Historical overview of co-operative in Tanzania

 Introduction  

There are many factors associated with the individual choice to cooperate. In Tanzania the pioneer cooperators were peasants who owned land and grew cash crops. These still make a large proportion of cooperators, although they have no title deeds to the land they farm on traditional lines. It has been observed that the holding of land in insecure tenures does not affect the decision either to cooperate or not (White and Runge, 1994:25).

Peasants in Tanganyika (now the mainland of Tanzania) started informal (unregistered) cooperatives in 1925 so that they could capture part of the trade profit of their crops. The first cooperative union in the country was the Kilimanjaro Native Cooperative Union (KNCU), which was registered with its eleven affiliated primary cooperatives on 1st of January 1933. The event took place in Moshi district, which by then comprised of the current Rombo, Hai, Moshi, Siha, and Mwanga districts. In 1924 there were 3,300 peasants growing coffee in Moshi district who sold 40 tons of parchment coffee. The formation of the KNCU saw the number of growers increase to 15,000 in the district. They sold 1,709 tons of parchment coffee valued at ₤ 39,000 in 1933. By 1966 KNCU was marketing 16,730 tons of clean coffee per year sold at ₤ 308 per ton (University Press, 1968:176; Kimario, 1992:4).

The Ngoni-Matengo Cooperative Marketing Union and its three affiliated primary cooperatives were registered in 1936 in what is now Songea region. In the same year tobacco output rose to 120 tons – up from one ton in 1930. Tobacco output reached four figure numbers in the 1950s (University Press, 1968:176:177). Increased tonnages of crops were reported in other areas as soon the cooperative effort was put into action (Maghimbi, 1990:84-85).

In the 1940s and 1950s other important cooperatives and unions were formed and registered. These were the Bugufi Coffee Cooperative Society in Ngara district, the Mwakaleli Coffee Growers Association in the Rungwe district. The latter went on to change its name to Rungwe African Cooperative Union. Others were the Bukoba Native Cooperative Union in Bukoba district, and the Lake Province Growers Association in the Lake Victoria area, which later changed its name to the Victoria Federation of Cooperative Unions Limited (VFCU) (University Press, 1968:177).

 The VFCU was a remarkable organization that has gone down in history as a landmark. It grew dramatically in marketing and ginning cotton that was produced by peasants in the lake zone. It facilitated the supply of low priced inputs, such as cotton pesticides and seeds to members, which it purchased in bulk from manufacturers or wholesalers. It also started an industrialization process in the lake zone distinguishing itself in the operation of cotton ginneries. The federation bought and loaned tractors to its members; its famous building (Pamba House) in Mwanza town, where new tractors were on display for members to buy, was almost a “pilgrim” centre for cotton farmers in the whole of the lake zone. By the 1960s the VFCU was the largest cooperative in Africa (Maghimbi, 1990:85).

 By 1968 Tanganyika had the largest cooperative movement in Africa and the third largest cooperative in the world in terms of percentage of the market share of agricultural exports. It was observed that the cooperative movement in Tanganyika was expansive:

" cooperatives handle ₤27.5 million worth or 49 per cent of the country’s annual exports. Only in Israel and Denmark do cooperatives market a greater proportion of the nation’s overseas business

 (University Press, 1968:176)."

 Cooperatives increased rapidly in the country with firm support from the government. Agricultural marketing cooperatives were dominant, but different types of cooperatives were encouraged by the government. Hence the introduction of consumer cooperatives, such as the Cooperative Supply Association of Tangnyika (COSATA) and the Moshi and District Consumer Cooperative Society, the latter of which is still vibrant today. Transport cooperatives, such as Co-cabs and Coast Region Transport Cooperative (CORETCO) were formed, as were savings and credit cooperatives. These formed a cooperative union – the Savings and Credit Union League of Tanganyika (SCCULT). The increase in the number of cooperatives can be viewed in Table 1 below.

Year	Primary cooperatives	Cooperative Unions*
1948	62	N/A
1952	172	N/A
1953	188	N/A
1957	474	N/A
1958	546	N/A
1959	573	N/A
1961	857	38
1966	1,500	33
1974	2,500	21

 The number of cooperative unions decreased from 1961 to 1974 because of the government’s policy to have one union for each administrative region.

Source: Maghimbi, 1992:221.

In most of the Arabica coffee growing areas, central coffee pulperies were built by primary cooperatives to process the cherries, thus ensuring high quality coffee. Tanzania coffee - and especially Kilimanjaro coffee became popular and in demand on the world market. The number of cooperative unions decreased from 1961 to 1974 because of the government’s policy to have one union for each administrative region.( Source: Maghimbi, 1992:221.)

In most of the Arabica coffee growing areas, central coffee pulperies were built by primary cooperatives to process the cherries, thus ensuring high quality coffee. Tanzania coffee - and especially Kilimanjaro coffee became popular and in demand on the world market.

Both the colonial and nationalist governments supported cooperatives as institutions of the peasants. There were crop booms in the country from the 1950s up to the early 1970s and many observers agree that cooperatives contributed to this increase in crop output (Maghimbi, 1990:84:86).

The Cooperative Bank of Tanganyika was launched in 1962 and was replaced by the National Cooperative Bank (NCB) in 1964. The latter provided loans to cooperatives for purchasing crops. Cooperatives held shares and maintained current and fixed deposit accounts in the bank. The NCB also received overdrafts from the Central Bank of Tanzania. It was a success and a landmark in the history of the cooperative movement in the country. By 1967 it had accumulated TZS 1,800,000 as general reserves and TZS 1,100,000 as statutory reserves. In the same year it had appropriated TZS 250,000 in dividends, which was 7.3 per cent of its paid up capital. By 1970 the National Cooperative Bank had a share capital of TZS 4,500,000 and it made a profit of TZS 5,000,000 (Kimario, 1992: 24). This was no mean figure at a time when the exchange rate was TZS 7- to USD 1.

The holding company for the National Cooperative Bank was the National Cooperative and Development Bank (NCDB). The NCDB did not operate as a bank, but the National Cooperative Bank and the National Development Credit Agency (NDCA) operated as its subsidiaries.

The NDCA function was to provide the agricultural sector with credit in the form of cultivation and development loans. Legal backing for the cooperative movement was strong. The National Cooperative Bank and the NDCA were established under the National Cooperative and Development Bank Act, 1964. In this act it was stated that the NDCA would lend for the following purposes:

" agriculture, agricultural purposes and enterprises, for marketing and processing of agricultural products from the development of storage and transport facilities and undertakings, for the development and encouragement of small industries and trades and for the development of cooperative facilities."

The NDCA used the primary cooperatives and unions as agents to offer loans to peasants and to collect repayment. The NDCA granted loans using its own resources and funds from a subsidiary of the World Bank, the International Development Agency (IDA). By using the cooperative movement to channel credit to rural areas, the NDCA was able to reach 100,000 small farmers every year. Between 1962 and 1966 the NDCA gave agricultural credit worth TZS 39,153,000 to cooperative members. In the same period it offered agricultural credit worth TZS 20,428,000 to non-cooperatives members (Kimario, 1992: 24 – 26).

Marketing cooperatives expanded their business tremendously in the early 1960s. One source indicates that in 1966 there were 1,616 registered cooperatives and out of these 1,339 were engaged in the marketing of agricultural products. In 1960 cooperatives handled 145,000 tons of produce, in 1965 they handled 496,000 tons, and in 1966 the handled 628,833 tons of produce, which was worth TZS 605,200,500. By 1967 the cooperative movement had 3,000,000 members in rural areas (Kimario, 1992: 27). Here it is interesting to cite the Ministry of Agriculture, Food and Cooperatives statistics as it indicates that cooperatives were making profit and had huge surpluses.

Year	No. of	No. of members	Share capita	Reserves/
	registered		TZS	surpluses TZS
	cooperatives
1960	691	236,211	4,983,000.00	60,396,220.00
1962	974	330,644	9,140,720.00	54,350,080.00
1965	1,518	607,655	11,250,620.00	97,356,920.00
1966	1,616	N/A	N/A	N/A
1967	1,649	N/A	N/A	N/A

Source: Ministry of Agriculture, Food and Cooperatives

 Many of the cooperatives formed after independence began in a hurry and little preparation was undertaken. Many people equated independence with economic development and there was political expediency to open many cooperatives, some of which were not feasible. Complains of mismanagement and corruption were common. In January 1966 the president appointed a special Committee of Enquiry with the following tasks:

 "to review the staffing, and where necessary, the organizational structure of the Cooperative Movement and Marketing Boards in order to recommend what steps should be taken to strengthen them for the maximum benefit of producers and consumers alike (Report of Presidential Committee of Enquiry 1966:1)."

The presidential committee of enquiry submitted its report to the government in June, 1966, and it listed the five basic problems of the cooperative movement, which included:

1. shortage of the appropriate manpower;
2. presence of an uniformed membership;
3.  lack of democracy at union level;
4.   lack of skilled manpower;
5.   susceptibility of the cooperative movement to political interference.

In its response to the report of the presidential committee (in White Paper No. 3 of 1966) the government rejected the criticism relating to political interference in the cooperative movement. The government’s view was that there was nothing undemocratic in the procedure of electing cooperative unions’ committee members among delegates from primary cooperatives who were themselves democratically elected. The government was also of the view that by their very nature cooperatives could not be detached from political life (Kimario, 1992: 30 – 31). It is interesting to note how political interference was viewed by the government. For example:

…to employ the economic aim of cooperation to achieve the political aim of socialism. In this way, it is inevitable and also necessary that the two should meet and overlap from time to time (Proposals of the Tanzania Government on Recommendations of the Special Presidential Committee of Enquiry into the Cooperative Movement, 1966, cited in Kimario, 1992: 31).

The government accepted all the other criticism in the report of the presidential committee (Kimario, 1992: 31). There was much justification for political inference in cooperatives in White Paper Number 3 of 1966. The Presidential Commission was the first move that would in later years bring the cooperative movement to a course of sharp decline. Among the things the commission recommended was the dissolution of the Victoria Federation of Cooperative Unions (VFCU) and the Tanganyika Cooperative Trading Agency (TACTA). TACTA was a country-wide cooperative tertiary body composed of coffee growing cooperatives and unions that was formed in 1952. TACTA organized marketing of coffee from cooperatives and individual growers in Tanganyika, Nyasaland (now Malawi) and Northern Rhodesia (now Zambia) form the 1950s onwards. It also supplied farm inputs and provided insurance services to cooperatives.

Also dissolved was another country wide organization - the Cooperative Supply Association of Tanganyika (COSATA). The Presidential Commission of Enquiry also recommended the formation of a Unified Cooperative Service Commission (UCSC), which would be responsible for the recruitment, discipline, terms of service and dismissal of all employees of registered cooperatives (Kimario, 1991: 31). The UCSC was created and organized in much the same way as the Civil Service Commission. The UCSC compromised cooperative members’ autonomy and democratic right to hire and fire people of their choice. A further blow to the movement was the dissolution of the National Cooperative Bank and the National Development Credit Agency in 1970.

Radical changes in government policy on cooperatives occurred after the government’s introduction of socialism to all macroeconomic and social programmes. On the 14th May 1976 all primary cooperatives were abolished by the government. Their crop marketing functions were taken over by communal villages. At the same time cooperative unions were also abolished and their functions were taken over by parastatal crop authorities, which had to buy crops directly from villages. The abolished cooperative unions never bought crops directly from peasants, but through primary cooperatives. The other services which were rendered by the abolished cooperatives, such as wholesale and retail trade, were taken over by state owned companies, such as the Regional Trading Companies and District Development Corporations (Maghimbi, 1992:224-225).

The crop authorities failed in buying peasant crops and in providing price incentives. They did badly in the supply of farm inputs and credit. The impact on crop output was quickly felt as the government faced a shortage of foreign exchange due to the decline in peasant production. The treasury also lost the potential of local revenue that would have resulted from increased crop production. The government formally announced the re-introduction of primary cooperatives and cooperative unions in 1982 (Maghimbi, 1990:93-97). Nevertheless the damage was already done. Cooperatives lost much of their property and highly trained manpower during the abolition and up to now the movement has not fully recovered. The morale of members and potential members went down. Cooperative members became disenchanted with cooperatives and mistrusted the sincerity of the new efforts to revive cooperatives and the rhetoric that went with it.

References

1. Akpoghor, P. (1993) Selected Essays on Cooperative Theory and Practice, Marburg, Marbug Consult for Self-help Promotion.
2. Chayanov, A. (1966) The Theory of Peasant Economy, Homewood Illinois, Irwin for American Economic Association.
3. Ikeno, J. (2007) The Declining Coffee Economy and Low Population Growth in Mwanga District, Tanzania, African Study Monographs, Supplementary Issue No. 35, The Center for African Area Studies, Kyoto University.
4. Kaleshu, J. (2007) Successful Rural Produce Organizations in Tanzania: A Survey of Kilimanjaro, Morogoro, Tanga and Dodoma Regions, Research ReportSeries Special Issue: BEEP Research Report, Vol. 3, Moshi, Moshi UniversityCollege of Cooperative Studies.