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Enhancing development through cooperatives

February 14, 2018

Over the past 2 years, CTA has trained 460 leaders and managers of farmer associations and agricultural cooperatives to help them transform into viable businesses with greater capacity to integrate their farmer members into different agricultural value chains.

Agricultural cooperatives in Africa tend to be inclusive, democratic, equitable and socially responsible, yet only a few have been able to successfully commercialise the agricultural produce of their members. When an agricultural cooperative does not engage in collective commercialisation, it cannot generate enough equity capital to provide the services needed by its members. These complex organisations are also often led by poor farmers with little entrepreneurial and organisational experience.

Enhancing Development through Cooperatives (EDC) initiative aims to build ‘managerial capital’ in rural Africa and document if, how and when this leads to agribusiness development. Since May 2016, EDC has trained and coached 460 leaders and managers of 460 cooperatives and associations in Madagascar, Malawi, Rwanda and Uganda, through five Cooperative Leadership Events (CLE). The focus of the CLEs is to strengthen the leadership, management and governance of agricultural cooperatives by offering training, coaching, mutual-learning and policy-advocacy experience. The cooperative-level data collected at these events also helps to feed further research and guide decision-making by governments, donors and investors.

New generation cooperatives

In February 2017, 100 members of agricultural cooperatives from 16 regions in Madagascar – in addition to 100 representatives from the government, private sector and international NGOs – spent 3 days learning about so-called ‘new generation’ cooperatives, which operate as businesses and are fully integrated into value chains. This new cooperative model is designed to provide farmers with links to markets that are more reliable and more profitable, in addition to financing and other business services. Developing a new generation of cooperatives should also generate opportunities for rural employment, especially for young people and women who find it difficult to gain access to arable land and see no future for themselves in farming.

During the Madagascar CLE, cooperative members had the opportunity to share their concerns and discuss possible solutions to their problems, as well as articulate how cooperatives could be strengthened. Spokesperson for one of the participating cooperatives, Nirina Razafimanantsoa, stated that, “What we are advocating is the creation of a favourable environment that enables every co-op to get established in their supply chain and respond to market demands.” As a result of these discussions, government officials have established an inter-ministerial committee that intends to revise current laws and policies to help cooperatives transform into inclusive and viable businesses with greater capacity for vertical integration into different value chains. CTA also established a unit of management consultants and service providers to advise and support cooperatives that supply key value chains. The long-term aim is that cooperatives will see the value of these services and commit to pay for service provision and management consulting.

Increasing capacities of cooperative leaders

In July 2017 – in partnership with CTA’s Market-led, User-owned ICT4Ag Enabled Information Service (MUIIS) project – 150 leaders and managers from 70 cooperatives met in Uganda to promote the development of ICT-powered, business-driven and climate-smart cooperatives. As well as building upon a previous CLE, the event aimed to sensitise and train cooperative leaders to enable them to actively engage in MUIIS.

According to Dr Nicola Francesconi, senior technical advisor at CTA, the CLE training was designed to mark a break with the old model of community-based cooperatives. Francesconi believes that injecting new blood into the senior management of cooperatives could open up other opportunities. “One of the main limitations of traditional co-ops is that they are nearly always managed by older male farmers, who often have no formal education and are mainly elected because of their position as community chiefs or customary leaders,” Francesconi explains. “Incentivising and training new cooperative managers – not to replace but to help traditional leaders – would enable coops to professionalise and become more competitive in the marketplace. There is room for more women and young people in the leadership of cooperatives; people with an education, an entrepreneurial mindset and the ability to seize the opportunities offered by new information and communication technologies.”

EDC research in Uganda has shown that building the managerial capacity in agricultural cooperatives through CLEs has translated into higher revenues for cooperative members. “We find that the training increased the understanding and acceptance of the revised principles and that this prompted leaders and managers to make organizational changes which promoted collective commercialisation,” Francesconi adds. Results also showed that farmers who belonged to cooperatives that had benefitted from the first CLE were more resilient than other farmers to a severe drought that had occurred during the period between the first and second CLEs.

As well as building the capacity of cooperative leaders, CTA has also been working to improve and evaluate the impact of private sector investment strategies that support cooperatives. After the conclusion of a CLE event in Malawi, in September 2016, CTA entered into a public-private partnership with the Agricultural Commodity Exchange (ACE). ACE is involved in the trade of agricultural commodities, especially grains and beans, and it had recently made a large capital investment in four new warehouses. CTA is currently providing technical and financial support to ACE to enable them to transfer ownership of the warehouses to local cooperatives. To achieve this, CTA is working with ACE to strengthen the leadership and managerial capacity of Malawian cooperatives, and improve their level of professionalism and optimise governance structures, to enable the cooperatives to increase the volume of produce sold through warehouses.

Looking forward

In addition to the two CLE events, in 2017 EDC held a Cooperative Research Seminar (CRS) in Washington DC, in partnership with USAID, the US African Development Foundation, and the Overseas Cooperative Development Council and its member-organisations. The seminar launched a 1-year coaching initiative to support the leaders and managers of four cooperatives in Malawi. Each cooperative is receiving consulting services and is implementing warehouse receipt systems to improve their business performance and generate employment. Building on the first 2 years of the project, EDC has planned another three CLEs in Africa for 2018 and another CRS in Washington. Further research activities are underway and synergies with other CTA projects, such as MUIIS, are being established and reinforced. CTA hopes that these additional efforts, as well as further monitoring and evaluation of the impacts of such activities will help to solidify the progress made in the first year of the EDC project towards more business-minded cooperatives that generate profitable incomes for their member farmers.