Introduction to Co-operatives September 2005

Who owns the enterprise?Who controls the enterprise?Who uses the enterprise?Who gets the profits?A Type of Enterprise Dependent On

Individually Owned BusinessOne PersonOwnsControlsOperatesBenefits/Profits

Private CompanyInvestors as ownersProfits shared among investorsVoting weighted according to the number of share investment

What is a Cooperative?..A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

Co-operative Principlesvoluntary and open membership;democratic member control;member economic participation;autonomy and independence;education, training and information;cooperation among cooperatives;concern for community.

Democratic member controlThe people who own and control and finance the co-operative are those who use it.

Democratic member control is exercised by:Voting at annual and membership meetingsElecting Board of DirectorsMaking decisions on major co-operative issues

Co-ops Principles and Practices

Co-operative Principles and Practices PrinciplesPracticesVoluntary and open membershipMember recruitment policy, rules of admission, equal opportunities, Democratic member controlConstitution, voting rights, role of the board, members and managementMember economic participationEconomic performance, rewards to members, capitalization and how surplus is usedAutonomy and independenceRelations with government, other organisations and institutions and market position,Education, training and informationMember, board and management training and public relationsCo-operation among membersFederation, networks, joint enterprises, movement buildingConcern for communityPolicy on community development, environment and networking

Co-operative Valuesself-help;self-responsibility;democracy;equality;equity;solidarity.

Types of Co-operativesCo-operatives can be distinguished by:degree of formalityownershiptype of activitylevel in the cooperative hierarchyThese types can be combined

Degree of formalityInformal groups build on co-operative principles; example: stokvelsPre-co-operatives or common initiative groupsFully fledged, registered co-operatives

Ownership and PurposeThe worker-owned co-operative: the individual members are both workers and employers of the jointly owned co-operative enterprise. Its purpose is to provide employment to its membersThe user-owned co-operative: members have their own enterprise or household and use the cooperative for joint supply, marketing, finance, housing etc. Its purpose is to provide services to its members.

Type of activity (1)Economic activitiesagricultural marketing & supply;savings & creditconsumer good supplytransportshared services (business)handicrafts and small industriesservices

Type of activity (2)Social servicesHousingSocial reintegrationHIV-AIDS careMedical servicesOthersMusician co-operativesSoccer fans co-operatives

Individuals and Enterprises

Structure of co-operation (1)Co-ops can co-operative by membership formPrimary Co-op Structure - Individuals are direct membersSecondary Co-op Structure- Primary co-ops are direct membersTertiary Co-op Structure Secondary and/or primary are both are direct members

Structure of co-operation (2) Co-ops can economically co-operation by geography.Local organized on a municipality level Regional organised at district or metro levelsProvincial organised by numbers districts and metrosNational organised by provincesInternational organised by national co-op movements

Primary Co-op StructureCo-operativeMemberMemberMember

Secondary Co-op StructureCo-operativePrimaryCo-opMemberMemberLocalCo-opMemberMember

Organizational Make-UpMembersBoard of DirectorsManagerEmployees

Tertiary Co-op StructureCo-operativeMemberMemberPrimaryCo-opSecondaryCo-opSecondaryCo-opPrimaryCo-opPrimaryCo-opMemberMember

Participation RolesCo-operatives operate through the roles of principal partiesMembersDirectorsManagerEmployees

A national Movement (1) There are currently 4,000 primary co-ops in SAWorker co-opsHousing co-opsConsumer co-opsAgricultural co-opsFinancial co-ops

A National Movement There are 3 national co-operative federationsSavings and Credit Co-operative Leaque of SA (SACCOL)South African Federation of Burial Societies (SAFOBS)South African Housing Co-op Association (SAHCA)There is 1 Tertiary co-op national co-operative apex organization: National Co-operative Association of South Africa 3 co-operative federations representing 80,000 members 600 primary co-ops representing 167,000 members

A Global Movement750 000 cooperatives800 million individual members many of them women100 million jobs createdOver 50% of global agricultural output is marketed through cooperatives470 billion $ of savings mobilized by credit unionsCooperatives are worlds biggest health insurer

****Definition of a cooperative (ICA version)

Because coops anywhere observe the same principles and are based on the values, they have a natural propensity to form horizontal and vertical structure, national movements and international alliances.

The key words of the definition are: autonomous, association of persons, voluntarily, common needs, jointly owned, democratically controlled, and enterprise.

The defitnition does not distinguish between natural persons and legal persons (companies).***Cooperatives: an option for individuals and for SMEs

Individual members may from a consumer cooperative while small enterprise may from a purchasing coperative. This is just one example of how the cooperative model can be applied to small enterprises.**