CAPACITY BUILDING FOR COOPERATIVES ISSUES FOR DISCUSSION By Baqui Khalily University of Dhaka

DEFINE CAPACITY BUILDING FOR COOPERATIVES Capacity Building for Cooperatives should be defined in light of the goals of cooperatives The goal is to organize people into an informal (?) institution in order to attain a set of mutually acceptable goals – economic and social.

What should be the Underlying Driving Forces for Capacity Building? 1.Efficiency and Effectiveness 2.Sustainability of Cooperatives – both short and long run 3.Building confidence, trust and respect for sustainable shared goals 4.Adaptability to changing environment 5.Interaction with external agents 6.Diversification of activities to maximize institutional and individual interest 7.Expansion and replication of cooperatives

What are the Constraints in capacity building? Limited capacity of the organizational structure to protect member-interests ensure development of the cooperatives – poor governance Problem in building confidence, trust and respect among the members Principal-Agency problem prevails resulting Inadequate disclosure and transparency Lack of training in management, economic investments and to respond to challenges Interaction with external agents of changes? Limited or no excess to information technology

Major External Challenges? Development of informal primary cooperative society or groups in Micro Finance Development of private sector with ample opportunities Expansion of formal financial services creating opportunities for individual borrowing Limited access of cooperatives to bank credit Limited marketing network or inefficient marketing system Increasing political interventions No promotional agency for coperatives

Bangladesh - Case of Failure Heterogeneity in memberships Lack of political government will and pro-active government agency Classical conflict between individual and institutional interests No training Dominating role of Micro Finance groups Limited access to bank credit because of their poor repayment performance – evidence of political patronization

Challenges for Rebuilding Creating enabling environment with appropriate legal and regulatory framework Reducing government interventions Using external facilities for training at affordable cost or subsidized costs Linking with Micro Finance Institutions for financial cooperatives Reducing conflict between agents in traditional marketing chain and marketing cooperatives Building confidence, trust and respect of individual members, external agents and society Empowering cooperators in the society

Additional Support Services Required Learning from the best practices Continuous research to identify problems and solutions Exposure visits External agency to advice, guide and promote cooperatives – SHG being promoted by NGOs