Pulling together

By by Adam Robert Green | Published:  12 October, 2010

Co-operatives have a long history in Africa, and after a period of decline in the 1990s are on the rise again, proving especially popular among rural farmers, who are able to group together to share costs and seek out new markets. However, despite this growth and their popularity with foreign donors, the sector remains vulnerable

Githunguri Dairy Co-operative Society in Kenya collects the milk of 12,000 dairy farmers per day, converts it into packed milk, yoghurt, ghee and butter at a central plant and sells it to local markets. Members borrow inputs, like artificial insemination and animal feeds, on credit against future milk. Each pays an upfront fee and buys a few shares for the convenience.

Githunguri is one of several thousand co-ops in Kenya, a country with 7m individual co-op members contributing nearly half of national GDP. Uganda, Tanzania, Rwanda, Ethiopia, Lesotho and Nigeria are witnessing rapid growth as well. By sector, agriculture leads. Financial co-ops, known as savings and credit co-operatives, or Saccos, are a close second. Such enterprises now serve nearly 9 percent of the continent with success stories, like the Co-operative Bank of Kenya, a source of considerable inspiration. Service providers too, from taxi drivers to midwives, are increasingly taking up the model. “There is a clear renaissance of the co-op movement in Africa,” says Philippe Vanhuynegem, chief technical advisor of “Co-op Africa”, an eastern and southern Africa project implemented by the International Labour Organisation. The ILO’s parent agency, the UN, has branded 2012 “Year of the Co-operatives”.

In a continent hindered by poor infrastructure, dispersed populations and disjointed markets, co-op services are vital. “They enable economies of scale, higher bargaining power, risk sharing, and lower transactions costs in accessing markets,” says Chiara Cazzuffi, an economist at the University of Sussex.

Remote agricultural producers have proved particularly keen, she says. “Rural farmers, producing small quantities of variable quality, and often operating in isolated areas, perhaps with low education, face high transaction costs. It is more difficult for them to access and process information about markets, traders may be unwilling to purchase small amounts or to travel to isolated areas; or they may act opportunistically in valuing the product or its quality.”

Co-ops allow such individuals to group together and share transport and storage, buy and distribute inputs in bulk and, most importantly, seek and share new markets. The Nyakatonzi Growers Co-operative Union in Uganda does all three – marketing cotton, maize, soya beans, sunflowers and rice, distributing pesticides, herbicides, seed and spray pumps, and providing loans, tractor hire and warehouses. Chief executive officer Adam Bwambale speaks of Nyakatonzi’s “spirit of self-help and mutual trust”.

Further up the ladder are “apex” co-ops, usually a union of co-ops in one sector, which can often reach right up to government and abroad. Rwandan rice farmers, for example, negotiate prices with their government through such a union, and Ethiopia’s Oromiya Coffee Producers Federation represents its members in international marketing conferences.

Co-ops have a long history in Africa. Many were imposed during the colonial era to boost the production of cash crops, and were later adopted by newly independent African governments. But whilst membership bloomed in the 1960s and 1970s, it was mostly coerced. In Kenya, Uganda and Tanzania, for instance, farmers could only sell their produce to co-ops. In Burkina Faso, access to cultivable state land was restricted to co-op members. They were a means to help governments control production and pricing, rather than a tool to empower farmers. Corruption, mismanagement and financial ill-discipline were rife too.

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