Where state and co-operation meet: Case study from Malawi

'If the movement and governments work together to support the co-operative enterprises, the industry will realise sustainable growth and development'

“The 21st century provides the African co-operative movement with exciting and critical opportunities as the continent becomes the world’s second fastest-growing region.” So wrote the Honourable Vincent T. Seretse, chair of the Africa Co-operative Ministerial Conference, introducing the International Co-operative Alliance – Africa Co-operative Development Strategy 2017-2020.

“If the movement and governments work together to support the co-operative enterprises, the industry will realise sustainable growth and development, and inspire Africa’s performance in distinct segments of the movement.”

However, for many years, co-operatives in Africa struggled with a legacy of government intervention from both the colonial and post-colonial period. As noted by Hazel Johnson (Development Policy and Practice, The Open University) and Linda Shaw (the Co-operative College) in their 2014 paper ‘Rethinking rural co-operatives in development: introduction to the policy arena’, this legacy had an long-lasting impact on their performance and limited their effectiveness.

“Many co-operatives functioned as para-statals and were frequently captured by local elites,” they wrote. “Liberalisation and structural adjustment further weakened co-operatives that were previously dependent on the state.”

They add that African co-operatives have remained strongly marked by their colonial legacies – not only in terms of the legal and policy environment but also by the sectors in which they operate. In eastern Africa, until recently, the dominant types of co-op have been those specialising in export crops such as coffee and cotton.

Related: Working to build up Malawi’s co-op movement

Dr Johnson and Dr Shaw highlight a study of contemporary co-operatives in Africa published by the International Labour Organization which “argues that the British, Belgian and French colonial regimes left behind distinct legal frameworks, which are still apparent today. The British model has been characterised as a ‘unified model’, for example, with one law for all types of co-operatives, a separate co-operatives ministry and a single national apex body.”

They add: “Co-operatives were often co-opted by political parties. In socialist countries they became integrated into state-dominated agricultural systems while, in other countries, many agricultural co-operatives became dominated by big landowners and large scale farmers […] However those agricultural co-operatives closely associated with the state suffered as a result of the withdrawal of state support and structural adjustment policies from the 1980s onwards with many failing or considerably reducing their activities.”

Related: How Czech co-ops are shaking off the movement’s statist past

The shift away from a government-led and controlled co-operative sector began in the 1980s and 90s, with the liberalisation policies that started to remove government support and subsidy from co-operatives in many countries. And this was furthered in 1995 when, at its conference in Manchester, the International Co- operative Alliance adopted a Statement on the Co-operative Identity which firmly situated co- operatives as member-owned, democratically run and autonomous enterprises.

In Africa, small-scale financial co-operatives, such as credit unions, developed later as relatively autonomous organisations – and more recently, the region has witnessed a ‘co-operative renaissance’, with the number of memberships and active co-ops growing significantly.

According to the ICA – Africa, there are now three things that are fundamental to the future success of co-operative enterprises in the continent: data; cultural environment; and research and innovation.

“We need a comprehensive, internationally comparable and consistent data set that adequately reflects the economic activity of the sector,” said outgoing ICA – Africa president, Stanley Muchiri.

Mr Muchiri, who is also the chair of the Co-operative Bank of Kenya and vice-president of the ICA, adds that while “African governments now have a standard definition of what we mean by a Co-operative, they fail in providing guidelines on how it will be officially measured”.

To resolve this, the Africa Co-operative Development Strategy 2017-2020 aims to engage governments to ensure government information accurately reflects all parts of the sector and does not exclude the large proportion of the industry that exports goods and services.

“Diversity and innovation will define the future strategic growth of the co-operative movement,” he said.

“This requires that we build on our long history of excellence in the arts and culture, sports, and the talent it nurtures, to develop an ecosystem that brings together co-operatives and culture with technology, research, and innovation.”

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