Co-operatives in Africa have played an integral role to make an indelible footprint in the lives of millions of members across the continent. They have been identified as key vehicles in the ultimate realization and achievement of Africa’s Agenda 2063 and the United Nations Sustainable Development Goals (SDGs).
The era of digital disruption together with the introduction of challenge 2025, has birthed the 21st century African co-operative, swiftly reinventing it from the traditional analogue model.
Most Co-operatives have been at the forefront of eradicating poverty, by creating employment to millions of people, directly or indirectly across the continent. In addition, many have been been entirely responsible for transforming national economies inculcating modern agricultural methods to increase productivity, and enabling the continent to feed itself whilst exporting; boosting industrialization, manufacturing and value addition; bolstering education, health and nutrition to name a few of the various advancements.
As the Covid-19 Pandemic hit African co-operatives enormously, many across the continent are encountering liquidity crises, decreased loan portfolios, increased provision costs and write-offs, operational losses among a host of other challenges. To offset the impact, co-operatives have been formulating contingency plans to weather the storm brewed by the pandemic.
Assessing Cooperatives across Africa
The African Co-operative movement has been growing exponentially with Kenya, Ethiopia, South Africa, Egypt, Rwanda, Uganda, Ghana, Senegal, Nigeria and Tanzania, boasting some of the largest sectors. The need to revolutionize and adapt to the changing environments is critical if Co-operatives are to flourish into the next decade.
In Uganda for instance, Co-operatives have contributed to wealth creation for many citizens and government authorities have continually injected support that has seen to the establishment and registration of more than 16,500 co-operatives.
In Ethiopia, Co-operatives are especially instrumental in the role of agro-processing and banking; with a co-operative growth rate of 17% annually. The number of co-operatives had grown to 53,982 by 2014 from 26,672 of 2009. Ethiopia’s total co-operative members grew to 8.3 million from 5.8 million representing 9.8% of the population. Egypt has about 7,000 co-operative societies with four million members, In Ghana 85% of rural households are members of co-operatives, which have spurred banking, agriculture, fishing among many other industries.
The co-operatives industry is growing continentally and similarly, in Rwanda, it contributes to the economic well-being, of over two million people, with over 5,000 established co-operatives. The government, has especially strengthened agriculture co-operatives that consequently resulted in increased food production for export. 70% of rural households in Senegal, are members of co-operatives, whilst in South Africa, co-operatives exists especially for impoverished communities to contribute more meaningfully to the economy.
In Kenya Savings and Credit Co-operatives (Saccos) make up about 45% of Kenya’s Gross Domestic Program (GDP), with an asset base of over Kshs. 1 trillion Ksh (approx. $1 billion USD), mobilized savings and deposits in excess of Ksh 732 billion ($700 million USD) and a loan portfolio of 700 billion Ksh ($680 million USD). In addition, the sector employs more than 500,000 people, whilst necessitating self-employment, especially through lending.
The Ministry of Co-operative Development estimates that 80% of Kenya’s population, derives their income either directly or indirectly through Co-operative activities. Kenya recently scooped the 2020 membership growth award, by the World Council of Credit Unions (WOCCU). It has the largest Co-operative movement in Africa and is ranked in the 7th position globally, making it a vital player in the socio-economic development of the country.
The rapid mushrooming and proliferation of Sacco societies in Kenya, has brought the number to about 13,200 registered entities. The Sacco Societies Regulatory Authority (SASRA) currently regulates approx. 175 of them. In the pursuit of Kenya’s Vision 2030, Co-operatives were identified as key partners, with flagship projects and Medium-Term Plans already underway and have been paramount in the achievement of the Big 4 Agenda, birthed by President Kenyatta.
Challenge 2025: C-19 Expedites the Digitalization of African Co-operatives.
The Covid-19 Pandemic, has exposed the gaping need for digitalization of African Co-operatives and has inarguably, expedited its progress with many leveraging on their online platforms as a safety net to serve their members. In light of this, the World Council of Credit Union (WOCCU) has set ‘Challenge 2025,’ with the primary objective of increasing membership in Co-operatives worldwide through the digitalization of the of the global Co-operative system by 2025.
In 2014, the Council set a goal of reaching 260 million Co-operative members worldwide by 2020. A concerted worldwide effort by Co-operatives was able to see the fulfilment of the ‘Vison 2020” goal by 2017. However, it was noted that the co-operatives that grew, were those that offered core services via online and mobile channels, hence the need for challenge 2025. The Council looks to measure digitization of Co-operatives in four key areas and report annually on the progress being made toward challenge 2025.
- The improvement ofdigital channels. Offering members core digital transaction services, such as online loan processing, mobile and internet banking.
- Inculcating digitalpayments. as an area of focus, to connect co-operatives, to a shared payment system, allowing mobile payments and integrating services with a national payment system.
- Employing data analytics. As digitization increases, this will be an area of interest in determining additional services offered to members, while identifying those that need financial literacy or counseling services.
- Cybersecurity. In addressing the fact that more and more people are using digital means of transactions, the implementation of a cybersecurity system that complies with national regulations is vital to protect members’ consumer data from digital attacks and intrusions. In the wake of cybercrimes such as phishing schemes, account takeover fraud, data breaches, identity theft, money laundering and other digital scams; cyber security systems are of utmost importance to protect members’ funds.
Mass Entrance by African Youth into Co-operatives.
African co-operatives have marked a new dawn, heralded by the rapid surge in the number of youths joining the movement to save, invest and grow. A tectonic shift from the norm in many societies across the continent, where the demographic trend has been towards the older population is now changing.
In Kenya, according to the 2019 Subsector Demographic study, conducted by the Sacco Society Regulatory Authority (SASRA), more youth have been joining Saccos and seizing the opportunities therein. This debunked the misconception and public rhetoric, that Sacco membership has no place for the youth; birthing a revolution, that has hitherto recorded exponential growth both in Saccos and the economy on the whole. Co-operatives across the continent continue to create space to accommodate the youth, empowering them because they are the future of the movement.
Co-operatives Role in Agenda 2063 and the United Nations SDGs.
Agenda 2063, is the vision of Africa’s future of a shared prosperity, through social and economic transformation; founded on seven aspirations as key vehicles to its realization. Co-operatives have been playing a pivotal role, especially under the first aspiration of the agenda: A prosperous Africa based on inclusive growth and sustainable development.
During the recently held 75th United Nations General Assembly in September 2020; the progress of the Sustainable Development Goals (SDGs), was a key area of focus. Co-operatives; were identified as key partners, in the implementation and acceleration of the Agenda 2030, for Sustainable Development.
The Agenda was adopted by United Nations Member States and World Leaders in 2015; it sets out the roadmap for a future of shared prosperity and environmental sustainability. It stipulates 17 Sustainable Development Goals (SDGs), which are an urgent call for action, by all countries; both developed and developing, in a unified global partnership. The Committee for the Promotion and Advancement of Co-operatives(COPAC), has been carefully examining the contributions by Co-operatives, to the different SDGs and producing a series called ‘Transforming our world: A Co-operative 2030.
The series looks at how Co-operatives, are directly contributing to every particular SDG. For instance, in line with SDG 8, on decent work and economic growth, Co-operatives have a proven track record of directly and indirectly, providing stable employment and significantly contributing to the economy.
The International Co-operative Alliance, as the global voice of the movement, is committed to educating Co-operatives about SDGs, helping co-operatives, respond to the UN’s call to action. The ICA President, Ariel Guarco, notes that “Co-operatives are making differential contributions, to the sustainable development agenda; primarily because Co-operative values and principles are aligned to the global goals.”
Co-operatives for Climate Action
The Paris Agreement of 2015, formed with the ultimate goal of mitigating global warming and strengthening the global response to the threat of climate change, needs to be redressed, because 2019 went on record as the 2nd warmest year, according to the EU observatory. If this agreement is to be effective, then each country must strictly adhere to their greenhouse gas emissions target. Co-operatives have been championing for environmental conservation. The 2020 theme for the international day of co-operatives, was ‘Co-ops for Climate Action’, specifically chosen to support the Sustainable Development Goal (SDG) 13, on Climate Action and to highlight, the contributions of Co-operatives in combating climate change. African Co-operatives, vary in their ability to adapt and respond to climate change, according to the context in which they operate, the resources they have at their disposal, and their level of preparedness. Many co-operatives across the continent, have taken pledges towards environmental conservation, with different action areas, in line with the ‘Co-ops for 2030 Campaign’, initiated by the International Alliance for Co-operatives.
Co-operatives in Africa, face a myriad challenges being a developing continent, which differ from country to country. However, some common problems across the board have been loan defaulting which has been crippling the financial stability of the lucrative sector. In countries like Kenya, Co–operatives are included in the credit sharing system as subscribers, whereby they submit borrowers’ information to CRBs and also receive credit reports directly from them; which assists them to gauge the creditworthiness of members before disbursing loans. Corruption has also been a shared existential threat to African co-operatives which has led to the premature demise and insolvency of many. The non-remittance of dues to Co-operatives by employers has also been a stubborn wound for many co-operatives, across the continent, plunging many into financial distress.
Gender inequality in Co-operatives has been an obstacle, owing to the fact that most communities are patriarchal, where women are portrayed as inferior and not capable of being in leadership positions, yet in most countries they make up for the majority of membership. In Kenya, a report by the Sacco Societies Regulatory Authority (SASRA) indicate that men hold 80% of all senior management positions in Deposit Taking Saccos. Only 40 women hold Chief Executive positions compared to 134 male CEOs, whilst the board of directors elective positions are male dominated at 83% and a paltry 16% female. Many Co-operatives have also fallen prey to cyber-attacks, where members’ funds have been illegally siphoned electronically. However, the significance and enormity of Co-operatives in the continent, is invaluable and governments of respective countries continue to strengthen and empower their sectors, to promote socio-economic development.
By June Njoroge.