The Department of Small Business Development has identified cooperatives as one of the economic activities that can ensure that informal businesses form part of the South African mainstream economy.
In her opening address, the Chairperson of the Portfolio Committee on Small Business, Ms Ruth Bhengu, said they have resolved that where there are Department of Small Business Development-funded cooperatives they would, as part of their oversight obligation, use their constituency day to do a follow-up on the department’s commitments. A commitment meant to keep the department on its toes. “This will discover projects that are dying. And what is the department’s responsibility in this regard. We have to be on guard of those cooperatives that are dying and that need the department’s assistance. In that way we would be playing our oversight role effectively as a Committee,” she said.
The Department of Small Business Development presented a report on Abalimi, a pilot project of 12 agricultural cooperatives in KwaZulu-Natal, an initiative meant to influence the future model of cooperatives in the country. This report will be used to align cooperative support services to the model of developing cooperatives that will in the future inform the department’s plan of action on funding and supporting cooperatives country-wide.
According to the Chief Director of Cooperatives Development at the Department of Trade and Industry, Mr Jeffrey Ndumo, the plan of action involves the critical departments, municipalities and cooperatives to see how this model can be enhanced and a buy-in can be achieved to ensure that the model speaks to the various concerns of the stakeholders of cooperatives throughout the country.
According to him, one of the achievements of the plan of action is an agreement with eThekwini Municipality to leverage opportunities and synergies to turn these small cooperatives into fresh, high-value vegetable production that will be accessible to the markets. One of the standing agreements is to ensure that cooperatives form part of the municipalities’ Integrated Development Plans (IDPs). “There is now a move towards the integration of cooperative projects into IDPs. The municipal steering committee will be the driver of this initiative and will monitor projects and will report to the steering committee that will be responsible for their implementation and monitoring of their successes and challenges,” he said.
But most of all, to drive this synergy, a steering committee that comprises various stakeholder departments involved in agriculture has been incepted to oversee the efficiency of this plan of action. “There is a steering committee that is responsible for the success of the plan of action and to ensure that these municipalities sign transversal agreements that will safeguard the success of cooperatives. This agreement is not only limited to those involved in farming or agricultural activities, but other cooperatives operating in different sectors of our economy.
To date, the department has funded five cooperatives in the province. One of them is Sinothando Vegetable Cooperative, which has displayed a prospect for success. “Sinothando has a potential to create 10 job opportunities, it is registered, it has received funding, but is not yet functional. Land preparation has been done and is ready for plantation. A business plan has been developed. We believe there is a prospect for success.”
The areas that are currently funded include a borehole, pump house, sceptic tank, refrigerator container, back-up reservoir, security, administrative, pack house and there is an uptake agreement for a working capital and the cost for its success is well over R1m.”
The department and municipalities in the province have agreed to enter into a partnership with cooperatives and now they will form part of the municipalities’ IDPs. The Department of Small Business Development in the province has committed itself to do its own assessment to determine the nature and extent of its assistance to cooperatives.
The Ilembe District Municipality is supportive of the rollout of the two Abalimi agricultural cooperatives at the Ilembe District Municipality. “The municipality agreed to enter into a partnership implementation agreement, but wants to enlarge it to include all critical areas of collaboration with respect to cooperatives and SMMEs (small, micro and medium-sized enterprises) development. The District Municipality will engage the local municipality and Ngonyama Trust to secure land or lease agreement for Yahweh Cooperative of a minimum of 10 hectares.”
Most critically, the Ilembe Agency has agreed to fund the cooperatives and provide market access for its School Nutrition Programme. There is also an agreement in place to link this cooperative with Agri-Park Projects of the province as a means of giving it access to the 30% procurement set aside by municipalities for cooperatives and greater market access, said Mr Ndumo.
Mr Ndumo said the 12 cooperatives experience similar challenges from lack of market access, technical expertise in financial management, formulation of business plans and the technological know-how to keep their businesses afloat.
“There is very little that has been said about the sustainability of these cooperatives in your report,” said Mr Roger Chance. “In your view, would these cooperatives be able to sustain themselves in times of stress or market unviability? These are business projects which understand how a business is run. What then are the business plans of these cooperatives and how do they intend to be self-sufficient?” he asked.
Mr Ndumo replied: “Seda (Small Enterprise Development Agency) will assist with technical support on business plans and training and how to access the markets and how to keep their entities afloat going forward. Kohwa will also assist in this regard. These interventions will assist to ensuring that cooperatives are run successfully and are self-sustainable.”
“Can we be given a breakdown of what technical support is given by Kohwa Holdings, a specialist incubator to cooperatives? And what kind of funding are they getting?” asked the Chairperson. “This would determine whether the funding given to Kohwa is not the money that should be given to the cooperatives. We need to absorb leanerships and agricultural students and agronomists to assist cooperatives and phase out consultants that cost us so much with so little registered success. That could be another way of creating jobs for learners in the agricultural sector.”
Maybe, what is needed here is the focus on the impact that is made by incubators when there is a high level of failure rate, said the Chairperson. “There are many organisations that claim to train cooperatives, but there is 88% failure rate of cooperatives. Why are these cooperatives not trained by Seda? We only see Seda when we go on oversight. The issue of coordination in the department is a problem. How will it coordinate other departments when it fails to coordinate its own entities?”
When you make commitments before us, you must stick to that, stressed the Chairperson. “The department present its reports as if there are no timelines. The department reports as if it is not planning to complete a particular task at a given time. It is a pity that the director-general of the department is not here, these are the issues that the department must address.”
By Abel Mputing
23 March 2017
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