Prof D. R. Thakhathi University of Fort Hare, South Africa. at the International Co-operative Alliance Global Conference in Cape Town, November 2013.

1. ICA Global Conference –SA
2013
THE ROLE OF COOPERATIVES AS
AGENTS OF RURAL DEVELOPMENT IN
SOUTH AFRICA .
BY
Prof D. R. Thakhathi,
University of Fort Hare, South Africa.

2. OUTLINE
INTRODUCTION
THE COOPERATIVES IN SOUTH AFRICA
THE ROLE OF COOPERATIVES IN PROMOTING LOCAL ECONOMIC
DEVELOPMENT (LED)
THE CHALLENGES FACING COOPERATIVES IN SOUTH AFRICA
THE ROLE OF SOUTH AFRICAN NATIONAL APEX COOPERATIVE
(SANACO)
CONCLUSION

3. INTRODUCTION
The majority of the rural communities are facing hardships, unemployment and
poverty and hence the government’s decision to make ‘coops’ as agents of
local economic development especially in rural areas..
The South African government decided during the Presidential Growth and
Development Summit held in 2003 to endorse special measures to support
cooperatives as part of strategies for job creation in the economy.

4. INTRODUCTION
In order to address the high rate of unemployment and poverty, the government
came up with the concept of “Vukuzenzele” which implies that people must be
initiative and do things for themselves instead of waiting for “hand outs”.
This paper is addressing the challenges facing cooperatives in the rural South
Africa.

5. THE COOPERATIVES IN SOUTH AFRICA
 In
2004 the new democratic government launched the Cooperatives
Development Policy and later in 2005 promulgated the Cooperatives Act, No. 14
of 2005 as amended.
In 2010, the Department of Trade and Industry launched the Integrated Strategy
on the Development and Promotion of Cooperatives which sets out an
implementation framework of the policy and the Act.

6. THE COOPERATIVES IN SOUTH AFRICA
Common challenges facing cooperatives are;
• Lack of effective management skills
• Limited cooperation among cooperatives
• Limited access to finance and markets
• Lack of compliance with legislation
• Lack of monitoring and evaluation systems
• Limited access to technology
• Limited promotion and awareness
• Inadequate economic and social impact
• Poor management and technical skills
• Underdeveloped network and economic values chains

7. THE COOPERATIVES IN SOUTH AFRICA
The strategic pillars for the support programmes for cooperatives
To increase non-financial support services to cooperatives
To increase a demand for cooperatives products and
services
To improve sustainability of cooperatives
To increase financial support services to cooperatives

8. THE COOPERATIVES IN SOUTH AFRICA
The institutional framework and support programme included the following;
 Cooperative Development Fund
 Cooperative Business Development Support Programme
 Compliance with education and training legislation framework
 Cooperative Incentive Scheme ( start-up grants)
 Micro-Finance Loan
 Cooperative Special Projects Fund
 Enterprise Network Programme
 Export Marketing and Investment Assistance
 Bilateral and Multi-lateral agreements with foreign trade partners

9. THE COOPERATIVES IN SOUTH AFRICA
The following coordination bodies have been established;
Department of Trade and Industry and its relevant Provincial
counterparts and agencies
National and Provincial government Departments
Cooperatives Advisory Boards
Other State entities and para-statals
The following monitoring and evaluating mechanisms for coops were established;
 Provincial committee on coops Development
Inter-Departmental committee on coops Development
Cooperatives Movement, Labour and Private Sector

10. THE ROLE OF COOPERATIVES IN PROMOTING LOCAL
ECONOMIC DEVELOPMENT ( LED).
 The cooperatives are key players in getting the rural masses to participate in the social and
economic development of their areas.
 Coops enable their members to become active and meaningful participants in local and
national economies..Help in creation of employment and they provide training opportunities
for the non-skilled members.
 Coops provide organisational framework to deliver cheaply interventions aimed at assisting
members to access series such as extension and input supply and facilitate access to
financial services.

11. THE ROLE OF COOPERATIVES IN PROMOTING LOCAL
ECONOMIC DEVELOPMENT ( LED).
 Cooperatives create space for rural communities to get income flow through bulk marketing
and collective negotiation, collective investment in machinery as well as promoting economic of
scale.
 Facilitate expansion of productive activity and diversification to agro-processing and other
forms of value addition.
 Reduce pressure and over-dependency on government with regards to provision of housing,
health-care, electrification etc.
 Enhance family and social values and promote peace and security within communities.

12. THE CHALLENGES FACING COOPERATIVES IN SOUTH
AFRICA.
 Mobilisation of local communities in combating unemployment and poverty is crucial
and essential. Lack of management skills is a major challenge and this results in
coops failing to improve the quality of services and to respond to the needs and
opportunities of the locals
 In order to effective in their operations, the members of cooperatives must clearly
understand their roles and functions.
 Implementation of their vision and mission is another obstacle.
 Cooperatives fail to respect the values and principles of cooperatives
 Poor implementation of their strategic plans.

13. THE CHALLENGES FACING THE COOPERATIVES IN SOUTH
AFRICA
 They fail to identify their risks and come up with interventions
 Some of the Coops lack community “buying” and legitimacy
 Cooperatives lack the most effective and efficient management and financial system
that can identify crisis situations
 Coops do not have the capacity for leadership which can take quick decisions and
actions when necessary
 Coops cant employ the knowledgeable and competent staff that have good background
of business and financial management
 The coops do not comply with the legislation.

14. THE ROLE OF SOUTH AFRICAN NATIONAL APEX
COOPERATIVE (SANACO)
 The South African National Apex cooperative (SANACO) is an important leading
organisation that can help the cooperatives to deal with these challenges throughout
the country because they stay closer to both government and cooperatives themselves.
 In his opening address of the 2011 National conference of cooperatives in South Africa,
Mr Lawrence Bale emphasised the following points:

15. THE ROLE OF SOUTH AFRICAN NATIONAL APEX
COOPERATIVE (SANACO)
 Cooperatives must work together in order to fight poverty, unemployment and
inequality.
 Cooperatives must operate within the legal framework so that they must not be used by
other people who have their own personal and narrow views that are not to benefit
cooperatives but other agendas.
 Government must set aside some procurement that must be given to cooperatives as
the means to strengthen them financially and economically.

16. THE ROLE OF SOUTH AFRICAN NATIONAL APEX
COOPERATIVE (SANACO)
The cooperatives have the support of the president and should ensure
that they are always ready to deliver services to the people and thereby
building the economy.
SANACO must always engage various stakeholders through debates,
discussions, workshops and meetings on matters of economic and social
development of the country.
SANACO must identify challenges and provide solutions that are facing
various cooperatives

17. THE ROLE OF SOUTH AFRICAN NATIONAL APEX
COOPERATIVE (SANACO)
 SANACO must play a crucial role in educating and training all the cooperatives members
 The SANACO members should always stand up for their values, principles and
constitutions.
 SANACO must work with and monitor closely the activities and the core business of the
Cooperatives Development Agency .
 SANACO has the responsibility to turn rural communities around through the generation
of economic and social development.

18. CONCLUSION
 SANACO should assist the cooperatives to be united in search of excellence, effective
delivery, good governance, professionalism, accountability, equity and effective
administration.
 SANACO should champion the cooperatives to be visionary, competent and caring.
 Cooperatives in South Africa must become the learning organisations and inculcate a
culture of research, harnessing intellectual debate and encouraging learning, education
and development.

19. CONCLUSION
 Speaking during the 2011 national Conference of Cooperatives in Midrand, Prof Thakhathi
chose the topic “Accelerating Transformation and Service Delivery in the
Cooperative Sector” and emphasised the following points:
 Cooperatives should play a crucial role in enhancing local economic development in
rural communities by reducing poverty, unemployment and inequality through the
attainment of peace, greater freedom, social equity and sustainable development.
 The leaders and members of cooperatives must be creative, innovative and grow the
movement into vibrant, capable and sustainable entities.

20. CONCLUSION
The rural communities must be developed in various ways: inter-alia
agriculture, farming, business and commerce, agri-processing,
manufacturing, mining, training and education, arts and culture, tourism,
retail services, financial services, sports, etc.
It is clear that if all cooperatives in South Africa can plan strategically
and back their plans with business and operational details, they will
transform the country in tremendously.

21. A MILLION
THANKS