Cooperative Model Needs Rejuvenation - Minister

MBONGENI MGUNI
Staff Writer | Monday June 14, 2010 00:00

 

Cooperative societies, which date back to 1964, are usually focused on product retail, arts and crafts, savings and credit, cleaning and cattle sales. The basic model for cooperatives in Botswana is a voluntary organisation of community members who jointly finance an activity, whose proceeds they share or loan themselves. Other cooperatives are set up primarily to provide employment for members.

Speaking at the Cooperative Pitso on Saturday, Makgato-Malesu urged cooperatives to shrug off the decades-old approach to business and embrace the opportunities offered by modern commerce.

'Given that these days, there is strong growth of the retail sector, do we still want that shape that we have had since long back? Do we want to be the same cooperatives from the 1960s or do we need to keep with the times?' she asked.

'Let's not be afraid of the new opportunities like tourism, honey production, the motor industry and others. Let's not restrict ourselves but look at our societies like any other industry that is looking out for opportunities.'

The minister stressed that rejuvenating the cooperatives' business model will allow the sector to respond to the various challenges bedevilling it. Cooperative societies' biggest challenges include stiff competition from local and regional retail giants, particularly in the fast-moving consumer goods sector.

Another major constraint is under-capitalisation, which was worsened by the collapse of the Botswana Cooperative Bank in 1995 and the Botswana Cooperative Union a year earlier. As a result, only 170 out of the 207 cooperative societies registered in Botswana are classified as active while the remainder are frustrated by lack of funds.

Makgato-Malesu said compounding this challenge, is the persistent pattern of mismanagement and fraud by both cooperative employees and elected leaders. 'This is my biggest problem; there are those who try and cheat then struggle to balance the books. We need to talk about where this problem comes from and how it can be solved,' she said.

Cooperative society members at the Pitso pointed out that part of the problem is lack of training on the part of accounting officers running the organisations. They said this has also contributed to the poor audit record of cooperatives, as often ministry officials find the societies' books in disarray.

Moshupa cooperative member and councillor, Stephen Gaadingwe said most societies lack leaders trained in managing finances in an accountable and prudent manner. 'People campaign to be in the leadership of these cooperatives, but you may find that these same people don't even know how to write. I am not saying they must be excluded, but the leadership needs education. They need education, not just about the laws governing the societies, but also about business management,' he said.

Stakeholders at the Pitso agreed that modernising the sector and optimising its management would increase its annual turnover, income to members and contribution to the economy.

Last year, turnover in the cooperative sector reached P163 million, exceeding the targeted P110 million. Savings and deposits totalled P108 million, while loans to members were P93 million, compared to P79 million in 2005. Marketing cooperatives, which market goods produced by members either individually or collectively, contributed 25 percent of the Botswana Meat Commission's annual throughput.