Summary (1994) - Part 2

Part 2 of Summary (1994)

A Strategy for Co-operative Development Assistance

49.  Development assistance for co-operative development has to
     be re-oriented to support adjustment and transformation of
     co-operative organizations in line with what has been
     argued above. Such assistance should be guided by a set of
     basic principles.

XI   Basic principles for donor assistance:

50.  Donor assistance should be given on a movement-to- movement
     basis. Agreements should not be signed with the government
     in a recipient country on behalf of the co-operative
     movement and funds should not be channelled through
     government accounts. This principle has to be pursued with
     vigour. A government in a recipient country which is not
     willing to accept a movement to movement relationship is in
     all likelihood not willing to provide the co-operatives the
     autonomy which is a prerequisite for successful adjustment.
     In all circumstances such a situation suggests a very
     careful assessment before major commitments are made.

51.  Government funds for co-operative development provided in
     a donor country should be placed at the disposal of the co-
     operative movement in that country.

52.  As far as possible cooperation between two movements should
     be characterized by partnership and equality. Successful
     cooperation for co-operative adjustment presupposes shared
     concerns, shared objectives, shared perceptions of what the
     problems are and what the remedial measures ought to be.
     This would entail a context specific strategy for co-
     operative adjustment. In order to establish such a common
     platform, a donor should enter into a dialogue with the
     apex organization (or some other logical entry point which
     is representative of the general membership) as a
     preliminary phase to a more substantial involvement in a
     support programme. In cases where such a common platform
     cannot be established, the donor may be advised to

53.  As a basic principle the donor should not have an executive
     but a supportive role. The executive function should rest
     with the recipient co-operative organization. While the
     leading role should be played by the recipient organization
     also in the programme formulation phase, programme
     formulation should preferably be a joint effort in order to
     bring out disagreements in disguise on concepts such as
     participation, poverty focus, high priority, member
     interests,gender, urgent, important, etc which can cause
     problems in the implementation phase.

54.  External assistance which does not create some degree of
     external dependence is hardly conceivable. Great care
     should be taken to avoid the creation of undue and damaging
     dependence. Donor assistance should be given with explicit
     recognition of how and when the activities undertaken with
     donor funds can be supported by local funding.
     Alternatively, it should be convincingly demonstrated that
     an activity supported with donor funding has a logical time
     limit, or that the activity can be terminated with lasting

XII  Support to adjustment of formal co-operative structures or
     support to co-operative development outside these

55.  Whereas an existing formal co-operative organization hardly
     can be expect}d to give high priority to promotion of co-
     operative activities outside its own organization, a co-
     operative donor can take a different stand. A donor can
     even find reasons to promote the formation of a parallel
     (new) co-operative structure with the view to eventually
     replace inefficient and discredited co-operative

56.  As a matter of principle, donor agencies should take a
     radically different attitude to co-operative development in
     the sense that co-operative development outside the
     existing formal co-operative structures should be seen as
     equally interesting. A particularly important aspect is the
     potential to support women in co-operative development by
     supporting the non-formal sector. Hence, far more attention
     and support should be given to co-operative development
     outside formal co-operative structures than has been the
     case in the past.

     However, it must be recognized that support to co-operative
     development outside the formal structures calls for a
     different strategic approach and different modes of
     operation. It will also demand partly new skills from the
     donor agency.
57.  A donor must be prepared to acquire these capabilities to
     become a useful partner in support of co-operative
     development outside the formal structures. These efforts
     can hardly be justified unless the donor decides to make
     such support a major activity. Ad hoc and marginal
     activities should be avoided.

58.  A donor can chose to support both formal and informal co-
     operative development in the same country. In situations
     where the formal co-operative organizations are
     characterized by  continued far reaching governmental
     intervention and  inadequate capacity to adjust, and where
     co-operative development flourishes outside the formal
     structures, the choice may be to focus exclusively on co-
     operative development outside the formal structures. Should
     the donor have opted for not entering the field of informal
     co-operative development, support (of formal co-operatives)
     can be shifted to another country.

59.  In situations (countries) where there is considerable
     potential for successful adjustment within formal co-
     operative organizations, support may be exclusively
     provided to these organizations.

XIII Grant support to non-business activities:

60.  As a general principle, donor grant support should not be
     given to activities which have a direct impact on the
     profit and loss statement of a co-operative organization.
     Such support could easily disguise the inability of a co-
     operative to make necessary adjustments and give a false
     impression of economic viability.

XIV  Support to co-operatives with a potential:

61.  Support should be provided on a selective basis only to co-
     operative organizations with a potential for successful
     adjustment and adequate capacity to make necessary changes.
     It is important that support programmes do not maintain
     doomed co-operative organizations through artificial means.

XV   Support programme ideas:

62.  An issue of immediate concern is to raise awareness at all
     levels in co-operative organizations in Africa about the
     need for early and often substantial adjustment. Donors can
     assist national organizations to undertake such measures.

63.  Likewise, donors can assist apex organizations in their
     dialogue with governments with the view to revise co-
     operative legislation and alter the relationship between
     the State and the co-operatives.

64.  In line with the development perspective outlined above,
     donor support should first and foremost concentrate on
     primary society development. The strategy elements of such
     a programme are indicated in the development strategy

65.  In operational terms a participatory extension programme is
     foreseen. In a problem solving dialogue with primary
     societies, a cadre of co-operative extensionists could
     assist societies to review their situation and to develop
     a "plan" for how to become competitive (concentrating
     activities, reducing costs, simplifying the management
     task, etc).  

66.  A donor should only enter into such a programme if the
     condition that primary societies are given the right to
     trade with whoever they wish is met, and met in full.

67.  One serious constraint for many co-operative organizations,
     particularly at the intermediary level, is the shortage of
     working capital suppressing the volume of business and
     bringing the co-operative into a vicious circle. A co-
     operative donor may consider to provide a guarantee fund
     with a financial institution in order to soften this
     constraint. However, it is imperative that the provision of
     such a fund is seen as only one element of a plan for
     adjustment and that the elements of this plan which ought
     to precede the provision of capital are implemented prior
     to giving access to credit. The operation of such a scheme
     has to be surrounded with stringent rules and be based on
     business considerations only.

68.  Improvement of the management function of co-operative
     organizations has been identified as a key strategy
     element. Based on the experience of adjustment and change
     in their mother organizations, donors can be helpful in
     assisting with support to management training, introduction
     of management systems as well as schemes for re-orientation
     of organization strategies and modes of operation.

69.  Support programmes based on the ideas presented above would
     all qualify for grant funding.

XVI  The role of ICA:

70.  There are increasing difficulties to mobilize bilateral
     donor funds within the movements in the North. At the same
     time there are considerable untapped resources for co-
     operative development with multilateral donors and the EU.
     The smallness of many co-operative donor agencies
     constrains access to these resources. It is therefore
     recommended that ICA is promoted to become a major donor
     agency to access these resources.

XVII Staff development in co-operative donor agencies:

71.  Should a co-operative donor agency decide to provide
     assistance to co-operative development outside the formal
     structures, additional skills will be required. Unless
     available, donor agencies should add staff with the
     specific experience of working with self-help groups. 

72.  The proposed strategy for co-operative development proposed
     here presupposes a re- orientation which may not be all
     that easy for staff who has worked diligently with co-
     operative development of the past. It may be hard to admit
     that something one has whole-heartedly supported and worked
     with was partly mis-conceived and contributed to the
     present sad state of affairs. Also, loyalty, sympathy and
     friendship with individuals and co-operative organizations
     in cooperating countries may make it difficult to take a
     neutral and analytical stand, to draw detached conclusions,
     to deliver critical messages and to cut ties. For the same
     reasons as some board members and managers in co-operative
     organizations in the South ought to be replaced, some co-
     operative donor agency staff may need to be replaced in
     order to facilitate adjustment.

Mobilization of Resources for Co-operative Development

XVIII Internal and external mobilization:

73.  Internal mobilization is defined as that mobilization
     within the co-operatives themselves, in Africa as well as
     in Europe. External mobilization is the enlisting of aid
     resources outside the co-operatives, grants from government
     and international donors as well as loans from banks, etc.

74.  Internal mobilization on the donor side expresses a will to
     assist the African cooperators in their development
     efforts. This is an act of solidarity. This solidarity,
     expressed in financial contributions, is often a
     prerequisite for external mobilization of resources from
     government donors and the European Union. The resources
     mobilized by the European cooperators are therefore a must.

75.  There are basically two types of external resources
     supplied by national and international donors; those which
     require an internal co-operative contribution, as mentioned
     above, and those which do not. We believe there are good
     prospects for mobilizing additional resources of both types
     for co-operative development in Africa. To fully exploit
     these opportunities we  propose a two-pronged approach.

76.  First, since the European Co-operative Aid agencies (CAAs)
     are those which are able to mobilize internal resources, it
     is proposed that primarily focus their external resource
     mobilization on government donors and the European Union
     which demand counterpart funding by the applicants.

77.  The second approach entails a redefined and extended role
     of ICA as a co-operative donor, thereby enabling it to
     exploit aid resources of the international donor community.
     This requires a somewhat modified mandate for ICA as a
     donor. It is believed that ICA should put the co-operative
     development experience at the disposal of the international
     donors for development projects, which in all aspects might
     not be termed as co-operative. This will be of greater
     interest to these donors, than if ICA would confine its
     development work in the Third World to its member
     organizations. To be able to do this it will be necessary
     for ICA to expand and complement its capacity as a donor.
     This new donor role will over time be self-financing and
     should organizationally be separated, in Geneva as well as
     in the regions, from the traditional functions of ICA.

XIX  Mobilization of internal resources from the co-operatives
     in Europe:

78.  The European co-operative movements constitute an
     impressive base for mobilizing resources for development
     assistance. There are, however, considerable constraint
     facing the co-operative fund raiser. Many movements are
     presently undergoing structural adjustment of their own in
     order to increase business efficiency and competitiveness
     and some are fighting for their survival. In such a harsh
     economic climate the solidarity with the cooperators in
     Africa does not emerge at the top of the agenda within the
     co-operative organizations in Europe.

79.  Furthermore, the institution building character of co-
     operative development programmes does not have the same
     appeal as many other types of development aid have. It is
     difficult for the co-operative fund raiser to compete with,
     for instance, emergency aid and similar types of
     programmes. In addition, the sense of identity and
     "belonging" is considerably stronger in many other
     organizations than in the co-operatives. As a consequence,
     co-operatives can compete with, for instance, religious
     organizations and fraternal and social groups in mobilizing
     resources for the Third World.

80.  But there are advantages as well. The co-operative resource
     mobilizers have access to a great number of organizations
     and individuals, which is the basic advantage of the  Co-
     operative Aid Agencies (CAAs) as compared to many other Non
     Governmental Organizations (NGO).

81.  Considering the limited willingness of the co-operative
     organizations to contribute to development aid, pleading to
     their solidarity with the Third World, will not induce them
     to provide substantial funds for this purpose. The most
     important role of a co-operative organization is not that
     of a benefactor, acting out of solidarity, but that of a
     channel to the individual co-operative members and the

82.  Substantial resources can however be mobilized within the
     organizations if mobilization efforts can be linked up with
     the commercial activities of the organizations and serve
     their economic self-interests. Products and services which
     are able to bear the contribution to co-operative aid as a
     cost and still remain competitive have to be identified .
     Producing, selling and purchasing such products and
     services must be seen as an act of solidarity with the
     Third World, and thereby give the co-operative
     organizations a positive image in the eyes of the public.

83.  There are indications that the willingness of individuals
     to contribute to development assistance is not negatively
     affected by a harsh economic climate, as is the case with
     the organizations. Soliciting funds from co-operative
     members and employees must be based on their solidarity and
     generosity, and there are number of guidelines which need
     to be observed in the practical fund raising.

84.  First, prospective benefactors need to be approached in a
     personal manner adhering, to the extent possible, to the
     basic principle of "people give to people". Second,
     development projects for which support is solicited must be
     well defined and small so that the sense of identification
     with the project is enhanced. 

     Finally, it is of outmost importance that benefactors
     receive regular feedback on the use of their contribution
     and of the progress of projects supported.

XX   External mobilization - the European Union:

85.  The European Union (EU) provides substantial volumes of
     development aid to the Third World (ECU 3,2 billion in
     1993). An increasing part of this is channelled to the
     development work of NGOs. In 1993 some ECU 702 million,
     approximately one fifth of the total EU aid budget, was
     allocated to NGOs collaborating with the EU. The major part
     of this, or 53 percent, was for emergency relief
     development projects, victims of apartheid, refugees and
     displaced persons and support for the West Bank and the
     Gaza Strip.

86.  According to the EU budget of 1994, NGOs may have access to
     more than ECU 1,1 billion, which does not necessarily mean
     that NGO projects will qualify for the full amount. Of
     particular interest to the co-operatives are the two votes;
     "NGO Development Projects", combined with information
     campaigns in Europe and "Decentralized Cooperation". The
     former has an allocation of ECU 145 million in 1994 and
     requires co-financing by the NGO, normally on a 50/50%
     percent basis. The Decentralized Cooperation is a new
     facility under the Lome convention and other cooperation
     agreements with non Lome countries and is financed out of
     the official aid budget. This vote has no specific amount
     earmarked for financing of NGO projects and it does not
     require NGO contribution to the project costs.

87.  One may observe that most of the funds available to NGOs
     are designated for specific purposes and regions/
     countries. This does not seem to give the NGOs much leeway
     to determine themselves which development needs to address.
     Of interest to note is also the fact that long term human
     and institutional development support seems to be at a
     disadvantage compared with the more immediate relief
     support and similar aid programmes. These impressions and
     the fact that ten vote NGO Development Projects, mentioned
     above, was heavily oversubscribed in 1993, indicate that
     ICA and its development partners in Europe, the CAAs, have
     an important lobbying task ahead.

XXI  The European Union and the co-operatives:

88.  There are 15 Co-operative Aid Agencies (CAAs) in Europe, of
     which three are outside the EU. The mandate of these
     organizations varies as do their resources, volumes and
     types of aid. Their combined development assistance to the
     co-operatives in Africa is not comprehensive and needs to
     be expanded in order to better correspond to the needs.
     Some of them have limited exchange of experience with ICA,
     and the contacts with the EU and the NGO networks lobbying
     with the EU Commission are limited.

89.  In order to increase the development aid to co-operatives
     in Africa it is of greatest importance that the CAAs and
     their counterparts in Africa have a common understanding of
     the situation facing many co-operatives in Africa today,
     that the African co-operative development strategies are in
     conformity with the new situation and, finally, that the
     support strategies of the donors also are adjusted to the
     new circumstances. It is our strong belief that national
     and international donors will increasingly demand co-
     operative development and donor strategies, which take the
     new situation into account, as a prerequisite for funding.

90.  It is therefore recommended that ICA, as a first measure
     consults the African cooperators in order to ensure that
     their strategies for the future are fully reflected in
     programme documents before EU and other donors are
     approached for funding.

91.  Similarly, it is recommended that ICA consults its
     development partners in Europe on these questions, in
     particular with regard to the proposed strategy for the
     donors, in order to have it scrutinized and elaborated
     upon. This will facilitate the preparation of national
     donor strategies. With these two exercises co-operative
     development assistance programmes will improve
92.  It is no exaggeration to state that co-operative
     development interests are grossly under represented in the
     EU and the NGO networks. To make the Third World co-
     operatives and their needs for development assistance  more
     visible at the EU, calls for a consolidated approach.

93.  It is therefore recommended that ICA, as the global co-
     operative organization, takes the lead by opening up a high
     level dialogue with the EU. This dialogue would aim at
     increasing the EUs general understanding of the co-
     operatives in the Third World and their role in the
     national economies and the democratization process, as well
     as EUs understanding of  the current situation in Africa
     and the African cooperators need for support. ICA would
     thereby pave the way for a closer contact between the CAAs
     and the EU and for increased EU funding of co-operative
     development programmes. This dialogue would also form the
     opening of a continuous co-operative lobbying effort with
     the EU.

94.  Important lobbying with the EU is being done by the
     Development NGO networks and it is also important that the
     co-operative sector makes its presence felt here. ICA is
     the appropriate body for the preparatory work, and it is
     therefore recommended that ICA investigates the NGO
     networks and their lobbying priorities, so as to establish
     which networks are suitable for ICA and interested CAAs to

95.  There are a number of funding options within the EU aid
     budget for NGOs Some of them will be of greater relevance
     for co-operative development than others, and it is some
     what difficult to obtain a clear and comprehensive view of
     the options open to co-operative development programmes. In
     order to assist the CAAs on this issue, it is recommended
     that ICA compiles a small guide on the various votes
     suitable for co-operative development aid; rules and
     practices governing the various votes; and application
     procedures and routines.