Co-ops and Employment in Africa (1997)

  This document has been made available in electronic format by
Committee for the Promotion and Advancement of Cooperatives COPAC

                   Cooperative Development
               Occasional Discussion Paper 97-1
             International Labour Office - Geneva
                          June, 1997

                  *** Executive Summary ***

Cooperatives are successful in economic development because they
are commercial organizations that operate by a broader set of
values than those associated with the narrow pursuit of profit
alone. Cooperatives are first and foremost businesses, but at the
same time they practice economic fairness by ensuring equal
access to markets and services among an open and voluntary
membership base. Because they are owned by the consumers of the
services they provide, cooperatives tend to make decisions that
balance the need for profitability with the greater interests of
the community which they serve.

More than 40% of all households in Africa are members of a
cooperative society. Taken as a whole, the cooperative movement
is Africa's biggest non-governmental organization; cooperatives
play a significant role in many national economies, and have
created a great number of salaried jobs and self-employment
opportunities in Africa.

Yet, the role of cooperatives in employment creation has been
neglected by employment planners, cooperative promotion agencies,
social partners and donor organizations alike. In many African
countries, cooperatives were considered primarily as tools to
execute certain economic or political functions on behalf of the
government, not as autonomous, member-based organizations that
create and consolidate self-employment. This policy of
'incorporation' has done great damage to cooperative development
in Africa. Fortunately, government policies towards cooperatives
have changed after the economic reforms and the democratization
process that have taken place in most African countries. Today,
the economic, political, legal and administrative environment of
many nations is conducive to the development of genuine, self-
reliant and autonomous cooperatives and similar organizations
which can greatly contribute to job creation and to the
empowerment of the poorest. This opportunity must be seized.

The present report shows that African cooperatives have created
a sizeable number of salaried jobs; yet, their biggest employment
creation potential lies in the field of direct and indirect self-
employment. Cooperatives do have a comparative job creation
advantage over other types of enterprises: they are labour
intensive by nature, they are cost-effective because of member
commitment and participation, they generate economies of scale
and scope through horizontal and vertical integration, they
establish links between the informal and the formal sectors, and
they put economic and social development on a broader base.
Worker-owned cooperatives provide their members with decent,
permanent jobs; client-owned cooperatives, which are predominant
in the agricultural sector, can stabilize existing self-
employment in rural areas; financial cooperatives can mobilize
savings among the poorest and thus accumulate capital for
productive investment; and social cooperatives provide self-
employed workers with a minimum of social security while creating
jobs in the social service sector.

This report proposes a three-pronged strategy to exploit the
employment creation potential of cooperatives fully:

     (i) Support to macro reforms and to capacity building in
     organizations that provide assistance to cooperatives:
     Policy, legal and institutional reforms are still necessary
     in some countries to create a favourable climate for
     cooperative development. The design and implementation of
     such reforms usually require highly specialized, short-term
     expertise that development partners should make available.
     Secondly, many agencies, including NGOs, promote
     cooperatives and similar associations without having the
     appropriate expertise. Follow-up programmes to cooperative
     reforms should therefore include capacity-building at this

     (ii) Inclusion of cooperative development aspects into
     relevant development projects: This refers to investment
     programmes in infrastructure, agriculture and community
     development that should be combined with the cooperative
     organization of  beneficiaries, so as to ensure the
     productive use and proper maintenance of these investments.
     It also refers to projects that strengthen the informal
     sector and micro-enterprises; by organizing independent
     entrepreneurs into cooperatives, one can stabilize their
     precarious self-employment situation, create additional
     jobs and build a bridge to the formal sector. Micro-
     entrepreneurs can establish cooperative networks that
     produce economies of scale without affecting the
     independence of their members.

     (iii) Promotion of worker-owned cooperatives, social
     cooperatives and financial cooperatives: Worker-owned
     cooperatives, which have received very little support until
     now, have a high potential to create additional employment
     in industry, transport, services and other sectors with
     relatively small investment; they can also participate in
     the privatization of public enterprises through workers
     takeovers. Worker-owned cooperatives can be successful when
     they have access to appropriate technical assistance and
     financial institutions. Social cooperatives, which are
     almost unknown on the African continent, can create self-
     employment opportunities for social workers (in the broad
     sense) and provide those who are not covered by formal
     social security schemes with a minimum of social
     protection. Financial cooperatives have proven their
     efficiency in mobilizing large amounts of savings and in
     administering cost-effective credit schemes.

Cooperative action has become even more important in the context
of structural adjustment that has, in many countries, adversely
affected the rural and urban poor. Cooperatives are not a miracle
solution to unemployment and other problems, but they are a
development option that must not be neglected.

                       * * * * * * * *

To obtain a copy of the full document, please contact the
Cooperative Branch, International Labour Office, CH-1211 Geneva
22, Switzerland.  Fax:  +41 22 799 8572.

MariaElena Chavez				  Tel +41 22 929 8825
Coordinator					  Fax +41 22 798 4122
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