Chapter III - Coops and Economic Cooperation among Developing Countries

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   This document has been made available in electronic format
          by the Committee for the Promotion and 
               Advancement of Cooperatives
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CHAPTER III    ECONOMIC COOPERATION AMONG DEVELOPING COUNTRIES:
-----------    THE CONTRIBUTION OF COOPERATIVE BUSINESS
               ENTERPRISES

A.   DEVELOPMENT OF BUSINESS OPPORTUNITIES IN PRIMARY
     COMMODITIES AND MANUFACTURED GOODS

The international cooperative movement contributes to economic
cooperation among developing countries in a number of ways: by
promoting a favourable business environment, informing
cooperative enterprises of business opportunities, advising on
how these may be realized, and providing appropriate services. 
Individual cooperative enterprises may group together to
establish specialized marketing and business support cooperatives
in order to enhance the viability of their engagement in
international trade.  Financial cooperative may provide services
not otherwise available. 

The market share of supply, production and marketing cooperatives
in exported agricultural commodities is high in many countries
of the South, for example, 9% for sugar from Kenya (1992); 15 %
for cotton from Colombia (1993); 37% for coffee from Costa Rica
(1993); 44% for coffee and cocoa from Cote d'Ivoire (1989/90);
50% for wheat from Brazil (1993); 52% for coffee from Kenya
(1992); 57% for pyrethrum from Kenya (1992); 97% for cotton from
Cote d'Ivoire (1992); 100% for cotton Kenya (1992) and for
fisheries products from Belize (1993).  Of manufactured products
less is known:  11% of cotton yarn exports from India originate
in cooperatives (1993).  The greater proportion moves from South
to the North, but there is an increase in intra-South trade
originating in, or destined for, cooperative business enterprises
and groups.

Regional and global international cooperative organizations are
active in promoting opportunities for international trade
originating in cooperatives, directed toward cooperatives,
whether or not partners are themselves cooperatives, as well as
inter-cooperative trade.  These efforts are still largely
concerned with expansion in trade between South and North, or
between North and East.  Nevertheless, programmes and projects
undertaken in the South, particularly those at the regional and
sub-regional levels, have some South-South component and a
potential for considerable expansion.

In the mid- 1980's, ICA explored the possibility of establishing
an international data exchange centre for cooperative products
and equipment (IDECOOP).   Members would inform IDECOOP of
products they wished to buy or sell; this information would be
circulated by means of the computerized communication system
operated by the World Trade Centre to all members, who would then
establish bilateral or multilateral arrangements.  However, this
proved to be too ambitious a project, given the enormous amount
of data which had to be generated, maintained and diffused.

Specialized bodies of the ICA have taken action in a number of
regions.  For example, the International Cooperative Agricultural
Organization has made considerable efforts to promote trade among
members through its Economic Bureau, which has organized seminars
and roundtables in the Mediterranean region and in Latin America.

In Latin America a number of such initiatives have been taken
during the last few years.  For example, in December 1992 about
450 cooperative leaders from North, Central and South America and
the Caribbean participated in a conference held in Mexico City
on the impact of structural adjustment on cooperative business
enterprises.  The ICA was asked to coordinate a technical
assistance programme designed to assist cooperatives in Latin
America and the Caribbean to improve their competitive position,
and take advantage of opportunities opened up  by structural
adjustment.  The Conference was sponsored by five cooperative
development agencies in the North, as well as by the World Bank.

In March 1993, in conjunction with the Continental Congress of
the Organization of Cooperatives of America, the Uruguayan
Confederation of Cooperative Enterprises (CUDECOOP) organized an
"EXPOCOOP 93" designed to promote cooperation by identifying
suppliers and unmet needs. 

At the first meeting of the new ICA Regional Assembly for the
Americas, held in Sao Paulo, Brazil in November 1994, a paper was
presented on opportunities for improved cooperative participation
in joint ventures and international trade. 

Early in 1995, the ICA Regional Office for Central America and
the Caribbean (integrated in March 1995 with project offices in
South America to constitute the Regional Office for the Americas)
launched an innovative project entitled "Doing Business with
Cooperatives in Latin America".  This was designed to provide
businesses, investors and cooperatives both in the North and in
the same and other regions of the South, with information and
assistance in making contacts with regional cooperative
organizations in the region.  Business guides would be published
for several countries: they would include information on
opportunities existing in the cooperative sectors as well as
general information relevant to business activity.

In December 1995 and ICA Regional Conference on Strategic
Alliances and Joint ventures will be held in Miami, Florida
(USA).  More than 600 cooperative leaders are expected to
participate in sessions designed to generate cooperative business
and trade opportunities, including both North-South and intra-
regional and inter-regional South-South trade.  Conference
sponsors include the World Bank, Inter-American Development Bank,
Multilateral Investment Guarantee Agency, Developpement
International Desjardins (the external cooperative development
agency of the Quebec savings and credit ("credit union") system,
which has expanded into banking and other financial service, and
the Swedish Cooperative Centre.

Steps are being taken by individual cooperative enterprises,
particularly those already engaged in marketing agricultural
commodities, to improve their position with the structures of
international trade, hitherto dominated either by enterprises
from the North, or long established non-cooperative trading
enterprises.

For example, in Brazil in 1990 the first international trading
cooperatives, EXIMCOOP, was set up by a group of agricultural
marketing cooperatives after a period of study undertaken by the
Brazilian Organization of Cooperatives, the national cooperative
apex organization.

Member cooperatives would preserve their operation autonomy -
that is thy would not be obliged to work exclusively with
EXIMCOOP, nor would EXIMCOOP be obliged to work exclusively with
its members, or with cooperatives alone.  However, it would not
enter into competition with cooperatives.  The cooperative would
development international contacts, establish trading structures
abroad, construct its own terminals, set up its own
transportation systems and develop additional products to be
traded.  Trading began with soya, a product in which almost all
members had an interest. 

In Asia and the Pacific similar initiatives have been taken also
in recent years, mostly through ICA regional structures: its
Regional Assembly, regional organizations of its specialized
bodies, and the Secretariat of its regional office.

For example, the ICA regional Committee for Trade and Industry
in Asia and the Pacific adopted a cooperative trade development
agreement in 1990 which would promote joint trading, transfer of
technology and know-how and the transnational marketing of
finished products.  It would organize training programmes,
seminars, trade fairs, exhibitions and trade missions.
Subsequently, trading activities expanded between cooperative
enterprises in Japan and Australia and those in other countries
in the region on the other.  Trade between cooperatives in the
Philippines and those in Hong Kong and Malaysia also increased.

The Committee has continued its programme.  For example, members
from China, Singapore, Thailand and Vietnam, and also from
Australia and Japan, met in Vietnam in September 1992.  Their
discussions generated a number of bilateral trading agreements
between cooperative enterprises in Vietnam and those in the other
countries represented. 

The topic of inter-cooperative trade within the region was
considered extensively also at the 26th Meeting of the ICA
Committee on Agriculture for Asia and the Pacific in October
1992.

The ICA regional Office also operates a project designed to
promote trade between cooperatives.  It coordinates the exchange
of information concerning cooperative trade and commercial
collaboration among member organizations.  Examples of South-
South inter-cooperative trade promoted recently by the regional
office are the export of sugar from the Indian National
Cooperative Sugar Federation (which accounts fro 85 per cent of
sugar produced in India) to Sri Lanka, and the export of cashew
nuts from marketing cooperatives in Vietnam to consumer
cooperatives in Singapore.  The regional office organized a
Workshop on Cooperative Trade and Consumer Cooperatives which was
organized in Ho Chi Ming City, Vietnam in September 1993, one
objective of which was to explore possible areas of inter-
cooperative external trade. 

The opportunities for expansion of international trade
originating in or destined for cooperative business enterprises,
including inter-cooperative trade in the region is very
substantial.  The potential contribution of Chinese cooperatives,
now substantially "privatized", that is transferred from their
former parastatal condition to that of the status of normal
private sector cooperative enterprises, is very great.  At a
regional cooperative meeting held early in 1993 in Beijing, the
Chinese Minister of Domestic Trade stated that the Chinese
Government would continue to support the development of
international bilateral and multilateral cooperation. In 1994 the
All China Federation of Supply and Marketing Cooperatives
reported that since economic reforms had begun, member
cooperatives had set up about 1,000 joint ventures with foreign
enterprises, involving US$ 1 billion in foreign capital.  Most,
but not all, partners were in countries of the North, but
numerous opportunities existed for collaboration with cooperative
and other enterprises in the South.

The series of Asia-Pacific Cooperative Ministers' Conferences
have emphasized the importance of cooperative trade.  The Sydney
Conference in 1990 included within its proposals for "Action in
the 1990's" a recommendation that the ICA, its member
organizations and international agencies should take measure to
development skills and transfer technology to facilitate
cooperative trade.  The Jakarta Conference in 1992 also
recommended that steps should be taken by cooperatives to promote
and develop international trade on a cooperative-to-cooperative
basis within and outside the region.  In conjunction with this
Conference a cooperative trade exhibition was mounted, with
exhibits form Indonesia and Sri Lanka.

The Colombo Conference in 1994 recognized the need to develop new
patterns of relationship with business partners, including
transfer of technology, joint ventures and strategic alliance
within and outside the countries of the region. 

In Africa somewhat lesser activity has been undertaken, as a
result both to the economic crisis in most countries of the
region, and the fact that cooperative movements in many
countries, as well as sub-regional and regional structure, are
only now recovering from a long period of excessive governmental
control which resulted in the virtual incorporation of
cooperatives into the parastatal sector, with resultant loss of
member support, inefficiency and corruption and an unrealistic
commercial status based upon monopoly.

Substantial improvement int he situation is being achieved, and
in large potential for the development of an intra-regional
component in the international trade involving cooperatives is
being realized.  For example, in 1990, the ICA Regional Office
for Eastern, Central and Southern Africa, with the support of the
Canadian Cooperative Association, undertook a project to examine
the potential for trade, both internal and external, intra-
regional and extra-regional, originating in, or destined for,
cooperative business enterprises.  A first phase comprised the
collection information on current and potential inputs and
outputs.  It was known that numerous opportunities existed, but
had not been realized because of previews excessive limitation
of international trade even between neighbouring countries.  For
example, agricultural supply cooperative in Kenya imported animal
feed form outside the region, while surpluses existed unused in
Tanzania. 

The Regional Office has developed a productive working
relationship with the former Preferential Trade Area for Eastern
and Southern Africa (PTA), which had found it useful to have the
ICA coordinate on behalf of the cooperative movement. 
Representatives of cooperatives were routinely invited to the
buyer-seller meetings organized by the PTA.  It was believed that
the cooperative involvement in PTA activities had helped the
organization widen its focus from big business to small farmers,
whose aggregate potential for contributing to international trade
was very considerable. 

In most pars of Africa, until the recent period of economic
liberalization, international trade was the monopoly of
parastatal and state-owned agencies, including the "public sector
cooperatives" which were not member-owned entitites,  Recently,
with privatization and deregulation genuine private sector
coopertives, including supply and marketing cooperatives owned
by agricultural producers, have begun to engage directly in
international trade.  However, they face problems of insufficient
experience and capital, obstructive administrative procedures,
restrictive legislation, and remnants of previous monopolies, for
example in respect to transportation.  Nevertheless, progress is
being made, although with emphasis upon South-North trade.  This
has developed more in West Africa than in Eastern, central and
Southern Africa.  In West Africa, in addition to the traditional
agricultural exports, new ones are being developed by
cooperatives in mali and Burkina Faso, which export fruit and
vegetables directly to Europe by air.  The ILO is supporting
cooperative engagement in international trade through its Inter-
coop programme.

There has been some development in South-South trade,
particularly between neighbouring countries, or within sub-
regions.  Thus, since 1989, the Zambia Cooperative Federation has
exported maize and soya beans to neighbouring countries and South
Africa, importing in return fertilizers, agrochemicals and farm
implements.  Cooperatives in kenya also import farm inputs
directly.  In Tanzania cooperatives export cereals and
horticultural products.  In West Africa there is inter-
cooperative trade in nuts between Senegal, Mali, and the Gambia. 
The Union nationale des cooperatives agricoles du Senegal was
active in May 1994 in searching for trading partners in Africa.

In Asia inter-cooperative trade is growing, but still with a
South-North emphasis.  For example, Cooptrade Japan and Unicoop
Japan have entered into agreements with cooperative in China,
Indonesia and Thailand for the import of agricultural
commodities.  In India, the National Agricultural Cooperative
marketing Federation exports fresh fruits and vegetables, has the
monopoly for the export of fresh onions.  It exports niger seed
(a bird feed) directly to the Univestal Cooperatives of the
United States.  Indian cooperatives also export yarn, textiles
and artisanal products.  Chinese and Australian cooperatives have
signed a memorandum of understanding to sue Australian wool to
manufacture textiles in China which will then be exported.  The
extent of South-South trade within these development is not
known, but is probably small.  However, the potential for
expansion of this component from such exchanges is considerable. 

B.   COLLABORATION BETWEEN FINANCIAL COOPERATIVES

Financial cooperatives include savings and credit cooperatives,
frequently known as "credit Unions"; cooperative banks; and
cooperative insurance enterprises.  In all cases the users of the
enterprise are its owners: persons become members of a credit
union of cooperative bank by opening an account; they become
members of a cooperative insurance enterprise by taking our a
policy.

Most such cooperative enterprises begin at a very small-scale and
there are many examples of these at present in the South as well
as in the North.  The amounts involved may be limited at first,
but they increase because they are constantly recirculated among
members for the purposes of entrepreneurial development or
improvement in quality of life - and hence, increased
capabilities in productivity, creativity and initiative.  Thus,
in many developed market economies financial cooperative have
become a major enterprises in the financial sector: the largest
bank in Europe is the French Credit Agricole, owned by the
country's farmers; the third largest bank in the Netherlands is
the Rabobank, a cooperative; the fifth largest financial
institution in Canada is the savings and credit cooperative, the
Mouvement des caisses Desjardins; the greater par of the German
rural economy is financed by the cooperative Raiffeisen system;
the Japanese Norinchukin Bank, the central bank for agricultural,
fisheries and forest cooperatives (95 per cent of rice and 90 per
cent of fisheries products are marketed by these cooperatives);
the third largest insurance enterprise in the world and one of
the largest financial institutions in Japan is the National
Mutual Insurance Federation of Agricultural Cooperatives
(Zenkyoren).

Having begun as local initiatives, even when they expand, or form
alliances on the basis of numerous separate initiatives, they
tend to stop at national frontiers.  They have formed global
organizations which have represented, service and promotional
functions, such as the international Raiffeisen Union (IRU), the
World Council of Credit Unions (WOCCU) and tow specialized bodies
of the ICA, the International Cooperative Banking Association
(ICBA) and the International Cooperative and Mutual Insurance
federation (ICMIF).  Although in all cases, these organizations
include within their function the promotion of financial
cooperative enterprises in countries of the South, they are not
specifically geared to South-South cooperation.

Financial cooperative of all types are engaged in very
substantial technical assistance programmes, and are beginning
to engage in direct economic collaboration of various types.  The
emphasis is till on North to South assistance, but this is
characterized by a very strong partnership approach, maximum
control by regional and sub-regional organizations with the
South, with financial and technical assistance form partners in
the North being channelled through financial cooperative
institutions in he South-.

     (1)  Savings and credit cooperatives ("credit unions")

Almost all of the South-South cooperation activities of the
savings and credit movement comprises technical cooperation, and
has been examined in the previous chapter.  There is very little
operational collaboration, except where national or regional
savins and credit cooperative banks, which have themselves
established intra-regional operations, as is the case with COLAC.

     (2)  Cooperative banks

For several decades there have been discussion in the
International Co-operative Alliance of the idea of international
cooperative financial system.  In 1992, in a report to the
Thirtieth Congress of the ICA, it was suggested that, given the
existence in many countries of successful credit unions,
cooperative bank and cooperative insurance enterprises, as well
as the existence of a number of regional and sub-regional
organizations, it should be possible to create regional
cooperative development banks, working closely with the regional
offices of the ICA.

In Latin America in January 1993, the first concrete step was
taken to establish such a regional cooperative development bank. 
Cooperative banks existed in Argentina, Colombia, Costa Rica, and
Panama.

The initiative was taken by COLAC, the regional organization for
savings and credit cooperatives ("credit unions").  Members in
all countries of the region totalled in 1991, 17,00 credit unions
with 6.7 million members; assets of 3.9 billion; savings of 2.2
billion and balance on loans of 2.8 billion US dollars.  COLAC,
which is based in Panama, established(by providing the capital)
a regional cooperatives bank:  The Confederated Bank of Latin
America (COLBANCO) with the objective of establishing adequate
mechanism in order to facilitate the development of all
cooperative financial enterprises in the region, including their
intra-regional collaboration and integration, for the purpose of
promoting and supporting the development of the cooperative
sector as a whole with the region.  In the same year the
cooperative Banco Mayorista del Plata in Argentina was
established with similar aims, and was to work closely with
COLBANCO.

In Asia the cooperative Norinchukin Bank, the largest
institutional investor and one of the largest financial
institutions in Japan, with total assets of 35.5 trillion yen in
1991, in addition to branch offices in countries of the North,
has opened a representative office in Singapore.  However, there
has not been any move toward formal integration of the
cooperative banking neither in the countries of the South with
this region nor in Africa.

     (3)  Cooperative insurance enterprises

Cooperative insurance enterprises int he South have begun to
establish sub-regional and regional organizations.  In May 1994,
representative of cooperative and mutual insurance organizations
form Botswana, Kenya, Swaziland, Tanzania and Uganda set up an
African Association of ICMIF.  The Nigerian cooperative insurance
enterprise World-Wide Insurance Company, was also to join.  Other
regional association had been formed already: the Asian and
Oceania Association of ICMIF and the Americas Association
(AAC/MIS), as well as the Association of European Cooperative and
Mutual Insurance Societies (ACME).

A steering Group of ICMIF has recommended alliance between
cooperative insurance enterprises with sub-regions of the South- 
This has occurred already in parts of Latin America.  For
example, cooperative insurance enterprises in Puerto Rico and
Colombia have begun to invest in insurance cooperative in El
Salvador and Panama.  In October 1994, an agreement was signed
to consolidate the operations of COOPSEGUROS of Ecuador and
Seguros la Equidad in Colombia.  The enterprises will invest
resources in each other to strengthen their capital, support each
other in the development of new products, extend distribution
channels and marketing, work together by way of cession and
acceptance of reinsurance, and exchange experience.