Transcript The Co-operative - LexisNexis South Africa

THE CO-OPERATIVE:
A MODEL FOR WORK
& DEVELOPMENT
Adv. Kathy Idensohn
Dept. of Commercial Law, UCT
1.
INTRODUCTION – THE FACTS
Some worldwide numbers:
• 1 billion people are members of co-operatives (50% of the world’s
population & 3 x more than individual shareholders in companies and
other investor-owned enterprises)
• Active in all countries.
• International Co-operative Movements represent 800 million members
(more than the total population of Europe)
• Africa - 40% of households belong to a co-operative
• US – more than 100 million members (40% of the population)
1.
INTRODUCTION – THE FACTS
Financial co-operatives - serve 857 million people (13% of world’s population)
Job creation
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Provide 100 million jobs around the world.
EU - provide 2.3 million jobs.
Securing livelihoods
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Secure the livelihood of 3 billion people (half
the world’s population.)
Kenya - 63% of the population derive their
livelihoods from co-operatives.
1.
INTRODUCTION – THE FACTS
Proven success and resilience
• Highly successful business model
• Global driver of economic growth.
• 2005 - 2010 co-operatives worldwide outperformed publicly listed
companies on market share gains (e.g. insurance, food retail, pharmacy,
healthcare, business services , education and housing sectors).
• 2010 - 300 largest co-operatives had combined ann. turnover of $2 trillion
1.
INTRODUCTION – THE FACTS
Proven success and resilience
• Kenya
– account for 45% of the GDP
– 31% of gross national savings
– control the markets for coffee, cotton and dairy.
• India
– consumer needs of 67% of rural households are met by co-operatives
1.
INTRODUCTION – THE FACTS
Proven success and resilience
• Agricultural co-operatives - aggregate market share of 28% in processing
& marketing of agricultural products in the US, 60% in Europe.
• European co-operative banks:
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50 million members (10% of the continent’s total population)
181 million clients, & 780 000 employees
€5.65 billion in assets
market share of approx 20%.
1.
INTRODUCTION – THE FACTS
Proven success and resilience
Showing resilience to the global economic crisis.
• Financial co-operatives - remaining financially sound
• Consumer co-operatives are reporting increased turnover
• Worker co-operatives are growing with stable employment levels.
1.
INTRODUCTION – THE FACTS
International interest and enthusiasm
• 2012 - ‘The International Year of the Co-operative’, with the assertion
that: ‘Co-operative enterprises build a better world’
• UN’s ‘2020’ vision for co-operatives
2.
WHAT’S IT ALL ABOUT
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What is a co-operative?
How do they work?
Why are they growing?
Why are they outperforming more dominant forms of enterprise?
Why so much international attention and the enthusiasm?
2.
WHAT’S IT ALL ABOUT
Some explanations…
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Nature and legal features of a co-operative
Way in which co-operatives are structured & governed and how they operate
The co-operative philosophy, principles and values
Unique features
Potential for creating work and promoting development
Co-operatives in South Africa
Co-operatives in the labour law context
3.
WHAT IS A CO-OPERATIVE?
The definition of a co-operative
• ‘An autonomous association of persons united voluntarily to meet their
common economic, social and cultural needs and aspirations through
a jointly-owned and democratically controlled enterprise.’
(ILO Recommendation 193 on the Promotion of Cooperatives, 2002)
3.
WHAT IS A CO-OPERATIVE?
Types of co-operatives
•Can be used for a wide range of economic, social and cultural purposes.
•Purpose may be economic profit, non-profit purpose, social, cultural,
political, charitable or a combination of purposes.
•Examples of different types of co-operatives:
1. Consumer / service co-operatives
2. Producer co-operatives
3. Worker co-operatives
4. Multi-stakeholder co-operatives
3.
WHAT IS A CO-OPERATIVE?
Legal features of a co-operative
• Legally recognised model or structure
• Most significant legal features - legal status and capacity
• Have separate legal or ‘corporate’ personality:
• Separate rights and obligations
• Limited liability
4.
THE UNIQUE CO-OPERATIVE PHILOSOPHY
• Bringing of economic and other resources under democratic control.
• Kind of economic participation they give their members.
The co-operative principles
• The co-operative values:
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Self-help,
ICA’s ‘Statement on the
Self-responsibility,
Co-operative Identity’,
Democracy,
UN resolution &
Equality,
ILO recommendation
Equity,
Solidarity,
Honesty, openness, social responsibility and caring for others.
4.
THE UNIQUE CO-OPERATIVE PHILOSOPHY
1st Principle: Voluntary and open membership
4.
THE UNIQUE CO-OPERATIVE PHILOSOPHY
2nd Principle: Democratic Member Control
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Controlled and managed by members
Equal participation on a ‘one person one vote basis’
Participation not dependent on:
Extent of membership interest
Financial status
Race, gender, cultural or social background or any other discriminating criterion
Voting rights depend on number of shares
Number of shares depends on existing wealth and financial means.
Maintenance of majority control Structures
Separation of ownership / membership and control / management
4.
THE UNIQUE CO-OPERATIVE PHILOSOPHY
3rd Principle: Member Economic Participation
– Primary aim of the co-operative is to meet members’ needs.
– Economic needs - aim to maximise return for individual members rather than make
profits for the co-operative itself
– Equitable participation in economic returns
– The financial workings of a co-operative:
– Transactions by the co-operative – transactions with members /outside 3rd parties
– The concept of ‘surplus’
– The concept of ‘patronage payments’
4.
THE UNIQUE CO-OPERATIVE PHILOSOPHY
3rd Principle: Member Economic Participation
The contrasting position in companies
• Main aim is to maximise company profits
• Shareholder profit shares depend on number of shares
• Number of shares depends on existing wealth and financial means
• No redistribution of wealth - the rich stay rich and the poor stay poor
4.
THE UNIQUE CO-OPERATIVE PHILOSOPHY
3rd Principle: Member Economic Participation
A different kind of capitalism
• Companies favour financial capital
• Co-operatives favour social capital
• Companies reward individual competition
• Co-operatives reward co-operation
4.
THE UNIQUE CO-OPERATIVE PHILOSOPHY
4th Principle: Autonomy and Independence
– Autonomous, self-help organisations controlled by members.
5th Principle: Education, Training and Information
– Provide education and training for members, representatives and employees
– Play an important role in raising community awareness of co-operation.
6th Principle: Co-operation amongst Co-operatives
– Co-operation with other co-operatives in local, regional, national & int’l structures.
7th Principle: Concern for Community
– Work for sustainable community development
5.
ADVANTAGES OF CO-OPERATIVES:
WORK AND DEVELOPMENT
General strengths and benefits
• Flexible - can be used in diverse sectors and regions, for a wide range of
purposes, by groups of all sizes
• Can simultaneously meet a number of socio-economic needs
‘Co-operatives are a reminder to the international community that it is
possible to pursue both economic viability and social responsibility.’
– UN Secretary General Ban Ki-moon
5.
ADVANTAGES OF CO-OPERATIVES…
General strengths and benefits
• Comparatively more resilient to economic downturns
• Have long-term sustainability
• Give marginalised and disadvantaged groups access to work and
markets, mobilisation and ‘voice’
• Responsive, innovative and dynamic
5.
ADVANTAGES OF CO-OPERATIVES…
Contributions to employment and economic growth
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Reduce market failures and stabilise the economy
Improve market access and competiveness for individual members through
pooling of resources:
– Gives marginalised individuals access to markets they would not be able to access alone
– Allows individuals with different knowledge, skills and products to add value to the end
product or service - opens up different markets and increases profits
– Economies of scale - allow for bulk buying and selling, reduce costs and increase profits
5.
ADVANTAGES OF CO-OPERATIVES…
An illustration:
the olive farmer
5.
ADVANTAGES OF CO-OPERATIVES…
Contributions to employment and economic growth
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Help balance market participation and wealth distribution
Keep the production of goods and services close to the needs of the people
they serve
Provide goods and services that are unattractive to other commercial
enterprises and public authorities are unable to supply
Long-term view rather than short-term profit
Create jobs, increase sustainable employment and protect incomes
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ADVANTAGES OF CO-OPERATIVES…
Contributions to employment and economic growth
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Provide a different kind of work:
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individual autonomy and empowerment
directly incentivise and reward individual effort
benefits of a co-operative environment
generate knowledge and skills, act as schools of entrepreneurship and management
5.
ADVANTAGES OF CO-OPERATIVES…
Contributions to social development
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Inclusive, unite communities
Concerned with promoting members well-being and aspirations
Address the needs of particular communities
Help to solve problems that would otherwise remain the responsibility of
government agencies.
5.
ADVANTAGES OF CO-OPERATIVES…
Main areas of success:
• Countries with diverse political conditions, degrees of economic
development, cultural and historical backgrounds
• Times of economic crisis
• Rural and regional development.
• Agricultural, credit and banking sectors
• Provision of water, electricity and other utilities
6.
CO-OPERATIVES IN SOUTH AFRICA
Current regulation
• The Co-operatives Act 2005 & Regulations
• Administered by a branch of the CIPC
• Additional support agencies e.g. The Small Enterprise Development
Agency, Co-operatives Bank Development Agency
6.
CO-OPERATIVES IN SOUTH AFRICA
Registration numbers
Total of 54,461 co-operatives registered as at 31 January 2012
… Co-operatives registered under the Co-operatives Act 2005 alone, by province
Province
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Province
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Kwa Zulu Natal
11,820
North West
2,540
Gauteng
7,907
Western Cape
1,684
Eastern Cape
6,544
Free State
1,644
Limpopo
4,576
Northern Cape
709
Mpumalanga
3,296
TOTAL
40,720
6.
CO-OPERATIVES IN SOUTH AFRICA
Under-utilisation and challenges
• Lack of awareness of the co-operative model
• Lack of appreciation of its potential
• Lack of resources
• Undeveloped networks and lack of co-operation
• Lack of institutional support
• Mismanagement
• Breakdowns in member relationships
7.
CO-OPERATIVES AND LABOUR LAW
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The creation of jobs
The provision of decent and sustainable work
The position of worker co-operatives
Current status
Concerns and calls for reform
8.
MEASURES FOR REFORM
• The Co-operative National Policy (2004):
‘To grow a self-sustainable and integrated co-operative sector,
supported by all stakeholders, contributing to economic growth,
poverty reduction and employment creation as well as assisting in
bringing about economic transformation and an equitable society.’
• Government’s strategic objectives to grow, promote and support all
types of co-operatives
• Key focus areas - youth, women, and people living with disabilities,
rural, peri-urban and former homeland areas
8.
MEASURES FOR REFORM
The Co-operatives Amendment Bill, 2012
• The Bill’s aims – to address all identified challenges to co-operative
growth and success
• Main reform areas:
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Ensure good governance, transparency and accountability
Facilitate co-operation and co-ordination between co-operatives
Provide new support structures and resources
Address the position of worker co-operatives
9.
CONCLUSION
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Failure of predominant models of social and economic organisation
A time of global crisis
Co-operatives provide hope and a clear direction forward
The ICA’s cooperative growth areas:
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the provision of credit
the provision of housing
job creation.
agricultural production
management of cultural institutions, water resources, waste disposal, public
transportation and renewable energy sources
9.
CONCLUSION
‘The argument in favour of co-operatives has never looked stronger.’
– the ICA