Rethinking the Role of Cooperatives in African Development

By Cynthia Kwakyewah
2016, Vol. 8 No. 06 | pg. 1/2 |


In their search for a new development paradigm, many African governments and international organizations have reverted to cooperatives, a distinct business model that manifest a turbulent history ranging from pre-colonial to colonial and post-independence Africa. Owing to their ethical and democratic features as well as their dual pursuit for social and economic yields, cooperatives have come to be perceived as the solution to the enigma of underdevelopment. But a critical examination indicates that African cooperatives face profound encumbrances deriving from their historical background and the current socio-political environment surrounding them. Yet it is argued that cooperatives are still of vital significance as they are compatible with traditional African cultural values, create employment, and enhance social protection to many Africans living in rural areas. In the context of a renaissance of cooperatives, this paper seeks to investigate the role of cooperatives in African development by looking at both the opportunities they proffer and challenges they encounter.

1. Introduction

The failure of the neoliberal development strategy to deliver on its promises, as evidenced by the numerous horror stories of Structural Adjustment Programs(SAPs), has caused many international institutions and governments in the Global South to search for alternatives that can address the vital question of development. In light of this state of affairs, the UN declared 2012 the International Year of Cooperatives (IYC) as a way to emphasize the contribution of cooperatives in reduction, employment creation, and the promotion of social integration (IYC, 2012). As a member-owned business association with a set of ethical codes, cooperatives are recognized as enterprises that foster socio-cultural and economic advancement (Schwettman, 1997, p.1).

Do cooperatives truly have the ability to spur development?

But do cooperatives truly have the ability to spur development as the UN would want us to believe? In fact, the actual capacity and significance of cooperatives in a globalized capitalist economic structure has been the terrain of much heated debates among writers in the cooperative literature. As a result, scholars are polarized across spectrums with proponents asserting that cooperatives typify a viable bottom-up sustainable development approach, while critics profess the increasing negligibility of cooperatives, given their challenge to internationalize, strive economically and, adhere to their ethical principles concurrently (Reed & McMurtry, 2009).

Although cooperatives are found across the globe, the African experience with its distinct history and socio-political context, manifest idiosyncratic features that make it stick out compared to the Western cooperative movement. As a continent that is severely plagued by unprecedented poverty and political instability, the implementation of cooperatives has been coupled with a mission to combat underdevelopment. Thus, the cooperative experiments in many African countries have been underpinned by a strong notion of cooperatives as agents of change (Holmén, 1990, p.31). The results of these experiments have been mixed with both success and failure stories. Against this backdrop, this paper will critically examine the role of cooperatives in African development. It is argued that despite their internal and structural challenges, cooperatives remain significant in the African context due to their compatibility with traditional African cultural values, their capacity to create employment, and to provide social protection, particularly for many rural Africans.

Although the paper highlights the opportunities African cooperatives hold, it also alludes to their limitations as the professed sole developmental agent intended to transform the socio-economic fabric of African nations. The next section compares the history of cooperatives in Africa and in the West. Following this is an analysis of the various conceptualization of cooperatives which leads to a discussion on their challenges and shortcomings. The paper concludes with some remarks on how we ought to view the role of cooperatives in African development and some recommendation on how to advance research on cooperative activities in Africa.

Women's cooperative in Ethiopia

In Adwa, Ethiopia a woman works on a poultry rearing project in association with a women's cooperative. Photo: Trocaire/Jeannie O'Brien CC-2

2. The History of Cooperatives: Comparing African and Western Cooperative

The crucial and re-emerging question that experts of cooperative studies continuously engage with centres largely on the socio-economic relevance of cooperatives. Of particular interest to analysts of the Western cooperative movements are the issues of commercial viability of cooperatives, their competiveness in a global economic arena, the social goods they generate and other advantages they possess compared to the neoliberal business model. For instance, writers in the Western cooperatives literature pride themselves with the famous Mondragon co-ops, a complex of more than 80 co-ops owned and operated by about 30,000 worker-members, and present it as conspicuous evidence to the immense potentials of cooperatives (Hill, 2000, p. 282; William, 2007 p.11).

The focus within the African cooperatives scholarship, in contrast, has been to investigate the cooperative-development nexus with utmost attention placed on tendering strategies to better equip African cooperatives with their assignment of stimulating development. Although success stories like that of Mondragon are still absent within the African context, cooperatives in Africa have also recorded impressive strides and can boast of their many contributions. Among the observable figures come from Schwettman (1997, p.1), who noted that over 40% of African households are part of a cooperative enterprise.

Although largely disregarded by many development practitioners and agencies, the contributions of cooperatives in various African national economies, particularly in employment generation (i.e. salaried jobs, self-employment opportunities), certainly deserves more praise. For instance, 63% of the Kenyan population earns their livelihoods from co-operatives (ICA, 2012). Another example of the job creation ability of cooperatives can be found in Ethiopia wherethe cooperative sector produced employment for about 82,074 Ethiopians and generated over half a billion Ethiopian Birr in income from this employment in 2007 (Emana, 2009. p.18 -19). Not only do these statistics reveal the significance of cooperatives but more so, they point to the exigency of their role.

In acknowledging their relevance, it is also important to note that expectations of cooperatives and the context in which they emerge vary across regions. Indeed, the nature and outcomes of cooperatives in African countries significantly differ from that of Western cooperative movement for various reasons. Williams (2007) gives us insights into the origins of the cooperative movement in the West. As it becomes apparent, the Western cooperative movement emerged as a tool to ameliorate social ills. For example, in Europe we witness the rise of cooperatives at the onset of the Industrial and in the Midwest United States, cooperatives were formed to counteract the negative impact of the banking crises on family famers in the 1980s (Williams, 2007, pp. 9-10).

By comparison, the history of cooperative development in Africa reveals a very different trajectory. Although African mutual support groups predate the Western cooperative movement and existed during pre-colonial times, the introduction of formal cooperatives in Africa was undertaken by the British, French, Portuguese, Spanish, German, Belgian colonial administrations (Develtere et al, 2008, p.2). Since, the cooperative sector was a product of colonial socio-economic design, Africans perceived formalized and institutionalized cooperatives as foreign and alien organizations. Following the independence of African states, cooperatives were then re-introduced under state control.

Ultimately, many African governments saw cooperatives as a useful tool to serve their interest of implementing social and economic policies and advancing their nation-building agenda. As an extended arm of the government, cooperatives failed to accommodate the interests of their members or the general public (Develtere et al, 2009, p.6). By implication, the encapsulation of African cooperatives into state politics meant that failure of government activities similarly became understood as failure of cooperatives performance. In the 1980s, international financial institutions such as the IMF and the World Bank launched their Structural Adjustment Programs (SAPs) with the purpose of liberalizing what was perceived as an excessive government controlled economy.

Structural Adjustment Programs were predicated on the assumption that African economies needed to be transformed from a state-dominated to a market-oriented economy. Not surprisingly, the inauguration of Structural Adjustment Programs induced organizational and operational changes for African cooperatives (Develtere et al, 2009, pp. 8-9). With the renaissance of African cooperatives, international institutions like the UN and ILO have come to regard cooperatives as the primary apparatus for development (Develtere et al, 2008). Therefore, the various initiations of cooperatives in Africa always occurred as a top-down project. In the absence of organic or a grassroots character, typical for a social movement, analysts must desist from characterising African cooperatives as movements and rather see them,, as did Develtere (1993, p. 189), as a "cooperative sector".

3. Various Conceptualizations of Cooperatives in Africa

Given the enormous diversity of cooperatives in Africa, it is not surprising that they have been conceptualized in many different ways. While some see cooperatives primarily as engines of , others think of them from the perspective of compatible cultural economy, and still other see them as alternative economic variant, or as s tool of .

3.1. Cooperatives Vehicle of Development

For many observers and analysts the questions of whether cooperatives can facilitate development on the continent is largely understood in terms of their capability to yield employment opportunities and reduce poverty as a result. However, when discussing the employment creation ability of cooperatives, we must be aware that the availability of old and the gathering of new data is linked with severe obstacles. Unlike Western cooperatives, African cooperatives remain rather informal and consequently poorly documented. Nevertheless, Schwettman (1997, pp. 5-7) is convinced that cooperatives can be an engine for poverty reduction and employment creation. He emphasizes the fact that cooperatives provide members with economic services and sees their greatest potential in creating self-employment opportunities.

Furthermore, Pollet (2009, p. 23) statistics confirm Schwettman's optimism. His data shows that an estimate of 79433 people working in cooperatives in Uganda, 66252 in Zambia and 1,803,455 in Kenya in 2009. Additionally, Develtere et al (2008, p. 368) also gives us examples of profitable African cooperatives and allude to their employment creation and poverty reduction capacity. Mwalimu Savings and Credit Cooperative Society comprising of 44,400 members, for instance, is one of the most profitable cooperatives in Kenya with an annual revenue of Kshs. 711,562,812 (US$. 98,828,816). Likewise small cooperatives can demonstrate commercially viability and offer sustainable livelihood as the example of Rooibos Tea Cooperative in reveals. The 36 members corporative generates a yearly income of 1,250,000 South African Rands (US$. 198,413).

Aside from job creation, cooperatives equally feature other relevant elements that are often disregarded in the cooperative discourse. Although African cooperatives have been furnished with a developmental mandate, many scholars in the cooperative literature fail to critically engage with the concept of development. The dominant approach has been to interpret development mainly as economic growth, rather than applying a more comprehensive definition of development. As a result, the study on African cooperatives has been limited. With the nucleus on the economic outputs, the intrinsic democratic and cultural values of African cooperatives are largely neglected. Yet these immanent values play a significant role in the development process as it shall become evident.

3.2 Cooperatives as Compatible Cultural Economy

In his article Cooperative Movements in the Developing Countries: Old and New Orientations Develtere (1993) explores the reasons for the rapid growth of cooperatives in developing countries despite their colonial history. One of the answers can be found in the nature of cooperatives and the way in which it harmonizes with indigenous . The distinctiveness of cooperatives compared to other modes of economic organizations, stems from their adherence to the following seven principles: 1. Voluntary and Open Membership; 2. Democratic Member Control; 3. Member Economic Participation; 4. Autonomy and Independence; 5. , Training and Information; 6. Co-operation among Co-operatives; 7. Concern for Community.

In fact, these value commitments of cooperatives are very much compatible with the African communal value system called Ubuntu. Ubuntu is an African ethic that signifies cooperation, coexistence and consensus (Bhengu, 1996). In this sense, the African cultural norms and values constitute an enabling environment for the manifestation of cooperatives and could frame what can be term as "compatible cultural economy". The value of "compatible cultural economy" can be explained in that if cooperatives are to facilitate development, it must first and foremost align with the development paradigm of the people and this development paradigm ultimately derives from their culture.

In the same manner, Schwettman (2012) refers to an existing socio-cultural base for the promotion of cooperatives. According to him, self-help groups that embodied virtues of cooperation, mutuality, reciprocity and solidarity were prevalent in pre-colonial African societies and to that effect these virtues are not new to Africans. Tontines and esusu (African terms for rotating savings and credit associations) as well as burial societies and mutual working-sharing schemes for large, labour intensive ventures are among some of the examples of traditional voluntary and ethnic associations that provided services for the collective interests.

Many of these mutual assistance associations have persisted (particularly in rural areas) and evolved with time but still managed to retain their essential features and values. It is clear, therefore, that Africans are not alien to the concept of cooperatives. Accordingly, theoretically speaking, cooperatives form a more favourable and familiar business model over other types of business associations that are often rooted in Western philosophical thought.

3.3. Cooperatives and Democratization: Politicizing African Cooperatives

It is true that cooperatives are primarily businesses. But to depoliticize cooperatives is to limit our scope of analysis and deny the politics surrounding cooperatives in an African environment: For one, the inauguration of formalized cooperatives first by colonial powers and later by African governments clearly reveals a history of politization as previously elaborated.

Secondly, cooperatives have been rendering some social welfare services that are usually regarded as the function of the public sector. In many African countries, the provision of social services like health insurance by the government is marginal to non-existent. Cooperatives, therefore, represent a valuable substitute for these lacking services. Members of cooperatives provide traditional mutual support where there are instances of sickness, funerals, unexpected business expenses and other urgent life matters (Pollet, 2009, p. 24). In Ethiopia for example, cooperatives offer social protection to their members by lending money in the case of financial difficulties. As a result of these financial services, members abstain from selling their productive assets (Emana, 2009, p. 20).

Given the weak democratic institutions and practices in various African countries, the question of whether cooperatives can create a democratic space in a non-democratic environment translates into a critical matter. In her article Workers’ Cooperatives and Social Enterprise: A Forgotten Route to Social Equity and Rothschild (2009, p. 1023) challenges the notion of interpreting democracy in a strictly political sense. Instead she suggests the inseparable interrelation between political democracy and economic democracy. For Rothschild, democracy can only be meaningful, if it interfuses the political, social and economic sphere of people's lives rather than the political domain exclusively. Rothschild does not stand alone in the democracy in economic institutions academic tradition. As we learn from Hill (2000, p. 287), Colander equally made a case for the democracy-in-the-workplace argument.

Similarly to Rothschild, Colander points to the significance of work in people's lives and concludes that in order for a country to proclaim itself a democratic nation, it must establish democratic practices in the workplace (Hill, 2000, p.287). Additionally, Ake (1993, p. 241) suggests a more extensive perspective on the democracy and development linkage and holds that Africans do not excrete political democracy from economic democracy. In other words, the demand for economic development is paired with the cry for political democracy and as such the anticipation is that cooperatives will meet both expectations. In transferring Colander, Rothschild and Ake's argument into the African context, what can be said is that cooperatives presumably lack the capacity to transform the entire political arena (many of them are perceptible corrupt) of African countries. Notwithstanding, cooperatives can provide their members with a democratic space and experience in an undemocratic environment by virtue of their democratic character.

3.4 Cooperatives as an Alternative Economic Variant

It is widely accepted among critical development thinkers that the neoliberal framework suffers from universalism, Eurocentrism and ideological bias. In the words of Brohman (1995)

"[...] has increasingly stressed abstract economic modeling. This leaves its models too formalistic and abstract, too dependent on aggregate data, too narrowly focus on economic factors and too universal and general to be relevant to the everyday world of actual development practices in the Third World countries" (p. 138).

The neoliberal model, he asserts, was inaugurated to insert the economies of developing countries into the global capitalist system and in so doing serve the financial interests of transnational corporations. Considering their democratic and ethical nature, cooperatives undoubtedly present an alternative economic variant to the neoliberal developmental approach promoted by the IMF and World Bank. Unlike the individualistic profit-centered business model advocated by neoliberals, cooperatives present multiple benefits including economic (i.e. job creation) and socio-political (i.e. advocacy opportunities ) and socio-cultural (i.e. social integration and protection).

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