Co-operatives are unique business enterprises. One of the main ways that they differ from companies is that they are democratically controlled by their members and each member has one vote regardless of the amount of shares they hold in the business.
The Co-operative Act of 2005 defines a co-operative as:
“An autonomous association of persons united voluntarily to meet their common economic and social needs and aspirations through a jointly owned and democratically controlled enterprise organised and operated on co-operative principles….”
These enterprises are further differentiated by the seven international co-operative principles developed by the International Co-operative Alliance (“ICA”), namely:
- Voluntary and open membership
Membership in a co-operative is voluntary and open to all, regardless of gender, social, racial, political and religious status within the framework of South African law.
- Democratic member control
Members actively and democratically participate in decision-making and establishing policies.
- Member economic participation
All members contribute the same amount to the co-operative and the capital is democratically controlled.
- Autonomy and independence
The organisation is solely controlled by its members with no input from organisations or people outside the structure and/or membership of the co-operative.
- Education, training and information
Co-operatives need to provide the relevant training and information to ensure the development and sustainability of the co-operative.
- Cooperation among co-operatives
Co-operatives need to engage one another locally, regionally, nationally and internationally in a bid to provide a greater return for their members.
- Concern for the community
Co-operatives should define and adopt policies to develop the communities. which they serve.
Co-operatives are found in many different types of industries such as financial, housing, agricultural and consumer (retail industries). Regardless of the industry, this collaborative approach is particularly useful in securing bulk buying power. For these reasons, it has always been maintained that co-operatives are enabling business vehicles, which if applied correctly, smooth the progress of community upliftment, promote sustainable business opportunities across a wide range of industries and empowerment transactions.
However, co-operatives do face a number of challenges, particularly with empowerment transactions and community upliftment programmes. These stem mainly from a lack of prior working experience, business management expertise and financial literacy amongst some of the members. On the flip side of the coin, dissatisfaction often creeps into the structure amongst those members who do possess these skills and whose work is of a higher level because they feel that it is unfair that they receive the same payment as those members who do not share the same knowledge and abilities. As a result, the failure rate of co-operatives is higher than their survival rate.
According, to a report by news24 on 02/07/2011, BRIC (an international political organisation of Brazil, Russia, India and China) has committed to promoting co-operative development amongst its member countries.
News24 states that: “One of the commitments made in the MOU (memorandum of understanding) was the facilitation of bilateral and multilateral co-operation among co-operatives in Brics.” The article also states that: “The countries also pledged to boost trade and investment co-operation between co-operatives in Brics countries through exhibitions, trade fairs and delegation visits”.
An important point that is highlighted by News24 is that: “Co-operatives must take advantage of the Brics agreement which will open doors for South Africans to do business on a global scale”.
Whether or not this will breathe new life into a vehicle somewhat discredited by challenges faced in the South African context remains to be seen, but it is definitely an opportunity that should be embraced by all South African co-operatives.
