Nov 2012

Co-op success made easier

Written by Stephen Timm
Co-operatives have welcomed the new law that will increase training and funding to co-operatives and reduce the regulatory burden for these entities.

The Co-operatives Second Amendment Bill, which is currently before Parliament, provides for setting up a training academy, a support agency and a tribunal to resolve complaints. A co-operative is a business association of persons who co-operate for mutual benefit. Co-operatives include non-profit organisations and businesses owned and managed by the people who use their services.

The number of co-operatives increased dramatically after the 2005 Co-operatives Act was introduced – there are currently over 50 000 registered with the Companies and Intellectual Property Commission. However, they still fail at a high rate because of a lack of support, access to finance, business skills and inside fighting.

A survey in 2008 by the Department of Trade and Industry found that just 10% of co-operatives on the register for co-operatives in 2005 had survived.

In September, Deputy Minister of Trade and Industry Elizabeth Thabethe told conference delegates at the International Small Business Congress (ISBC) in Johannesburg that the Co- operatives Development Agency proposed under the amendment bill would go some way to address the lack of business skills found among many members of co-operatives.

Cooperatives welcome the bill

Vuyokazi Bodlani, chair of the Sithembene Women Development Enterprise, welcomed government’s moves to increase its support for co-operatives.

“For rural development, the co-operative approach makes people eager to work. They (rural people) don’t want to be dominated or instructed – they want to own,” she said.

The Sithembene Women Development Enterprise, a women’s sewing and crafts co- operative, has 13 members. Thirty-nine more people are set to become members as soon as all eight rural centres in the Eastern Cape are registered.

A further 190 women work as crafters in a network of co-operatives, which supplies these centres.

Creating jobs

The members, who provide designer cultural wear to Members of Parliament and diplomats, last year opened a R5,2 million factory in Libode, funded by the Eastern Cape Development Corporation (ECDC) and the European Union. The Eastern Cape provincial government has provided a further R2 million grant to help cover operational costs.

Bodlani said the factory helped inspire people to start their own businesses and provided employment to 52 people, many of whom were unemployed until then.

Agnes Qwabe who runs a bakery co-operative in rural Ga-Mathabatha, Limpopo, along with seven other women, also welcomed the idea of an agency and academy. The women set up the Bokamoso Bakery Co-operative in 2006. They employ 16 people and supply confectionaries, buns and bread to the com- munity, crèches and a local mine.

Thanks to support from several organisations and funding from the Nelson Mandela Children’s Fund, Anglo Platinum and the Department of Trade and Industry’s Co- operatives Incentive Scheme (CIS), the co- operatives could buy equipment, a building and a bakkie, which has helped them to raise the monthly income from their project.

In 2011/12 the department helped 130 co- operatives with CIS grants. Co-operatives can also get funding of up to R10 000 from the Small Enterprise Finance Agency (SEFA), while several provinces, mainly through their respective development agencies, have set aside large amounts of funding for co-operatives to buy machinery and attend exhibitions.

When they need support co-operatives can approach the Small Enterprise Development Agency (SEDA). They assisted 125 co-operatives in the 2011/12 financial year, mainly helping members to access markets, finance and infrastructure, and to offer them mentorship.

In 2010, following assistance from SEDA in areas such as management and quality control, Rossdav Manufacturing Primary Co-operative increased its sales and reduced its turnaround time.

The co-operative, chaired by Mthethua, specialises in manufacturing leather products, such as belts and handbags, mainly for boutiques in Cape Town and Gauteng.

He and his wife originally started a close corporation (CC) in 2003, but converted it to a co-operative in 2009 after hearing about the increasing support government was giving to co-operatives.

The co-operative’s three other members have a 50% share in the business, with an option to increase this in such a way that each member has an equitable share.

“Co-operatives have a future because they create a spirit of community ownership and production,” Mthethua said.

SEDA’s senior manager responsible for the Co-operatives and Community Public and Private Partnership Programme Zandile Dlamini said co-operatives needed to be supported as they provide employment to those in and outside co-operatives.

She said people most suited to forming a co-operative were those willing to work in a collective and democratically controlled business environment and who want to make a profit.

In addition to SEDA’s support, the Department of Trade and Industry in partnership with provincial governments, also helps co-operatives to buy machinery and exhibit their products at local and international exhibitions.

For more information, contact Department of Trade and Industry at tel. 0861 843 384
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