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 withdraw. 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 benefits. XII Support to adjustment of formal co-operative structures or support to co-operative development outside these structures: 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 organizations. 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 above. 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 employees. 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 considerably. 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 join. 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.