Report No. 7442-ZiM

ZimbabweAgricultural Cooperatives Sector ReviewFebruary 9,1989

Southern Africa DepartmentAgriculture DivisionFOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may i-ot otherwisebe disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = The Zimbabwean Dollar (Z$)

US$1.00 = Z$ 1.65

Z$ 1.00 = US$0.61

ABBREVIATIONS

AFC - Agricultural Finance CorporationASC - Agricultural Ser7lce CooperativeCACU - Central Association of Cooperative UnionsGMB - Grain Marketing BoardICA - International Cooperative AllianceIFAD - International Fund for Agricultural

DevelopmentMCCWA - Ministry of Community and Cooperative

Development and Women's AffairsNACSCUZ - National Association of Savings and Credit

- Cooperatives in ZimbabweNFAZ - National Farmere Association of ZimbabweNGO - Non-government organizationOCCZIM - Organization of Collective Cooperatives

in ZimbabwePCO - Provincial Cooperative Officer3CC - Swedish Cooperative Center

FISCAL YEAR

July 1 - June 30

This report is based on the findings of several missionsbetween February and September 1988, led by Mr. T.Turtiainen of the World Bank. Specialist support wasprovided by Messrs. J. Abbott, E. Bendsen, Y. Friedman, L.Karlen, J. Lindberg, 0. Lindberg, and A. Mafeje(consultants). The Government had formed a counterpart teamwhich, together with local specialists and officers of thevarious institutions and agencies involved in cooperativedevelopment in the country, provided invaluable assistanceto the missions.

FOR OFICIAL USE ONL'

ZIMBABW'EAGRICULTURAL COOPERATIVES SECTOR REVIEW

Table of Contents

Executive Summary

Page No.

I. INTRODUCTION .......................................1 A. General ......................................... 1B. The Agricultural Sector ......................... 2C. Agricultural Cooperatives in Zimbabwe ........... 4D. Sociological Issues ............................. 9

II. KEY POLICY ISSUES AND RECOMMENDATIONS FORCOOPERATIVES . . ..................................... 11A. General Policy Issues . . 11B. Agricultural Service Cooperatives . . 14

1. Structure, Organization, and Functions ofthe Cooperative Movement ................. 14

2. Marketing in Traditional Cooperatives ....... 163. Management Issues ........................... 204. Accounts and Finance ........................ 22

C. Collective Farming Cooperatives . . 25D. Cooperative Education and Training . . 28E. Potential for Cooperative Banking Facilities... 30F. Women and Cooperatives . . 32

III. TENTATIVE FORMULATION OF TECHNICAL ASSISTANCE,CONTRACT AND INVESTMENT PROJECTS, AND FOLLOW-UP .... 33A. Scenarios ...................... ........... 35B. Technical Assistance or Contract "Packages" .... 36C. Tentative Investment Packages .................. 39D. Follow-up Actions .............................. 43

Tables 45Figures and Chart 51Annex 1: Background on Collective Farming

Cooperatives 53Map 71

ANNEX VOLUME: SPECIALIST REPORTS:

II. COOPERATIVE INSTITUTIONS AND THEIR MANAGEMENTIII. MARKETING IN TRADITIONAL COOPERATIVESIV. ACCOUNTING AND FINANCESV. CREDIT AND BANKINGVI. COLLECTIVE FARMING COOPERATIVESVII. COOPERATIVE EDUCATION AND TRAININGVIII. SMALLHOLDEF. DEVELOPMENT WITH SPECIAL

REFERENCE 10 SOCIOLOGICAL ISSUESIX. EXTERNAL ASSISTANCE TO COOPERATIVES

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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Executive Summary

1. Background. This is the Bank's first subsector review ofagricultural cooperatives in Zimbabwe. The latest agricultural sectorreview was carried out in 1983. It handled cooperatives briefly, concludingthat "given the limited development of an input supply and marketing systemin the "Communal Areas" prior to Independence, cooperative societiesprovide a potential institutional framework for carrying out thesefunctions." As well as focussing on the cooperatives, the review directedits attention to the small savings clubs that had also developed inCommunal Areas. Cooperatives have also been reviewed to some extent in thecontext of project preparation work.

2. Cooperatives in Zimbabwe. The cooperative movement in Zimbabwedates back to 1909, when the Cooperative Agricultural Act was promulgatedto facilitate the formation of marketing and supply cooperatives bycommercial farmers. Nine such cooperative societies still remain inoperation, serving the interests of the approximately 4,000 large-scalefarmers. They now operate under the Companies Act.

3. When Independence was gained in 1980, the agricultural servicecooperative (ASC) movement comprised 343 registered primary societies witha membership of about 70,000 communal farmers. In 1987, the nUmber ofactive ASCe was 527 and membership was approaching 125,000. Anothersignificant development after independence was the introduction of theconcept of collective cooperatives. The Government has promoted thesecooperatives in all sectors of the economy, especially in the agriculturalsector, as part of the program of resettlement of ex-combatants andlandless families. In 1987, the registered farming collectives numbered312, with 13,200 members.

4. The rapid growth of the number of registered cooperatives since1980 has strained the resources available in the movement itself and !- theMinistry responsible for developing and supervising the cooperativesocieties (presently the Ministry of Community and Cooperative Developmentand Women's Affairs--MCCWA.). As a result, the rate of failure or non-starting among cooperatives appears to have been high. A survey conductedin 1987 revealed that only 44 percent of the registered farring collectiveswere active and only 96 had actually received land. The rate of activeagricultural service cooperatives was higher--85 percent--but in recentyears they have experienced increasing financial difficulties and adeclining business turnover.

5. Main Problems. As mentioned, the Government of independentZimbabwe has promoted the rapid expansion of the cooperative movement.After Independence, ASCs were given the main respon3ibility for inputdistribution--financed through the Agricultural Finance Corporation (AFC)--to communal farmers. Because of a severe shortage of adequately trainedstaff, deficient management systems, and inadequate storage and transportfacilities, they were ill-equipped to handle this task, and, thus, were notable to satisfy the majority of their customers. The Ministry responsiblefor cooperatives also lacked the experienced manpower and funds to developthe management capability of the cooperatives themselves. They continue tobe plagued by management deficiencies, undercapitalization, and pooroperationaal and financial performance.

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6. Adding to the problems of ASCs has been the recent strongcompetition from private companies, which supply farm inputs to communalfarmers, and from *.he Grain Marketing Board (GMB), which has been expandingits network of depots and collection points in the Communal Areas. As aresult, ASCs' market share of input supply and produce marketing has fallenand their financial position has deteriorated. It is estimated that ASCsnow handle approximately 25 percent of the input supply and less than 10percent of produce marketing in the Communal Areas. This level of turnoveris inadequate to cover the overhead cost of numerous cooperatives.

7. Main Recommendations and Follow-up. in addition to involving allconcerned organizations and agencies in the review, the World Bank missionshave discussed the main issues and problem areas with MCCWA and themanagement of the Central Association of the Cooperative Unions (CACU)after analyzing the review results. There appears to be no majordifferences in views concerning the main recommendations. These include:

- the Government should formalize its recently adopted policy ofgradually reducing its involvement in the affairs of the cooperatives.To this end, over the next five years, the Government should designmeasures to strengthen the management capability of the cooperativesand to develop the capacity of the national apex cooperatives tosupport their affiliates;

- The r- iernment shouid not restrict competition among various inputsuppiiers that has probably resulted in improved services and lowerprices. The cooperatives need to adjust and rationalize theiroperations to meet any fair competition and ASCs should operate oncommercial pcinciples;

- because GMB has needed large subsidies to be able to bypass thecooperative network and buy directly from small producers, GMB should--in collaboration with MCCWA and cooperative movement--undertake apilot project to identify the practical problems and requirementsrelated to a larger transfer of marketing operations to cooperatives;

- because the main reason for poor performance by most collective farmingcooperatives has been that the members handling the technicalmanagement of large-scale collective farms have no professionaltraining for this work, these cooperatives should, to attain theeconomic goals set for them, be encouraged to reorganize themselves,including such arrangements as allocating part of the farm land to themember families for individual cultivation, employment of aprofessionally qualified farm manager for the co-lectively cultivatedarea, or outright subdivision of the farm; and

- vast improvements in the technical and financial operations ofcooperatives need to be effected through development and documentationof new accounting and management systems, improved accounting,financial control and auditing, pooling of cooperative funds andmembers' savings, and expanded training.

8. Although the analysis of the cooperative development situation indicatesno larger-scale financing needs at this time, smaller investments will benefitcooperatives. In addition, the cooperatives at all levels in Zimbabwe need

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improved know-how and management systems, both of which can only be acquiredthrough provision of expertise either locally as contractual services or fromabroad as technical assistance. However, these needs can be more easilyfulfilled by agencies smaller and more specialized in cooperative developmentthan the World Bank. The report makes proposals in this respect. MCCWA andCACU have indicated that they would like to see the World Bank act in acatalytic role, helping to identify potential financiers and technicalassistance agencJes, and helping to monitor the cooperative development needsemerging with future actions.

2IMBABWE

AGRICULTURAL COOPERATIVES REVIEW

I. INTRODUCTION

A. General

1.1 The situation of Zimbabwean agricultural cooperatives some yearsafter Independence is typical of that in most African countries. Thecooperative movement started several decades ago among the white settlers,and some years before Independence the colonial governments allowed andeven encouraged formation of African cooperatives. Progress was, however,relatively sloTt during that period.

1.2 At Independence, when the new African governments looked for ideasand organizations that could accelerate economic development among poorpeasants and help bring about social equality, they turned to cooperatives.As a result of the enthusiasm and idealism of the leaders, a large numberof new cooperatives were established, but most of them died within a fewmonths or years. Enthusiasm and idealism were not enough to makecooperatives economical and competitive, and the governments were unable toprovide the necessary resources and advisory manpower, without whichaccelerated cooperative development is impossible.

1.3 Since Independence, the Government of Zimbabwe has promotedcooperative development in several ways: (i) by preparing new cooperativelegislation; (ii) by providing a long-term basis for cooperativedevelopment through preparation of a Cooperative Policy Paper in 1983;(iii) by gradually increasing the governmental staff to support andsupervise cooperatives; and (iv) by establishing a separate ministry forcooperatives in 1986 (which, however, was combined with another ministry atthe end of 1987). The Ministry staff did its best to help their charges toperform up to the expectation of the cooperatives by members and theGovernment, but only about 60 percent of the registered cooperativessurvived or became operational during the first years of Independence.

1.4 Although cooperative organizatiors are relatively easy toestablish, they are complex to manage and rur profitably. In recognitionof these difficulties and the demands that the cooperatives face in allaspects of their operations, the Government of Zimbabwe asked for the WorldBank's assistance. The Bank responded by fielding a mission in February-March 1988 to review the agricultural sector cooperatives. The dialoguebetween the Government and the Bank on major policy issues concerningagricultural pricing, marketing, and input supplies had not been successfulin the past, and it was believed that a thorough review of the cooperativesector would provide opportunities for formulating options and improvingthe efficiency in these respects. The tasks of the mission were as follows:(i) to identify the development issues in the cooperative sector andformulate sound policy advice for the Government's consideration; (ii) toreview the need for specialized advice required to accelerate thecooperative development and prepare specialist assistance/contract packagesfor the Government's use in seeking assistance from bilateral and other

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agencies; and (iii) to estimate the cooperatives' long-term financing needsand prepare draft investment packages that the Government could offer tofinancing agencies for consideration.

1.5 The method used in the report is mainly descriptive. It is basedon an analysis of the available, limited data, review of the previousstudies and material, interviews of the key participants in the cooperativedevelopment process, and field visits. The specialization of each tehmmember in his field and the experience gained in numerous developed anddeveloping countries allowed consideration of the Zimbabwean situationagainst a broader background.

1.6 This report, besides describing the position of the cooperativesin Zimbabwe and its agricultural sector (Chapter I), details the policydecisions concerning cooperatives and related agencies, the operationalimprovements required in cooperatives, the means to achieve them, and thecosts involved if the cooperatives are to become sustainable organizationsand achieve the objectives that the Government and cooperative leaders andmembers have set for the cooperatives (Chapters II and III). Asupplementary review document is provided as an Annex volume of the report.It gives, in eight annexes, detailed descriptions of the findings andrecommendations of the World Bank mission.

B. The Agricultural Sector

1. Aariculture in the Economy

1.7 The Zimbabwean economy, serving a population of 8.5 million, isfairly diversified. Although agriculture is important for a large segmentof population, it does not account for as high a proportion of the grossnational product (GNP) as in most other Africen countries. In 1986, itaccounted for about 14 percent of GNP, while the service sector occupiedthe largest position at 54 percent, followed by manufacturing at 23.5percent. However, in the export sector, agriculture was more importantthan others; its products constituted 41 percent of total exports in 1986.

1.8 Although agriculture has a smaller share of GNP than services andmanufacturing, it has a major influence on employment and on the level ofeconomic activity in its own right and through linkages with other sectors.In normal agricultural years, Zimbabwe is self-sufficient in stablefoodstuffs and produces a wide range of manufactured goods based onagricultural produce. The agricultural sector is expected to continue toplay a major role in output and export performance of the country, as wellas in income growth, particularly in the Communal Areas with their 800,000smallholder families.

2. Land Use

1.9 Zimbabwe must be regarded as a fertile country. Although thesuitability of land for agricultural purposes varies, about 85 percent ofits land area is designated as agricultural land. The rest is nationalparks, state forests, and urban and state land. Zimbabwean agriculture issharply divided between the 4,000 mostly white commercial farmers and the

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4.5 million people in the "communal subsector." The modern 3ubsector,technologically advanced large-scale commercial farmers occupy nearly 39percent of the agricultural land. The traditional, "communal" farmersoccupy about 49 percent of the agricultural land. In addition, some 8,500small- or medium-scale commercial farmers occupy about 4 percent of theagricultural land and about 40,000 families have been settled on about 8percent of agricultural land previously occupied by large-scale commercialfarmers.

1.10 There are three broad categories of use or ownership ofagricultural land: land under private title (comprising both large- andsmall-scale commercial areas), Communal Areas, and the ResettlementSchemes. Private title holders have few restrictions on the use of theirland. In the Communal Areas, ownershit is bestowed by the Communal TrustAct of 1982 upon the President, who h' is the land in trust for the people.The power to control the occupation and use of the communal lands is vestedin the District Councils, which have the power to prescribe conservationmeasures and demarcate lands for grazing and crop cultivation. Under theResettlement Schemes, which were introduced after Independence, newsettlers are given land for agricultural use. Although settlers receive auser's permit from the Government, their title to the land is unclear.Most settlers are located in the schemes where the land has been dividedinto small family plots. A smaller number of settlers have become membersof collective farming cooperatives (para 2.52).

1.11 The country is naturally divided into five regions, which aredetermined by the amount and regularity of the rainfall. About half of themodern commercial subsector operates in regions I to III, which haverelatively plentiful rainfall (more than 650 mm per annum); although somemodern inputs are used, the methods of cultivation remain relatively labor-intensive. About 75 percent of farming by the traditional communalsubsector takes place in regions IV and V which have low rainfall (lessthan 650 mm per annum); fewer modern inputs are used in these areas. Theresettlement areas are evenly located in relation to rainfall.

3. Agricultural Production

1.12 Zimbabwe's broad range of ecological conditions allow for widelydiversified agricultural production. The major agricultural commoditiesproduced are maize, tobacco, cotton, sugar, wheat, coffee, tea, groundnuts,soyabeans, sunflower seeds, sorghum, milk, and beef. Reliable cropproduction data for the communal and other small-scale farming are notavailable, but the data on volume of marketed output probably reflect alsothe relative performance of commercial and small-scale agriculture.

1.13 At the time of Independence in 1980, communal and other small-scale farmers produced maize and sorghum, primarily for their ownconsumption, and smaller quantities of cotton and groundnuts. Since then,because of better access to modern inputs, credit, and agriculturalextension, and in response to incentive producer prices, they have managedto increase their output of these crops. They have also emerged asimportant producers of other crops that were earlier grown mainly bycommercial farmers. Between 1980/81 and 1986/87, the share of smallholdershas increased from about 10 percent to about 40 percent in the marketing of

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maize, from 7 percent to 53 percent in cotton, and from 41 percent to 5q

percent in groundnuts. Smallholders also grow nearly 90 percent of thesunflowers in the country.

1.14 Between 1980 and 1985 the communal farmers and other smallholdersincreased their combined share of the estimated gross agricultural outputfrom 21 percent to 32 percent. The market value of the total output duringthis period grew from Z$711 million to Z$1,967 million. The agric-l.turalyear 1983 was a drought year, and although data are not available for 1986---another drought year--output was estimated to be substantially lower thanthe general trend.

4. Agricultural Institutions and Services

1.15 The main ministries servicing the agricultural sector are: (i) theMinistry of Lands, Agriculture and Rural Resettlements and (ii) theMinistry of Community and Cooperative Development and Women's Affairs(MCCWA). In the first, the Department of Agricultural, Technical andExtension Services (Agritex) is responsible for extension services; theDepartment of Research and Specialist Services for agricultural research,and the Department of Lands Administration for land use planning andpurchase of farms for settlements. Other important departments areVeterinary Services, Economics and Markets (and Marketing Board); and RuralState Land Office, which is the custodian of all state lands.

1.16 All the agricultural marketing boards are under the Department ofEconomy and Markets of the same mninistry. The Tobacco Marketing Board issupervised directly by the Deputy Secretary in charge of the Department,but the Agricultural Marketing Authority oversees the operations of theothers, i.e., the Grain Marketing Board (GMB), Cold Storage Commission,Dairy Market'ng Board, and Cotton Marketing Board.

1.17 Several other ministries provide auxiliary or support services,many of which are relevant to cooperatives. The main promotionresponsibi'lity for the cooperatives, however, has been given to MCCWA(described in Chapter II). Its role is discussed in paras 2.6 to 2.8 andstructure in 2.9 to 2.10. Other agricultural support services, such ascredit, farm input supply, and marketing, are described in Chapter II andAnnexes II and III. The other main ministry linked with cooperatives isthe Ministry of Local Government, Rural and Urban Development. One of itsdepartments, the Department of Rural Development, is charged withmanagement of the resettlement program.

C. Agricultural Cooperatives in Zimbabwe

1. Growth of Agricultural Cooperatives

1.18 The cooperative movement in Zimbabwe dates back to 1909, when theCooperative Agricultural Act was promulgated to facilitate the formation ofmarketing and supply societies by commercial farmers. Nine suchcooperatives still remain in operation, serving the interests of theapproximately 4,000 large-scale farmers. They now operate under theCompanies Act and, unlike those registered under the Cooperative Societies

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Act, are not subject to supervision by the Government. The cooperativecompanies are generally financially sound and professionally managedenterprises. The largest, Farmers Coop Ltd., had a business turnover ofapproximately Z$ 170 million in 1987. These cooperatives are not dealtwith in this report.

1.19 The Cooperative Societies Act introduced formal cooperation in theAfrican peasant sector in 1956. The purpose of the Act was to allow forthe formation of agricultural service cooperatives (ASCs),l which werepromoted by the Government in the Tribal Trustlands (later renamed CommunalAreas) to perform the following functions:

(i) to organize bulk purchase of farm inputs;

(ii) to provide marketing outlets for the surplus production from thepeasant sector; and

(iii) to organize transport of members' agricultural produce to theMarketing Boards.

1.20 The growth in the number and activities of societies at theprimary level gradually led to the formation of regional cooperative unionsto provide certralized services for the primary societies, including bulkpurchasing of inputs, produce marketing, accounting, and managementservices. Up to Independence, all cooperatives were run by state-appointedstaff who were posted at these cooperatives and who performed nearly alltechnical functions of operations.

1.21 When Independence was gained in 1980, the ASC movement comprised343 registered societies with a membership of about 70,000 communalfarmers. In 1987, the number of active ASCs was 527 and membership wasapproaching 125,000 (Tables 1 and 2). However, during the period from 1975to 1980, the cooperatives were not very active because of the war.

1.22 In the early 1980s, the Government of independent Zimbabwepromoted the revival and rapid expansion of the cooperative movement.After Tndependence, ASCs were given the main responsibility for inputdistribution--financed through the Agricultural Finance Corporation (AFC)--to communal farmers. Because of a severe shortage of adequately trainedstaff, deficient management systems, and inadequate storage and transportfacilities, cooperatives were ill-equipped to handle this task. Resultingfrom the poor management capability of the cooperatives, the input supplyand production credit programs were administered by the Ministryresponsible for cooperative development. But also the Ministry lacked theexperienced manpower and funds to develop the management capability of thecooperatives themselves, and the cooperatives continue to be plagued bymanagement deficiencies and poor operational and financial performance.

l/The term agricultural service cooperatives (ASCs) has been used hererather common "marketing and supply cooperatives" because the latter doesnot cover adequately the present, let alone future services of thesecooperatives. Besides marketing and input supply, these services alsoinclude credit and savings, consumer goods, and transport and cultivationservices.

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1.23 The ASCs have recently been exposed to competition from privatecompanies, which supply farm inputs to communal farmers, and from the GrainMarketing Board (GMB), which has been expanding its network of depots andcoilection points in the communal areas. As a result, ASCs' market shareof input supply and produce marketing has fallen and their financialposition has deteriorateA. It is estimated that the ASCs now handleapproximately 25 percent of the input supply and less than 10 percent ofproduce marketing in the Communal Areas.

1.24 Another significant development after Independence was theintroduction of the concept of collective cooperatives. The Governmentregarded these cooperatives as suitable for all sectors of the economy,especially for the agricultural sector, as part of the program ofresettl.ment of ex-combatants and landless families. In the beginning,there was no effort to restrict registration of these cooperatives, and by1987 nearly 1,100 collective cooperatives had been formed, with aregistered membership of about 35,000. In 1987, there were 312 farmingcollectives in the registry with 13,200 members. Only 96 of them, withsome 5000 members, had actually received land (Table 3). Today, theregistration is much more selective and the Ministry reviews internalcohesiveness of the proposed groups and the feasibility of the plannedprimary society before registering them..

1.25 Besides the agricultural and collective cooperatives, thecooperative movement in Zimbabwe comprises several other types ofcooperatives. The distribution of registered cooperatives from 1956 to1987 is as follows:

1956 1960 1965 1970 1975 1980 1987Category

Agr. service cooperatives 2 21 169 283 310 343 642Farming collectives - - - - - 1 312Other cooperatives (mainly

non-agricultural) - 3 7 18 30 32 848

Totals 2 24 176 301 340 376 1,802

1.26 The rapid growth of the number of registered cooperatives since1980 has outdistanced the resources available in the movement itself and inthe Ministry responsible for developing and supervising the new societies.As a result, the rate of failure among cooperatives appears to have beenhigh. A survey conducted in 1987 revealed that only 44 percent of thefarming collectives were active. The rate for active agricultural servicscooperatives was higher--85 percent--but in recent years they haveexperienced increasing financial difficulties and a declining businessturnover. Overall, about 1,100 cooperatives in all sectors are recorded asactive, which amounts to 60 percent of all registered cooperatives (Table3). However, these figures do not necessarily describe the survival levelof cooperatives; some registered cooperatives, including a substantialnumber of collective farming cooperatives, have not yet started theiroperations. Also, in the beginning of the decade, many cooperatives wereprovided with a certificate of registration to allow them to become "legal"entities for the purpose of applying loans or assistance.

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1.27 Details of the number of different types of cooperatives, theirmembership, and their activity status are presented in Tables 1 to 3.

2. Cooperative Development Policies and Legislation

1.28 Government Policy on Cooperative Development. The currentGovernment policy on cooperative development was formulated in 1983 (a newpolicy was being drafted in the spring of 1988, see also para 2.4). Thepolicy strongly emphasized collective cooperatives in the agriculturalsector as well as in other sectors of the economy. According to the oldpolicy, collectives were the most advanced form of cooperati-:es. They wereexpected to play a central role in the promotion of economic growth, thegeneration of employment, the more equitable sharing of income and wealth,and the general transformation of the economy into more socialized forms ofproduction and ownership.

1.29 Although the emphasis was on the collective form of cooperation,the policy recognized other types of cooperatives as well. The Governmentpromoted cooperatives because it believed that they can:

(i) improve the economic position of members in the form of higherproductivity and income through establishment of shorter marketchannels, permit investments that no individual could affordalone, and enable economic use of larger facilities;

(ii) provide psycho-social security to members in times of bothprogress and crisis; and

(iii) promote socio-cultural activities that enhance socio-egalitarianlife-styles.2

1.30 Policymakers have viewed the cooperative development as a phasedprocess; informal precooperatives were gradually to evolve into formallyconstituted service societies and ultimately into collectives. Inpractice, the Government has promoted and supported all these types inaccordance with the principles of open and voluntary membership.

1.31 The Government has played a central role in the promotion andsupervision of the cooperative movement, as is reflected in this statementof policy:

The principle guiding the Government's attitude towards sounddevelopment of cooperative societies is that the Government willtake a high degree of active interest by providing basicfacilities, assistance and incentives through measures in legal,fiscal, economic and agricultural policy. The main aim of thesemeasures is to promote a sound cooperative movement.3

2/Government Policy on Cooperative Development 1983, para 3.5.

3/Ibid., para 9.

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1.32 MCCWA believes that the Government needs to provide protection tocooperatives and their members and that it should act as an interestedparty on behalf of the commercially and technically inexperienced members,guide other organizations to provide services to cooperatives, and,generally, create an "enabling environment" in which cooperatives canoperate for the benefit of their members. Officially, the main areas ofGovernment intervention, as outlined in the 1983 policy and in theCooperative Societies Act, are as follows:

(i) registration and inspection of cooperatives and dissolution ofthose that do not operate in accordance with their objectives;

(ii) organization of treining and education for members and staff ofthe movement;

(iii) provision of business consulting and advisory services;

(iv) provision of auditing and supervisory services;

(v) arbitration, settlement of disputes, and similar judicialservices; and

(vi) planning and research for cooperative development.

1.33 The budget of MCCWA for cooperative development was Z$4.3 millionin 1987/88. The amount requested for cooperative development in 1988/89 wasabout 25Z higher, but whether the increase has been approved is not known.The cooperative staff in MCCWA number about 500, up from 200 in the earlypart of the decade. Most of these people had no previous cooperative orbusiness experience; they have been trained on the job and in variouscooperative courses arranged since their joining the Ministry. They servenot only ASCs but also other types of cooperatives.

1.34 Cooperative legislation. The Cooperative Societies Act is in theprocess of revision. In contrast to the emphaiis on supervision andcontrol under the existing legislation, the new bill, which is expected tobe submitted to Parliament during 1988, introduces--in line with MCCWA'scurrent policy--measures that promote the interests of cooperativeorganizations and their memoers.

1.35 Among the several changes that the new bill proposes are thefollowing:

(i) the bill defines cooperative principles and -mphasizes thedevelopment of a self-reliant movement on the basis ofinternationally accepted cooperative principles;

(ii) it clearly explains the role of Government in the promotion andsupervision of cooperatives;

(iii) it introduces the concept of precooperatives and provisionalregistration of cooperative societies;

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(iv) it establishes a Central Cooperative Fund, to which all societieswill be required to contribute part of their annual surplus andwhich will be used to finance education, training, audit and otherexpenses for development of cooperatives;

(v) it creates a Cooperative Tribunal for settlement of disputeswithin the movement. Its members are to be appointed by thePresident from amongst car,didates nominated by cooperative apexorganizations; and

(vi) it empowers the Registrar to act in extraordinx.ry circumstances toprevent mismanagement of cooperatives.

1.36 As in other African countries, the Government will, through theRegistrar of Cooperatives, retair. its powers to intervene in the managementof cooperatives. The bill empowers the Registrar to "rescind a resolutionor action of an officer or of a general meeting of a cooperative societywhich, in his opinion, is outside the objects of the society as defined inits by-laws."4

1.37 The new Cooperative Societies Bill provides an adequate legalframework for the organization and administration of cooperatives. Itemphasizes measures conducive to the development of an increasingly self-reliant and operationally efficient movement. Although the bill providesfor the Government to 'Le actively involved in the promotion and supervisionof cooperatives, this activity has to be regarded as appropriate becausethe movement, at this early stage of development, cannot be expected toprogress effectively without Government support and supervision.

D. Sociological Issues

1.38 In order to improve the results of the adjustment process wheninstitutional development is promoted among agricultural cooperatives, themission reviewed a number of sociological issues relating to smallholderdevelopment in Zimbabwe. The observations have been considered in makingthe recommendations presented in Chapter II. They are discussed morebroadly in the Annex volume (Annex VIII). Among the several issues thatare related to the cooperative development in Zimbabwe are the accelerationof change, support to cooperatives, and the farmer groups.

1.39 Acceleration of change. Although any society is constantlychanging, change is usually gradual and substantial developments take time.Change can be directed and accelerated, but there still are limits as tothe "leaps" that are possible in any given situation. It is apparent thatin the case of planning and implementing of collective cooperatives inZimbabwe, too much was attempted at once.

4/In the past, the Government has not used these powers except in blatantcriminal cases, and there are views among the cooperative movement thatthe Registrar should have been involved more, e.g., by stoppingquestionable management practices or enforcing compliance with theresolutions made at the central cooperative organs.

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1.40 The members of cooperatives were assembled from diverse groups ofpeople, mainly ex-combatants, farm laborers, unemployed workers, andsmallholders. Any agricultural experience they had was essentially smallin scale. The attempt to transform a smallholder peasant economy intolarge-scale commercial farming was apparently too ambitious in regard tosociety and to production technology. Moreover, the change was rooted in acompletely new ideology, i.e., collective cooperation, but there was noearlier cohesive bond among the participants. As a result, very fewcollective cooperatives can claim success. An approach that attempted moregradual adjustment would probably have succeeded better, as the relativelybetter performance of the Model A type settlement schemes--with their landdistributed between individual famili3s--indicates (for different "models",see para 2.52).

1.41 Support to cooperatives. The Government has long supportedcooperatives with manpower and finance and its continued support isjustified. The performance of large-scale farmers is used as the standardagainst which the performance of other agriculturalists is measured.However, those farmers achieved their success only through substantialassistance and concessions from the state over the past 30 years. Thefollowing questions may be justified. How can smallholders and theireconomic organization, cooperatives, be expected to reach the same level ofadvancement, performance, and competition without the same kind of support?Don't smallholders need as good a chance (and assistance) to establishthemselves and their cooperatives as the large-scale farmers received inthe pait, so they can benefit from the economies of scale now enjoyed bylarge-scale producers?

1.42 Farmer groups. Although large-scale cooperatives may not have abasis in the traditional social structure of Zimbabwe, small-scalecooperation seems to suit the rural population well. The 8,000 savings andfarm-input purchase groups active in Zimbabwe seasonally are a case inpoint. They have apparently found the "common bond" needed forprecooperative activities, in this case, the interest to benefit from bulkpurchases with people whom they can trust. The units thus formed are toosmall to become permanent, multiservice development institutions, but theircontinued cooperation should be encouraged. In the short run, these groupsmay take some business from cooperatives, but they are based on an actualneed among the farmers and are sustainable. In the longer run, some ofthem may be linked to ASCs, thus bringing the business back, or they maybecome cooperatives in their own right.

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II. KEY POLICY ISSUES AND RECOMMENDATIONS FOR COOPERATIVES

2.1 A favorable policy environment is one of the most importantdeterminants of success for coopezatives. Many of the policies creating afavorable environment can be addressed in a cooperative policy paper,already initiated by MCCWA; others--such as pricing and marketing ofagricultural produce--require decisions outside the Ministry responsiblefor cooperative development. The following paragraphs discuss both types ofpolicy issues, conlcentrating on those regarded as the most important tomodify in order to improve the chances for success of agriculturalcooperatives.

2.2 The specialist reports in Annexes II to IX provide manyrecommendations for specific cooperative activities and operations.l/ Themain recommendations are collected in this Chapter under paragraphs 2.4 to2.83.

A. General Policy Issues

1. Government Policy on Cooperative Development

2.3 As mentioned, the Government has undertaken a review of its policyon cooperative development. The existing Government policy in this respectdates back to 1983. The policy statement made at that time was only ageneral declaration of intentions, and thus presented an approach forcooperative development rather than providing an operational foundation.

2.4 Since 1983, a number of adjustments have been made in the overallnational and agricultural development policies. These adjustments are boundto have an impact on the cooperative sector. The planned revision of theCooperative Societies Act, which is in the process of being completed, alsocalls for a review of the policy to ensure compatibility with thelegislation. In addition, the experiences of the past few years as well asthe recommendations made by the World Bank Review Mission of March 1988,provide a suitable basis for a revision and updating of the CooperativePolicy Paper. Thus, the new policy, the draft of which was circulated inthe concerned ministries in the fall 1988, will address the followingissues, among others identified elsewhere in the mission's report:

(i) the role of cooperatives within the framework of the overallnational development policies and objectives;

(ii) the role of the Government in the promotion and supervision ofcooperatives. This should include specific policies on theextension and organization of efficient Government supportservices in the fields of:

- cooperative member education;

1/ The Annex Volume containing the specialist reports is available onrequest.

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staff training;management and business development;supervision, inspection, and auditing of cooperatives; andgeneral cooperative promotion and mobilization;

(iii) the division of promotional and support functions between thenational apex cooperatives and the Ministry responsible forcooperatives. This should include policy guidelines for a gradualtransfer of functions now performed by the Ministry to themovement's own organizations;

(iv) the role of ASCs in marketing and provision of production creditin relation to that of the Marketing Boards and AFC;

(v) the institutional arrangements required to ensure effectiveservices to members through an increasingly self-reliantcooperative movement. This should include policy guidelines onthe organization and functions of:

- the primary agricultural societies (service cooperatives aswell as collectives);

- the regional unions and their role in relation to that of theprimaries;

- national cooperative institutions such as the existing apexbodies, a cooperative bank, and a federation of cooperatives;

(vi) the role of nongovernment organizations (NGOs) and bilateralagencies, priority areas for external assistance to cooperatives,and administration and coordination of such assistance; and

(vii) the financing of and financial aid to cooperatives.

2.5 Because of the long-term importance of the policies formulated,the Government should consider the views of all interested persons and thepolicy should be prepared as a joint exercise by the Government and thecooperative movement. On the basis of the policy, once it has beenapproved, a 5-year cooperative development plan should be prepared toprovide a practical tool to implement the new policy. In 198g. theCooperative Department prepared the first annual plans for its variousactivities and had started work on a long-term plan.

2. The Role of Government in Promotion of Cooperatives

2.6 The existing cooperative set-up has been created largely at theinitiative of the Government. The Cooperative Act gives MCCWA far-reachingpowers to direct the cooperatives. The Government's support hascontributed significantly to development of the movement, and some supportwill continue to be needed until the cooperatives become strong enough tomanage their affairs. But extensive Government involvement, howevernecessary, tends to convey an image of cooperatives as Governmentorganizations rather than bodies controlled by their members, and henceoften prevents members from actively participating in the movement.

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Cooperatives must not become Government bodies, because in that case theywould lose their main strengths, community-based self-help and self-control. Korea and Kenya are good examples of cases where cooperativeself-determination has successfully increased after a lengthy developmentphase initiated and supervised by the Government. The Government also hasan important role in facilitating the profitability of cooperatives throughadequate flexibility in its policies concerning agricultural prices andservice margins. As a general task, the Government urgently needs toimprove statistical work on cooperatives and their operations and it hasalready started work in this respect with the help of a United NationsVolunteer.

2.7 In the new Policy Paper, the Government should formalize itsrecently adopted policy of gradually reducing its involvement in theaffairs of the cooperatives by reducing its control functions andconverting them to support functions. To this end, over the next fiveyears, the Government should give priority to strengthening of themanagement capability of the cooperatives and to develop the capacity ofthe national apex cooperatives to support their affiliates. In thiscontext, the Government should develop a system of selective promotion andsupervision of cooperatives by MCCWA staff. Such a system would have twoelements: (i) a method of categorizing cooperatives by their performanceand (ii) a mechanism of allocating MCCWA staff to help the most "needy anddeserving" ones (i.e., those which need help and have potential to becomeviable). The Government's system for allocation of resources should be asuitable basis for arranging the mechanism mentioned in point (ii).

2.8 The ultimate aim should be to leave MCCWA to handle onlyregistration and liquidation, settlement of disputes, and other similarstatutory matters. Functions that should be considered for an earlytransfer to the cooperative movement should include general cooperativepromotion and development of accounts and management systems. The movementshould also be encouraged to participate more extensively in the design andimplementation of staff training programs. A good example is the transferof the responsibility for management of the AFC-financed input supplyactivities to the union staff, which has already been accomplished innearly all the unions (para 2.25). However, the possibility of secondinggovernment officers to key technical positions in CACU and unions (such asaccounting and education tasks) should not be excluded.

3. Operational Structure of MCCWA

2.9 Following the recent amalgamation of the Ministry of CooperativeDevelopment with the Ministry of Community Development and Women's Affairs,the former departments of the two ministries are being reorganized. Thecooperative functions of training, education, accounts and audit,management, and registration, along with functions related to communitydevelopment and women's affairs, have been incorporated into fourdivisions. At the national, provincial and district levels, there will becooperative specialists, whereas at the ward and village level's allofficers may be generalists.

2.10 At the time of this review (March and September 1988), theintention was to retain, within the integrated structure, a high degree of

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specialization on cooperative matters. This is crucial becausecooperatives, as business enterprises, have needs that differ from those ofcommunity and women development groups. The Ministry needs to ensure thatthe sections responsible for cooperatives have adequately trained andspecialized staff. In addition, the generalist staff at the grassrootslevel should receive basic training in cooperatives. (According to morerecent information, the Ministry may allocate one or two cooperativespecialists also for the ward level.)

4. Promotion of New Cooperatives vs. Consolidation of Existing Cooperatives

2.11 Since Independence, the num' r of registered cooperatives andindividual membership have grown rap. .y. From approximately 400 primarysocieties with fewer than 70,000 members in 1980, the movement has expandedto 1,800 registered societies with a membership of nearly 160,000 at theend of 1987 (paras 1.21 to 1.25). Many cooperatives that were registeredwithout adequate studies of their viability have since become defunct.Even many of those that had a good potential for development have failedbecause of the lack of support from the Ministry and the cooperative apexbodies. Less than 60 percent of the registered cooperatives are todayclassified as functioning, i.e., they had some activity during thepreceding year. MCCWA is in the process of developing a revitalizationprogram for dormant cooperatives but will attempt to revitalize only thosethat have adequate potential.

2.12 In the new Cooperative Policy Paper being prepared at MCCWA, theexisting cooperatives should be required to be consolidated before newcooperatives are actively promoted. In its resource allocation, MCCWAshould emphasize training, management and business advisory services whichcontribute to a strengthening of the existing cooperatives. It should alsoestablish "management standards,' providing the profitability andoperational ratios expected from cooperatives. Registration of newcooperatives need not be halted, but it should be contingent on morestringent tests of their potential viability than earlier.

B. Agricultural Service Cooperatives

1. Structure, Organization, and Functions of the Cooperative Movement

2.13 National Federation of Cooperatives. At the initiative of MCCWA,a committee of the four existing national apex cooperatives (CACU, OCCZIM,NACSCUZ, and the Mining Cooperative Union) has studied the recommendedformation of a National Federation of Cooperatives. The draft CooperativeSocieties Bill has provided for such a Federation. The main reason behindthe promotion of a Federation is reportedly that formation of such a bodywould enable the movement to gain affiliation to the InternationalCooperative Alliance.

2.14 In the mission's view, the current cooperative structure--divisionof traditional and collective cooperatives into two separate sections ofthe movement--is appropriate because of the special political andhistorical situation in Zimbabwe. There is no urgent need to form aFederation at this stage. The cooperatives are financially too weak to

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sustain a Federation with meaningful activities. Also the MCCWA's currentthinking seems to be that that each organization has to be able to justifyits existence through demand for its services and through its financialviability. The limited resources should be concentrated on strengtheningof the specialized national and local cooperatives. However, there couldbe some merit in all four national organizations establishing a NationalCooperative Committee to deal with issues of common interest; this groupcould evolve into a registered Federation if and when joint activities areidentified and can be financed. Meanwhile, each individual national bodythat so desires can affiliate separately with the International CooperativeAlliance.

2.15 Strengthening the service functions of CACU. Along with graduallytransferring support functions from MCCWA to the cooperative movement, thecooperative movement and MCCWA should take steps to develop the servicesprovided by the Central Association of the Cooperative Unions (CACU) to itsaffiliated unions. Until now, CACU has remained a small entity, employinga staff of five and having a budget of about Z$100,000. The main functionsthat should be developed within CACU, if resources can be made availableand sustained financial viability can be demonstrated, are:

(i) cooperative education and staff training of the movement. CACUshould be assisted to employ an Education Secretary to facilitatedesign and coordination of the education and training programsthat are to be carried out through the unions and with MCCWA;

(ii) management systems development, including methods of internalcontrol and coordination of their implementation in ASCs. CACUis already receiving external technical assistance in this area,but needs to recruit local counterpart staff;

(iii) cooperative planning and research, including systems formonitoring of the ASC movement; and

(iv) coordination of bulk procurement of farm inputs and consumergoods through the Central Retail Management and Control Unit,which has already been established and for which externaltechnical assistance has already been secured.

2.16 Major emphasis on promotion of viable cooperatives at the primarylevel. The typical primary agricultural service cooperative has fewer than200 members (Tables 1 and 2). As a result of low membership, low businessvolume, and seasonal marketing and input supply operations, the primarysocieties are unable to generate enough capital for development of theiroperations. Most primary cooperatives are running at a loss, and most aretoo small to afford to employ qualified permanent staff.

2.17 Other cooperative movements in countries such as India and Kenya,and in all developed countries, have found it necessary to promoterelatively large cooperatives to benefit from the economies of scale and becompetitive in the market place. In order to create primary societieslarge enough to provide effective services to members in Zimbabwe, thefollowing measures should be considered:

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(i) if geographic conditions allow, small cooperatives should beamalgamated or new members should be recruited to increase themembe::ship to 500 to 1000 members per society and to achieve abusiness turnover high enough to generate capital for investmentsand for employment of permanent staff;

(ii) restrictions should be introduced to limit the subdivision ofexisting primary societies as well as regional unions;

(iii) some mechanism should be developed to link smaller cooperatives sothey can benefit from economies of scale and permanent staff;

(iv) small primary societies should diversify into new businessactivities, such as consumer goods retailing and small-scale grainmilling; and

(v) as a measure to increase members' commitment to theircooperatives, general elections should be held as soon as possibleand new committee members elected as required by by-laws.2/ Theminimum shareholding should be increased to Z$25.

2.18 Functions of the regional ASC unions. The proposal in para 2.17implies a strengthening of the primary societies relative to the status ofthe unions. However, the unions will have to be developed, too, if theyare to provide centralized support for the activities and management oftheir affiliated societies. The basic functions of the unions should be asfollows:

(i) to make bulk purchases of farm inputs and consumer goods on behalfof their member societies;

(ii) to coordinate produce marketing (i.e., supply of grain bags,organization of transport, processing of payments to producers,and collection of production loan repayments);

(iii) to provide centralized accounting and management support services;

(iv) to organize education of cooperative members and locally basedtraining of staff and committee members.

2.19 When these basic functions have been consolidated, theintroduction of a system for channeling of production credit through theunions should be considered.

2. Marketing in Traditional Cooperatives

2.20 Grain marketing. The ASCs represent one of the three channels formarketing grain from the communal areas. Two other channels are direct

2/ Reportedly, annual meetings and elections have not been held since thestart of primary societies in a large number of cases. A unit toassist in and follow up annual general meetings has been established atthe Registrar's office in 1988.

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deliveries by individual farmers or by informal farmer groups to GMB ordeliveries through private buyers approved by GMB.

2.21 Because of an exceptionally large maize crop in 1985/86 and theresulting marketing and storage problems, the Government decided that GMBestablish an adequate number of depots and collection points in thecommunal areas. GMB pays the same prices to individuals, groups, andcooperatives. However, cooperatives deduct 3 to 4 percent of the pricefrom farmers to cover their operating costs, plus the cost oftransportation. This situation has resulted in a loss of marketingbusiness by the cooperatives. Although the proportion of cooperativepurchases has been as high as 27 percent (and private buyers from 10percent to 15 percent), over the past two to three years the cooperativeshare has fallen sharply, so that in 1987 the deliveries by cooperativeswere only 19,000 tons, that is, less than 5 percent of GMB's total grainpurchases. The remaining turnover (Tables 4 and 5) does not cover theoverhead and operating costs, and many primary societies are no longerviable, and their unions are often technically bankrupt.

2.22 Continuance of the cooperative system as a major marketing andsupply channel is vital for the development of the communal farming areasof Zimbabwe. This is especially the case in outlying areas where servicesare inadequate to meet the needs of the rural population. Here theexistence of a strong cooperative channel would:

(i) provide assurance of access to markets and provision of inputs atminimum cost consistent with maintenance of a continuing service;

(ii) constitute a continuing structure onto which the provision ofadditional cooperative services--crop processing to meet localneeds, the distribution of farm tools and equipment, essentialconsumer goods and seasonal credit--can be built; and

(iii) provide the nuclei around which local economies can be developed.

2.23 Improved access by communal farmers to alternative marketingchannels is a positive development. However, GMB's operating costs havegrown much faster than inflation (from 3.5X of purchases in 1980/81 to7.23% in 1986/873/ ), largely because of the numerous new depots and400,000 trading accounts, and GMB has needed large subsidies to be able tobypass the cooperative network and buy directly from small producers. Itwould probably be more feasible to leave the local collection of grain tothe cooperatives and to allow GMB to return to its earlier role of awholesale buyer (buying minimum quantities of, say, 5 tons). Adopting thisapproach would require a policy change; at the present, GMB is required toaccept sales as small as one bag to avoid discrimination againstsmallholders.

3/ At real prices the increase was from 4.04% to 6.52% of purchases.

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2.24 Following the mission, the World Bank and the Government agreed toundertake a comparison of GMB's marketing costs at the local level and thecost of the increased use of the cooperative network or farmers groups, andto devise appropriate compensation to these bodies for taking over part ofGMB's workload. The review of the follow-up mission showed that thecooperatives would need to receive a commission of 6 to 7 percent from GMBto be able to run this operation. They could, however, simultaneouslyreduce their charge to farmers from the present 3 to 4 percent. As GMB'scost to manage the smallholder depots--including the overhead--issubstantially higher (at least 9 percent of the turnover in respectivedepots), GMB has agreed to undertake a pilot project to identify thepractical problems and requirements related to a larger transfer ofmarketing operations to cooperatives. Also, the cooperatives must beassured that their taking over a larger share of the work makes financialsense not only on paper but also in practice. Such a pilot project withtechnical assistance from the Netherlands was discussed in 1985/1986, butwas not implemented.

2.25 Farm input supply. Until recently, MCCWA was responsible formanagement of input supply activities related to the AFC-financed SmallFarmers' Credit Scheme. This supply business was operated by Ministrystaff through a separate account (the so-called Account Number 2) with verylittle participation by the unions. This arrangement may have beenjustified in view of the poor standard of cooperative management but,except in one or two cases, steps have been taken to transfer the businessto the uxions. To be successful, the transfer requires that it be based ona program the Ministry and the unions agree on, that the unions haverecruited adequate and qualified staff, and that training and othermeasures necessary to ensure effective management by the unions areprovided. The role of MCCWA as a supervisor is expected to continue forsome time after the transition to help it succeed.

2.26 In the past, sales of the farm inputs were the unions' main sourceof revenue. Since 1985/86, however, these sales have fallen substantially,largely because farmers who used to receive the supplies financed by AFCthrough the cooperatives now have the option of selecting any supplier theychoose. The total value of farm inputs traded by cooperatives was Z$33million in 1985 and Z$37 million in 1986. In 1987, the value declined to Z$19 million.4 / (The fertilizer prices and markups are presented in Table6.) A number of private suppliers have entered the market, includingmanufacturers of fertilizer and other inputs. They normally distribute theinputs through informal farmers groups located mainly in the moreaccessible areas, leaving the cooperatives to supply the more remotelocations where higher transport costs are involved. Ti° prices charged bythe private suppliers are reportedly below those of the unions, whichcomplain of unfair competition.

4/ MCCWA and cooperative organizations are in the process of improving thedata collection methods. Several aspects have complicated theuniformity of the data in the past, including possible omission withcooperatives not affiliated with CACU, and cash transactions of thosecooperatives affiliated with CACU but not monitored by unions, as wellas the poor state of accounts.

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2.27 Competition among various suppliers has probably resulted inimproved services and lower prices, and so should not be restricted. Thecooperatives need to adjust and rationalize their operations to meet thecompetition. ASCs should operate on commercial principles. Although moreinformation is needed on this issue, it appears that one problem is thatcooperative unions try to charge uniform prices in their area ofoperations, which means that they are not competitive near the main roadsand lose money in areas further away. (However, enterprises sellingfertilizer in areas distant from Harare are allowed to exceed the regulatedbasic cost by an amount which they may be asked to justify.) An analysisof the supply operations needs to be carried out to improve thecompetitiveness of cooperatives in this respect, but it appears that thecooperatives are in danger of being left as the "residual suppliers" tohigh-cost remote areas. They must apply pricing policies that enable themto cover their costs, i.e., add the extra costs to the price of farminputs, even though this raises objections from farmers in these areas.Maintenance of viable cooperatives is important in other parts of theCommunal Areas, where farmers may be able to obtain inputs directly fromthe point of origin (aften the importer or manufacturer) and sell theirgrain to GMB depots within easy reach. These cooperatives provide analternative competitive service. Farmers can count on a ccoperative beingoperated in their interests because they can participate in its overallmanagement and policy direction.

2.28 Improvements in input distribution. The unions must make aconcerted effort, together with CACU, to improve their performance tobetter compete with the private sector. They should:

(i) place orders well in advance to be sure that supplies will beavailable in good time; provision should be made for adaptation tochanges in prices should there be delays in announcing them;

(ii) take full advantage of price rebates for accepting supplies earlyif they are beneficial (taking into account the financing chargesand the extra handling and storage involved);

(iii) deliver balanced packs of fertilizer, agrochemicais, and seeds tofarmers at the same time. Here three options are open:

- assembling packs at union warehouses for onward delivery toprimary societies (this can mean unloading and reloading allconsignments);

- *sing CACU to provide a ready facility for quick loading onto atruck that has collected fertilizers from one of the fertilizercompanies as well as the additional components, i.e., seed andchemicals, so that it can proceed from Harare with balancedconsignments directly to the final destination; and

- contracting with an enterprise specializing in preparingbalanced packs for the delivery of ready made lots directly tospecified destinations. CACU could also attempt to deliver fullinput packages in a pilot area.

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2.29 CACU can also help the unions reduce operating costs to meet theircompetition. CACU has acquired bags for them at a bulk buying price, foran annual value of over Z$500,000. It has bought them seed for about Z$3million annually. Its general manager has a good reputation in theenterprises with which he is works. The proposal that CACU acquire storageand loading capacity in Harare (with USAID or other assistance) has merit.It could also arrange transport for unions in cases where starting the tripfrom Harare would be an advantage. However, if CACU is to undertake theselarge and more diverse activit'les, it will need considerably strengthenedcommercial management and product handling expertise.

3. Management Issues

2.30 Management of marketing and input distribution. Current unionmanagement has demonstrated relatively little marketing initiative orplanning of operations, an inability to obtain advantageous terms fromsuppliers of products and services, and an inability to use up-to-datebusiness accounts to control costs and maintain a focus on profitability.Split responsibility for decision making between the union management andthe Cooperative Department had been another handicap, but in this respectMCCWA has now opted out of decision making in nearly all the unions.Cooperative societies should play a more decisive and aggressive role inthe marketing of produce and distribution of inputs at the primary level.Also, they should exploit the opportunities to promote purchasing throughthe cooperatives at farmers' preloan meetings organized by AFC every seasonfor potential short-term borrowers.

2.31 Clear responsibility for management decisions should be assignedforthwith to all unions that have a competent, reliable manager in place.When the unions undertook sales of farm inputs against AFC loans, it wasunderstood that this activity would be controlled by the ProvincialCooperative Officer. As mentioned, this arrangement has now been changedand almost all unions have the full responsibility for farm input sales. Ingeneral, although cooperative officers should countersign documents toprotect public interest whenever internal control is questionable, unionmanagement should have authority to sign contracts or cheques withoutcountersignatures up to a fixed amount.

2.32 Standardized systems. Standardized systems for the management ofcooperatives should be worked out as soon as possible. Withoutstandardized systems, training of cooperative staff and supervision andmonitoring of cooperative operations is difficult and expensive. However,improvement of the ASC systems, which are outdated, cumbersome to operate,and ineffective, has already started. In the farming collectives someprogress has been made in aystems design, but virtually none inimplementation.

2.33 First priority should be given to development of basic budgeting,accounting, financial management, and recording systems for the primaryagricultural service cooperatives and their regional unions, and for theprimary farming collectives. Although the MCCWA's Accounts and AuditSection must take the main responsibility for the task at first, thespecialized national apex bodies, CACU and OCCZIM should eventually takeover once their resources will allow them to do so (para 2.15). Because

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some of the cooperative business operations are so specialized, theresources needed for this work are probably not available locally andexternal assistance will be needed for this work.

2.34 Actual implementation will require careful execution of a tailor-made training program for MCCWA's and cooperative movement's staff and formanagement committee members of cooperatives (para 2.64). Representativesfrom the regional unions (in the case of ASCs) and MCCW'A's field staff mustbe appointed for accounts implementation teams to carry out introduction ofthe systems at the primary society and union levels.

2.35 Other management systems and procedures. In addition to the basicsystems already mentioned, management procedures for the various activitiesof the regional ASC-unions need to be developed, documented in detailedmanuals, and implemented. These activities include marketing, transport,supply and retail management, and at a later stage--if production loans areto be channeled through cooperatives--credit management. As far aspossible, material and manuals already available under the ILO/MATCOMprogram should be used and the existing manuals reviewed for theirpracticality as working tools.

2.36 Furthermore, there is a need to review the internal organizationof the unions and introduce manpower development programs and personnelmanagement procedures to ensure that the cooperatives can attract andretain qualified staff. The present salary scales for cooperative staff donot provide sufficient incentives (para 2.38). In addition, many unionsand primary societies would need to have new committees elected, asrequired by the cooperative Act.

2.37 Also, basic material on business management should be developedfor the management committees of the unions and the primary societies; thismaterial should form part of a training program for the committee members(para 2.67)

2.38 Management incentives. Remuneration must be adequate if the unionsand primary societies are to attract and hold nanagers who have thecapacity to plan and implement innovative programs that will maintainefficiency under competitive conditions. The cooperatives should introducea salary system that provides a direct incentive for performance. As anexperiment, t'ie unions could pay a base salary and a bonus that would berelated to the expansion of profitable business achieved during the year.Bonuses would be provided from the profits before completing the accounts,or, in the weaker unions, from external sources on a temporary basis. Inaddition, a structure for job categories and development of career paths incooperative management should be developed. The recruitment of a marketingand supply management specialist under the ILO/Danida Project that hasalready been agreed to may offer an opportunity to start work on aremuneration system and management incentives.

2.39 Retail operations. Most unions and several primary-levelagricultural service cooperatives have established retail stores. Argumentsthat support the operation of retail stores by rural cooperatives arethese:

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(i) such stores can supplement the income from produce and inputmarketing, which is highly seasonal;

(ii) they are a convenience to members, serve as a meeting place, andgive the members a feeling that their cooperative is an active andcontinuing institution; and

(iii) they can employ cooperative staff during the agricultural off-season, thus reducing the overhead in other activities of thecooperative.

2.40 The convenience that retails stores offer to members in outlyingareas in cashing cheques for grain sales and the business this may bring tocooperatives are probably additional advantages. However, this is aseasonal factor. The competition from other retail enterprises must betaken into account, particularly in view of the limited purchasing power inmany communal areas, and the ability of family-run enterprises to stay openfor long hours with very low overhead. Many of the retail stores nowoperated by cooperatives are reportedly running at a loss.

2.41 If the stores are to succeed, there must be adequate managementavailable to handle this relatively specialized activity, sufficientturnover of stock to cover the costs of specialized staffing, and financingof stocks and other overhead costs. These requirements are not easily metin most cooperatives and, thus, establishment of each new retail store mustbe preceded by a comprehensive feasibility study.

4. Accounts and Finance

2.42 The current status. Agricultural cooperatives in Zimbabwe have aprecarious financial position. The extent of their problems is difficultto ascertain, because the account books of almost all cooperatives areseveral years in arrears. Most primary societies have not been able topresent audited balance sheets or statements of operations at their annualgeneral meetings for several years. However, the Government andcooperative movement officers, helped by the Swedish Cooperative Center,were carrying out a crash program to have the books of the ASC unions andtheir affiliated cooperatives brought up to date by the end of August 1988and audited soon thereafter. (The auditing backlog is estimated to be some6,000 to 7,000 sets of accounts.) The accounts crash program, in whichmost of the cooperative field staff of MCCWA were involved, sas progressingwell. It is expected that the audit program will be completed but behindthe planned schedule.

2.43 The crash program has revealed that some primary societies havelost their capital and are insolvent. Their losses have been financed bythe unions, which are acting as banks for their affiliated societies.

2.44 The main reasons for the serious financial problems of ASCcooperatives are:

(i) lack of clear roles for the cooperatives and GMB marketing, whichhas resulted in reduced turnover to cooperatives and losses toboth (paras 2.21, 2.23);

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(ii) lack of a clear policy for the supply of inputs to the members ornonmembers. The cooperatives make most of their income by3upplying members with production inputs and, lately, withconsumer goods. For a couple of years the cooperatives haveexperienced a considerable drop in their sales and thus in theirgross surpluses (paras 2.26 to 2.27); and

(iii) shortage of good management and management systems. This shortageis most clearly illustrated in the state of the accounts in thecooperatives. The primary societies are too small to employstaff, and most unions have difficulty attracting or keepingqualified staff, partly because they do not offer competitiveterms of employment. Poor financial control and loss of funds arethe results (para 2.32).

2.45 If the cooperatives are to gain the confidence and loyalty oftheir members, the shortcomings in record keeping, accounting, andfinancial management must be overcome. Only then can the cooperatives playa meaningful role in the development of the farming sector in the CommunalAreas, a role that will be beneficial for both the farmers and the nationaleconomy.

2.46 Prerequisites for improvement. The future financial position ofcooperatives primarily depends on resolution of their main problem: canthey increase the turnover in their marketing and merchandising operations?If they cannot, the only solution is to drastically restructure andrationalize cooperatives' operations (para 3.2). In practice,cooperatives would as a result play a much smaller role in the economy andthe weaker sections of the rural society would suffer.

2.47 As mentioned, as the first step toward an improved situation, theGovernment and GMB have agreed to undertake a pilot project to study therole of cooperatives in the marketing uf farmers' produce, particularlygrain and oil seeds from the communal areas (para 2.24). Second, a studyshould be undertaken of the role of cooperatives in supplying inputs andextending production credit to small-scale farmers. The study would havetwo purposes: (i) to examine the market for farm inputs and makerecommendations on how the cooperatives can improve their market share.and (ii) to establish whether it is advantageous to let the cooperativestake over part of the credit administration now being performed by AFC. Thestudy should be carried out in collaboration with the cooperatives and AFC(para 2.80) and with partial financing from the proposed AgriculturalCredit and Export Promotion Project. The National Farmers Association ofZimbabwe is interested in participation in this study.

2.48 If the cooperatives prove unable to provide the marketing, inputsupply, and credit services competitively, it will be difficult for them toplay a meaningful role in the better agricultural areas. If turnover inthe cooperatives is to increase, a comprehensive program to strengthen the

cooperative movement is needed. As part of this program, the followingaccounting and financial management steps should be taken:

- the financial requirements of the agricultural cooperative sectorshould be analyzed rn the basis of the marketing and the credit

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studies and the picture of the present financial situationemerging as a result of the crash program. Each new cooperativeshould have a satisfactory feasibility study made to support itsregistration application or a proof of satisfactory performance asa precooperative;

- a standardized budgeting and accounting system should beintroduced in the cooperative unions. In this respect, acontinuation of the present SCC-assisted program with additionalsupport would be beneficial;

- a standardized members' transactions system is needed to handleall the relevant activities inside the same system (and members'accounts), such as input supply, credit, collection of produce,and payment to members;

- a monitoring and reporting system should be developed for use bythe management of the cooperatives, and for the apex organizationCACU and the Ministry; and

- the audit capacity in the Ministry should be strengthened toensure that a new audit backlog does not build up. Eventualestablishment of a cooperative audit company is planned within theSCC program.

2.49 Financial rehabilitation. The unions need substantial infusion ofnew working capital (i) to relieve them of debt they have incurred and ofthe need to pay high charges on commercial bank overdrafts (to takeadvantage of savings on advance orders or on payment in cash in purchasingsupplies); and (ii) to gain more flexibility in undertaking promotionalactivities. Such an infusion of working capital is envisaged in a proposedIFAD project.

2.50 It is particularly urgent that the USAID-financed program underwhich the cooperative unions were provided with warehouses and centersshould be reevaluated. For instance, one union had more than Z$80,000budgeted for such payments but cannot use the warehouse because it islocated in the wrong place. Without this financing burden, the union couldprobably afford to drop its markup on fertilizer from 15 percent to 10percent. When the warehouses are not used, the unions should be given amoratorium on repayment of the loans until the results of the specialevaluation regarding the future of these facilities are known. MCCWA plansto carry out retroactive feasibility studies on a number of unionwarehouses to obtain reliable data for a review of the situation and toplan alternative uses for these structures.

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C. Ccllective Farming Cooperatives

1. Organization and Management of Collective Farming Cooperatives5'

2.51 Collective farming cooperatives in Zimbabwe are based on thecountry's socialistic, egalitarian and democratic ideolcgy. Thesecollectives combine, in their purest form, communal living with cooperativefarming. According to the "Government's Policy on Cooperative Development"of 1983, cooperatives were expected to remeay widespread poverty,unemployment, exploitation, and low standard of skills. This policydocument is now being revised, and the new draft policy emphasizes thatcooperatives--and collective cooperatives as a group of them--represent oneelement of the Government's policies and strategies in this respect.

2.52 Despite the substantial assistance efforts by Government and non-government agencies, most of the collective farming cooperatives (calledModel B settlements) formed under the Government's settlement program6/are troubled by low productivity, underutilization of the farming land,poor management performance, and undercapitalization. Their members had notradition of large-scale commer:ial farming, and they have been slow toadapt to the social and economic demands of a collective farmingcooperative (see paras 1.39 to 1.40). The total production and businessturnover has fluctuated substantially. In eight cooperatives out of 96 ofwhich data is available, the turnover reached Z$ 1.8 million in 1987. Thecollective farming cooperatives established during the past two to threeyears reportedly are faring better, probably because of more carefulscreening of the prospective groups receiving land and the fact that manyof them have invested their own funds in the cooperative.

2.53 Inherent problems. As an organizational form, collectivecooperatives also suffer from several inherent drawbacks:

5/ The staff of MCCWA has prepared a more comprehensive presentation aboutthe background and experiences of agricultural cooperatives (Annex 1).It differs in some respects from the views of the mission.

6/ The Zimbabwean Government has developed four basic "models" for theresettlement schemes to be implemented. (There are also a couple ofvariations.) The basic models are:Model A: resettlement schemes, in which farmers usually from CommunalAreas have moved to new villages in better areas where they farm theirown small plots (up to 5 hectars) as well as share common grazinglands;Model B: collective cooperatives, with 50 to 200 adults, combiningcommunal living with collective management, production, and marketing;Model C: similar to Model A, but containing also a core estate that isprofessionally managed (by a Government employee). Essentially, theseseem to have remained as Government estates, because they coverstrategic export crops such as tea and tobacco; andModel D: large-scale estates adjacent to communal areas that havebeen provided to communal farmers as additional grazing land.

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(a) because decisions concerning collective actions are made byconsensus, the decision-making process often requires compromisesamong members. Thus, the group may sometimes pay more attentionto political than economic considerations when reaching adecision;

(b) because several units and levels are involved in even relativelysmall decisions, the decision-making process is slower and morecumbersome than in private enterprises; and

(c) if the members are to manage the cooperative activitiessuccessfully, they should have, as in any other form of economicorganization, a good command of economic and production processes.Because members often do not have these skills, professionalmanagers would be needed. However, managers find it difficult tooperate in the democratic environment of a cooperative, where lessqualified members often interfere with the day-to-day management.

2.54 These inherent problems, among others, have made it difficult toimplement efficient farming collectives in other African countries such asKenya, Tanzania, Somalia, Ethiopia, Zambia, and Mozambique. Most of themhave either abandoned the collective cooperatives or modified the approach.Modification has usually involved subdividing the land among the farmer-members or allowing them to also have their own plots for the needs of thefamily. (Also in Zimbabwe, collective farmers are allowed to till up to oneacre for family needs.) Outside Africa, countries such as Hungary,Bulgaria, and China have allowed the farmer-members to operatesmallholdings on a commercial basis, besides participating in the commonlyowned large-scale central unit. The results in increased incomes have beencommendable. In Romania, where state farms, farming collectives, andprivate smallholdings have been in operation since socialization of thecountry, the smallholdings have proved to be more efficient productionunits than farming collectives or state farms. In USSR, the government isin the process of restructuring the state and collective farms with theintention of giving individual families long-term leases on land.

2.55 Requisites for success. Experience elsewhere, including Israelwhere farming collectives until recently have been successful, indicatesthat the factors which are crucial to the success of collectivecooperatives are the following. First, it is necessary to build among theparticipants a strong ideology based on communal cooperation or at leasthave a strong business interest as has been the case for instance in someagricultural collectives in Italy. Second, the farming collectives have tobe able to provide tangible, material benefits to their members at an earlystage. Third, there needs to be an incentive or reward system in place thatprovides bonuses for hard work. Fourth, the collective form oforganization is suitable for people who share similar beliefs and adhere tosimilar norms of behavior. In addition, it is important that there besufficient capital to provide for the necessary requirements of thecooperative, the capability to handle large-scale farming technology, andleadership to manage commercial operations involved in large-scale farming.

2.56 Ir. Zimbabwe, one important reason why farming collectives haveperformed poorly is that the members handling the technical management of

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large-scale collective farms have no professional training for this work.Also, more educated and younger members have often left these cooperatives,leaving behind older members with less formal education or commercialexperience. To attain the economic goals set for these cooperatives, theModel B farming cooperatives operating on Government-owned land should beencouraged to reorganize themselves as follows:

(i) part of the farm land should be allocated to the member familiesfor individual cultivation. Consideration should be given in somecases to subdividing the land among the members (as in "Model Aschemes'). This modification has already been allowed in a fewcases;

(ii) the remaining undivided land should be put under the management ofa professionally qualified farm manager employed by thecooperative (or by a regional union--see para 2.58 and Annex VI);7 /or

(iii) farming collectives that do not opt for a partial subdivisionshould be allowed to retain their status as pure collectives. Theyshould, however, be required to employ an adequately qualifiedmanager to ensure efficient management of the farm. /

2.57 Competent managers for large-scale farms may be in short supply inZimbabwe, but there are a large number of agricultural extension officerswho could be relatively easily trained in farm management. One possible wayto organize management services for collective farming cooperatives wouldbe to form a management services cooperative which would employ and trainfarm managers, and then employ them in collective farms under managementcontracts. Such contracts could include a bonus system in a form of anagreed share of the profits or incremental turnover. (This approach hasbeen used successfully in Fiji by USAID.) Also, Zimbabwean commercialfarmers and staff of local institutions could be hired as advisers forcollective cooperatives if funds could be made available for this.

2. Establishment of Secondary Societies for Collective Cooperatives

2.58 At present, the collective cooperative movement has almost nosecondary structure (Chart 1). Some secondary structure between the apex,OCCZIM, and the primary collectives is necessary, but the organizationalset-up of the collective cooperative movement as envisaged by OCCZIM (afour-tier structure with primary societies, 60 district unions, 8provincial unions, and a national apex body) is unnecessarily elaborate andwould be too expensive to maintain. In the future, unions should be created

7/ In late 1988, MCCWA was in the process of recruiting 12 cooperativespecialists for collective farming cooperatives as a partial measure toprovide them with managerial expertise.

8/ These aspects were reportedly being considered in late 1988 in a draftpolicy paper on resettlement issues dealt with by an inter-ministerialcommittee. Independent of the mission's work, the Government had cometo the same conclusion concerning the need for restructuring .

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only in areas (not necessarily districts or regions) that have asignificant number of collective cooperatives. The functions of theseunions in relation to the primary agricultural production cooperativeswould include the following:

(i) bulk purchasing of fertilizer, seeds, and other Zarm inputs;

(ii) transport of agricultural produce to the Marketing Boards;

(iii) provision of management services to farming collectives inagricultural production management, centralized accounting, andfinancial management;

(iv) farm machinery hire services;

(v) organization of local cooperative training and education under theauspices of OCCZIM and in collaboration with MCCWA.

2.59 In areas where there are few primary collectives to justifyformation of specialized unions, the farming collectives should beencouraged to affiliate with the existing ASC unions to receive some of theservices mentioned earlier, especially accounting services. Secondarystructures should be established only when they have prospects of becomingeconomically viable.

3. Other Issues

2.60 Although a substantial amount of education relating to cooperativework has been provided in recent years, many of the problems of farmingcollectives stem from lack of basic education and technical training amongcommittee and ordinary members. They can be rectified over time onlythrough continuation of the education program. Undercapitalization andvery low working capital in these cooperatives seem to be the other mainproblems. Most farming collectives were established by people withoutassets who were promised Government start-up capital, that, in most cases,did not materialize because of budgetary problems. A well-plannedrehabilitation program--based on an adequate study of the needs--would berequired if the agricultural farming collectives are to meet theexpectations set for them.

2.61 A separate program is needed to prepare standardized accountingsystems and procedures for the collective farming cooperatives, becausetheir operations differ from ASCs' operations. The task force set up byMCCWA and Agritex to prepare such a program should be strengthened. I.addition, a survey of the need for working capital for the farmingcooperatives should be carried out, and a separate credit program should beestablished to meet the requirements of these cooperatives.

D. Cooperative Education and Training

2.62 The cooperative education and training tasks are formidable. Thecooperative staff at MCCWA is about 500 and the number of staff in theunions and primary cooperatives is more. The committee members, sometimes

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changing frequently, are about 6,000, and ordinary members total nearly160,000. Nearly all of them would benefit from cooperative education andtraining. 9/

2.63 Cooperative education and training in Zimbabwe started five yearsago and the Government recently increased its support for the training unitconsiderably. The unit at MCCWA and in the provinces (in the office of theProvincial Cooperative Officer) carries out education and trainingactivities. MCCWA has recently mounted a major effort to improvestatistics training.

2.64 Although there are enough funds to hire Government staff to plan,guide, and partially implement cooperative education and training programs,the training officers in the field struggle with a lack of facilities andtransport. If meaningful results are to come out of the planned program inthe provinces, substantial financial support is needed for operationaltraining expenditure in the field. (Funds for training have been increasedduring FY88, but they are still inadequate. MCCWA has opened discussionswith the Confederation of Zimbabwean Industries and other agencies for helpin its staff training. Staff training profiles have been prepared and "keycompetency courses" planned.)

2.65 Several non-governmental agencies also organize trainingactivities, but their effort lack adequate planning, coordination, andevaluation. The training would be substantially more valuable if a high-powered Central Coordination Committee and Provincial CoordinationCommittees for cooperative education and training were established.(Informal bodies are already meeting on educational issues, butinfrequently.)

2.66 The agricultural service cooperatives have arranged no educationor training themselves. Because of their financial problems, it will bedifficult to induce them ASCs to reserve funds for this purpose, buteventually the cooperative unions should start their own education sectionsand employ specialized officers to man them.

2.67 Members' education has been started with the help of MCCWA andexternal agencies, using material that emphasizes on elementary cooperativeeducation, that is, aspects other than the financial and economic viabilityof the cooperatives. Although such an elementary program was appropriateinitially, a more functional approach both in terms of methodology andtraining materials is now needed in Zimbabwe.

2.68 In the absence of standardized systems for accounting, budgeting,planning and marketing, effective education and training are difficult toarrange. Systems development should be accelerated to make expandedtraining practical (para 2.32). Because the need to establish thesestandardized systems is urgent, external technical assistance, in the form

9/ 'Cooperative education" conveys to the target group general knowledgeabout cooperation - its principles, benefits, and procedures."Cooperative training" provides cooperative officers, staff, andcommittee members with practical skills needed in their work.

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of consultancies, is necessary. This second "step" of member education isunder preparation at MCCWA. Also, local expertise from such agencies asthe various f?armers unions should be tapped to increase members' awarenessabout cooperative operations.

2.69 Although many women belong to the cooperative societies, they donot actively participate in the various functions of the agriculturalcooperatives, reportedly because of traditional attitudes and women's lackof access to education. The result has been that men--with their bettereducation and place in society--have been appointed to leadershippositions. An extensive literacy campaign and more functional education,along with a program to train woman to be officers at tYa provincial level,would help alleviate this discrepancy.

2.70 Training venues are scarce in the field, but the existingGovernment institutions can be better used. Existing Government traininginstitutions such as Domboshawa should be used--for the time being--forcentralized courses, but eventually a decentralized education and trairingsystem is needed to meet the expanding training requirements. A start inthis respect has already been made.

2.71 In the area of information and publicity, cooperatives need tochange the rather negative picture of their operations into a positive,development-oriented approach. To achieve a rapid change in the public'sattitude toward cooperatives, MCCWA, CACU, and OCC2IM should employ amulti-media approach, including radio (already started), TV, newspapers,and cooperative magazines.

2.72 Finally, a systematic and continuous approach is needed toevaluate education and training activities. Such assessment and evaluationshould include standardized and regular reports from the field, compilationof statistics at the Ministry, and research into the education, training,and other needs for further cooperative development. Part of the requiredstructure and procedures are already in place at MCCWA.

E. Potential for Cooperative Banking Facilities

2.73 Although the cooperatives and their members handle substantialfunds, there is no clearly structured cooperative banking system in thecountry. Few smallholders have savings accounts or permanent bankingrelations. Farmer groups and cooperatives keep their liquid funds eitherin cash or at various banks, usually for short periods only. Althoughtentative plans have been discussed, no actual initiative to start acentral cooperative bank has been made. However, the Agricultural FinanceCorporation provides credits and loans to a large number of farmers, mostof them smallholders.

2.74 Economic development in the rural sector requires that organizedfinancial services be available. Cooperatives and their members often findit difficult to compete for services in the few existing institutions, andso, to receive adequate banking services, they have found it necessary toestablish their own bank and countrywide network. Often such cooperativebanking systems create competition in the sector, thus improving services

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to everybody. Because the cooperatives form an extensive network, theyprovide a remarkable potential for developing a savings scheme in ruralareas. Savings collected from cooperatives and their members have sometimesproven adequate to finance at least the short-term investment needs in thissector. The establishment of a cooperative banking system is, however, ademanding and long-term task that requires much planning and preparation.The following paragraphs describe the approach that is recommended.

2.75 Pooling of resources. The experience of the voluntary savingsmovement (farmer groups) described previously, and the similar experienceof cooperative operations in other African countries, proves thatsmallholders and their organizations have substantial amounts of money intheir possession, at least seasonally. For rural development to benefitfully from these funds, they should be pooled and deposited in oneinstitution serving the rural areas. Only then can the liquid funds be usedfor loans and investments in the areas from where the funds originate.Because the cooperative apex organizations still are too small to organizesuch pooling, MCCWA should initiate this planning and related actions.

2.76 Savings facilities in agricultural service cooperatives. The basisfor organizing farmers' savings operations at their cooperatives hasalready been established. Farmers generally receive cash or cheques fortheir produce after they have delivered it. If the personal records thefarmers already have in their primary societies or unions were to beupgraded to include a savings account (at a specialized section of theunion or in a bank), they would have an opportunity to start formal savingsby leaving in their account the funds that they do not need immediately.The two main benefits of this arrangement are as follows:

(i) a savings account provides better safety for the farmers' moneythan cash at home; and

(ii) part of the funds could be used as a source of credit to meet theneeds of cooperative members.

2.77 Central institutions. The cooperative set-up in Zimbabwe is stillnew and financially weak, so it would be premature to establish aCooperative Bank at this stage. However, as the first step toward formingsuch a bank, a Cooperative Finance Fund should be established to provideonly basic banking services. That is, it could offer savings facilitiesfor all cooperatives, including precooperatives and urban credit andsavings societies; it could lend funds for carefully studied cooperativeprojects; and it could provide funds for cooperative members' pilot creditschemes.

2.78 Specialized assistance. Developing the necessary systems andorganizational structures for credit, savings, and banking, as well asrecruiting and training staff, are demanding and time-consuming tasks.Because local resources are inadequate to build up such a program, a pilotprogram should be started with external assistance. The manpower and staffneeds are outlined in Appendix 1 of Annex V. (The management systemsdevelopment for salary earners' credit societies, scheduled for late 1988by the Africa Confederation of Cooperative Credit and Savings Associations,will be only partially beneficial for the rural credit and savingsactivities.)

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2.79 Channeling of AFC credit through ASCs. Production loans toindividual farmers are administered by AFC, which deals with approximately100,000 borrowers. AFC recognizes that direct lending to individuals iscostly and that ensuring prompt loan repayments from a large number ofborrowers is difficult.

2.80 To avoid high overhead, AFC could introduce group lending throughcooperative unions and societies. This solution should be carefullystudied, however, before any decision is taken to implement it. Experiencewith the present AFC loan scheme indicates that the rate of nonrepayment incommunal farmer lending is higher than the interest margin--administrativesexpenditures have to be added on top of that figure. The cooperativeswould not be able to carry such costs, and if they were to take over partof the AFC lending chE3.n, they would have to be compensated for theexcessive costs (see lIra 2.47). A pilot scheme should be planned andimplemented before the scheme is expanded to larger areas.

2.81 Consolidation needed for credit and savings. For several years tocome, the main emphasis at the primary level should be on the consolidationof the operations and viability of the existing cooperatives andprecooperatives. More than 8,000 different groupings of farmers, eitherformalized cooperatives or informal farmer groups, now exist in Zimbabwe.They provide an adequate foundation for an extensive cooperative credit andsavings network. Before this network is established, no more credit andsavings cooperatives should be promoted, because the Government or otheragencies would not be able to give them the advisory assistance and othersupport they need to operate reliably. MCCWA has already taken a cautiousapproach toward establishment of new cooperatives.

F. Women and Cooperatives

2.82 Problems for women. Farm women in Zimbabwe, like theircounterparts in other African countries, are a vital force in producingboth cash and subsistence crops. Their work input is 77 percent of thetotal work input in groundnut production, 55 percent in maize production,and 56 percent in cotton production.

2.83 Despite women's very important role in agriculture and theGovernment's policies to improve their lot, they have not acquired anequitable position in rural communities or even in their own households.The main reason is an age-old tradition concerning the different roles ofmen and women. The process of change in this regard will be slow.

2.84 The main constraints for women to improve their position inproduction and well-being appear to be their limited access to productiveland and inequitable distribution of income earned by the family unit. Theland permits are issued to "farm family units' in the name of one person,that is, the husband, if there is one in the household. The practicaleffect is that the man will have direct access to credit and thus farminputs. He will also be given the marketing cards by the marketing boards,and will collect the payments for produce once it is sold. Having littleaccess to cash income, women also have difficulties in marketing producenot sold through the official channels, such as vegetables and eggs,because they cannot hire transport.

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2.85 Women in cooperatives. Very few women are members of agriculturalservice cooperatives and can thus seldom be elected to committee positions.In collective farming cooperatives, women are members together with theirhusbands or in their own right if they are single.l1/ Although they aremembers, very few take pcrt in the meetings or are elected to managementpositions in their collective. The poor participation of women in themanagement of cooperatives has sometimes been interpreted as lack ofinterest or apathy on their part. Reportedly, women often fear men'sdomination in m3etings and committees, and are thus reluctant toparticipate in them. The central organization of agricultural servicecooperatives, CACU, has passed a resolution urging all cooperatives toreserve seats in their management committees for women.

2.86 Some cooperatives have only women members, who have started theirown projects for cultivation of cash crops, raising poultry, or sellingfirewood, to mention a few examples. There are also quite a few women'sgroups that are registered as precooperatives. They get support and advicefrom cooperative officers who make feasibility studies of women'sactivities and teach the groups the benefits and legal implications of aregistered cooperative society. The women can then choose to retain theirgroup as reserved for women or become a society under the cooperative law.

2.87 A recent study in Zimbabwe among the collective cooperativespoints out that the main problems found in this type of society are lowstandards of literary and basic education (para 2.56), and pooradministration and financial management.

2.88 Improvements. As mentioned, a change in the attitude towardwomen's role is needed to make their position more equitable. Cooperativescan be a vehicle in this process; one of the cooperative principles, openand voluntary membership, speaks against any social, political, racial, orreligious discrimination.

2.89 Cooperatives can be most helpful in this respect through theservices, mainly marketing they provide to members, and once credit isintroduced, also provision of farm inputs on credit. In the first instance,a system should be developed which would provide a marketing card andcheques jointly to the husband and wife. (A comparable system has beenimplemented in Kenya for credit operations.) Second, special programs forwomen should be promoted through cooperatives and a predetermined portionof other programs allocated to women.

2.90 Also, the service sector is an area where the Ministry ofCommunity Development, Cooperatives, and Women's Affairs comes in.ll/ Inresponse to frequent complaints by women's groups about lack of transport,

10/ Incidentally, it is reported that up to 70 percent of the non-agricultural production cooperatives in the communal areas belong towomen. According to a number of studies, these cooperatives tended tocontain single women, divorced or widowed, or wives of migrant workers.

11/ At the time of the mission, the MCCWA had carried out 17 area seminarson women issues, problems, services, and solutions.

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late deliveries, if any, and lack of financial and technical support, theMinistry has now committed itself to developing special support cervicesfor women, including training, finance, technical inputs, purchasing andmarketing. If successful, this will not only enhance the productivecapacity of women's groups but will also reduce pressure on their meagersavings. MCCWA could also join forces with CACU which has planned aworkshop to study the role of women in cooperatives. Other bodiesinteresting in this respect would be the Zimbabwe National Farmers Unionand the National Farmers Association of Zimbabwe. The latter's membershirconsists of some 60 percent women, and it has a special women's section inits organization.

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III. TENTATIVE FORMULATION OF TECIINICAL ASSISTANCE,CONTRACT AND INVESTMENT PROJECTS, ANDFOLLOW-UP ACTIONS

A. Scenarios

3.1 The agricultural service cooperatives (ASCs) in Zimbabwe are at acrossroads. Their performance during the next one or two seasons--and thedecisions made during this period--will be crucial. Based on an analysis ofthe recent developments and new policies and plans in the sector, thereview mission identified two probable scenarios: either ASCs will movetoward becoming nominal organizations, meaningless from the developmentviewpoint, or they will have a chance to struggle toward achieving animportant position among the rural i stitutions that society andcooperative members need for developLent.

3.2 Which of these two scenarios will materialize depends on both theGovernment and the cooperatives themselves. If past policies continue andthe cooperatives lose ground, the first scenario (excluding services thatare not normally performed by cooperatives) would be as follows:agricultural marketirg would be handled mainly by the Grain MarketingBoard, which would buy from individual farmers and farmer groups. It wouldmaintain at least the current network of offices, depots, and collectionpoints. Farm input supply would be in the hands of the two commercialcompanies active now, and they would directly deal with farmers and farmergroups. Agricultural credit would be provided directly to farmers only bythe Agricultural Finance Corporation as at present.

3.3 The main benefit under this arrangement is that farmers willreceive the principal services they need, although at a high cost ineconomic terms. The main disadvantages are associated with the dangersinherent in monopolistic or ollgopolistic situations, including thepotential inefficiency at GMB if it lacks competition, and the continuationof the historical and regional inequality in relation to weakest and mostremote (i.e., commercially least profitable) farmers.

3.4 Under the second scenario, GMB would operate as the wholesalebuyer through its central and regional level depots. It would be suppliedby large farmers, cooperatives, and larger farner groups. Cooperativeswould take care of the marketing of smallholder produce below the regionallevel, and they would also help smaller farmer groups in their marketing.In input marketing, cooperatives would compete with the private companies.Agricultural credit would be channeled partly through the strongercooperatives, partly directly by AFC.

3.5 Although a comparative study would be beneficial to obtain factualdata, it appears that the second scenario has no disadvantages, unless theadditional investments in cooperatives and the increased workload among thecooperative staff are regarded as such. The benefits are numerous:

(i) savings in GMB's operational costs anu subsidies as a result ofthe reduction in the number of farmer accounts, warehouses, andoffices;

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(ii) opportunities for cooperatives to have enough turnover to covertheir overhead costs and use their existing facilities morefully;

(iii) maintenance of the existing network of depots and offices,whitch ensures nearby servJces to members and nonmembers alikeand around which new cooperative and other services can bebuilt, thus creating nuclei for microeconomies in the ruralareas;

(iv) potential stimulation of management and staff performance inall institutions as a result of competition; and

(v) a way to balance the inequalities among members, which alwaysoccur to some extent in cooperative organizations.1

3.6 The Government, the cooperative movement, GMB, and AFC havediscussed these topics and have initiated actions to provide cooperativeswith better opportunities to succeed. However, consolidation oracceleration of cooperative development in Zimbabwe requires substantiallyincreased resourcesZ --funds for investment and operational costs andtechnicians who are experienced in preparing and implementing the systemsrequired to run cooperatives effectively and in a businesslike manner. Inaddition, a well-structured program is necessary to formulate the importantpolicy decisions and organize their implementation to bring about thedesired development.

B. Technical Assistance or Contract 'Packages'

3.7 With the exception of the large-scale farmers' cooperatives, whichserve a different type of clientele, the cooperative movement and MCCWAlack many of the special skills needed to operate a business effectively.These skills need to be supplied either as contractual services fromsuitable agencies in Zimbabwe (e.g., the Farmers' Coop has successfullyhelped other cooperatives on several occasions in the past) as bilateral,multilateral, or NGO assistance from abroad. Because the cooperativemovement has no funds and the Government can provide only limited budgetaryresources to support cooperatives, the most likely sources of assistanceare bilateral, multilateral, or NGO agencies.

1/The prices and charges are usually the same to all members of acooperative, regardless of their distance of the headoffice or volume ofbusiness.

2/Ir, this respect, cooperative development does not differ from agiiculturaldevelopment. In countries where substantial increases in agriculturalproduction have been achieved, higher public expenditure ininfrastructure, extension, and research (in addition to increased farm-gate prices, suitable taxation, tolerable production costs, andintroduction of high-yielding varieties) have been needed to build afoundation for later success. Cooperatives are part of the institutionalinfrastructure that must be developed to support the other actions inagricultural development efforts.

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3.8 As no single source is able to handle all the needs of thecooperative movement, suitable "packages" need to be formulated for whichassistance could be requested. Each package, such as point (i) in thefollowing list, could represent a separate subproject proposal. 3 Inallocating the pazkages to various agencies, MCCWA should keep in mind thatthe priorities should relate to strengthening and consolidating the currentoperations rather than to expansion into new activities.

3.9 Contract/assistance "packages" for agricultural servicecooperatives:

(i) training and education (linked with provision of modern officeequipment, stationery, and transport for training officers) for:- committee members- ordinary members- vocational training of staff- management training (ILC/DANIDA already involved)4

(ii) system development for accounts and audits:- accounting systems- management accounting and budgeting, profitability, and

statistics- external and internal audits (DANIDA and SCC already involved)

(iii) marketing:- marketing and supply policies- marketing and stock control procedures- input supply and stock control procedures- special crops marketing (ILO/DANIDA involved to some extent);

(iv) storage and logistics for:- transport management and control- storage and processing (USAID has helped in the past);

(v) consumer warehouses for:- unions- primary societies;

(vi) credit and banking:- farmer credit and savings- cooperative banking and union accounts (ZIMBANK and ACCOSCA

carried out studies);

(vii) special promotion of primary societies; and

(viii) feasibility studies of operations for:

3/Expertise has already been provided, often partially, for some of the'packages" mentioned.

4/The references to assistance agencies here are not comprehensive. Formore detailed information, see Annex ix.

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- new cooperatives- new activities and programs (Friedrich Ebert Stiftung has

assisted in the past);

(ix) promotion of womens activities.

3.10 Contract/assistance packages for collective farm:ng cooperatives:

(i) education and training (linked with investments in equipment andvehicles for trainers) for:- committee members- ordinary members- vocational training for staff;

(ii) accounting and audits:- accounting systems and implementat.ion- management accounting and statistics- internal and external audits;

(iii) marketing:- marketing and supply policies- marketing and stock control policies- supply and stock control procedures;

(iv) special produce marketing;

(v) other management systems and their implementation- annual farm planning- monitoring and statistical reporting- transport management and control; and

(vi) feasibility studies for:- new cooperatives- new activities and investments.

3.11 General contract/assistance "packages":

(i) publicity, public relations, and printing (including investmentsin printing facilities);

(ii) support for women's participation:- further efforts to develop women's capabilities to hold

leadership roles in cooperatives- recruitment of female cooperative trainers (and equipment and

vehicles)- preparation of more training materials for women in

cooperatives;

(iii) promotional and statutory role of the Ministry:- training and scholarships for cooperative training officers and

supply of equipment, vehicles, and transport for them- development of statistical and research units at the Ministry- strengthening of the inspection structure and capability of the

Ministry;

-39-

(iv) consideration of rural housing and electrification schemes forcooperative areas that perform especially well.

3.12 Coordination of assistance. A large number of international NGOsand other development agencies--possibly as many as 40--are involved inproviding assistance to cooperatives. 5 Because the current procedures formonitoring and coordinating their activities are inadequate, the resourceshave not been used in an optimal manner and conflicting systems andprocedures are introduced into the cooperatives.

3.13 MCCWA needs to establish a special unit within the Ministry todetermine a policy framework for such assistance, to introduce a system ofrecording all assisting agencies and their programs, and to monitorregularly the progress of the projects. To ensure that the coordinatingmechanism does not hinder implementation of development projects, decisionson donor assistance issues should be made in the unit itself, within aspecified number of days. Appendixes 1-2 of Annex IX outline a simpleformat for the allocation of apecial assistance tasks to external agenciesor, should funds be available, contract tasks for local agencies. (In1988, the Research, Planning and Evaluation Section of the CooperativeDepartment has started to collect financial assistance information fromNGOs.)

C. Tentative Investment "Packages"

3.14 The cooperatives' operating capital and equity have been weakeningduring the past two years. When cooperatives have inadequate operatingcapital--or have to rely only on borrowing--it is difficult for them toexpand their activities. In this early phase of development, theZimbabwean cooperatives need much more operating capital than investmentcapital but over the longer term, the cooperatives need incremental amountsof investment capital to benefit from the growth opportunities.

3.15 A number of investment needs have been identified. Some arenecessarily linked with contractual or assistance packages because theywould not be feasible separately. Others are feasible only as grants orlow-interest loans, whereas a few could tolerate the tests of a normalfinancial analysis. The investment or financing needs can be packaged inthe following manner:

3.16 Working capital for cooperative marketing. A pilot program totransfer the primary level crop marketing from GMB to cooperatives (paras2.24 and 2.47) would probably require working capital of about Z$500,000 toZ$1 million. Improved payment to farmers and suppliers--the latter wouldsave money through discounts--would require more working capital, but theamount cannot be estimated at this stage.

5/Chapter IX in Annex volume gives a picture of the current assistanceprovided by variois agencies, including some NGOs. The main multi- andbi-lateral agencies involved have been ILO/UNDP, DANIDA, SwedishCooperative Center/SIDA and USAID. Most prominent among NGOs haveprobably been the Friedrich Ebert Stiftung, HIVOS, CUSO, Zimbabwe project,and the Belgian Socialist Solidarity.

-40-

3.17 Strenathening of central supply facilities of CACU. Thecooperative unions and societies would benefit if CACU had betterfacilities and a larger organization to provide centralized supplyservices. The amount required by CACU to achieve this has not beenestimated.

3.18 Transport facilities for cooperative union and societies. Duringthe mission's stay in Zimbabwe, different cooperative entities repeatedlymentioned the need for transport to carry out cooperative functions moreeffectively.

3.19 As the marketing and supply functions of the ASCs are nowdeclining, it may be wiser to hire transport capacity from existingtransporters than to provide more vehicles to be owned by the cooperatives.Of course, it is sometimes difficult to hire vehicles during the peakcultivation and harvesting period.

3.20 A transportation expert should be recruited to assess thetransport needs and to investigate ways to solve the related problems ofspare parts supply and vehicle maintenance within the cooperative sector.Such an assignment should take 2 to 3 months. Apart from these majortransport questions, the mission observed that, in any event, all unionsand some larger societies will need pickup trucks and motorc.ycles valued atbetween Z$1 million and Z$2 million.

3.21 Cooperative stores/warehouses. Many local ASCs have inefficientstorage capacity for farm inputs before the planting period and for produceduring the marketing period. Other ASCs have stores that are poorly built(e.g., water does not drain away from store floor). Some union warehousesthat were constructed with USAID assistance were not well located (para2.50) and other warehouses remain partly idle because of the decline in thesupply and marketing functions of the unions.

3.22 The quantity and quality of existing cooperative warehouses andgodowns6 need to be evaluated against the requirements for the storagecapacity within the cooperative movement and taking into account theexisting storage and office facilities. MCCWA has initiated a study inthis respect.

3.23 In conr,ection with this evaluation, a standard godown (50 to 100tons capacity) should be designed; a small shop and office should beincluded to enable the society manager and storekeeper to perform theirduties on cooperative premises. Conistructing godowns according to astandard design, using local materials and standard construction elements,would be more economical than building stores to a variety of designs. Theinvestment cost per godown can be estimated at Z$20,000 to Z$30,000 each.For example, a capital outlay of Z$500,000 would allow construction of 25godowns as a pilot program. (There are some Z$5 million available underthe previous USAID-assisted warehouse program.)

6/"Godown" is used here to describe a small unit containing both stores andoffices, and possibly a consumer shop for basic supplies.

-41-

3.24 A consultant could take stock of existing storage facilities inabout 1 to 2 months' time. Designing a standard godown would probably takeanother 2 months. During the first period, the consultant could also adviseon the use of the existing union warehouses, as well as on the economy ofretaining them as -.nion assets.

3.25 Processing of produce from ASCs and collective cooperatives.Processed produce fetches higher prices than unprocessed. In addition,although produce such as maize is delivered to marketing boards, farmhouseholds still have to buy mealie meal from suppliers. It would becheaper for a cooperative to provide staples within a local area byoperating its own hammer mill or dehuller. Some cooperatives mightconsider operating multipurpose mills, whic. could also process oilseeds.(Many primary cooperatives and collectives already have hammer mills.)

3.26 Ways to increase cooperatives' production of fruits and vegetablesare being investigated. If cleaned, graded, and packed, these productswould fetch a higher price than if they were sold and delivered in bulk.

3.27 For processing to be economical, however, careful planning, goodmanagement, and adequate financing are required. To establish the actualneeds and opportunities for cooperative processing and the financingrequirements, the cooperatives need the help of a processing expert. Hewould probably require 4 to 6 months to acquaint himself with the differentfarm products, assess the existing facilities, and investigate thepossibilities for cooperatives to establish profitable processing systems.Suitable experts would probably be available locally.

3.28 A cooperative credit and savings scheme (Annex V, paras 5.68 to5.69). Such a scheme would probably need start-up capital of Z$500,000 toZ$1,000,000. Within a period of three to five years, it would most likelybe self-financing (except for the substantial funds for technicalassistance needed to plan and implement the system--an estimated US$250,000per year for 5 years.) An unidentified amount would be needed for women'sschemes (para 3.9 (ix)).

3.29 Cooperative Finance Fund (see Annex V, para 5.82). An estimatedUS$500,000 would allow establishment and first-year operation of this fund.After that, the fund--incorporating union and primary society accounts--would probably be self-financing and profitable. Technical assistancevalued at some US$250,000 over a period of 3 years can be envisaged.

3.30 A cooperative bank. Establishment of a full-fledged cooperativebank would be a follow-up to a successfully operating Cooperative FinanceFund and would thus take place in the medium to long term (5 to 10 years).The share capital to be raised must meet the requirements of the bankinglaw.

3.31 Rehabilitation of collective farms. On the collective farms, onlythe best part of the farmland is used; the rest either stays idle or isused for cattle grazing. At the time these farms became cooperatives, manywere stripped of their tractors, machinery, pickups, and even irrigationequipment (para 2.60). The indebtedness of collective farms is estimatedat Z$3 million to Z$4 million, excluding the land.

-42-

3.32 Many members working on the collective cooperatives are ex-combatants who had no training in large-scale farming. To help relieve theoften-mentioned unemployment problems in Zimbabwe, more farmers could besettled on the collective farms if farming activities were more efficientlyhandled (trained managers are essential--see Annex VI), and substantialamounts of investment finance were forthcoming. A comprehensive review ofthe land use by collective cooperatives, their management situation, andtheir finance needs for rehabilitation would probably take a high-levelfarm management specialist and two assistants about 12 man-months.However, experts could probably prepare a pilot program for rehabilitationof some 10 farming collectives within a few weeks; such a program wouldrequire between Z$1 million and $2 million for investment and workingcapital and for training programs. 7

3.33 Other cooperative needs. Several other cooperative needs forexternal financing can be envisaged in the future. These include ruralservice and repair stations for vehicles, tractors, and implements; ruralcooperative consumer shops or small supermarkets; communication and dataprocessing equipment, including computers; farm buildings andinfrastructure for Model-A resettlement schemes; access and feeder roads tocooperatives; and fishing boats, gear, coldstores and fish marketingfacilities.

3.34 As mentioned, several of the technical assistance or contractualervice packages need financial support to be effective. In addition, theactivities currently being carried out by MCCWA and cooperative staff wouldbenefit from financial assietance. Among the needs are the following.

(i) modern office equipment and stationery for the Ministry andprovincial training officers;

(ii) vehicles for provincial training officers and motorbikes andbicycles for field workers;

(iii)transport and equipment for the proposed female cooperative trainers;

(iv)extension of existing facilities to conduct cooperative training in centrallocations;

7/The mission also visited the Cold Comfort Farm Trust (CCFT) which hasinformally applied to the World Bank for a low-interest loan of US$10million. UNDP is preparing a feasibility study on the proposal. Themission regarded the activities of CCFT as valuable because theydemonstrated that general farming could be developed into more specializedactivities, giving farmers a chance to achieve higher income through morehighly processed produce. The financing needs of the Cold Comfort FarmTrust are beyond the scope of this report, because MCCWA does not regardit as a cooperative, although it reportedly is registered as such.

-43-

(v) support for the printing and distribution of a cooperative newsmagazine;

(vi)creation of a bursary fund for participanta from weaker societies who apply forlonger residential courses; and

(vii) communication equipment for offices.

D. Follow-up Actions

3.35 The main actions recommended for the cooperative leadership inZimbabwe are as follows:8

(i) bringing to conclusion the process of revising the CooperativeSocieties Bill (1.35-1.36);

(ii) revision and updating of the cooperative policy paper of 1983(2.3-2.5);

(iii) preparation of a 5-year cooperative development plan (2.5);

(iv) ensuring that the new organization of MCCWA reflects thespecific needs of the cooperatives (2.9-2.10);

(v) establishment of a pilot program in communal areas to transferGCMB's local purchasing functions to cooperatives in order toprovide them with adequate turnover and improve GMB's economy(2.24);

(vi) in collaboration with AFC and NFAZ, initiation of a pilotstudy/scheme to set up a credit scheme through cooperativesusing group approach (2.47)

(vii) organizing pooling of cooperative funds under a CooperativeDevelopment Fund to be established (2.75);

(viii) completion of the crash program for updating the accounts andaudits of cooperative entities (2.42);

(ix) acceleration and expansion of the development andimplementation work on standardized accounting and managementsystems (2.32-2.34, 2.48);

(x) financial rehabilitation of cooperative unions (2.48-2.49);

(xi) initiation of improvements in the cooperative inputdistribution mechanism to make it competitive (2.28-2.29);

8/As indicated earlier and in this list, MCCWA has been actively working onseveral of these tasks.

-44-

(xii) organizing a review of the financial position of collectivecooperatives and initiation of a reorganization program forthem (2.56, 2.60);

(xiii) making arrangements to better coordinate the NGO and bilateralassistance programs for cooperatives (3.12-3.13);

(xiv) increase of training activities aimed at improving themanagement and operational skills of the cooperative staff,based on new standardized systems (2.68);

(xv) organizing a campaign to increase membership and improve theimage of cooperatives (2.17, 2.71); and

(xvi) formulation of investment and contractual/technical assistancepackages to support the other actions (3.9-3.34).

-46-

Table 1ZIMBABWE

AGRICULTURAL COOPERATIVES SECTOR REVIEW

Multi-Purpose Agricultural Marketing and Supply Cooperativoe In 1986

No. of Member- ShareSocioties ship Capital Marketina Tradina Total

Manic.land

Mutaca/Inyanga Union 23 7,679 19,588 588,405 417,808 965,711

Mutare/Oumwe Union 67 6,689 11,987 1,038,667 289,428 1,278,080

Rusape 89 7,991 21,462 2,460,820 794,887 8,264,867

Mashonaland Contral

Bindura 66 14,077 81,468 8,172,149 9,946,889 18,117,688

Ouruve 28 8,228 19,106 8,706,624 6,764,481 10,459,955

Mt. Darwin 11 6,119 12,288 1,616,789 122,848 1,788,087

Mashona land East

6VCU 76 12,298 66,688 1,894,996 8,876,041 10,770,086

Mashonaland West

Hurungwe 24 6,546 17,648 2,282,271 682,469 2,864,740

Lomagundi 18 6,597 25,881 1,248,386 4,864,892 6,047,757

Zvakanaka 10 1,091 10,847 1,550,481 910,190 2,460,671

Matebelelarnd North

Hlanganani 26 2,828 6,649 118,918 79,997 198,915

Matabeleland South

Slyaphambill 85 5,088 11,924 281,677 689,921 871,698

Midlando

Mashambanzou 24 4,628 18,188 806,266 811,129 1,117,885

Mberengwa 17 2,688 6,602 141,669 802,968 444,612

Mtora 12 1,594 6,876 967,220 82,611 989,881

Somabula 26 6,101 10,280 872,611 882,809 764,920

ChamsnC - 21 1,768 4,917 1,468,694 821,185 1,777,829

Macvinao

Msavingo Union 146 19,668 101,679 2,016,488 1,915,874 8,982,862

841 119,750 885,826 26,646,829 87,481,266 68,027,684

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Table 2ZIMBABWE

AGRICULTURAL COOPERATIVES SECTOR REVIEW

Multi-Purpose Aaricultural Marketing and Supply Cooperatives In 1987

No. of Member- ShareSoelties ship Capital Mgrketinn Tradine Total

Msntesolnd

Uutass/Inyanga Union 24 8,829 118,747 561,920 870,687

Mutsre/Oumwe Union 58 6,498 189,668 207,706 1597,368

Rusnp 40 8,121 745,214 682,628 1,807,742

Mashonaland Central

Bindura 48 10,882 21,829 2,098,410 2,789,186 4,882,646

Ouruve 11 8,979 20,976 1,817,804 1,776,442 8,692,746

Mt. Darwin 9 6,680 14,260 1,481,148 1,887,796 2,868,944

Mashonaland East

CMCU 78 14,888 688,871 6,861,168 6,986,084

Mashonaland West

Hurungwe 24 6,962 895,126 2,024,072 2,919,198

Lomagundi 11 7,011 429,86C 1,164,604 1,688,860

Zvakanaka 7 966 26,020 26,020

Matabeleland North

Hlanganani 26 2,210 29,870 29,670

Matabeloland South

Siyaphambill 86 6,278 12,174 160,808 788,717 889,020

Midlands

Mashambanzou 28 4,9!7 208,178 419,221 627,894

Mberengwo 18 2,994 9,786 199,917 209,882

Mtora 12 1,612 627,281 68,862 898,098

Somabuls 26 5,108 11,816 148,887 160,608

Chnminuko 21 1,805 428,967 217,844 644,801

Masvingo

MUavingo Union 145 21,179 848,087 1,797,668 21146,846

606 128,889 10,191,661 19,844,771 29,586,482

Source: MICCWA, but the Ministry emphasized that tho figures are tentative.

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Table 3Zimbabwe

AGRICULTURAL COOPERATIVES SECTOR REVIEW

Table 3: Distribution of registered cooperatives by type and by activitystatusl

Type of cooperative F NF T

Agric. service cooperatives 534 108 642Farming collectives 138 1742 312Other agric. cooperatives 23 11 34Fishing 15 - 15Mining 38 15 53Grain milling 1 3 4Bakery 6 25 31Sewing 117 69 186Arts and craft 6 6 12Carpentry - 6 6Printing and publishing 1 - 1Soap making 1 - 1Brick making 2 1 3Fence making/metal working 5 17 22Building 8 7 15Wholesale 2 5 7Marketing and supply 3 2 5Butchery 1 2 3Food vendors 1 - 1Retailing collectives 92 177 269Hawkers and vendors 3 15 18Stall holders 4 - 4Catering 13 1 14Transport 12 35 47Savi:igs and credit 18 36 54Housing 1 3 4Decorating 1 - 1Security 1 - 1Industrial 1 2 3Other types 21 7 28

Total number of cooperatives 1,075 727 1,802

1/ (F=functioning, NF=non-functioning, T=total number). December 1987.MCCWA has emphasized that the figures are tentative.

21 Actually, not yet started because of inadequate land available.

- 48 -

Table 4

Table 4s Business Turnover of Agricultural Service Cooperatives by Provincein 1986 (Z$1,000) '

1983 1985 1987…------------------------------------------------------------------__----

Province ASCs ASCs ASCs…______________ -- __________________________________ -- ______________,._____

Mashonaland West 5,026 6,347 11,373Mashonaland Centr. 8,493 16,82 25,315Mashonaland East 1,895 2,866 4,761Midlands 3,734 n.a. 3,734Matabeleland N. 119 80 199Masvingo 1,909 297 2,206Matabeleland S. 151 609 760Manicaland 3,803 630 4,433

…------------------------------------------------------------------__---Totals 25,130 27,651 52,781

…--------------------------------------------------------------__-------

1/ Source (Tables 1-3): MCCWA, but the Ministry emphasized that thefigures are tentative.

2/ The data available on collective farming cooperatives was too limited(only eight cooperatives with Z$1.8 million turnover) to be included inthis statistics.

1/ Not all societies included

-49-Table 5

ZIMBABWEAGRICULTURAL COOPERTIVES SECTOR REVIEW

Table 6: Statistics on Trading In Multi-Puroos. Agricultural Marketing and Supply CoopOrative.1982-1987 (in Zs)

1982 1983 1984 1986 1986 19871

Fertilizer 7,612,620 10,984,696 18,921,469 19,592,448 22,972,746 9,316,811

Seeds 1,162,604 1,783,657 1,919,681 8,191,628 8,684,715 2,189,296

Agricultural Hardware 488,860 848,646 789,87 883,197 1,142,691 1,436,467

Chemicals 894,696 2,742,607 2,217,823 2,883,114 8,118,440 1,869,097

Grocery and clothing 622,777 1,181,600 1,9V4,936 1,684,162 2,986,339 8,801,828

Animal teds 204,206 290,878 818,779 864,097 441,620 485,793

Fuel and oil 76,546 88,984 184,121 120,348 298,099 74,268

Packaging (bags and labelo) 692,618 486,417 646,696 3,08,607 2,656,388 26B,924

Services (transport or storage) 849,603 808,402 1,046,117 1,289,442 8860,86 262,864

Other. 19,710 54,498 181,680 206,986 695,988 241,654

12,094,8389 19,148,981 28,118,268 13,42,9186 87,481,268 19,344,771e- 1987figur====e= =a==tna= =i===ei= s======= .- ==e

l/ 1987 figures are tentative figures.

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Table 6

ZIMBABWE

AGRICULTURAL COOPERATIVES SECTOR REVIEW

Table 6s Fertilizer Prices. Handling Costs and Distribution Markup

Per Tonne Per 50 kg Bag…----------- Z$…

Compound A 443.20 22.16Compound B 465.00 23.25Compound C 467.80 23.39Compound V 445.80 22.29Compound D 355.60 17.78Compound J 410.80 20.54Compound L 404.00 20.20Compound M 350.80 17.54Compound P 380.60 19.23Compound S 448.20 22.41Compound X 434.40 21.72Compound Z 371.20 18.56Compound T 460.40 (23.02)

Double Supers 479.60 23.48Ammonium nitrate 406.00 20.30Sodium nitrate 609.80 30.49Potassium chloride 351.80 17.59Potassium sulphate 536.40 26.82Single Supers 256.00 12.80Gypsum 55.40 2.77Colmanite 896.40 44.82Borate 808.60 40.43Urea 541.40 27.07

Compound D - Handling Costs and Markup

Harare price 17.78Transport 1.10Casual labor 0.13Insurance 0.18

Land cost 19.19Markup 151 2.87Selling price 22.06 rounding it off $22.10

- 51 -Figure 1

ZIMBABWEAGRICULTURAL COOPERATIVES SECTOR REVIEW

Marketing and Farm Input Distribution Channnels

A. Marketing Channels for Grains

Communal Area Farmers

Primary APproved Local Traders

Societies Buyers and Mills

Unions

BoardBuyingPoints

Grain Marketing Board Depots

A. Distribution Channels for Agricultural Inputs

Fertilizer and Chemical1 Compan ies seed Coop

Agritrade

C Unions FrePri rateTradlers

Primary Buin BuyingSocieties Groups ||Groups|

I IJ ' 1-' F Communal Area Farmersl

- 52 -

CHART 1

ZIMBABWE

AG JLTURAL COOPERATIVES SECTOR REVIEW

Chart 1: Organization of the Collective Cooperatives Movement

Organization of CollectiveCooperatives in Zimbabwe(OCCZIM)

I Regional Unions (3)

Primary farming Primary retailing Other primarycollectives collectives collectives(approx. 310) (approx. 270) j (approx. 600)

Individual members (approx.35,000)

Note: The figures refer to the number of registered cooperatives. Thenumber of actually functioning cooperatives is shown in Table 1.

Less than half of the cooperatives are affiliated to OCCZIM. Onlya small number of primary societies are affiliated to the regionalunions, which operate in three regions only.

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ANNEX 1

ZIMBABWEAGRICULTURAL COOPERATIVES SECTOR REVIEW

Background on Collective Farming Cooperatives 1/

A. General

Collective forms of agricultural rroduction have been in existencein Zimbabwe since pre-colonial times. Only after Independence, however, havecooperatives been officially recognized. Most visible today are theZunde cooperatives where a group of farmers till a collective plot in additionto their individual plots.

Collective cooperatives in their present form were firstpopularized by veterans following independence. Many of them had observedcollectives while training abroad in socialist countries. Followingindependence, they used their severance pay to purchase land for employment.The largest concentration is now found around Bulawyao where, due to the lackof suitable land for purchase by Government, the veterans had to procure theirown land.

B. Collective Farming Cooperatives as Part of the Resettlement Program

As part of the Independence Settlement Agreement between theBritish Government and the Zimbabwe Nationalists, Britain had agreed to assistthe newly independent Government in the purchase of land for re-distributionto landless Africans (Land had been a key factor in the war of independence).

-When negotiating for the purchase of the land, the governmentalways made attempts to purchase sufficient blocks of land to support schools,clinics and other social services centers.

1. Targets

Under the original joint Zimbabwe/British Government three-yearprogram, the target was to resettle 18,000 families on 1.1 million hectares ofland at a cost of $60 million. This target was revised under the Three YearNational Transitional Development Plan (1981/82 - 1984/85). Under this plan,the target was set at 162,000 families to be resettled on 9 million hectares,at an estimated cost of $500 million. By 1985, at the end of the TransitionalDevelopment Plan, only 11,000 families had been resettled. Drought, financial

1/ By the staff of MCCWA.

- 54 -

constraints and problems in the acquisition of land had made it difficult tomeet the target of 162,000 families.

In planning for the distribution of land, two basic models weredeveloped. Farms that had no infrastructure at all, such as irrigation, wereparcelled out to individual families in what is known as Model A resettlement.Farms whose infrastructure would make it un-economical to subdivide were leftintact. Most of these farms have irrigation facilities and otherinfrastructure such as tobacco barns. These are termed Model B resettlementschemes, and could only be settled by groups such as cooperatives.

2. Obiectives of the Resettlement Program

The objectives of the Intensive Resettlement Program are set out below:

(1) to alleviate population pressure in the communal areas;

(2) to extend and improve the base for productive agriculture in thepeasant farming sector through individual and cooperativeownership;

(3) to improve the standard of living of the largest and poorestsector of the population of Zimbabwe;

(4) to ameliorate the plight of people who have been adverselyaffected by the war and to rehabilitate them;

(5) to provide, at the lower end of the scale, opportunities forpeople who are landless and unemployed and therefore classified asdestitute;

(6) to bring abandoned and underutilized land into full production asone facet of implementing an equitable policy of landre-distribution;

(7) to expand or improve the infrastructure for economic production;and

(8) to achieve national stability and progress in a country that hasonly recently emerged from the turmoil of war.

From these eight objectives, the primary objective of theresettlement program was to redistribute land largely from the settlercommunity to the poor. The other two models, Model C, which is largely anoutgrowth scheme from State Farms, and Model D, which is a grazing scheme forcommunal areas, have not been developed to the same extent as the first twomodels. Table 1 shows the amounts of land under each model :

- 55 -

Table 1 - Land Settlement by Model

Model Land Settled Land not Settled Total LandA 2,164,832 (91) 289,538 2,454,430B 135, 982 (6Z) 39,837 175,892C 11,902 (0.5?) - 11,902D 57,997 (2.5?) 135,283 193,830

TOTAL 2,370,713 (100X) 464,718 2,836,094

Source: DERUDE

3. Obiectives for the Resettlement Program

Model B cooperatives were conceived essentially as resettlementschemes. The objectives for selecting settlers remained basically the same inall models. Settlers had to be either landless refugees who had beendisplaced during the war and the unemployed. In Model B schemes, veteranswere preferred because it was felt that, due to their war experience, theycould work well in groups.

Most of the farms that were made available for sale to Governmentduring the early years of the resettlement program had been abandoned by theirowners long before, at the height of the war. The workers remaining on thesefarms, most of whom had no other home, were asked to join these cooperatives.Many chose to join. It also happened that those left behind on these farmswere largely the old and the unskilled.

The decision as to what Model would be used on a particular farmwas only taken after the farm had been purchased. It is difficult thereforeto predict how many Model B schemes there will ultimately be.

In the early years of independence, there was more land offered atlow prices than the Government could resettle. For Model B resettlements, itwas therefore necessary to keep ahead with registration to avoid delays insettling groups once the planning had been completed.

Between 1981 and 1984 over 300 groups had been registered. By theend of the Transitional Development Plan, peace had been completely restoredand very few farms were being offered for sale. Less than 50 groups had beenresettled on Model B schemes. By 1987 only 86 groups had been resettled onGovernment land and 51 had purchased their own land. (See Table 2)

- 56 -

Table 2 - Effective Use of Farms Purchased before 1985.

PROVINCE COOP NAME ZEFFECTIVE AVAILABLE AVAILABLEFARM USE ARABLE GRAZINGLAND IN IN HECTARESHECTARES

MNICALAND Bethel 39 164 40Charewa 8 147 324ChiOneso 45 103 162Kubatana 29 82 917Kuedza Masimba 11 197 323Rujeho 16 243 660Ruponeso 0 67 550Ruwaka 8 171 727Shingirirayi 17 116 211Svinurai 44 24 172Tanhi 57 39 132Zingondi 8 420 376

MASHONALANDCENTRAL

Batsiranai 28 140 349Chakoma 22 213 594Kubudirira 44 58 148Kuenda 7 150 157Kurima Inhaka 22 139 33Kushingirira 2 192 24Simba Youth 12 166 .371

MASHONALANDEAST

Kumhanya 10 137 375Kwaedza 7 194 722Marova 25 141 175Mt. St. Marys 37 185 288Nyamanje 0 150 123Shandisayl *Pfungwa 22 260 396Tabndirira 13 659 477Tamuka 17 99 183

MASHONLANDWEST

Ganyunga 13 285 331Gowe 32 256 489Makuwapasi 20 209 374Mauya 22 164 276Nyamakate 18 223 574Tashinga 15 533 248

- 57 -

MASVINGO Kuvamba 20 137 326MIDLANDS Dangarendove 27 166 715

Gutsaruzhinji 12 224 279Hatineti 87 54 9Makwikwi 10 268 450Shangudzebvu 31 78 482Zezayi 15 260 34

TOTAL - 7,781 13,549

Adapted from Model B Cooperative Resettlement Program Preliminary Appraisal ofPre-1985 groups - Monitoring and Evaluation - LANDS - 1988.

NOTES: 1. At an average of 2 ha per person, the surplus land canaccommodate 3,890 more people.

2. At an average of 250 herd of cattle per person, thesurplus cattle available can employ an additional 54people.

3. Assuming some of the available land is irrigab'e, up to4,000 additional people can be accommodated on the farmsresettled before 1985.

From the number of farms available to the Government, it was clearthat most of the groups registered for Model B farms would not be resettledand therefore it was not worthwhile to register any more new groups that werelooking for land. It had also become clear that some-of the groups that hadbeen registered had done so primarily to obtain land.

4. Cooperatives on Privately Owned Land

As indicated above, the first farming collective farms were formedby veterans soon after independence. Funds for the purchase of these farmswere raised by pooling severance payments. Veterans who had not been absorbedinto the army bought these farms as a way of creating their own employment.Out of all functioning cooperatives registered as collectives today, 51 of the96 existing today were formed by veterans using their own resources. Most ofthe groups were formed in locations where the guerrilla armies had beenassembled during the cease-fire. They looked for land independently and madetheir own purchasing arrangements. Most of these individuals had noexperience farming either on a large-scale or communal basis.

5. The Human Dimension of the Collective Farming Program

As mentioned above, these cooperatives were formed by people whounder normal circumstances were not covered by the country's socio-economicnet. In the Model B schemes, before 1985 only the landless, ex-combatants,

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ex-refugees and the unemployed could be resettled. They were joined by ex-farm laborers who had been left behind by their employers.

6. Characteristics of Settlers on Model B Schemes

Recent revie.s by the Ministry have yielded the followinginformation about these groups:

Educational Att&inment. A survey undertaken by the Ministry at the end of1987 shows that modal educational attainment for the leadership is equivalentto 7 years of sw_hooling. The general membership has even less formal academiceducation. An analysis of the educational levels recorded in the "members'profile" shows that the educational levels were much higher when the groupswere first registered. Most groups have lost up to 302 of their originalmembership representing largely the more well-educated members. Those whohave remained are largely without another home or have no qualifications.Members, especially those with skills to sell, left largely because ofunfulfilled expectations.

Group Composition. In the policies and procedures of the resettlementprogram, any group with the characteristics listed in the objectives could beresettled. There are basically two distinct groups on each farm. There aresettlers who formed their group either at an Assembly Point or in a CommunalArea and those who established themselves as a group on the farm. If a farmwas planned to support 50 people and there were 25 ex-farm laborers on thefarm, the group from either the Assembly Point or communal area had to reduceits members to meet the stipulated limit. Quite often there were otherparticipants drawn from the employment centers in urban areas. Thus,frevuently there was one core group around which the cooperative was supposedto exist. This divergence of interest also reflects a divergence ofobjectives. Ex-farm laborers are generally used to receiving orders andwages. As mentioned above, most ex-farm laborers found on these farms were atretirement age and most of them, having come from neighboring countries, hadnowhere to go. The farms offered them an opportunity to set up permanenthomes. Conflicts inevitably arose once groups discovered they had differentinterests. Those who could move did so, leaving behind those with no otheralternatives. From 1985, the ministry has attempted to select groups that hadcooperated before being offered a farm. There are many such groups incommunal areas. Most of them have been farming collectively in what arecommonly called Zhundes. They even possess common assets like tractors.

Following recent reviews, the Inter-Ministerial Committee onResettlement (IMCR) is proposing to offer alternative land to all those whowere members of a cooperative when the Government was resettling a cooperativeon the farm. This includes squatters and ex-farm laborers.

Problems of Commitment to the Cooperative Idea. Most peopleresettled in any of the schemes have at one time belonged to some communalarea. They may not have possessed any land, but the social system protectedthem and provided for all their needs. Resettlement was a challenge because

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often they had no one to turn to in time of need. The cooperative could notin its early days offer the emotional and social security. It is thereforenot uncommon to fird." members returning to the communal areas wheneverhardships occur on the cooperative. When the schemes were first conceived,the Government assumed that settlers would be too poor to afford even a basiccontribution like share capital. None of the Model B schemes resettled before1984 required any share capital. It became easy therefore for members to joinand to leave the cooperative. They left behind debts to the AFC which couldnot be recovpred elsewhere. This has been a major cause of instability inmost coopa.-atives. Under the New Cooperative Law, all cooperatives will berequired to contribute share capital to protect against such losses. TheRegistrar has ordered all cooperatives to revise their By-laws to reflect someshare capital by the end of this year. All cooperatives that have beensettled on their own land require some share capital from their members, andhave a more stable membership than Model B schemes.

Essentially most of early Model B schemes are creations of theGovernment. Members were offered land if they grouped themselves. They mayhave stated initially that they wanted land but in most cases they may havenot thought out how they would work the land. Cooperative groups that havecooperated while still in the communal homes know in advance how they will runtheir farm and generally have no problems in meeting the targeted output.Economically, they also perform much better. It is also of interest to notethat they did not have to wait for Government support before embarking ontheir ventures. Often they utilized their own assets and cash.

7. Administration of the Scheme

The document entitled 'Policies and Procedures' on the IntensiveResettlement Program describes how all resettlement schemes are administered.The Inter-Ministerial Committee On Resettlement (IMCR) which is made up ofrepresentatives from the Ministries of Local Government, Urban and RuralDevelopment; and Community and Cooperative Development and Women's Affairs,administers the Resettlement Program as a whole.

Under the Ministry of Lands, the Rural State Land Office isresponsible for purchasing land for resettlement. Agritex is responsible forpreparing the five year plans for each farm and for general extension servicesin the area of agricultural and livestock production. The Ministry ofCommunity and Cooperative Development and Women's Affairs is responsible forselecting the settlers, their registration as a cooperative, and generalsupport in the area of cooperative development. The Ministry of LocalGovernment through the Department of Rural Development is responsible for allphysical works such as the provision of water, housing, etc. They alsoadminister the Land Act under which the settlers are permitted to occupy theland. Other Ministries are responsible for the provision of services whichfall under their portfolio. The IMCR meets once a month and agenda itemsinclude discussion on progress in the preparation of plans and physical worksand recommendations of groups to be resettled. The performance of each groupresettled is monitored periodically by the IMCR. The Ministry of Community

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and Cooperatives Development and Women's Affairs also administers thaEstablishment Grant (a start-up grant). Only collectives that are resettledby Government benefit form this grant. Collectives settled on their own landare not administered by the IMCR as they receive assistance directly from theGovernment Ministries.

8. Technical Support

Each farm bought by Government has its capability assessed byAgritex in accordance with the criteria laid down for assessing farms in thecountry. A five year plan indicating crops and rotations to be followed isalso drawn up. Projections are also made of the inputs required and expected.The plan allows for growth in membership with increasing intensity in landutilization. Membership targets are based on the labor requirements for theenteLprises planned for each farm. It is important to note that the plan isdrawn by technicians and that the settlers have no input into the plan. Arecent survey shows that very few cooperatives ever bother to follow the plan.Although the subject of revising the plans mid-wa, has been discussed, thesection responsible for this kind of review in Agritex has not been able to doit, largely because of lack of capacity. In essence, the plans have become apaper exercise largely to justify the viability of each farm bought byGcvernment.

Once a group has been identified, it is supposed to be registeredwith the Ministry of Community and Cooperative Development and Women'sAffairs. Registration under normal circumstances is supposed to be precededby an assessment of the group in terms of skills and cohesion. The viabilityof their project is reviewed by Agritex.

4

In the early years of the resettlement programme, cooperativeswere formed by people who had already occupied the land. Government in mostcases bought land which had already been taken over by the people. There wastherefore no time to train the members on what a cooperative principles.These activities could only start after the cooperative had been formed.

Also in the first few years after independence, there were a largenumber of farms available for purchase. In order to avoid vandalism to theinfrastructure, it was necessary to settle as many groups as possible at thetime the farms were bought. This tended to render all planning meaningless.

The planning adopted by Agritex assumes that once means ofproduction in form of land, labor and capital are in place, everything will bein order, that is, cooperatives will be ready to operate effectively.

Management is *upposed to be provided by the Cooperative oncooperative lines. This type of management is not defined in the plan. Whatis termed as "group profile" in the plan constitutes the only indicator of thegroup's abilities. The plan does not define the minimum skills and experiencefor the plan to be met or the key skills to be possessed by the settlers.

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The by-laws of these collective farms give an indication of thetype of management to be adopted. A management committee of seven isprescribed. There is no separation of political and technical roles ofmanagement. All members of the committee are to be elected on an annualbasis. This unfortunately prevents the development of any stable technicalteam on the farm.

Agritex and the then Department of Cooperatives have been chargedwith providing operational support to cooperatives. For the four years up to1984, Agritex treated cooperatives like commercial farms. Extension supportwas only provided on request. Thus, if a cooperative did not ask forassistance, it was left on its own, even if it was not performing well. Mostof the resettled people, if they had any farming experience, were used toextension assistance being offered, and not requested.

It was not until 1985 that Agritex established a special unit tooffer assistance directly to cooperatives. There are now in every region ofthe country specially trained staff who offer technical support tocooperatives. In 1987, the former Ministry of Cooperative Development wasallocated by the Public Service twelve (12) posts for special assistance tofarming collectives. The selected staff took up their positions in July 1988.

In 1985, Government invited FAO to assist in the improvement ofcollective farming cooperatives. Under the assistance programme, FAO wasrequested to:

- assist Government in conducting socio-economic and technicalfeasibility study and identifying and formulating a pilot projectfor the establishment of collective cooperatives dealing withlivestock; and

develop a management model for collective cooperatives, includingsystems for record keeping, planning and evaluation.

Under the first project, the objective would be to establish twopilot projects based on existing cooperatives on two clusters of farms inMashonaland Central and Midland Provinces. The main objective of this projectwas to introduce a manager who would assist a cluster of cooperatives withboth livestock and agronomic techniques. The project was planned forimplementation over four years.

The second part of the project was aimed at introducing managementsystems for farming collectives. A management model was developed and testedover a two-month period. A one-year project was prepared for funding by FAO.Agritex has since adapted the model for local conditions. It also now formsthe basis for the training of both Agritex and Ministry of Community andCooperative Development and Women's Affairs staff working with farmingcollectives.

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Parallel to these developments, in 1984 the Government of Zimbabwesigned a Technical Cooperation Agreement with the League of ItalianCooperatives. Under the three year Technical Cooperation Agreement signed in1984, the League undertook to assist the Ministry to establish a trainingprogram on Cooperative Management. A team of trainers with extensionexperience in 'Collective/Producer" types of cooperatives has been in Zimbabwesince 1986. The trainers are in the process of documenting their extensionexperience for training purposes. The systems they have developed will beincorporated in the general training programmes of extension staff.

Responsibility for the promotion of cooperatives tias shifted fromone Ministry to another since independence. At independence, the CooperativeBranch was part of the Ministry of Internal Affairs, which in turn wasresponsible for promoting peasant agriculture. Soon after independence, theBranch became part of the Ministry of Agriculture. In 1984, it became a fullDepartment headed by a Director in the Ministry of Lands, Resettlement andRural Development. In 1985, after the merger of Lands and Agriculture, itshifted to Lands, and in 1986, it became a fully fledged Ministry ofCooperative Development. In 1987, the new Ministry merged with CommunityDevelopment and Women's Affairs.

In the early years following independence, the institutionsresponsible for providing extension services to cooperatives had lost most oftheir qualified staff who were mainly white. Thus in the height of expansionin both cooperative types and numbers, the Government support system was foundwanting. The farming collectives were thus being formed with this void atpolicy level. The development policies for collective farms were largelydefined by Departments which had no direct responsibility for theirdevwlopmept. Thus between 1980 and 1984, there was a void in terms of policydirection relating to collectivizing farmitig cosperatives. It was only after1984, after the creation of the Department of Cooperatives that concrete stepswere taken to define a specific assistance programme for collective farms. Bythat time, some of the cooperatives had lost all chances for survival (Seetable 3).

During this void, non-governmental organizations intervened bothtechnically and financially. They introduced systems of management andprovided funding. The first exercise of the new Department was to prepare apolicy on Cooperative Development. The Policy is the first attempt sinceindependence to structure the spontaneous development of cooperatives sinceindependence and to define the role of Government as a whole.

After four years of operation, it has again become necessary torevise the old policy. The new policy places more emphasis on a systematicpromotion of cooperatives and planning for each sector of operation. Theintervention strategies are well-defined and all support institutions such asnon-governmental organizations, the private sector and Government departmentsare to be coordinated by the Ministry more systematically.

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9. Technical Inputs

As mentioned above, the Model B schemes were generally conceivedon one hand as part of a land redistribution exercise and on the other ascommercial agricultural enterprises. As commercial units, they neededexperience with the kinds of inputs used on commercial farms.

The plan preSared by Agritex includes the acquisition of modernequipment such as tractors and related implements and the use of chemicalfertilizers to attain the output levels indicated in the plan. Theresettlement policy recognizes that since most of the settlers aredisadvantaged, the Government needs to assist them in acquiring these inputs.Thus the Government, as early as 1980, introduced an Establishment Grantthrough which settlers would be provided with inputs for 100 hectares in thefirst year, together with garden tools, protective clothing and a tractor withall its implements. Most of the non-government organizations (NGOs) whosupported these cooperatives also held similar ideas. They provided tractorsand related modern equipment to the cooperatives they worked with.

In order to sustain the level of agricultural outputs, theGovernment offered to guarantee all loans to collectives through AFC. Thesewould be made available from the second year of the resettlement scheme.

The first five collectives to be supported by the Government werefinanced through a British grant. The inputs listed on the establishmentgrant were provided on time as planned. Imported items like tractors allarrived on time. All collectives established since the initial five yearperiod have been affected by the general shortage of foreign exchange. Sofar, only 16 cooperatives have received their allocation of tractors.

Beginning in 1984, several analysts have questioned the policy ofissuing tractors to collectives in the early stages of their development.Comparative analysis clearly shows that it would be cheaper for a collectiveto use ox-drawn equipment, especially in the early years of its development.More modern equipment would be introduced gradually. Cooperatives that havein fact used ox-drawn equipment have realized profits even under droughtconditions. Those cooperatives that rely entirely on tractors haveexperienced mechanical problems and lack of spares at the most critical time.This has adversely affected their performance at a critical stage of theirdevelopment. All ox-drawn equipment is made in Zimbabwe, requires minimumequipment, and can do as much work as tractors.

The IMCR 1988 has proposed a policy change with regard to draughtpower under the establishment grant. The plan is to increase the number ofoxen and ox-drawn equipment in addition to tractor-drawn equipment. Thiswould give these cooperatives enough equipment to rely on.

10. Financing of Collective Farms

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Under the present resettlement policy, farms purchased by theGovernment remain property of the Government. Resettled cooperatives can usethem free of charge. The inputs and equipment supplied by the Governmentunder the resettlement also remain Government property until they are used upor reach the end of their useful life. In the event of a cooperativedisbanding, the Government will compensate the cooperative for anyimprovements made. The assessment of such improvements is made by a qualifiedvaluator. So far, very few cooperatives have made any improvements on thefarms they occupy.

Under the existing policy, cooperators are not required tocontribute anything when they occupy a State Farm. In the first few years ofthe resettlement programme, the people being resettled could have not broughtanything because they had been drawn largely from those without property. Inthe latter part of the resettlement programme, more and more people werebringing cattle and ox-drawn equipment into the cooperative. Some of thislivestock and equipment has come in handy when the Government-supplied inputshave not been forthcoming. However, it has also caused problems when thecooperatives have tried to secure cooperatively owned cattle and equipment.

Ufnder the Cooperative Societies Act Chapter 193, one of therequirements for registration as a cooperative is that applicants shouldindicate the amount of share capital in their By-laws. Because the generalassumption was that the people being resettled were poor, no share capital wasrequired. Th'.s meant that these enterprises were being rese.tled by poorpeople who could not afford any share capital. In essence, it meant thatmembers were not sharing equally the risks and benefits of their endeavors.This also meant that, for the group to operate, it had to either borrow or begranted all the requirements.

A report prepared by the Ministry in 1984 showed that only 16Z ofthe establishment grant had been disbursed. This also varied from cooperativeto cooperative, with those financed by the British Government faring better.'What had happened is that during the 1981 to 1984 drought years, Governmenthad diverted resettlement funds for drought relief. Resettlement had goneahead because most of the farms had already been purchased by 1981.

When Government could not provide the funds non-governmentalorganizations stepped in. They supplied inputs, equipment and advisers. EachNon-government Organization designed its own strategies and there was nocoordination at all among them. Some gave generous grants while otherssupplied soft loans. As f-s already been mentioned, they also introducedtheir own management systems.

In most cases, there was very little coordination with extensionagencies.

Also, because members had not contributed any share capital, itbecame very easv for dissatisfied members to quit if they thought their needswere not being met. Thus, when some members secured a loan for a seasonal

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operation and at the end of the season their returns were below expectations,they would just walk away. They had brought nothing and they left withnothing.

From 1985 onwards, groups selected for resettlement have largelybeen those that been functioning in the communal areas in one way or another.Preference has been given to groups that have shown some commitment to theircooperatives through contributing share capital and other commonly ownedassets. In the three years of operation, groups that have contributedsomething have shown a greater degree of stability. These compare well withgroups that have purchased their own land. In the revised policy paper andnew Cooperative Act, share capital will be a standard requirement for allcooperatives.

Also in the 1988 work plan, the Registrar will request all farmingcollectives to amend their by-laws to include share capital. Thus, if amember resigns or absconds leaving his/her cooperative indebted to the AFC orany other lender, he/she will remain liable to the extent of his/her sharecapital. This means that no member is free from the debts of the society.

11. Organization of Farming Collectives

As has already been indicated, the Model by-laws that wereprescribed when the programme was first introduced emphasized politicalcontrol and tended to underplay the technical inputs. Every cooperative has aChairman, Vice Chairman, Secretary, Vice Secretary, Treasurer, EducationSecretary, Transport Secretary, Production Secretary, Health Secretary,Committee Member, and Security Secretary.

The title holders are elected annually as also preRcribed by theRegistrar. In most cooperatives the committee members also control thebusiness of the cooperative on a daily basis. Because these are elected(political) positions, there is no guarantee that a holder of a post who hasbeen trained will hold the post after an election. Government and othersupport agencies have trained many committee members to perform tasks only tofind out that these people are removed at an election. Once they have lost apolitical post, they also lose their technical functions.

In the new Policy Paper and in the New Cooperative Bill, theRegistrar will prescribe the management structures of each type of cooperativein consultation with the cooperatives themselves. Work on the new structureswill be completed by the end of 1988. The new structures emphasize aseparation of political roles from technical ones. The technocratic structurewill be composed of appointees only.

At National level, most farming collectives are affiliated to theOrganization of Collective Cooperatives (OCCZIM). This Apex was formed in1983 at the height of the expansion of Collective Cooperatives. It wascreated largely in reaction to the chaotic situation that was prevailing at

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the time with so many cooperatives being formed without a clear support base.The organization's functions are as follows:

- to provide centralized training and education facilities;

- to mobilize finance for the development of collectives;

- to solicit assistance to the collectives from Government andexternal sources;

- to investigate and provide solutions to purchasing and marketingproblems faced by collective cooperatives; and to extendmanagement assistance and guidance to primary collectives.

From its inception, OCCZIM has been plagued by problems ofinexperienced leadership since its membership was drawn from very neworganizations. Its weakness is also linked to its shallow financial base.Member societies do not generate the funds to support the mother body. LikeCACU, it has depended to a large extent on donor funds for most of its centralservices.

The availability of the donor funds has enabled it to extendservices nation%ide. Services such as the Bulawayo Mechanics School, theeight Provincial Field Officers and the District Union network are allfinanced from donor funds. The organization is also vulnerable to any changesin support by non-governmental organizations.

At the last Annual General Meeting held in 1986, a blue-print forthe revitalization of the organization was passed. Instead of having a teamof elected representatives running the affairs of the body on a full-timebasis, only a core of employed technocrats would run the affairs of theorganization. They would be supporte4 by regular meetings of the boardmembers drawn from the regional and sector committees. This approach stillhas to be put into practice.

The new law requires that any new support structure being set upby Apex body should justify itself in terms of services it can offer and theability of members to pay for them. In the New Policy Paper, Government willencourage sector-linked structures rather than structures based on geographiclocation. The present District Union structure under OCCZIM emphasizesgeographic location rather than functional specialization. Discussions aretaking place between the Ministry and OCCZIM to find ways of creating a cost-effective structure that would be supportive to member societies.

The new policy also assigns a great deal of responsibility toOCCZIM. They will have to participate in systems development, identificationof training needs and actual training. This requires that at the technicallevel the movement should be manned by people who will match the servicesprovided by Government and other Agencies.

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When OCCZIM was first created, it projected itself as anorganization that would maintain its independence from other cooperativetypes. Over the years it has become apparent that the rationalization ofservices offered at field level would make the cooperative movement as a wholemore efficient. For instance, there is no need for OCCZIM to set upfacilities for supplying inputs and handling the output. In fact, somefarming collectives are already members of Marketing and Supply Unions. Arationalization of functions on business lines would make the cooperativemovement more efficient that at the present.

Under the ILO/DANIDA assistance programme which will run until1990, the Ministry will explore possibilities of rationalizing functions ofthe different organizations. The Ministry of Community and CooperativeDevelopment and Women's Affairs takes the view that some of the structurescreated immediately after independence need revising.

Taking a case from the private sector in Zimbabwe, sector-basedorganizations form the basis of organizations such as the Confederation ofZimbabwe Industries or the Commercial Farmers Union.

C. Performance of the Collective Sector Since Independence

From the fore-going presentation and given the short period thesecooperatives have been in existence, it may not be correct to judge them assuccesses or failures. Also it would be improper to compare them to similarstructures elsewhere in the world or other cooperative types in the country.

It is very clear that in the early years Government was moreconcerned with land re-distribution than the performance of cooperatives.Because collective groups were being resettled on land that was regarded ashighly productive, it became necessary to plan them on the basis of commercialfarms and to expect them to perform at the same standard as commercial farms.There is therefore a need to improve the selection criteria of members ifthese farms are to perform better.

However, if one compares the human capital on commercial farms andthat prescribed for Model B resettlements, there is an obvious difference. Ona commercial farm, the entrepreneur employs the best people and equipment inorder to realize the best results. On Model B farms, the investment in theform of the establishment grant is designed to meet largely the welfare needsof the group. From year two, the group is required to borrow 10OX from AFCfor its needs. On the human capital side, ex-farm laborers, refugees and theunemployed organized as a cooperative are expected to perform as well as thoseselected by the entrepreneur on commercial farms. The outcomes from the twoapproaches are most likely to be very different. On Model B schemes, memberswere selected largely to meet welfare objectives. The economic objectives, itseems, were introduced to justify the occupation of some of the best land.

Even if the mismatch between the land capability and the humanresources to use the land was clear, there was no clear action plan to redress

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the obvious deficiencies among the groups formed. One obvious deficiency wasthe lack of both technical and management skills. Until 1984 there were nospecially trained extension staff to work with resettled groups. The generalassumption was that if they needed help they would ask for it. Thus if theydid not know what to ask for they did not ask even if they wera makingmistakes.

The extension services put more emphasis on political than ontechnical control. The seven member management committees elected annuallywere supposed to run the business of the cooperative.

Also from a legal point of view, there was nothing binding memberstogether. They received free land, a grant at the beginning of their project,received loans that were guaranteed by the State from AFC, and were notrequired to commit their own resources to their business venture. This madeit easy for members to leave the cooperative when things appeared not to begoing well. It hence contributed to the instability of the membership. Therewas even nothing to make members to work hard so as to repay loans.

When the Government resettled the people on Model B farms, itpromised to supply the members with a grant which would include freeequipment, protective clothing and inputs for the first year. If the grantdid not arrive, the cooperative was blamed for the bad performance. The offerof a grant became a substitute for self-help.

The plan prepared by Agritex assumes that the group will usetractors and other modern equipment. When this equipment was not forth-comingas happened during the drought years, members sat back until the promisedinputs were provided. Non-governmental organizations in some cases did comein, bringing their own management systems and mod6rn equipment. Those thatreceived modern equipment tended to associate collective farms with modernequipment. Without the necessary skills to maintain the equipment, equipmentbroke down when it was most needed. Also due to the general shortage offoreign exchange, members could not find spare parts to buy even if they hadthe money. When equipment broke down, members left unattended some of thecritical farm operations, even those that could have been undertaken with handtools or ox-drawn equipment.

As required, members borrowed from AFC to finance croppingprogrammes in their second year of occupation. Most of the loans had to bepaid at the end of the season.

Result. The result of what is described in earlier sections hasbeen the following:

(i) 49 Collective Cooperatives, especially those resettled between1980 and 1984, have been troubled by lack of cohesion, poormanagement and technical skills, heavy indebtedness to AFC andother lenders, low utilization of the land against projectedlevels, and low yields and hence incomes.

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Under such conditions, the most able bodied and educatedmembe?rs have deserted. Only the aged and those who havenowhere to go have remained. They are the least concernedwith raising an income from the land as long as theirsubsistence needs are met. Evidence of this are the smallplots which are individually cultivated found especially inthe first Model B schemes.

(ii) From 1984 onward, the Government began to identify the key areasof concern in the promotion of Model B schemes. These are some ofthe measures taken:

- from 1985, all collectives resettled have been thoroughlyscrutinized in order to make sure that only those which weregenuine cooperatives were resettled. Preference was givento communal area farmers who had farmed together as Zundesor related schemes;

- even if these groups were not registered, efforts were madeto register them;

- this also meant that all the groups that had obtained theirregistration in anticipation of receiving land would bescrutinized before being given the land. As per the surveyconducted in 1987, a majority of the defunct cooperativesare mainly those registered in anticipation of receivingland. The new policy has paid dividends. The new groupsare stable in terms of membership and also bring with themthe equipment they used while they were in the communalareas. Oxen and ox-drawn equipment and even tractors andcash are also contributed. Most of these groups have sharecapital and have borrowed from AFC before. The Governmenthas moved away from resettling groups of destitute toresettling cooperative farming groups whose main objectiveis to produce on a commercial basis.

There are therefore two types of Model B farms based on performance andcomposition. There are the pre-1984 groups most of whom are in serioustrouble and the post-1984 groups that seems to have stabilized and whoseperformance is improving all the time.

Between 1984 and the present date, the Government has been veryconcerned about what to do about new groups. Up to now it seems that verylittle has been done for the old groups. The 1988/89 Annual Plan pays moreattention to these latter groups. Among the elements of this Plan are thefollowing activities:

(i) the Ministry will undertake a human resource audit on each farm.The age and sex distribution of each group will be analyzed and

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the skills of the membership will be assessed. Earlier surveyshave indicated that some farms are occupied by very old people whowere left behind by the departing commercial farmers. The newapproach is to resettle elsewhere all those who do not want tooperate or cannot operate on a commercial basis;

(ii) the Ministry will coordinate all support services throughspecially trained farm management technical advisers. These willbe deployed from July 1988. All groups resettled on Governmentland will be required to follow the plans prepared for them.Failure to do so will result in Government withdrawing land. Therationale is that Government has allocated'good land to acooperative, and if the cooperative is not prepared to followproper advice on the utilization of the land, the land will betaken away;

(iii) it will be a requirement that all people being resettled on ModelB farms should contribute something in the form of share capital;

(iv) the farm management and accounting systems which have just beendeveloped will be enforced. All cooperatives both on State andprivately owned land will be required to follow the systemsprescribed by the Registrar.

(v) it has also been observed that most of the farms are just toolarge for the groups. Once group size exceeds 50, problems ofgroup cohesion begin to show. Government plans to sub-divide thefarms to allow more groups to occupy these farms. The sub-division will not constitute a physical sub-division of the land.Only user rights will be increased from the present one per farm.

D. Conclusion

It is very clear that Government Policy at the inception of theprogramme was torn between maintaining the levels of output on high valuefarms and meeting the welfare needs of the landless and the poor.

The lesson that has been learnt is that cooperatives are not asimple grouping of people at whose disposal factors of production are placed.If the people themselves set the objectives and goals, they will be willing aswell to define the inputs required including management.

It would be a mistake also to assume that by merely placing amanager on these farms, performance would improve.

Under the New Cooperative Policy and Law, any support structurewithin the Apex body has to be justified in terms of real services offered andthe ability of the primary cooperatives to pay for the services offered. Thestructures being proposed by OCCZIM have evolved largely out of offers ofassistance by Nongovernment Organizations.

MAP SECTION

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