Government has respect for the co-operative movement as it has brought services
to the people and empowered farmers economically and contributed to infrastructure
development.
The Management runs the co-operative; they are hired professionals. The Board meets every two
months and the Union level meets every four months. The co-operatives are strong enough to
ward off any federal government interference in their running.
Comment by Participants
EAFF President began by saying that Oromia is successful as it is connected to the Ethiopia’s
policy’ Agriculture for Industrialization’. The process belongs to the producers and it is clear
that the government is not as prominent in co-operatives as is the case for Ethiopia’s
neighbouring countries.
Co-operatives have been slow in contributing to national agenda in most countries because
of their structures and slow communication processes; in most cases they are not in time to
make their voice heard on national discussions on issues that would affect co-operative
members. Co-operatives should develop and position themselves as bargaining platforms
promoting the members’ economic and social interests.
The Ethiopian Case is an eye opener. In Kenya there is a big difference between the law and
what actually happens on the ground. If a new leader comes in, the law is reinterpreted to
suit the ends of the new leadership.
Other areas that need to be given consideration are:
o The role of the co-operative movement vis a vis the emerging issues. E.g. at the end
of 2007, global GDP was 44.6 Trillion dollars, of which US contributed 28%, Japan-
10.1%, Germany-6%, China- 5% and UK- 4% UK. G7 contributed 61% of global GDP. Africa
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contributed on 1.7% (53 countries). How do we make co-operatives a vehicle of raising
the profile of Africa’s contribution to global productivity?
o The United States of America is a strong producer because of its foundation of Unity
amongst the states. Co-operatives-read unity- therefore are necessary.
o Encouraging entrepreneurship amongst co-operatives
o The role of ICT in driving the co-operatives forward
o Gender mainstreaming of co-operative membership and management
o Providing opportunities for Youth participation in co-operatives for increased
expertise, and transition; both with leadership and membership
o Focus on various specialist sectors within the co-operative movement e.g.
agriculture
US - agriculture contributed only 1% to GDP and 2% of total US employment.
Kenya - agriculture contributed 28% of GDP and 50% of employment
With that poor ratio, resources continue to be underutilized. Industrialising
agriculture and incorporating service elements into it e.g. value addition would
raise the GDP and balance contribution of agriculture: industry: services to
economic development
o The role of the SACCO in promoting national productivity
In Kenya, it is evident that there is violation of voluntary co-operative membership. We have
learnt from Ethiopia that though the government want to influence co-operatives, it need
not be the case.
In Uganda, previously the office of the Minister for Co-operatives was the barrier to co-
operative development but with his removal, the barrier is now the office of the
Commissioner of Co-operatives. How do we rid ourselves of government interference?
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Ethiopia: local development-school built with co-operative funds
In Kenya there were very strong co-operatives which have been failing because of
competition. When government ministries were split, the powers of each minister were
reduced. The President of Kenya needs to ensure that we have one effective governing Co-
operative Act that harmonizes all activities that an individual engages in; housing, coffee
farming, livestock keeping, savings and finance, fisheries etc. In Kenya, a farmer with
multiple farming activities has several bodies governing him/her as there is a body for almost
all farm products. This is how political interference has affected farmer associations, local
government, health, etc and the price is being paid as seen through the slow pace of
development.
Tadesse Meskela’s response:
In Ethiopia, one of the key subjects taught during training of co-operative leaders is the Law.
The union invests money in training farmers and sensitizing local leaders, using government
staff. The land policies of African countries hold back the success of the small holder
initiatives and so co-operatives are a testament of how one’s life can improve through
uniting with other similarly challenged individuals. The result is that Ethiopian politicians are
happy to see their areas developing and this has generated increased government support
to co-operative initiatives.
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The biggest challenge facing Ethiopian co-operatives currently is market linkage. Globally,
the history of development is the history or co-operatives; it is only that now they are
referred to as ‘corporations’, ‘enterprises’ etc. Essentially, it is the power of unity at work.
Ethiopia hopes to get the point of having professional boards governing Co-operatives, just
as corporations in the developed markets are governed by professional boards.
Comment by Mr. Geza Varga
Mr. Varga expressed his gratitude for the presentations as they have clearly oriented him on the
issues affecting co-operatives in Eastern Africa.
He posed a challenge to participants to change their way of thinking. Competitiveness is an
overarching issue for co-operative but this has limitations. In a market such as Europe the
competitiveness approach is not sustainable. The competitiveness of the country as a whole is
more important than that of the individual co-operative.
The Co-operative movement in Europe has found its niche. The private sector/business in Europe
is focused on generating profit and leaves the social cost of these profits to the State. Co-
operatives have gone beyond competitiveness and have generated other useful values to the
society over and above profit and competitiveness. People had lost faith and confidence in co-
operatives because of the social arm which was imposed using a socialism government approach.
The social arm has now however began to be seen as an advantage as Europeans being to feel
the cost of capitalism.
-------------------------------------------------LUNCH BREAK 1.30 P.M.------------------------------------------
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AFTERNOON SESSION
The session was moderated by The EAFF President who iterated that the agenda was to discuss:
1. Comments to presentation
2. Experience of implementation in three country presentations
3. Policy options and recommendations
C5 COUNTRY PRESENTATIONS CONTINUED
PRESENTATION BY GLORIA MAZOKO - TFC
The stage was set for Ms Gloria Mazoko who began by describing the Co-operative legislative
environment of Tanzania. The Registrar of Co-operatives has a lot of power provided by the law.
This power has in many cases frustrated co-operators seeking registration. Time periods offered
for review of registrations is 60 days within which registration may be granted or refused. If
refused, redress would be addressed by the Ministers. That arrangement as it is is fraught with
political challenges.
At the time co-operatives were formally introduced, the colonialists forced them into being,
hence all the rights ended up belonging to the government, registrar, commissioner, etc. The
focus was rural for development purposes, yet rural markets have lower bargaining power due to
education and information challenges of rural folk.
After the colonialists in Tanzania, then came Ujamaa-socialism. With the collapse of socialism,
politicians became the new capitalist and in addition to interfering with co-operatives which they
used to consolidate their power, they grabbed buildings and property that belonged to co-
operatives to enrich themselves.
The issue of co-operatives in Tanzania therefore is one of image, because of the influence of
colonialism, socialism and eventually capitalism coupled with the interference by politicians.
The action that TFC is taking is developing a Co-operative Reform Organization Programme which
is being carried out jointly by TFC and Moshi University College, Auditing agencies and other
parties.
This programme is aimed at improving the image of co-operatives in the country and its key
strategies include education and training. The programme is also working towards streamlining
the Policy and Co-operative Act.
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Comments from participants
Poor image of co-operatives is common within the Eastern Africa region. In Uganda, the
Co-operatives are working on a new image that is based on evidence of performance.
They have demonstrated that they can deliver the required development.
In Uganda, the existing structures were changed, a different operating framework is in
place and co-operatives are no longer monopolies-there is no longer government funding
to co-operatives.
The Hungarian and European experience is that co-operatives became professional and
began to do elementary processing; the tendency then was to grow these co-operatives
as big as possible for bargaining power purposes. One co-operative became so big it
covered half the country, yet the distances were prohibiting. This co-operative then
started competing with other countries, Spain, Italy etc.
o If a co-operative is not competitive, it becomes irrelevant to the farmer if it
cannot sell product. Evidence is that in 2009, some farmers decided not to belong
to a co-operative but to market their individual farm produce-they faced the
challenge of establishing a value chain up to the retail shops; this value chain is
the key benefit of the co-operative movement to the farmer. It would be even
more effective if the produce reaching retail was still owned by the farmer, that
way they get the full benefit of value addition.
o Mr Varga then asked whether there was a plan to have an agricultural policy for
EA Union. The potential of the countries differs and those who have less
resources will lose if they will not be part of co-operatives. He gave an overview
of the Hungarian experience of policy alignment. Hungary joined the EU in 2004
together with a number of former socialist countries as part of their steps
towards globalization. The Hungarian farmers were not prepared for the
enlargement as markets had to open markets immediately, which put quite a
strain on the country. Since then, the economy of Hungary has been number 27
out of 27 nations. It was not a step-by-step market access but an immediate
floodgate.
The EAFF President responded and indicated that there is a possibility of monopolies
arising with the co-operatives and this must be checked. A good example of how this has
worked is operating within the CAADP framework; the leaders of each country aligning
the agricultural policies to the framework. The question still holds; are members of
Eastern African states ready for an immediate opening up of markets? In East Africa,
Kenya was taxed by her neighbours for exports into their countries as a way of other East
African countries protecting their local business. This agreement was to run for a five year
period, which is ending July 2010 after which all trade barriers are coming down and
governments are opening up.
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Mr Muchiri indicated that the process at EAC has been very consultative. The Agriculture
and Rural Development Strategies for each country are being created in reference to
such documents as CAADP and the EurepGap which is a voluntary certification for farm
produce availed to the European retail market, a global quality assurance based on the
Good Agricultural Practice.
Mr Varga noted with pleasure that rural development has been included in the discussion
of market access for Eastern African agricultural produce. Rural development is more
than just agriculture, there are various opportunities for co-operation toward rural
development.
The EAFF President commented on the Common Agricultural Policy of the EU which has
two pillars;
- First Pillar - Direct payment and export subsidy.
- Second Pillar - Rural development; initiative of the last 5-6 years so the budget is very low
Rural development must be a pillar for Eastern African agriculture, taking into account the social,
infrastructural and geographical/natural structures and disparities between the various
agricultural regions, given that most agriculture is rural. Co-operatives will therefore never be in
competition with the private sector as their services are society oriented.
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D DISCUSSION ON COUNTRY PRESENTATIONS
This session was for participants to relate their experience of the practice on the various
provisions of the Co-operative law within their country
Comments by Tadesse Meskala on practice and law on co-operatives in Ethiopia:
1. Co-operative district promoters have brought education and information to the people
on the benefits of co-operating
2. Government support is available for co-operatives- for example: no licenses and no
income tax is charged to co-operatives, as co-operative members have already paid these
in their individual capacities. Oromia Coffee Farmers Co-operative Union though is a
primary co-operative is directly exporting the coffee to the market-it is not passing
through the commodity exchange
3. Since the products being delivered to the co-operatives are area specific, there is no
problem selling shares to non-members of co-operatives, it only empowers it.
4. There is co-operation on inputs too. Fertilizer buying is now being done by co-operatives.
5. Societies amalgamate gaining several benefit:
a. Export is possible when they have bulk and better prices can be negotiated
b. Co-operative proceeds go back to the growers. The administration funds are also
used to build schools, clinics and water, developments that would not have
happened without the amalgamation
c. Amalgamation allows for continuous supply of product to the market
d. Processing, packing and value addition can only come through amalgamation
6. In Ethiopia, the board of the co-operative is also the management.
a. The Proclamation is to be amended so that management and board are totally
separated. Management should account to the board and should consist of
employed professionals for improved accountability
b. The issue of the Control committee within the Proclamation needs to be
amended-it is not practical and the control committees have not performed well.
7. There is no federal co-operative union so as to ensure that there is no ethnic grouping
imbalance.
8. The proclamation currently is the 5th. There are some legal issues which need emphasis
a. Procedure on settlement of disputes; arbitration will be considered first
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b. Tax exemption issues are still unknown.
9. Lack of awareness must be addressed through comprehensive training and education
a. Entrenching education and training in the law will provide a budget for the same
b. Definition of the co-operative will need to be done more clearly-be explicit what
the co-operatives require from the government.
Response by participants:
It is paramount to re-think the role of co-operatives; if viewed as middle-men, it means
that they will not focus on providing services, but rather on doing business for the co-
operative at member’s expense. Co-operatives are not middle-men but facilitators. The
co-operative society does not exist for itself but exists to maximise the profits for the
individual farmer. They do business for the member as opposed to with the member. A
case in point; the Kenyan government stepped into the running of co-operatives and
decreed that operating costs must not exceed 20%, which is considered a facilitation fee.
Oromia Coffee Farmers Co-operative Union might need to come up with internal by-laws
governing rules and guidelines of operation costs, which can be approved by the general
assembly; this would be some form of self-regulation.
To get out of government interference, co-operatives must lobby for a general East
African Act to govern the Co-operative movement. This will reduce the power of
ministers of each country who currently heavily influence co-operatives. The East African
Parliament can pass the EA Co-operative Act upon which all countries will need to align
themselves. Co-operatives must also self-regulate and develop a policy. In Kenya, the co-
operative movement suffered a poor image, beginning with the Apex organization,
formerly Kenya National Federation of Co-operatives (KNFC), now CAK which was heavily
indebted and ineffective as an apex organization, as it had focused on doing business for
its own sake rather than providing an environment that enables co-operatives to thrive.
The rebranding exercise restored confidence amongst co-operators locally as well as
international confidence which allowed it to access needed grants. New by-laws were
developed:
o An apex organization should be the voice of all co-operators and not a business.
The main function of CAK will be to address national issues
o Seek finances which should be used for training of members, governance,
management etc.
Conducting business will be left to primary co-operatives.
In Kenya, the co-operative model is functional and effective. The challenge facing co-
operatives is governance. Nevertheless, an Act has been reviewed to handle these
governance issues. Co-operatives also have a business plan template, training
requirements for producer factory managers, procedures for the recruitment of leaders
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among other provisions available with the Ministry of Co-operatives in Kenya. Alongside,
co-operatives are being encouraged to develop terms of employment and minimum
education for board members.
In Kenya, the movement wants to encourage the application of ICT across the board.
This will allow for real-time information transfer, reducing problems of governance. The
Ministry of Co-operatives in Kenya is also giving 140 computers and is also building
marketing information systems. The first of this is the current development of a coffee
sector database is currently under development.
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E DISCUSSION OF RECOMMENDATIONS FROM THE REPORT
The EAFF President moved the participants to discuss recommendations from the report:
1. Acts and Policies
Part of the reason why the co-operative movement is so interfered with unlike many
other sectors in the economy include:
o The high level of illiteracy and ignorance of membership because of the rural
nature of these co-operatives.
o Large numbers of people that can be used for political mileage
o Members are not well educated and yet are entrusting a few people with a lot of
money
o The government gains a lot of foreign exchange income through the outputs of
the co-operative movement
The EAFF President commented that we need a structure that safeguards the members while
enabling them to carry out their work diligently.
Ethics and leadership challenges must be addressed. The Act should deal directly with
leadership/governance and management. The Act should also provide for enforcing the law that
exists; sometimes it is ignored but in many cases it is leadership integrity that is the problem.
The case in Uganda is that the protector of co-operatives is the Parliament since it has a genuine
vested interest in the success of co-operatives. They represent development in their
constituencies.
The Act should be clear on the penalties for failing to maintain integrity in co-operative
leadership. There should be a clear description of where the Co-operative Tribunal’s
mandate ends and the Court’s mandate begins. Our role in leadership within the
movement should be seen as one of lobbying to strengthen the laws and for improved
overall governance.
2. Comments on Term Limits
Kenya - There is an age limit for co-operative leaders in Kenya-70 years. The 3 year limit for
leadership terms is not enforced. Since the co-operative is a private entity, members are allowed
to choose, so this should not be in the Act as it is contradictory and allows the government into
governance of co-operatives which is not part of their mandate.
Ethiopia - The Proclamation addresses terms for The Board, this changed from management
committee as there was a separation of management team from the governance team. If you put
a term limit, the leaders have no integrity-they want to rob as much as they can during their 3
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year term, so now without the pressure of terms, the Board can work freely and doesn’t have to
meet often to try and benefit as much as they can.
3. Comment on direct participation on commodity exchanges
If an individual has a large farm with large output, they can sell their farm produce at the
commodity exchange. At the primary level, co-operatives can choose who will be their value
addition partner. This is the case in Kenya and in Ethiopia. In Uganda there is minimal
participation of co-operatives at commodity exchanges because of collapsed structures.
4. Comment on including informal sector
The Uganda law does not acknowledge the informal sectors. There is need to incorporate the
informal sector in co-operatives
5. Comment on bureaucracy
Timelines for legal redress need to be reduced
6. Comment on languages
Common languages should be used on the Law. It shouldn’t be in English only.
7. Should co-operatives engage in business?
Law should provide that Apex bodies should be facilitating bodies and should not engage in
business.
8. Amalgamation and division of cooperative societies
In addition to amalgamation or division, co-operatives could be restructured or reorganized.
Major gaps in the Co-operative Acts
1. Co-operatives are perceived as a closed system
2. In Uganda, the Registrar/ commissioner is a member of the board of UCA, a good
initiative which ahs not been documented in the by-laws.
3. Structure of the cooperative movement is incomplete or ineffective
4. Co-operative law and policy: The movement in all countries should have a policy and a
law. The law follows from the overall guiding policy. Some articles need to be removed
from the Acts/Laws e.g. the provision of specific fines provided for various co-operative
crimes.
5. Rigidity of the co-operative structure:
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The apex organization is provided for in the law (Kenya and Uganda)… “there shall be only
one apex organization”. As much as this may be problematic, in that co-operatives are
voluntary bodies in the first place, there are benefits of having an apex body as co-opeators
can speak with one voice and have issues affecting them addressed. The CEOs of national
associations of various co-operatives should be the technical arm of the board of the Apex.
The roles of the primary co-operatives and the secondary co-operatives need to be clarified.
At the secondary level, membership should not be based on political boundaries as this may
re-politicize co-operatives by placing them in districts and also creating ethnic co-operatives.
In Tanzania the law has addressed this by providing for only two levels – the primary level and
federation level.
6. Rethinking the role of co-operative movement
The role of objectives needs to be rephrased. Co-operatives should engage in business as well as
facilitation for marketing. They could own stores and warehouses but in addition offer value
addition services and development services
7. At the regional level, there is need for co-operative policy to guide the growing regional
trade.
8. Co-operatives and business principles. Dual registration of primary co-operatives as
limited liability companies must be implemented with caution as the body will end up
being registered under the Co-operative Act and Companies Act. At the national level, it
may be more applicable though there are risks too. There are cases where dual
registration has been applied though: In the Insurance industry, insurance co-operatives
are registered both under the Insurers Act and the Co-operative Act. The same applies
within the financial sector, though the question of which legal jurisdiction to apply
remains. Dual registration calls for caution so that the management does not lose sight of
its core mandate which is to serve members, over and above doing business. The by-laws
of the co-operatives should ensure that the emphasis remains that way.
The consultant was requested to carry out further research on this element of dual registration
and provide considerations that can be made for the regional framework.
9. Gender equity: Agreed that there should be gender mainstreaming in governance of co-
operative societies.
10. Conservation of environment: By-laws for co-operatives should ensure that this is
addressed. Farmer co-operatives tend to be based in a specific location and can therefore
be very useful vehicles for environmental conservation. The by-laws governing this may
be developed in collaboration with national conservation agencies such as Kenya’s
NEMA. The by-laws should also address the implementation and awareness creation of
these by-laws.
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WORKSHOP PROCEEDINGS
DAY 2
PRESENT
1. Mr. Philip Kiriro –President, EAFF
2. Harriet Ssali – Vice President, EAFF
3. Stephen Muchiri - Chief Executive Officer, EAFF
4. Mainza Mugoya – Programme Officer (Policy) EAFF
5. Tadesse Meskela – Chief Executive Officer, Oromia Coffee Co-operative Union
6. Mr. Joseph Nkandu-Consultant
7. Mr. Geza Varga – President, Galgafarm First Hungarian Co-operative
8. Mrs Varga – Galgafarm First Hungarian Co-operative
9. Mrs. Mary Mungai – Senior Assistant Commissioner for Co-operatives, Ministry of Co-
operatives
10. Mr. Leonard Msemakweli – Secretary General, Uganda Co-operative Alliance
11. Ms. Gloria Mazoko, Policy and PR officer, Tanzania Federation of Co-operatives
12. Mrs. Grace Ngambi- Treasurer, KENFAP
13. Mr. Francis Kamande – Board Member, Co-operative Alliance of Kenya (former KNFC)
14. Ms Judith Nthiga – Co-operative Alliance of Kenya(Former KNFC)
15. Mr. Stephen Kiwanuka – Programme Officer, International Co-operative Alliance
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A THE MOVIE: BLACK GOLD
The session began at 8.40 a.m. with members watching a movie, Black Gold produced by Tadesse
of Oromia Coffee Co-operative Union.
Black Gold www.blackgoldmovie.com is a provocative movie that exposes the story behind the
coffee available on our tables. It is the story about Tadesse Meskela of Oromia Coffee Co-
operative Union of Ethiopia and how he has struggled to keep members of the coffee co-
operative from Western Exploitation through the coffee marketing chain.
It is a story that contrasts the struggles of the coffee farmer with the profits of the coffee retailer
and how the coffee co-operative has been effective in removing at least six levels from the coffee
value chain, increasing the revenues that coffee farmers make.
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B KEY NOTE PRESENTATION BY GEZA VARGA
Session began at 10.40 a.m. with a presentation by Mr Geza Varga on the co-operative movement
in the European Union.
Mr. Varga is the President of the First Hungarian Co-operative for Organic Farming. He also was a
Board Member of the European Family Farmers Federation between the years 2002 and 2007.
History of the Co-operative Movement in Europe
He began with a history and description of the co-operative movement in Europe. In Europe
there are two types of co-operatives;
for small farmers
for agribusiness.
History of European co-op can be followed by following these two farmer federations. As a
former board member of the Family Farmers (small farmers’ co-operative), his approach is a
bottom-up as opposed to the agri-business approach. This is because his personal interest is in
the development that agribusinesses are unable to provide to the local people they work with.
The co-operative movement began in 1844 at Rochdale in the UK. The founding members are
now referred to as the Rochdale pioneers. The producers of the time realised that the shops
were profit oriented and this made them cheat the consumer both on quality and quantity. The
first co-operative had 28 members. Mr. Varga met an elder from the area who gave him some
additional information on the history of this first co-operative. The pioneers began by co-
operating to purchase kitchen foodstuff and then later developed into other products as well.
The 7 basic principles of co-operatives were developed by the Rochdale pioneers.
In 1858 a book was written on co-operatives, by George Jacob Holyoake ‘Self help by the people’,
who was a British co-operator. This book is a useful source of information.
Co-operative Movement in Hungary
In Hungary, co-operatives are named after Ants-the hard working little black insects. ‘Ant’ type
co-operatives do not focus on one commodity but are multi-product, they also concentrate on
the wholeness of rural development.
The development of the co-operative movement in Hungary was interrupted by two wars (WW I
and WW II) and by communism (1955-1990). The Hungarian population began to consider co-
operatives again in 1998. In 2004 when Hungary joined the EU, co-operatives were also affected
so they cannot be termed a true success story though they have continued to exist despite the
challenges. In 1992 the 1st Hungarian co-operative for organic farming was started.
Mr. Varga mentioned that co-operatives are pushing for food sovereignty and for the dumping of
food to end. They are pushing for locals to consume their own produce as opposed to that
produced by other EU countries through subsidies. Mr. Varga was personally involved in the
demonstrations at the failed WTO Cancun talks of 2003.
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The European Co-operative Society was established in 2006 to enable the internal EU market
work more effectively. This legal form was created to make it easier for transnational co-
operatives in the EU to operate, without having to establish a subsidiary in each Member State in
which they operate. The co-operatives can keep their legal entity end even move offices across
the EU.
There are many types of co-operatives in Europe:
a) Consumers' co-operative – Co-operative wholesale society
b) Worker co-operative - Workers' self-management
c) Purchasing co-operative - Retailers' co-operative
d) Co-operative banking - Savings and loan associations
e) Housing co-operative - Intentional communities
f) Agricultural co-operative - Collective farming – for example Wheat pools
g) Utility co-operative - Community wind energy
h) Mutual insurance - Health insurance co-operative s
i) Food co-operative
j) Recycling co-operative
Mr Varga encouraged EAFF to look at the European Act and see how it may apply for the Eastern
Africa Region. In Europe, it is allowed to have subsidiary co-operatives or international co-
operatives.
Mr. Varga indicated that his presentation will focus more on the Ant type co-operatives as they
are multi-product and farmers can compete with multinationals. They also make it possible for
farmers to explore opportunities to co-operate with the United States of America’s Consumer co-
operatives.
Presentation on the First Hungarian Co-op for Organic Farming
The First Hungarian Co-operative for Organic Farming is an Ant-type co-operative. Before the co-
operatives, 100ha of land would employ only 1 person, but now only 8ha is needed to create
employment for 1 person. This is because of value addition at the local level. The benefits of co-
operating have already been realised.
The First Hungarian Organic Farmers Co-operative operates under the Gaia Ecological and Rural
Development Foundation founded in 1990 on the day after the communism collapsed and the
country transitioned to Capitalism.
With the entry of capitalism, farmers have had to compete professionally amidst many
difficulties-balancing seeking profits, protecting the environment and dealing with social issues.
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Co-operatives have been very influential in these areas as this is what sustainable rural
development is about; looking at social, economic and environmental issues. This approach was
based on research carried out between the years 1996-2000 where the reports indicated that
there were superior environmental and social benefits achieved by organic production. However,
transporting organic produce a distance exceeding 200km wipes out all the benefits of organic
farming, hence the push by farmers in Europe, asking consumers to purchase local produce-to
ensure produce has not travelled farther than 50km. The location of the Gaia producers happens
to be 50 km away from Budapest the capital of Hungary and the largest market, so their
produces incidentally happen to be certified organic. Accessing the capital city market has been a
great boon for the First Hungarian Organic Farmers Co-operative.
There was a photo demonstration of the produce that is supplied to the local market- value
added.
The co-operatives have to comply with the same standards as multinationals. By cutting the
supply chain, the price can be competitive, which means a better return for the farmer even
without economies of scale which the multinational agribusiness has.
In addition to agriculture, there are other activities the co-operative engages in. The objective is
to create an autonomous surrounding for the member of the co-operative, to improve the quality
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of life of the rural person who may not be able to keep up with the pace of urbanization.
Agriculture is the most important element though and others are described below:
Building insulation technology to deal with the Hungarian winters of up to -27 degrees
Celsius and the summers of up to 40 degrees Celsius. The buildings are constructed with
clay bricks made by the members of the co-operative using local clay as the
recommended building materials that are environmentally sound are unaffordable to
rural folk.
There are youth programmes to ensure continuity
There are children’s programmes to teach them their culture.
QUESTION SESSION:
1. How funds were mobilized to set up this Ant-type co-operative?
Profit from the co-operatives was returned; and members were getting wealthier. The
wealthier they got, the bigger the market grew and in turn the bigger the co-operative grew.
EU development funds are available for such programmes
2. What makes this co-operative competitive:
a. Yet organic food is costlier because of the loss in productivity?
Research proved that organic produce was healthier/better quality so a market then
developed ready to pay for this. A stable market of about 10-12% of Europe for organic
products exists.
Total income is just as good. Healthy cows reduce livestock management health costs so the
overall costs of producing from organically fed cows are lower. Organic vegetables require
more labour but the social element of co-operatives comes in as people have jobs created for
them. Margins are about 30-50%
b. Global financial crisis-how did the co-operative survive?
Subsidies were not available but farmers then consolidated themselves to access
development funds.
They were also very diligent in seeking markets for their produce and got creative
Ant co-operatives have many products available for the market, so as one product’s price
drops, another product with a competitive price then sustains the co-operative
3. How does the ‘Worker Co-operative’ work and can we get a constitution
on how to form one? What other benefits do you give the workers?
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Worker co-operatives are for the employees working at the society. They don’t have land so they
work on people’s farms using their skills. The employees are members/part owners of the co-
operative so their energy, housing and other needs are met and overall rural life quality is
improved.
Workers get benefits depending on their shareholding within the co-operative as membership is
voluntary. It is affordable to become a member; approximately one day’s salary. The votes are
not distributed according to shareholding but one vote per person so that even the President,
Mr. Varga has only one vote as much as he has over eight (8) million shares.
4. What is the cost of organic certification like?
The cost of organic certification is less than ½ of the value of the output and is affordable.
5. Is there a co-operative policy?
There is no co-operative policy though it is necessary as the law is not sufficient. The policy
should exceed election periods as laws are always subject to change when new legislators come
in. Mr Varga indicated he is more interested in seeing a framework for the development of the
co-operative movement developed as it is difficult for the co-operatives to compete with private
businesses that have efficiency and economies of scale-while showing solidarity towards the
farmers and the social problems they face.
6. It seems in this arrangement that there are two entities: A foundation-
Gaia and a co-operative - First Hungarian Organic Farmers co-operative.
What is the difference of the two and what is the foundation about?
The Foundation is regulated by the law for associations, foundations and trusts. A foundation is
allowed to have economic activity but it is limited to 10% of the total income to the foundation.
The co-operative is governed by the Law of economic enterprises.
7. The EAFF President had a question: there seems to be assets; land and
machinery. The project is also linked to the neighbourhood. How is this
relationship between the foundation and the co-operative governed in
relation to the dividends?
a. Do the dividends go to the co-operators or does the foundation/project also get
some div?
b. How is the product handled? Do the co-operators sell their product to the
project and get their money; then value addition begins?
c. When it comes to water, housing, health and other amenities, is this applicable
only to those homes in the foundation or project property?
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The foundation was started with a fund of about four days worth of a worker’s wage. The
foundation is part of Europe-Africa project and carries out research on co-operation and
education. The foundation can raise money easier than the co-operative.
There is also a third entity; a limited liability company owned by the members. This corporation
gets tax benefits.
These three entities are establishing better life for the rural folk. The development can be
separated. The limited liability company invests for housing in machinery, labour etc it has
financial power enough to build a house and then sell it, much more profitably.
8. Question posed by ICA representative. On the development of the co-
operative policy, can a co-operative draw members from anywhere in the
EU region in the spirit of integration? This is something we would like to
lobby for in Eastern Africa, by ensuring we set up super-national laws.
Mr. Varga asked if there is a minimum membership for co-operatives in the region. He also
indicated that the policy of the residents of the two countries applies to European co-operatives.
9. What impact did the wars and socialism have on the image of co-
operatives in Europe? How did you re-package them for confidence
amongst the population? Do Hungarians embrace co-operatives as an
attractive business model to be associated with? Image of co-ops in
Hungary in general-Is it a new generation and that is why they are
succeeding or what happened? How can we clean up our image?
There is still a lot of suspicion about co-operation. The name was misused during the
communist period of 55 years. The capitalist system provides equal opportunity. Citizens have
not yet discovered that not everyone has an equal chance and when they do discover this,
they will join co-operatives. It has only been twenty years so they are yet to realise the need
to co-operate. Currently, the rate of indebtedness is 8 times what it was in the year 2000, so
the economic situations worsening and citizens will soon join co-operatives.
10. Now that the co-operative for organic farmers is looking national, how
much inter-co-operative trade exists in Europe? Is it significant? In Eastern
Africa, we are grappling with how to promote inter-regional co-operative
trade and we would appreciate some experience?
In Hungary there are about four large umbrella co-operatives in agriculture. There is no one single
apex body that handles them all. Even the four compete with each other. Bargaining power
however is a little lower so they cannot compete with the multinationals. The total number of co-
operators is about 40,000 individuals. The population is 10M and only 100,000 are fully employed
in agriculture and 500,000 do agriculture part-time, subsistence, etc. EU calls it common market
organizations. We are members of the national movement too.
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11. Do you have restrictions on how many shares?
Five (5) people can form a co-operative according to the law and there is no restriction of
contribution, as long as each person is actively involved and not just an investor. It will still be one
vote one person. There is no limit for the workers either who want to join the co-operative.
On shareholding, Mr. Varga indicated that he has 22% of the shares at the co-operative. The
average shareholding is 4-5%. He also indicated he owns the land where these developments are
yet he does not receive a dividend. Older co-operators, who can no longer work, make money by
leasing land to the co-operative.
Mr Varga may have chosen the route of forming a limited liability company which may have been
more beneficial to Mr. Varga personally but it would have done nothing for helping the people.
He wants a quality life for his family too, so it is a way of thinking where selfishness and altruism
work together; of thinking, ‘I am better off co-operating with you than competing with you’.
12. Does Hungary have an Act that anchors on the European one or do the
two acts relate?
Before joining EU, a country needs to harmonize its laws to the EU provisions, so there is 99%
similarity between the EU and Hungary Co-op Act.
13. Dual registration; you seem to have a group of three different
organizations. If a co-operative is doing well, should we convert it into a
company or what do we do?
Mr. Varga explained the agricultural policy in Europe and gave his opinion on the same.
It has two pillars:
Direct payments
This is unfair and disputable for all, both within and without the EU. Marketing subsidies come
under this and are given according to the scale of activities. The turnover levels needed to qualify
for the subsidies have been increasing, so the small producers cannot access the funds and their
chances to do so keep decreasing. Currently one must have produce worth 3 M Euros per year. A
co-operative needs to have thousands of farmers to meet this level and compete with the
commercial farmers. With 200-300 members, it is still difficult to hit the threshold to get
subsidies form EU agriculture policy so small scale farmers are suffering under this pillar.
Rural development pillar
The Europe Act is a place that Eastern African can learn from. There are gross product co-
operation projects in action in Europe. For example, Slovakia is now co-operating with Hungary
and is getting funds for that. If First Hungarian Organic Farmers Co-operative registered, they can
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access more funding and hence more markets and seek other areas of co-operation such as
education, tourism and many others which eventually lead to rural development.
Mr. Varga went on to provide some productivity data for Europe: Agriculture and Food
production is worth 2% total GDP worth 50-60B Euro per year. 30-40% of this is co-operation. The
rest is attributed to ‘Copa cocheka’ (agribusiness and the co-operatives of the agri-businesses).
The agribusinesses are very competitive and profit oriented. They are not too interested in co-
operation either. Unlike the organic farmers co-operative, the agribusinesses are not interested
in what the animals are fed and will look for the cheapest inputs/feeds wherever it may be found.
They are not interested in just the European market, but the global competiveness of their
products. This therefore affects inter-country trade and has a negative effect on market access
for Hungarians.
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C DISCUSSION OF POLICY RECOMMENDATIONS
The EAFF President began the discussion with a request for contributions on how to create a
regional policy framework for co-operatives. The objective was to assist in harmonization of the
national policies, which will be aligned with the regional policy.
The Eastern African region may want to seek to have leaner Co-operative Acts and focus on the
regulations and by-laws governing operations at the country level. These processes for reviewing
the Acts and regulations should be very participatory.
This is very important because markets are becoming regional, thus opening up opportunities
that are not currently available. The sooner we have a harmonious co-operative structure
environment, the more we can assist each other in business both for inputs and outputs. Instead
of offloading our produce to middlemen for cross-country trade, we can directly trade with each
other through inter-co-operative trade.
Issues which Mr. Muchiri, CEO EAFF, picked up over the workshop that would provide possible
recommendations to a regional policy are:
1. Less government involvement in co-operatives governance and management
2. Acts, by-laws and regulations were not properly developed; each of them needs to be
reviewed so that components are placed in the right document.
3. On business participation/welfare or representation, Primary co-operatives should be more
business oriented while apex bodies should be more focussed on representation. In the case
of Oromia Coffee Farmers Co-operative Union, the union is actively engaged in international
business. The co-operatives should do business with the union while the federation offers
service, training, representation etc. The federation should be focussed on handling
bureaucratic issues and do no business. The higher you go up the hierarchy of co-operative
structure the less business becomes an objective.
4. Amalgamation and division of co-operatives should be a principle and not part of the law;
5. Registration of co-operatives is still an issue that requires a lot of discussion; mainly on dual
registration of co-operatives.
6. Issues to do with conservation of the environment will need to be reviewed and include in
the regulatory framework of co-operatives.
7. Demographic groups across gender and age should be included. A comment from the
KENFAP National Treasurer was that in Kenya there will be a challenge with gender
mainstreaming. As much as there is affirmative action towards including female
representatives up to 1/3 of all representatives, land is owned by men. Producer co-operatives
in rural areas will therefore be constrained to maintain this affirmative action statistic. In
urban SACCOs this may not be a problem. Psychologically, women though they are more in
number, still elect men as they believe leadership positions belong to men. The
representative from ICA gave a comment on this issue and said that a gender committee
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within ICA exists, which developed a gender strategy framework over a ten-year period. This
document articulates ICA’s mission with respect to realizing gender balance in co-operatives
based on the recognition of the disadvantages of gender discrimination. For Eastern African
regional policies, we can only provide gender guidelines broadly in recognition of existing
national and sectoral gender policies.
8. Management issues; Executive Committee and Control Committee. In Kenya co-operatives
have an executive committee to run the co-operative and a board that meets only once a
month. The use of the phrase management committee may therefore be misleading. There
also is a supervisory committee/control committee who check the running of the co-
operative by inspecting what has been going on then developing an independent report to
the AGM. This committee also provides their findings to the board every three months and
provide implementation guidelines to the board. This should be adopted and there should be
clarity on the names ‘management committee’, ‘control committee’.
Mr. Muchiri invited other comments and they included:
Incorporate what we have learnt from Hungary regarding rural development. Should our
framework mandate the co-operatives to participate in rural development or should it be a
wish so that the co-operatives decide wither they want to be involved in rural development
or not?
Develop a cross-cutting regional law that enables inter-country business. West Africa is
already on course with such an arrangement, East Africa should too.
The top down approach in co-operatives management must change, with EAFF intervening
at Policy Formulation level and see how the government may need help. Intervening at lower
levels will be difficult and will take longer given that some countries have revised the laws.
Discussion at the policy level will force the authorities to revise their laws.
Members requested that the Ethiopian Law be shared with all other Eastern African
countries as it provides very useful information on inclusion.
The EAFF President indicated that regional bodies such as EAFF have a challenge as the
regional agenda does not trickle down because of inefficient structures. The Councils of
Ministers of COMESA want markets to help transform small scale agriculture for
development. The private sector is doing this not for development but for profit; the
middlemen mobilize produce and do what co-operatives should do and sell to large buyers,
the way a co-operative should. The co-operative however provides capacity for improving
the quality, while the middleman only wants products cheaply. Funds are now available for
capacity building of co-operatives. WFP’s Purchase for Progress programme will purchase
food produce where there are already organized farmers. As part of the programme, WFP
has partners who are willing to provide training and other forms of support such as and
other support such as cold storage for horticultural produce to organized groups. This
support applies both to livestock in addition to commodity crops. EAFF is interested in seeing
clusters of co-operatives, as these clusters mean capacity sufficient to access market
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assistance. In Ethiopia, the WFP Purchase for Progress programme as well as other FAO
programmes buys from co-operatives but benchmark quality on commercial farming
standards. Since seed varieties are many, it would be prudent for WFP to provide the
required seed so that standards can apply.
A series of challenges in the Kenyan market include:
o Weak Agricultural marketing co-operatives:
As a result, farmers are suffering with excess produce. Any collaboration that will
offer technical assistance to co-operatives on accessing funds is welcome as money
is not being accessed because the proposals seeking the funding are too poorly
done.
o Loss of Arable land:
land is being lost to housing developments to provide urban housing, a situation
which is worsening a critical food security situation.
o Information:
CAK is introducing a Kibutz system and internet kiosks at the village level to
encourage availability of information for development. Information on participation
in the value chain needs to be disseminated.
o Sustainability of the WFP market:
Once these markets are gone, farmer are back to where they are as they cannot
access markets on their own, the way farmers operating under subsidised marketing
situations do.
To conclude this session, the EAFF President asked for final comments aimed at providing
guidance on the strategies for moving forward the development of a regional policy. The areas of
focus are:
1. What strategy should be adopted to push for policy recommendations (at national and
regional levels?)
2. What are the possible areas of partnership with the European co-operative movement?
3. What is the way forward?
Adopting a Strategy
Have a common policy that we can wrap our country policies around
Build structures for creating and sustaining markets
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Farmers’ Unions exist to expand marketing opportunities, which poses a benefit for some
and a disadvantage for others. The farmers unions need to carefully watch whether they
adequately represent those who would be disadvantaged.
Focus on the public good. Most bureaucrats would be happy with policies that focus on
public good thus creating public good through the co-operative movement is a good start
for negotiating for government and other assistance. Let the policy makers know that co-
operatives are a social enterprise first, before being an economic enterprise first.
Response by Mr. Varga: Free market benefits can be wiped out by the disadvantages of
the same. A case in point is the milk market in Europe. Large scale farmers from Poland
produces milk at 0.18 Euros per litre and sell it to Slovakia at prices lower than the
production cost of 0.20 Euros per litre. Slovakian milk is competitive in Hungary because
in Hungary milk is produced at 0.22 euro per litre. Hungarians then sell the milk to Italy for
0.25 euro per litre. This is an example of what can happen in a free market situation. Co-
operatives are necessary to create the necessary bulk to attain the economies that large
scale farmers can attain.
Increase synergies within the member countries first and then get full buy in by the
farmers through their relevant farmer organizations.
Have a database of the key issues around which a policy can be formulated in-case this
has not been done. Once the issues have been clearly identified, the policy interventions
can be crystallised and distilled out and the common areas reviewed. Once these areas
have been reviewed, the secretariat of EAC can come in and assist in taking it to the
legislative platform. The EAC secretariat is debating a number of regional issues including
tourism. Agriculture however is not being given much consideration as the level of
knowledge on the opportunities and framework options is still low. Those in agriculture
need to make their voice heard in the EAC.
ICT infrastructure and ability to network and communicate should be included and used
for synergy in identifying policy issues.
Share information on what is already available e.g. the Ethiopia proclamation was very
useful
Focus on policy as focussing on the law will take a much longer time than policy
development.
Inclusion of the Youth:
o The EAFF President has been invited to the universities in the region in the past
and there were consultations to make agriculture mainstreamed in the education
system so that there is an upgraded agricultural training programme that includes
rural development. This initiative is funded by the EU and is aimed at training
trainers across various agricultural disciplines. Core content will include rural
development.
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o Agriculture needs to be repackaged to the youth as it is seen as a career for
failures in school yet farming is the most important economic activity as food
production is necessary for life. This perception is rife because due to poor trade
and unfair practices, farmers are the poorest people in Ethiopia, where the school
drop out rate is also very high. If there is skill that can be built through the
curriculum it would help those who choose to drop out of school early contribute
economically as well and raise their standard of living instead of becoming more
destitute.
o Part of repackaging agriculture is to carry out research which has not been done
since the 1940s under colonial rule. Obsolete technologies need to be replaced
with new ones that are not only effective but enjoyable to work with, in order to
attract the youth. In Europe, farms and barns are for sale as youth do not want to
farm. This is a future problem of feeding our nations. EAFF is taking this matter to
the AU where a broad strategy to raise the profile of agriculture needs to be
implemented.
o Encouraging the educated to participate in rural development is also another
strategy as the current education systems in the region exclude agriculture more
and more. It can be included through the angle of mechanization, value addition,
market negotiation and other interesting areas as opposed to being seen as
‘tilling the land’. The approach of the education system is the problem.
o There are affordable technologies from markets such as India which can be
adopted to improve productivity and thus attract the youth into agriculture
Areas where partnership is needed
Mr. Varga indicated that the European co-operative movement had not established contact in
Eastern Africa though this was underway and it would be possible in coming months to work
together possibly on joint ventures and access to markets as Hungary has the necessary
infrastructure and a very central positioning.
Identifying and articulating issues well will attract partners. Partners like well organized and well
informed groups.
Ugandan co-operatives need information on accessing inputs, technologies, tools and
markets.
The process of understanding market needs and trends so that farmers can provide what
the market needs and then providing links to these markets. Middlemen and other
intermediaries will then provide financing to the producers so that they can continually
be in business.
Managing debt which has come about through assisting various commodity sectors
survive the opening up of markets. When co-operators are too heavily indebted, they
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leave their societies and regrouping under ‘self-help groups’ banner yet the role these
groups play is the same as that of the co-operative.
Assisting more commodities as opposed to selectively focussing only on foreign
exchange earning cash crops such as coffee or food security strategic crops such as
maize
Training on governance of co-operatives
Proper timing for speed and availability of funds for commodity sector support. The
funding in many cases arrives when seasons have changed and for a rain-dependent
region, the funds cannot wait for the next season due to other pressing needs and they
therefore get misallocated, leading to increased indebtedness.
The Way forward:
Greater linkages of EAFF with other secretariats in the region
Continue with research as the success stories encourage and inspire.
Have a business strategy for the various co-operatives so that they can take advantage of
the opportunities. Co-operatives ought to have business plans
Bring technical people on board to open the eyes of co-operators on the world of
commerce
Harmonize laws in the regional integration spirit
Create inter-linkages across and among co-operatives to allow exchanging of the right
capacity
Identify the key issues for the region. In EAC we have an agriculture and rural
development strategy and we need to follow that.
Facilitating dialogue and widening our catchment to include technical government people
who are available to help co-operatives. Connecting with each other and fast track what
each country is doing by enriching each other though various country experiences. If
networking precedes developing a regional policy, the policy that will come out of the
process will be more effective.
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CLOSING COMMENTS ON THE REGIONAL CO-OPERATIVES AND SUCCESSES
ACHIEVED
The EAFF President indicated that the region is battling with the issue of the farmers’ mindset.
Farmers must understand that aid is not given with the intention of assisting the beneficiary to
outdo the donor.
Co-operatives should promote a change of attitude where countries and groups direct their own
internally generated resources to their own development. Malawi is a case in point where
internal funds have supported farmers. Rwanda also has a policy on government support which
includes an exit strategy for the government so that farmers can take over themselves.
Progress made so far:
The EAFF President is the first Chairman of the ACTESA project. He indicated that ACTESA is not
focussing only on WFP’s Purchase for Progress but on several other commodities. ACTESA
comes in to help farmers access markets. The President also indicated that EAFF will ensure
forums of discussion on policy issues, provide information to members, and provide capacity-
leadership training with The Ministries of Co-operatives in member countries and assist in image
building and awareness creation especially in Kenya and Tanzania where co-operatives have had
a negative image.
Improvement of regulatory environment after efforts by CAK to improve governance of Co-
operatives in Kenya. This is improving the image of co-operatives. The same is being done in
Tanzania under TFC.
Introduction domain name in Kenya .coop.ke which is overseen by CAK with an aim to get co-
operatives use the internet platform for information exchange.
D CONCLUDING REMARKS
The President indicated that the key outcome of this validation workshop will be a draft regional
co-operatives policy document that will be developed by EAFF secretariat and then circulated to
members for comment before it is documented as regional co-operatives policy.
The Closing statement of Mr. Muchiri, CEO of EAFF, was that the way forward would include a
review of the scope of the study by the consultant and see how to capture additional data that
would aid the process of developing a policy framework for Eastern African Region co-
operatives.
He thanked all the participants for being part of the process and the EAFF Vice-President, Harriet
Ssali, to give closing remarks and vote of thanks.
The Vice President thanked all participants and acknowledged the contribution of the guest from
Hungary, Mr. Geza Varga to our discussion on co-operative laws and policies as tools for rural
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development and for the improvement of quality of life for small scale farmers. She also
appreciated the fact that we formed new relationships. She also appreciated the EAFF President
for fundraising to make this validation workshop possible. She challenged participants to review
the structures and roles of their co-operatives and closed by indicating that the team is looking
forward to the policy framework to be developed by the EAFF secretariat.
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APPENDICES
APPENDIX I PARTICIPANTS
1. Mr. Philip Kiriro –President, EAFF
2. Harriet Ssali – Vice President, EAFF
3. Stephen Muchiri - Chief Executive Officer, EAFF
4. Mainza Mugoya – Programme Officer (Policy) EAFF
5. Tadesse Meskela – Chief Executive Officer, Oromia Coffee Co-operative Union
6. Mr. Joseph Nkandu-Consultant
7. Mr. Geza Varga – President, Galgafarm First Hungarian Co-operative
8. Mrs Varga – Galgafarm First Hungarian Co-operative
9. Mrs. Mary Mungai – Senior Assistant Commissioner for Co-operatives, Ministry of Co-
operatives
10. Mr. Leonard Msemakweli – Secretary General, Uganda Co-operative Alliance
11. Ms. Gloria Mazoko, Policy and PR officer, Tanzania Federation of Co-operatives
12. Mrs. Grace Ngambi- Treasurer, KENFAP
13. Mr. Francis Kamande – Board Member, Co-operative Alliance of Kenya (former KNFC)
14. Mr. Stephen Kiwanuka – Project Manager, International Co-operative Alliance
APPENDIX II ACTESA COMMODITIES
Grains and pulses - such as maize and common beans
Roots and Tubers - such as cassava and sweet potatoes
Oilseeds - such as groundnuts, soybeans and sunflowers
Livestock - of which COMESA has the largest population in Africa
Forest and Natural Resource products - such as honey,
Horticultural products - such as green vegetables and fruits
Tree Crops - such as coffee
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Agricultural Inputs - including seeds and fertilissszers.