The significance of the cooperative movement in development

Introduction

Currently the cooperative movement in Tanzania is large in terms of membership. However, it appears smaller in business volume and impact when compared to what it was in the 1950s and 1960s. By June 2008 there were 8,597 primary cooperatives. Their distribution according to type is shown below.

         

Type of Cooperative	2007	2008
Industrial	101	185
SACCOs	4,445	4,780
Crop Marketing	2,670	2,614
Livestock	119	71
Service	209	218
Fishery	113	129
Housing	7	11
Mining	16	3
Water Users/Irrigation	96	98
Consumers	96	103
Transport	10	4
Others	269	335
TOTAL	8,151	8,551
Unions	44	44
Federation	1	1
Confederation	1	1

Source: Department of Cooperative Development; TFC.

The total number of members of registered primary cooperatives in June 2008 was 1,600,000. Most cooperative members are adult males. The average household size in Tanzania according to the 2002 Population and Housing Census was 4.9 and we can gauge that approximately 7,840,000 people in Tanzania mainland are directly dependent on the cooperative movement. The population of Tanzania mainland was 33,584,607 in 2002. Thus the cooperative movement is by number, one of the largest economic movements in the country. There are other people who depend on cooperatives, for example the employees of primary cooperatives, cooperative unions, the federations and confederation. The tobacco cooperatives have their own federation and the Tanzania Federation of Cooperatives (TFC) is the highest organization in the cooperative organizational pyramid. The TFC employs 24 people and SCCULT (the Union for SACCOs) employs 41 people (33 men and 8 women).

Cooperatives also hire seasonal labour during crop collection and processing. Savings and Credit Cooperatives provide loans which help members to start small businesses that provide them with employment. Others use the loans to buy animals or expand crop output. In the process they gain self-employment.

1.  Employment, income and poverty reduction

The TFC employs 24 people and a typical crop marketing primary cooperative employs three or four people on a full time basis. Crop marketing cooperatives employ more people during the crop collecting season. SACCOs employ 4,524 people. There are approximately 30,000 jobs which are about to be created in the cooperative movement. This will be achieved by sensitizing people to establish and join new types of cooperatives, such as mining, fisheries and crafts. This estimation is based on sensitizing that TFC undertook from 2004 onwards.

The quality of employment in cooperatives may be low. However, the standard of living of cooperative members in villages (peasants) is low, but better when compared to those who are not members of cooperatives. The standard of living of cooperative members was measured by observing their housing, dressing, schooling of their children, freedom from debts and ownership of bicycles, radios and mobile phones. It was also measured by looking at the socio-economic activities in which they engaged. In some areas, such as Uru North, the cooperative provides services to the community that increase the community’s quality of life, for example, building of schools, water development, a dispensary and caring of orphans.

Another example is Tanga Diary Cooperative Union Ltd. (TDCU) (established with the assistance of Tanga Diary Projects, financed by HIVO – a Dutch NGO). TDCU includes nine dairy primary cooperatives. The union supports small livestock keepers by providing them with highly productive milk cows and organizing a milk plant and milk marketing.

The reduction of poverty is a central issue in the cooperative movement. In the past five years the TFC has encouraged cooperatives to have strategic plans. Members’ needs are now more readily obtainable once solicited and participatory approaches to planning are mainstreamed. Strategic planning aims at evolving the practice of business to encourage economically viable cooperative enterprises through building a culture of entrepreneurship and business insight.

The poor performance of cooperatives in the 1980s to 1990s has limited the participation of cooperatives in official poverty reduction programmes. Cooperatives are still the most numerous organizations in the rural areas. They participate in poverty reduction, but they do not fit centrally in the large official poverty reduction programmes, such as NSGRP. However, there is a gradual change in attitude and this has helped to promote cooperatives and cooperative type of organizations, such as farmers associations. The National Network of Smallholder Farmers in Tanzania (MVIWATA) has a network of 150 groups of small farmers with about 50,000 members.

Tobacco growers seem to have made more progress in increasing the income of their cooperative members than cotton growers. In the main traditional crops (coffee, cotton, tobacco, cashewnuts) cotton growers are most numerous. The income of tobacco cooperative members shown below indicates above average incomes when compared to those who are not members of cooperatives.

 Income of tobacco cooperatives

Unions	Primary	Tobacco		Production
			2006/07		2007/08
	Coops	Growers
			(Kgs)	D	(Kgs)	Value USD
WETCU	129	39,676	24,367,911	23,568,643	23,142,134	27,045,333
KACU	43	8,735	5,217,250	5,740,540	5,017,845	6.062,809
LATCU	48	6,954	4,831,883	4,996,650	5,002,289	6,188,166
CETCU	11	2,500	1,335,177	1,193,247	1,770,799	1,911,574
CHUTCU	6	9,327	5,140,409	4,631,508	6,026,585	6,465,458
SONAMCU	20	6,500	1,380,070	1,034,983	2,739,379	2,420,432
TOTAL	257	73,692	42,272,700	41,165,573	43,699,031	50,093,774

Source: TFC

2. Social protection

Cooperative members provide social protection to each other through mutual support. Mutual support systems between cooperative members are found mostly in SACCOs. Nearly all SACCOs have established special borrowing schemes and members can borrow money when they are bereaved or have other emergencies. Some industrial primary cooperatives have solidarity funds to which a member contributes regularly and out of which she/he is helped with an agreed sum of money when an occurrence, such as death of a spouse or child occurs. Some cooperatives, including Uru North Njari Cooperative Society, have teamed with two other cooperatives and formed a SACCO to act as a facilitating mechanism for providing loans, especially in emergencies. Indeed, one of the driving forces behind the success and the fast spread of SACCOs is the social protection it provides during emergencies. Even without emergencies SACCOs are viewed as a mechanism for social protection for the millions of people whose only available channel of credit is the local SACCO.

In Same District some primary cooperatives have increased social services by providing water to their members. These cooperatives that operate as water users associations include Chaivombo, Bere and Chome. The three cooperatives have also facilitated access to electricity for the members (Kaleshu et al, 2007:32-37).

 Access to electricity by members of three rural cooperatives

Name of Cooperative	No. of members	Members with	% of members
		electricity	with electricity
Chaivombo Water Users	25	12	48
Association
Bere Water Users Association	40	7	2
Chome Catchment Cooperative	65	19	29
Enterprise Association

Source: Kaleshu et al, (2007:35)

Cooperatives are engaged in activities that help to mitigate the impact of HIV/AIDS. This is done through sensitization seminars and skills training. The interventions to prevent HIV/AIDS are mentioned as a responsibility of the Cooperative Reform and Modernization Programme (CRMP), but so far only modest work has been done in this area. A good example is the KNCU, which now supports 288 children made vulnerable by HIV/AIDS through providing assistance with school fees and uniforms. TFC has also published and widely disseminated publication titled ‘A Cooperative Policy on HIV’.

2.  Giving voice

 The cooperative movement lobbies through TFC. The chairman of TFC is a member of the National Executive Committee of the ruling party in Tanzania. This is not necessarily a positive feature, as partisan politics may be dragged into cooperatives. TFC has been silent on the issue of revising the current law as it has been found to have flaws. However, the current cooperative law gives cooperative members wide powers to communicate concerns through their organizations and to take action within the movement to empower themselves economically and socially. Cooperative members are much freer in association and can bypass cooperative unions and federations. For example, 13 primary cooperatives in Kilimanjaro region have side stepped their union (KNCU) in the coffee business. They have exercised their democratic right to cut out the costs of intermediaries, including their old union (KNCU), and the benefits associated with increases income have been evident. Poli Meru Primary Cooperative Society in Arumeru district has also raised its voice, seceded from its union (Arusha Region Cooperative Union) and now markets its coffee independently. GOMATA Coffee Rural Cooperative Society in Same District has also taken initiative to sell its coffee independently and now bypasses the Vuasu Cooperative Union (Mwaibasa et al, 2007:76-84).

 Cooperatives link up with other movements directly and through TFC. There are strong links between some cooperatives in Kilimanjaro and Tanga regions with other movements. The voice of cooperative members is raised in meetings and it is heard by cooperative movements in other countries, especially Western Europe. This has enabled assistance to be made directly to primary cooperatives. For example, a Dutch NGO (HIVO) financed nine dairy primary cooperatives in Tanga region and they have now established a very successful diary cooperative union (Tanga Diary Cooperative Union or TDCU) which supplies fresh milk and milk products to the city of Dar es Salaam. MVIWATA or the National Network of Smallholder Farmers (which has facilitated the formation of over 30 SACCOs) networks and collaborates with various foreign organizations, including FERT, LVIA, TRIALS, Agriterra, IFAP and INADES. MVIWATA is a member of several international associations, including IFAP, CAFÉ and PELUN. Its other regional affiliations and networks are RELMA, EAFE, SADC, COMESA, EAC, ISAD and NEPAD. Locally it networks and collaborates with SCCULT, PELUM Tanzania and TANGO (Kaleshu, et al, 2007:17-19, 32).

  Vibrancy

 The movement has shown signs of regeneration and the number of cooperatives has been increasing since 2004 as is indicated in the table below.

 Newly registered primary cooperatives

Year	New cooperative registrations
2004	573573
2005	268268
2006	127127
2007	1,4421,442
2008	1,2981,298

Source: Cooperative Development Department, TFC

However, despite the growth in the number of cooperatives, the movement requires support in certain areas. For instance, crop marketing cooperatives are heavily indebted to banks. They owed over TZS 48 billion in December 2004. The exact amount owed now is not known and the government has chosen to offset part of these huge debts at times.

Moreover, less than 80 per cent of registered cooperatives are active. To further illustrate, out of the 44 cooperative unions eight are relatively dormant and do not all hold annual general meetings as is shown below.

                                   

Year	Number of AGMS held	% of unions holding AGMs
2004	30	68.2
2005	25	56.8
2006	30	68.2
2007	33	75.0
2008	36	81.8

Source: TFC

Each primary cooperative is represented by at least two delegates in the annual union meeting. Representation of primary cooperatives ranges between 65 to 95 per cent. There are examples of primary cooperatives that have had successful innovative practices during the past three years; these include Kanyoro Primary Cooperative Society in Kigoma, Kinole SACCO in Morogoro, Kitunda SACCOs in Dar es Salaam, Uru North Njari Primary Cooperative Society and Posta na Simu SACCO in Dar es Salaam. The economic success of these primary cooperatives is based on active member participation, dedicated board and chairpersons, and effective management of business, transparency and other affairs of the cooperative.

Membership of primary cooperatives is voluntary and this point is emphasized during the formation of cooperatives and at AGMs. Members make all the major decisions in a democratic manner. The one member one vote principle is always followed. In 2006/2007 nearly all active primary cooperatives in the country elected new board members through democratic voting. Members contribute to the capital and do business with their cooperatives and decide on how the surplus should be distributed and/or expended.

Primary cooperatives are free to affiliate to any partner or representative organization based on the economic and non-economic gains anticipated. Primary cooperatives are self-propelled and act without undue government control, political/government or external interference.

Seminars are organized for members and leaders and information is regularly disseminated. Training budgets were mentioned by some members of the movement, but by and large current cooperatives do not have training funds. This is in contrast to the cooperatives of the 1950s and 1960s, which saw cooperative contributed a percentage of their surplus towards an education fund.

Cooperatives cooperate with each other. For example, three primary cooperatives in Uru North in Kilimanjaro region have come together to form an association that provides common services and undertakes common ventures. Primary cooperatives utilize part of their surplus to pay for community projects, such as water and education activities. The association of three primary cooperatives in Uru North has initiated a community water project, built classrooms, and paid school fees for orphaned and other vulnerable children in the community. It works in close collaboration with the village governments and all the development programmes in the area.

Conclusions 

 Findings from this analysis show that cooperatives are gradually giving voice to their members. Some successful cooperatives, such as Tanga Diary Cooperative Union, are examples of this. The paper also shows how policy reforms have been effective and that the authorities have instituted strong institutions (for example, SIDO and MUCCOBS) to support the advancement of the movement in the country. The movement is big and it is estimated that there are over 5,000,000 people, in addition to the 1,600,000 cooperative members, use cooperatives services for their livelihood. Nevertheless the conclusion reached is that the movement is not strong when compared to movements on other continents, in other African countries, and even to its own historical past.

 The positive conclusions which can be drawn from the post are that there is a significant potential for the movement to help reduce members’ poverty and contribute to the social protection and economic growth of the country. The rapid growth of SACCOs in recent years is encouraging, though there are only two small cooperative banks in the country. The more numerous cooperative financial institutions (SACCOs) are not strong enough and are only offer modest loans to members. However, these loans, small as they may be, are very important for the welfare of members and their households. There is thus a need for the department and the movement to appreciate the formidable task of developing SACCOs so that they can become strong cooperative financial institutions that can successfully participate in crop buying. Much work is needed in training and legal reform to make it easier for SACCOs to be registered as microfinance companies. Currently few SACCOs in urban areas have the organizational capacity to properly administer the demand for their services as the necessary manpower is lacking. This means that even if there was injection of capital to cooperatives (by the government, donors and from members’ savings), the problem of low organizational capacity would be a constraint. Most of the training done at MUCCOBS is not for staff belonging to the cooperative movement. MUCCOBS and the other players and stakeholders should reposition themselves so that they can direct more education and training to the movement. Cooperative organizations need to be more active in education, training and information-sharing. They can also take advantage of the proliferation of the electronic and print media in Tanzania.

 The heavy debt of the crop marketing cooperatives was mentioned as an issue. Cooperative members and experts interviewed indicated that few unions in crop marketing are strong. Only Kagera Cooperative Union (KCU) and Karagwe District Cooperative Union (KDC) were mentioned as financially strong unions in crop marketing. The two unions have members (primary cooperatives) which market coffee. Nevertheless, despite the presence of a few good examples, the territorial picture is not good. In the past thirty years coffee output has gone down or at best stagnated in some areas because of lack of strong cooperatives to support marketing and the supply of inputs at competitive prices (Bank of Tanzania, 2006; Mhando, 2005; Ikeno, 2007).