Analysis of Good Governance Practices by Cooperative Societies for

contributing for sustainable development: Case of Cooperative

Unions in East Wollega zone, Oromia, Ethiopia

Asfaw Temesgen Bari (MA in Cooperative Management, lecturer)Wollega University

College of Business and Economics

Department of Cooperatives

P. O. Box 596

E-mail: asfaw.tembari@gmail.com

Telephone: +251 917 81 1360

National conference on Ethiopian Cooperative Development organized by Hawassa University & FCA

Introduction

International cooperative principles known as cooperatives

corporate governance act as guidelines in serving the members

and customers (Sanchez Bajo, 2014)

Cooperative governance is the set of relationships between the

cooperative’s members, the board of directors as and the

management that carry out the operation (Wong and Jacobus,

2008).

Cooperative exercising implementation of good governance

pillars of accountability, transparency, participation, rule of law,

equity and equality (Henry, 2012)

Cooperative business model is intended to practice general

good governance principles established by the Committee on

Standards in Public Life

Statement of problem

Cooperatives are highly relevant and important in the

realization of the post 2015 proposed sustainable

development goals.

Cooperatives and cooperative members, in their dual

role as stakeholders and owners or controllers, can

provide an important voice in the global debate on

governance and transparency (ILO, 2014).

Despite, many agricultural cooperative organizations

have not yet cultivated the right leadership and highly

qualified management Chambo (2009) for putting good

governance in practice.

Statement of problem….

Some studies revealed that there were less

transparency, accountability, responsiveness and loyalty

of board of directors to general assembly and weak

member participation in decision making in primary

agricultural cooperative (Abenet, 2010) and Tamirat, 2010)

Study by Asfaw (2011) provided that there is poor

good governance of management of cooperatives

pessimistically affecting business.

Statement of problem…

Nevertheless study by Bezabih (2012), revealed that

there are good leaders for farmer’s cooperatives in

which managers make a difference and transparent

and rule-based operation of markets which are some

of the indicators of practicing good governance by

cooperative.

Therefore, because of such debates this study is

designed to scrutinize how well cooperative unions in

the study area are practicing good governance

elements in their business operation and management

affairs so as contributed for development of

democracy in community they serving.

Objective of the study

General objectives

The general purpose of the study is to analyze practice of good

governance by cooperative unions in East Wollega zones,

Oromia, Ethiopia.

Specific objectives

To examine practice of good governance by cooperative

unions in business operation and management

To investigate the level of the implementation of good

governance with respect to good governance principles

To identify factors contribute for success of good

governance implementation by cooperative unions

Research questions

In order to investigate practicing of democracy by

cooperative the following question were posed

What good governance elements are practicing by

cooperatives in study area?

How well good governance applied by cooperative in

cooperative management and services for

community?

What are the factors associated with success of

good governance by cooperative unions?

Research MethodologyData collection:

Type: mostly primary data

Source: individual respondents, key informants and focus group

Tool: structured questionnaire (Likert-scale)

Sampling design

sample coop: 3 coop unions the first from their sector (Gibe Didessa

FCU, Aga Dhayi SCCOU and Walin Gudana CCU)

10 member primary cooperative societies were selected randomly and

361 individuals systematically and proportionally

8 Key informants and three FGD

Data analysis method

Descriptive statistics for analyzing application of good governance

Multiple Linear Regression for examining the factors determining

success of good governance practice by coops

Result and Discussion

Implementation of cooperative principles Implementation of cooperative principles

level of application of these coop principles analyzed and found that

Members democratic control in the unions 92.0% of respondent agree

Concern for community 87.0% of respondent agree

Voluntary and open membership 81.4% of respondent agree etc

The result confirmed by KI & FGD

Response Vo

lunta

ry a

nd

op

en

mem

ber

ship

Dem

ocr

atic

mem

ber

co

ntr

ol

Mem

ber

ec

on

om

ic

par

tici

pat

ion

Ind

epen

den

t an

d

auto

no

my

Edu

cati

on

, tr

ain

ing

and

in

form

atio

n

Co

op

erat

ion

am

on

g co

op

erat

ives

Co

nce

rn f

or

com

mu

nit

y

Fre

quen

cy

per

centa

ge

Fre

quen

cy

per

centa

ge

Fre

quen

cy

per

centa

ge

Fre

quen

cy

per

centa

ge

Fre

quen

cy

per

centa

ge

Fre

quen

cy

per

centa

ge

Fre

quen

cy

per

centa

ge

S. agree/ Agree 294 81.4 332 92.0 253 70.1 241 66.8 220 60.9 289 80.1 314 87.0

Neutral 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0

Disagree/ S.Disagree 67 18.6 29 8.0 108 29.9 120 33.2 141 39.1 72 19.9 47 13.0

Total 361 100.0 361 100.0 361 100.0 361 100.0 361 100.0 361 100.0 361 100.0

Table 1 application of international cooperative principles

Thus coop unions are good in applying coop principle as corporate

governance of coop

Indicators of good governance

Analysis of application of Indicators of good governance indicates respondents

agreed that the coop unions apply

Rule of law 88.6%

Member equality in service delivery 84.8%

Leaders and management bodies are transparent for members 81.4%

Least applied indicator is cooperative leaders are honest in management

and business operations 55.1%

Response Mem

ber

par

tici

pat

i

on

Ru

le o

f la

w

(mem

ber

s

Lead

ers

and

m

anag

emen

t ac

cou

nta

ble

Tran

spar

enc

y o

f co

op

erat

ive

Lead

ers

are

ho

nes

tfo

r co

op

erat

ive

s

Equ

alit

y

Fre

qu

e

ncy

per

cen

tage

Fre

qu

e

ncy

per

cen

tage

Fre

qu

e

ncy

per

cen

tage

Fre

que

ncy

per

cen

tage

Fre

qu

e

ncy

per

cen

tage

Fre

qu

e

ncy

per

cen

tage

S. agree/ Agree 268 74.2 320 88.6 276 76.5 294 81.4 199 55.1 306 84.8

Neutral 0 0.0 0 0.0 2 0.6 3 0.8 0 0.0 0 0.0

Disagree/ S.Disagree 93 25.8 41 11.4 83 23.0 64 17.7 162 44.9 55 15.2

Total 361 100.0 361 100.0 361 100.0 361 100.0 361 100.0 361 100.0

Table 2: Responses of respondents on good governance practices of cooperative

The result is also supported by KI & FGD this indicate that cooperative unions are

fair in application of good governance indicator unless for honesty

Implementation of good governance principles

Responses

Focusing on

purpose and

outcomes for

members and

service users

Performing

effectively in clearly

defined functions and

roles

Promoting

values for the

wholeTaking informed

and transparent

decisions

Developing the

capacity and

capability of

leaders

Engaging

stakeholders

and making

Fre

qu

e

ncy

per

cen

t

age

Fre

qu

e

ncy

per

cen

t

age

Fre

qu

e

ncy

per

cen

t

age

Fre

qu

e

ncy

per

cen

t

age

Fre

qu

e

ncy

per

cen

t

age

Fre

qu

e

ncy

per

cen

t

age

S. agree/ Agree 304 84.2 323 89.5 276 76.5 309 85.6 246 68.1 312 86.4

Neutral 4 1.1 2 0.6 2 0.6 3 0.8 0 0.0 10 2.8

Disagree/ S.Disagree 53 14.7 36 10.0 83 23.0 49 13.6 115 31.9 39 10.8

Total 361 100 361 100 361 100 361 100 361 100 361 100

Table 3: Implementation of good governance principles

Coop need to apply general good governance principle. Regarding this it is found

that respondents agree that :

Focusing on purpose and outcomes for members and service users (objectivity

84.2%

Performing effectively in clearly defined functions and roles (accountability)

89.5%

Engaging stakeholders and making (openness) 86.4%

However least in developing the capacity and capability of leader (leadership)

The result also confirmed by KI & FGD and it is indicates coop unions practicing general

good governance principles for successful business operation & service delivery

Factors for success of good governance in cooperative

The respondents, KI & FGD

identified factors

contribute for good

governance application by

coop unions as

Member education level

Member participation

Training for governing bodies

Commitment of leaders

Good management structure

Cooperative policy

Good flow of information

Factors for success of Good

governance indicators

Responses

of

responde

nts

Frequency Percentage

Member education level

Yes 198 54.8

No 163 45.2

Total 361 100.0

Member participation

Yes 312 86.4

No 49 13.6

Total 361 100.0

Training for governing bodies

Yes 231 64.0

No 130 36.0

Total 361 100.0

Commitment of leaders

Yes 89 24.7

No 272 75.3

Total 361 100.0

Good management structure

Yes 308 85.3

No 53 14.7

Total 361 85.3

Cooperative policy

Yes 349 96.7

No 12 3.3

Total 361 100.0

Good flow of information

Yes 215 59.6

No 146 40.4

Total 361 100.0

No Interferences of external

body

Yes 28 7.8

No 333 92.2

Total 361 100.0

Table 4: Perception of respondents on factors for good governance

Factors for success of good governance…

ModelR R Square Adjusted R Square

Std. Error

of the Estimate

1. Good governance

factors0.864 0.7465 0.665 0.423

Table 5: Regression model summary

summary of linear regression analysis for factor for success

of good governance in cooperative unions of the study area

shows that R Square value is 0.7465 indicated that 74.65% of

good governance success of the case coops is because of these

factors

Factors for success of good governance…

Model Unstandardized Coefficients Standardized

Coefficients

t Sig.

B Std. Error Beta

1 (Constant) 4.784 0.417 0.12 .000

Member education 0.034 0.041 0.047 .49 .035

Member participation 0.213 0.25 0.098 .654 .057

Training for governing bodies 0.702 .341 0.341 1.22 .000

Commitment of leaders -0.232 .183 -0.102 1.41 .023

Good management structure 0.064 .059 0.072 1.06 .015

Cooperative policy 0.155 0.152 0.127 0.18

6

.040

Good flow of information 0.094 0.164 0.073 0.57

4

.015

Interferences of external body -0.162 0.142 -0.037 1.14

2

.035

Table 6: Coefficient for good governance factors

Except interferences of external body and commitment of

leaders all the identified factors contribute positively for the

success of good governance application by the cooperative

unions

Conclusion

From the result, it is concluded that coop union practicing

cooperative principle as corporate governance of coops,

governance pillars and general good governance principles.

Thus cooperative promote good governance for empowering

members and other community as users of cooperative

service contributed for sustainable development.

Recommendation

As a general it is recommended that the cooperative unions of

the case required strengthening and scaling up the good

governance practices applied well

Cooperative promoters required to providing continuous

education and training for leaders and recruited staffs of

cooperative to build the accountability and loyalty in the

cooperatives so as strengthening good governance in serving

member.

The external cooperative stakeholders need to be aware about

cooperative principles and values for not to interfering

cooperative management rather respecting cooperative

autonomy and supporting good governance applied by

cooperative from which the local leaders shared the

experiences for empowering community.