Louw Van Der Walt, North West University, S. Africa at the International Co-operative Alliance Global Conference in Cape Town, November 2013.

1. ICA CAPE TOWN
November 2013
Louw vd Walt
North-West University
South Africa

2. Cooperatives in South Africa
 Since the early 1900s, cooperative were mainly found in the
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agricultural sector
Since 1994, the majority of big agri-coops have converted into
companies
The trend currently is more towards the non-agricultural sector.
Recent research showed the following:
22 030 registered co-operatives
65% – fewer than 10 members
0.75% of GDP
84% employ fewer than 15 people
70% – turnover < R 50,000 p.a.
31% – turnover < R5,000 p.a.

3. Coops in SA
 Coop sector still very active; popular in all sectors of
economy
This tendency is in line with aim of government to use
coops to:
* support informal entrepreneurs
* use cooperatives as development tool
 Success rate of coops is unfortunately measured i.t.o.
numbers
 Many coops might not be operational any more
 Research proved this

4. Coops and rural development
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Success of rural development depends on:
Degree to which community can utilise farming land
successfully
Ability to create employment for people not in agriculture
Development programmes must include entrepreneurial
development
Cooperative might be answer to successful community
building
Financial support during initial stages is indispensable
Government should contribute to establish environment that
supports private investment
 Although the Government recognises and promotes the
cooperative as an ideal business form for economic
development, and potential entrepreneurs are very enthusiastic
about the business form, there are serious handicaps..

5. Research projects
 Resuscitation of the cooperative sector in the
Limpopo Province of SA
 The use of the cooperative as tool for rural
development
 The transformation of cooperatives into
companies
 Determinants for the success of workers
cooperatives

6. Results Limpopo study
 Members do not have necessary knowledge
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about cooperatives ( 80%)
Members
were
not
informed
about
cooperative principles and expectations
Wrong mindset about coops
Government main provider of finance
Local banks are reluctant to provide loans
Lack of managerial skills

7. Problems identified during research
Many new established cooperatives failed
Problems identifies were:
 effective management,
 member commitment,
 entrepreneurial mindset, not member-driven
initiative
 conflict among members, directors and
community leaders
 shortage of capital

8. Results: Transformation into companies
Majority of respondents indicated that:
 cooperative added more value to farming
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activities
service delivery of cooperative was more effective
they missed the close relationship that existed
between coop and member
marketing was done more effectively by coop
companies are not involved in community
the majority of respondents felt that it was the
wrong decision to convert

9. Results: Rural development
 Poor management indicated as the most
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important reason for failure
Members do not want to get involved in
management
High percentage of members do not support the
cooperative
Members rely too heavily on appointed staff and
directors to run cooperative
Although cooperative is very popular, members
must accept responsibility
Above-mentioned problems might create conflict,
which will lead to termination of cooperative

10. What do we need for strong cooperative
sector?
 Need for a study to evaluate cooperative sector to
determine success rate and implement necessary
steps
Issues that needs to be addressed:
 Change the mind set of future coopentrepreneurs(coop-preneurs)
 Effective management training
 Adequate entrepreneurial skills/training for directors
and staff
 Start-up capital
 Mentorship programme, especially during
establishment phase
 Supporting research

11. The way forward
Education
 More cooperative focused training, not generic training programmes
 Establishment of institutes or centres for cooperatives linked to tertiary
institutions( NMMU, Univ Fort Hare)
 Start formal cooperative training at under-graduate level
 Partnerships between cooperatives and educational institutions at
provincial level
Research
 Collaboration between African countries to strengthen the research
basis
 Joint research projects between universities internationally
 Encourage post- graduate students to do research on cooperatives
 Cooperative college/university

12. THANK YOU