Introduction to Co-operatives

September 2005

A Type of Enterprise Dependent On

Who owns the enterprise?
Who controls the enterprise?
Who uses the enterprise?
Who gets the profits?

Individually Owned Business

One Person
Owns
Controls
Operates
Benefits/Profits

Private Company

Investors as owners
Profits shared among
investors
Voting weighted
according to the
number of share
investment

What is a Cooperative?
A cooperative is an autonomous
association of persons united
voluntarily to meet their common
economic, social and cultural
.
needs and aspirations through a
jointly owned and democratically
controlled enterprise.

Co-operative Principles
1.
2.
3.
4.
5.
6.
7.

voluntary and open membership;

democratic member control;
member economic participation;
autonomy and independence;
education, training and information ;
cooperation among cooperatives ;
concern for community.

Democratic member control

The people who own and control and finance
the co-operative are those who use it .

Democratic member control is

exercised by:
Voting at annual and
membership meetings
Electing Board of Directors
Making decisions on major
co-operative issues

Co-ops Principles and Practices

Co-operative Principles and Practices
Principles

Practices

Voluntary and open membership

Member recruitment policy, rules of

admission, equal opportunities,

Democratic member control

Constitution, voting rights, role of

the board, members and
management

Member economic participation

Economic performance, rewards to

members, capitalization and how
surplus is used

Autonomy and independence

Relations with government, other

organisations and institutions and
market position,

Education, training and information

Member, board and management

training and public relations

Co-operation among members

Federation, networks, joint

enterprises, movement building

Concern for community

Policy on community development,

environment and networking

Co-operative Values

self-help;
self-responsibility;
democracy;
equality;
equity;
solidarity.

Types of Co-operatives

Co-operatives can be distinguished by:

degree of formality
ownership
type of activity
level in the cooperative hierarchy

These types can be combined

Degree of formality

Informal groups build on co-operative

principles; example: stokvels
Pre-co-operatives or common initiative
groups
Fully fledged, registered co-operatives

Ownership and Purpose

The worker-owned co-operative: the

individual members are both workers and
employers of the jointly owned co-operative
enterprise. Its purpose is to provide
employment to its members
The user-owned co-operative: members
have their own enterprise or household and
use the cooperative for joint supply,
marketing, finance, housing etc. Its
purpose is to provide services to its
members.

Type of activity (1)

Economic activities

agricultural marketing & supply;

savings & credit
consumer good supply
transport
shared services (business)
handicrafts and small industries
services

Type of activity (2)

Social services

Housing
Social reintegration
HIV-AIDS care
Medical services

Others

Musician co-operatives
Soccer fans co-operatives

Individuals and Enterprises

Member
SME

Member
SME

Purchasing
Consumer
Member
SME
Member
SME
cooperative

Member
SME

Member
SME

Structure of co-operation (1)

Co-ops can co-operative by membership form

Primary Co-op Structure - Individuals are

direct members
Secondary Co-op Structure- Primary co-ops
are direct members
Tertiary Co-op Structure Secondary and/or
primary are both are direct members

Structure of co-operation (2)

Co-ops can economically co-operation by
geography.
Local organized on a municipality level Regional
organised at district or metro levels
Provincial organised by numbers districts and metros
National organised by provinces
International organised by national co-op
movements

Primary Co-op Structure

Co-operative

Member

Member

Member

Secondary Co-op Structure

Co-operative

Local
Co-op

Member

Member

Primary
Co-op

Member

Member

Organizational Make-Up
Members
Board of Directors
Manager
Employees

Tertiary Co-op Structure

Co-operative

Primary
Co-op

Member

Secondary
Co-op

Secondary
Co-op

Primary
Co-op

Primary
Co-op

Member
Member

Member

Participation Roles
Co-operatives operate through
the roles of principal parties

Members
Directors
Manager
Employees

A national Movement (1)

There are currently 4,000 primary co-ops in SA

Worker co-ops

Housing co-ops

Consumer co-ops

Agricultural co-ops

Financial co-ops

A National Movement

There are 3 national co-operative federations

Savings and Credit Co-operative Leaque of SA

(SACCOL)
South African Federation of Burial Societies
(SAFOBS)
South African Housing Co-op Association (SAHCA)

There is 1 Tertiary co-op national co-operative

apex organization:

National Co-operative Association of South Africa

3 co-operative federations representing 80,000 members

600 primary co-ops representing 167,000 members

A Global Movement

750 000 cooperatives

800 million individual members many of them

women

100 million jobs created

Over 50% of global agricultural output is marketed

through cooperatives

470 billion $ of savings mobilized by credit unions

Cooperatives are worlds biggest health insurer