1 THE INTEGRATED STRATEGY ON THE PROMOTION OF COOPERATIVES: PROMOTING AN INTEGRATED COOPERATIVE SECTOR IN SOUTH AFRICA PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY 05 JUNE 2012

Secret2 Presentation Outline Background and Process International Best Practice Strategic pillars; Coordination Monitoring and Evaluation Mission & Objectives Global driver of economic growth Situational Analysis of Co-ops in SA Co-operative development a shared responsibility Co-operative types – value chain Action plan

3 Background & Process On 5 December 2001, Cabinet agreed that the mandate for co-operatives development be transferred to the dti In 2002: ILO Recommendation No. 193 on the Promotion of Co-operatives In 2003, in the GDS Summit, it was agreed that a fully- fledged co-operatives unit be established within the dti

Secret 4 In October 2010, Co-ops Strategy tabled to Cabinet and Cabinet approve for public comment In Jan – March 2011,Strategy gazetted for public comments In May- July 2011, public comments on the the Strategy discussed at NEDLAC and NEDLAC Report produced In March 2012; the Strategy was submitted to Cabinet for approval and was approved Background & Process

5 Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation. Build mutually beneficial regional and global relations to advance South Africa’s trade, industrial policy and economic development objectives. Facilitate broad-based economic participation through targetd interventions to achieve more inclusive growth. Create a fair regulatory environment that enables investment, trade and enterprise development in an equitable and socially responsible manner Promote a professional, ethical, dynamic, competitive and customer-focused working environment that ensure effective and efficient service delivery. the dti Strategic Objectives

6 VISION The vision of the National Cooperative Strategy remains consistent with the one contained in the Cooperative National Policy (2004) and is as follows: Towards a growing, self-sustainable and integrated cooperative 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

7 Strengthen the potential benefits of cooperatives by raising the value and profile of cooperatives Foster human capital development with a special focus on cooperative principles, business management and technical skills; Foster a culture of cooperation, self-help, self-reliance and solidarity among cooperative beneficiaries and beyond through conducting awareness programmes; Work towards self-sustainability of the cooperative movement in the medium to long-term, which will be achieved through partnership models and by consistently capacitating all stakeholders during the formation years and beyond; Conduct leading-edge research to inform the development, evaluation and monitoring of performance on cooperatives. MISSION

Secret8 Objectives To grow all forms and types of cooperatives and its movement as well as increase its contribution to the country’s GDP growth rate, economic transformation and social impact. To promote cooperatives as a vehicle that can assist in creating decent employment and reducing poverty through income-generating activities. To raise the profile of cooperatives as a dynamic and effective business organization that can empower communities and uplift their social and economic well- being.

9 Objectives… To raise the profile of cooperatives as an institution that allows agglomeration of small economic activities. To aggressively promote closed cooperatives that constantly attract high levels of membership as captive market, enabling them to be highly sustainable and have huge potential to contribute towards substantial economic and social impact.

10 Co-operatives is a highly successful business model in the global business environment and is relevant for South Africa, here are some of the international statistics The Revenue of the world’s top 300 co-operatives exceeds US$ 1 Trillion, equal to the world’s 10 th largest economy Co-operative as a global driver of economic growth

11 International Co-operative Movements represent 800 million members, more than the total population of the entire European continent Co-operatives in Germany and France create 440,000 and 700,000 jobs respectively Co-operative as a global driver of economic growth cont..

12 Kenyan co-operatives accounts for 45% of the GDP and 31% of gross national savings. The co-operatives also control markets for coffee, cotton and dairy In the US, more than 100 million people or 40% of the population are members of co-operatives Co-operative as a global driver of economic growth cont..

International best-practice 13 Best Practice CanadaSpainKenyaBangladeshItalyIndia Favorable legislationXXXXXx Intergovernmental coordinationXXX--X Strong partnerships with coop movement XXXXXX Education and Training through colleges, universities XXXX-- Formation of secondary cooperativesXXX--X Financial and non-financial support-XX--x Tax benefits-X--X- Ministry of cooperatives--XX-- Conflict resolution system--X--- Coops banks--XX-- Favourable procurement policies----X-

14 Situational Analysis of Cooperatives in South Africa (Source: Registrar of Cooperatives, Statistics of Cooperatives in South Africa, March – 2009 (Boom period) for coops growth in numbers Drivers of Growth Enabling environment through legislative framework such as the 2005 Coops Act Support programmes across government These emerging cooperatives are still weak and vulnerable

15 Province% KwaZulu Natal29.3 Gauteng19.3 Eastern Cape16 Limpopo11.2 Mpumalanga8.1 North West6.2 Western Cape4.2 Free State4 Northern Cape1.7 Situational Analysis of Coops in South Africa cont…

16 Situational Analysis: Challenges facing Co-ops in SA Government Challenges: Inadequate economic and social impact statistics on cooperatives. Coordination. Limitation of current support from existing enterprise development agencies for cooperatives. Recognition of cooperative as a unique business form and diversity in public and private markets remains very low. Accessibility of cooperative registration to local communities. Limited promotion and awareness. Limited access to finance Limited access to technology Limited access to critical business infrastructure

17 A Situational Analysis: Challenges facing Co-ops in SA.. Cooperative Management Challenges Poor management and technical skills Limited trust and social cohesion Democratic decision-making skills within the cooperatives remain low Limited cooperation among cooperatives Compliance with the Cooperative legislation among new cooperatives. Market Challenges Undeveloped networks and economic value chains. Limited access to markets.

18 Challenges on Cooperative Organisational Structures Lack of strong and viable cooperative associations and organisations. A Situational Analysis: Challenges facing Coops in SA..

19 NationalProvincialLocal National Departments will be responsible to formulate sector-based legislation /policies/strategies/ support programmes aimed at enhancing the growth of a specific sector aligned with the National Cooperatives Strategy Provinces will be responsible to formulate provincial coops strategies with support programmes aimed at enhancing the growth of cooperatives in the province aligned with the National Cooperatives Strategy. Support for the CDA and Cooperative Tribunal District & local Municipalities will be responsible to develop Cooperatives Implementation Plans to be integrated in the IDP’s & LED. Support for the CDA and Cooperative Tribunal Strategic principles

20 Strategy positions the promotion of cooperatives as a shared responsibility involving the following stakeholders Responsible for growing and develop cooperatives: They may provide research, education and training, financial and non-financial support, advocacy, mobilisation and awareness-raising. Have a role to play in assisting in providing international expertise; financial and non-financial support Co-operative Movement, Apex organisations, CBOs, NGOs, labour organisations & churches International organizations: ILO, DGRV Financial Institutions: banks, etc. Have a role to play in developing funding products tailor-made for the development of cooperatives.

 Focusing on youth, women, and people living with disabilities;  Focusing on special geographical areas: rural, peri-urban and former homeland areas;  Focusing and promoting social and enterprise cooperatives – all forms of cooperatives both social and enterprises form will be promoted in the strategy. 21 Strategy attends to all the cooperatives beneficiary base

22 Supported cooperative types and promoting the entire value chainStorage Raw Material ProcessingManufacturing DistributionDistribution Agriculture Co-operatives Marketing and Supply Coops Consumer Co- operatives Worker Co-operatives- Labour intensive e.g. mining; construction; textiles; and arts and craft Financial Co-operatives

23 Strategic approach for promoting cooperatives in South Africa Strategic pillar 4:To increase financial support services to co- operatives Strategic pillar 1: To increase non- financial support services to cooperatives Strategic pillar 2: Creating demand for co-operatives products & services Strategic pillar 3: To improve sustainability of co- operatives These strategic programmes will be underpinned by efforts aimed at improving the availability of quality business information and knowledge through expanded research, communication outreach, education and training, and monitoring.

Secret24 Strategic Pillar 1: Non-financial support ProgrammeInstitution Cooperatives Business Development Support Programme: capacity building, cooperatives principles, technical skills, management skills, mentoring and access to market Co-operative Development Agency Compliance Education and Training Cooperative Development Agency in partnership with CIPC and the Cooperative Tribunal Enforcement, conflict resolution, investigation and proactive inspection Programme Cooperative Tribunal Registration of CooperativesCIPC To increase non-financial support services to co-operatives

25 ProgrammeInstitution Bilateral and multilateral agreements: government trade agreements giving access to foreign markets to cooperatives Administered by the dti Export Marketing and Investment Assistance (EMIA): access to market incentive assisting cooperatives with individual exhibition and in-store promotion, primary market research and FDI and inward mission Administered by the dti Targeted 10 products for micro, small cooperatives providing access to market The dti, National treasury and Co-operative Development Agency Strategic Pillar 2: Access to markets To increase demand for co-operatives products & services

26 ProgrammeInstitution Enterprise Network Programme: Vertical and horizontal integration to be administered by the Cooperative Development Agency Business Infrastructure Support: Municipalities to provide space for co-operatives to operate, DWP renovate old gov. buildings The dti and provinces to monitor implementation Taxation of Cooperatives: A favorable tax regime for cooperatives National Treasury, the dti and to be administered by SARS Strategic Pillar 3: Sustainability of co-ops To improve sustainability of cooperatives

27 Support Programmes: Strategic Pillar 2.. ProgrammeInstitution Micro Finance loan through wholesaling to be transferred from SEFA to the Cooperative Development Agency Cooperative Incentive Scheme (CIS) to be transferred to the Cooperative Development Agency Cooperative Special projects Fund (start up & expansion) to be administered by the Cooperative Development Agency Strategic Pillar 4: Financial support To increase financial support services to cooperatives

28 ProgrammeInstitution Cooperative Promotion and Awareness Support Programme (CPASP) to be administered by the dti in partnership with other gov. departments, institutions and cooperative movement. Research and Monitoring and Evaluation the dti, CIPRO & other stakeholders. Cross-cutting programmes

29 Coordination, Monitoring and Evaluation Relevant Coordination Bodies Relevant Monitoring & Evaluating Mechanisms Department of Trade & Industry and Provincial Departments Government Departments Cooperative Movement and other stakeholders Other Bodies Provincial Support Committee on Coops Development Inter – Department Committee on Coops Development Cooperatives Movement, Labour & Private Sector Cooperative Advisory Council

30 Cooperative Information Communication System (ICT) To provide information on cooperatives development The strategy proposes three key performance reporting mechanisms: Annual Cooperative Review Report Three Years Mid - Term Review Report (2015) Ten Years Comprehensive Review report (2012 – 2022) Coordination, Monitoring and Evaluation

31 Action plan for implementation  Action plan for implementation attached as an appendix to the strategy outlining key activities and actions to be implemented by relevant stakeholders.  Activities not exhaustive but provide guidance to role players.

32 Chief Director of Cooperatives: Jeffrey Ndumo EIDD: Cooperatives Business Unit: the dti Call Centre: the dti Switchboard: Website: Postal Address: Private Bag X 84 Pretoria 0001 South Africa the dti’s Contact Details

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