One of the great challenges facing the South African economy is to increase the number and variety of viable and sustainable economic enterprises. We have a particular history that has brought about many interruptions in the development of enterprises. This has been particularly associated with our racial history and the destruction of wealth in black hands in both the rural and urban areas. This has adverse effects on income distribution, entrepreneurship and employment creation.

Accordingly it is central to government’s economic policy that it promotes the development of economic enterprises and diversifies the ownership, size and geographic location of those enterprises. This policy statement deals with an important variant of economic enterprise, namely co-operatives and outlines the government’s approach to defining the co-operative enterprises as well as the policy instruments that will be utilized to achieve our objectives. The support measures to grow this sector are clearly outlined in the co-operatives development strategy as an implementation framework. This policy statement should be read in conjunction with those on Small, Medium and Micro-enterprises and the Strategy on Broad Based Black Economic Empowerment.

A viable, dynamic, autonomous, self-reliant and self-sustaining co-operative movement can play a major role in the economic, social and cultural development of South Africa, through effective and efficient services extended by co-operative enterprises to their members. By doing so, co-operatives contribute to the creation of jobs, income generation, resources mobilization, and broad-based economic empowerment, thereby enhancing sustainable human development in South Africa.

This policy is South Africa’s first explicit co-operative development policy. This document was drafted shortly after the adoption of the new ILO Recommendation No. 193, which was adopted by the General Conference of the International Labour Organization on 20 June 2002, with the delegation of the Republic of South Africa being one of the major driving forces in the process of formulating the new Labour Standard.

The policy document is the result of an intense consultation process, which was initiated in 1997 with the establishment of a Co-operative Policy Task Team, the process involved the main stakeholders in South Africa’s co-operative development at the time. The responsibility for co-operative development was at that time with the National Department of Agriculture. Among others, the Task Team organized altogether nine regional workshops and one national co-operative conference to discuss the main policy issues.

This was followed by establishment of a task force by the co-operative development unit of the Department for Trade and Industry (the dti) that initially dealt with the process of transferring the responsibility for co-operative development from the National Department of Agriculture (NDA) to the dti. However, the participatory development of South Africa’s first Co-operative Development Policy document was later continued. The Government will continue to consult co-operative organizations as well as other stakeholders concerned, in the formulation and revision of legislation, policies and regulations applicable to co-operative development.

The Government believes that a clear, comprehensive, and widely agreed co-operative development policy, implemented successfully will :

This Government co-operative development policy applies to all types and forms of co-operatives, in all sectors of the economy. Hence, it also applies to so-called established co-operatives but the emphasis is on supporting emerging co-operative enterprises.

In its support to co-operative development, the Government subscribes to and upholds the principles upon which co-operatives were founded.

The Government will review its co-operative development policy in accordance with international developments and the demands of an ever changing economic, social and political environment.

The Government is committed to the universally accepted definition, principles and values central to co-operatives. They are as follows:

The Government recognizes that co-operatives may operate in all sectors of the economy. All sectoral strategies should include proposals for strengthening co-operatives in the sector.

The Government is committed to ensuring that co-operatives have a stake in the overall economy by facilitating their expansion into areas in which they have never existed. Such expansions promote greater participation in economic activity, which constitutes a prerequisite for broad-based economic empowerment and greater equity.

The Government acknowledges that a genuine, autonomous and economically viable co-operative movement and its membership have a vast development potential to:

The Government recognizes that the main purpose of co-operatives is to render services to members. Co-operatives contribute to the development of the nation or communities through the improvement of the socio-economic situation of their members.

Whereas the development potential of co-operatives is in principle not different from the one of other types of enterprises, the double nature of co-operatives (members are at the same time owners and users of their co-operatives), makes them more appropriate for specific population groups, geographical areas, sectors or situations. Hence, co-operatives possess an inherent special potential for socio-economic development.

The Government acknowledges the existence, relevance and value of less formal, traditional co-operative-type organizations. It also acknowledges the important role of co-operative development in transforming the "informal economy" into legally protected work, fully integrated into mainstream economic life, however, without destroying their identity.

Government will facilitate the establishment of co-operative networks of individual entrepreneurs or micro-enterprises through which certain economic functions are organized (e.g. net control stations operated jointly by independent taxi drivers organized as a co-operative).

Co-operative model can enhance the small business competitiveness nationally and globally in accessing opportunities through its comparative advantage of economies of scale, synergies, increased bargaining power, joint innovation, member involvement, and stability.

The Government acknowledges the specific potential of co-operatives, as enterprises and organizations inspired by solidarity, to respond to members’ needs and ensure greater black participation in the mainstream economy, especially persons in rural areas, women, persons with disability and youth. Government shall continuously engage with stakeholders in the youth and women sectors to design appropriate support programmes.

The Government shall also consider introducing support measures for the activities of co-operatives that meet specific social and public policy outcomes, such as employment creation and the development of activities benefiting disadvantaged groups or geographical areas.

Special consideration in co-operative promotion shall be given to increase the participation of women in the co-operative movement at all levels, particularly at management and leadership level. Coupled with this, all available and future support programmes shall place particular emphasis upon emerging black co-operative enterprises.

10.1 The Government’s approach to co-operative development is one of creating a favourable legal, economic, administrative and institutional environment by, among others:

A strong, coherent and effective voice of emerging co-operatives is an important part of ensuring that the co-operatives strategy meets its objectives. There is need to support secondary and tertiary co-operatives as support structures to the co-operative movement including the capacitation of business organisations especially black business organisations, community and civil society structures to understand co-operatives and their support needs.

It is critical that co-operatives are effectively represented on and participate in the various economic and advisory bodies and councils that form part of South Africa’s institutions of social dialogue.

The government will establish a co-operative advisory board to advise on implementation of the co-operatives strategy and the functions of the Advisory Board are to advise the Minister generally, and to make recommendations, with regard to –

Subject to the laws governing the public service, the Minister must provide the Advisory Board with the staff that the Minister considers necessary for the performance of its functions.

The expenses of the Advisory Board are to be met by money appropriated by Parliament for that purpose and which is subject to auditing by the Auditor General.

Furthermore, co-operatives will be assisted to access expanded public works programmes, Public Investment Initiative contracts, forestry and construction projects, preferential procurement, state and private procurements, business rescues of failing enterprises through worker buy-outs, export markets, other government related programmes opportunities and clear support programmes in key sector charters to benefit co-operatives enterprises.

The dti shall be the Government department at the national level with the overall responsibility for legislative framework, policy and strategy, coordination as well as administration in consultation with key national and provincial departments including other stakeholders.

A fully-fledged Co-operative Enterprise Development Unit shall be established, and the Registrar of Co-operatives’ office shall be located in the dti’s Corporate and Intellectual Property Registration Office – CIPRO.

The functions of registration and de-registration of co-operatives shall be decentralized to provinces in order facilitate rapid, simple, affordable and efficient procedure. The function location provincially is still being discussed.

The role of the Co-operative Enterprise Development Unit is threefold and includes the areas of policy, legislation, coordination, promotion and implementation as follows:

Within the Government structure, the Department for Trade and Industry shall establish an interdepartmental committee responsible for coordinating the various Government institutions concerned with co-operative development, and ensuring that there is effective coordination of various government institutions concerned with co-operatives development.

The Government will establish a Co-operative Advisory Board, which will be a representative body for co-operatives. The Co-operative Advisory Board will be a statutory agency that advises the Minister on co-operatives related issues.

The Co-operative advisory Board will advocate on issues of importance to the co-op sector and advise the government on key relevant issues. It will consider the impacts of co-op enterprise development, in relation to equity, growth and employment and will comment on the effectiveness of the co-op development programmes. The dti will provide executive support (secretariat) to the Co-operative Advisory Board.

The Government encourages co-operatives to create geographic and sectoral apex structures that operate according to co-operative model.

The Government also encourages co-operation between established and emerging co-operatives in South Africa; however, co-operation among co-operatives from different origins shall be voluntary.

In addition, the national apex organization/s shall represent the movement at the national level, as well as in the International Co-operative Alliance (ICA) and in other international co-operative bodies.

The Government is aware of international trends in co-operative development and will keep abreast of the trends to the extent possible whilst having regard to any particular local circumstances that must be taken into account from time to time. To this end, the Government will, in consultation with all stakeholders, continually review its policy on co-operative development.

Equally, the Government encourages the co-operative movement to develop strategies that will enable its members to exploit and benefit from opportunities that may exist regionally and internationally.

The promotion of co-operatives is not to be viewed in isolation from wider national development policies and programmes. The Government is conscious of the link between co-operative development policy and national development plans into which co-operative development policy should be integrated. The promotion of co-operatives is considered one of the aspects of national economic and social development. The dti will facilitate and support other Government departments’ and agencies’ endeavour to support co-operatives development.

Promoting co-operative enterprises is a key programme component of the Government’s Broad-Based Black Economic Empowerment (BEE) strategy that seeks to address the imbalances of the past and equitably transfer the ownership and control of economic resources to the majority of its citizens. The BEE strategy will, among other things, encourage and support efforts by co-operatives and other forms of enterprise that support broad-based economic empowerment (Broad-based empowerment models-ESOPs, community trusts/groups, worker co-operatives, stokvels, burial societies, etc.) to assert ownership and control of economic activities in new and existing enterprises and break into new sectors of economic activity. Government is committed to work with the co-operative movement to ensure that an increasing portion of the ownership and control of the economic activities is vested amongst co-operative enterprises.

Government recognises that co-operatives play an important role in the growth of the local economy. Local government has an important role to play in supporting co-operative development and providing an environment at the grassroots in which co-operative enterprises can flourish through existing programmes such as Integrated Sustainable Rural Development Strategy (ISRDS) and LED Strategy. In turn, co-operative enterprises enable local people to be directly involved in producing and delivering goods and services that their members and the community require.

The dti will facilitate and support the access of the co-operative sector to SETAs and learnership programmes.

Macro-economic policies as well as measures such as trade liberalization, deregulation, commercialization and restructuring of state enterprises and public services will have an impact on co-operatives, in some instances creating opportunities and in others posing challenges for co-operatives. Policy alignment and incorporation of co-operatives across government will start growing the sector to benefit targeted sector of the society.

The government will provide and design relevant support through designing specific support measures such as incentives and capacity building for the co-operative sector.

Arbitration and the settlement of disputes are regarded as internal matters of the co-operative movement and if possible co-operatives will be encouraged through secondary, tertiary and apex organizations to settle their matters internally The tertiary organizations are encouraged to set up dispute resolution procedures to offer an alternative dispute resolution channel to members where disputes have not been resolved internally. Co-operatives have the right to go to court or utilise any arbitration structures available.

The provision of co-operative support services such as education and training, business advisory services and access to loans, should eventually become the responsibility of the co-operative movement under the guidance of the national apex body.

Technical support services shall be extended by a cost-effective support service system, which will:

In order to ensure sustainability, the co-operative movement is encouraged to take over the system’s functions in the long run.

Government will promote co-operatives education and training in public education, training and society at large.

With regard to financial support services, the Government will examine the feasibility of opening up existing loan schemes for small and medium enterprises such as KHULA, the Industrial Development Corporation (IDC), the National Empowerment Fund (NEF), the Land Bank and the Umsobomvu Youth Fund (UYF) to co-operative enterprises.

The Government will facilitate an autonomous system of finance for co-operatives including savings and credit, banking, and insurance co-operatives within the context of broad-based economic empowerment. Based on other policy alignment and other agreements including the Financial Sector Summit and the GDS, the Government will support new forms of financial institution within the co-operative movement in order to ensure greater access to financial services, especially for the poor.

In the long run, these institutions will provide an autonomous system of finance for the co-operative movement.

The Government will encourage conditions favouring the development of the technical, commercial, and financial linkages among all forms of co-operatives in order to facilitate an exchange of experience and sharing of risks and benefits.

The Government recognizes that, although co-operatives are self-help organizations, they usually neither succeed without a minimum of external assistance, nor do they simply emerge from the grassroots, which in South Africa applies to the majority of emerging co-operatives. They are initiated by community leaders, churches, NGOs etc.

In addition, the Government urges development partners, recognizing the significance of co-operatives for the attainment of sustainable development goals, to seek, in partnership with the dti and Co-operative Advisory Board, ways and means to promote the development of emerging co-operatives.

External partners should focus technical and financial assistance on the establishment of a conducive legal, institutional and administrative environment for co-operative development, and on providing technical and financial support to organizations that work in the field.

Aid to co-operatives should not entail any obligations contrary to the autonomy and interests of co-operatives, and should be designed to encourage rather than replace the initiative and effort of the members of co-operatives. Such aid should be coordinated so as to avoid overlapping and waste of resources.

The Government encourages the South African co-operative movement to establish alliances and partnerships as well as to collaborate, to the greatest extent possible, with other co-operative movements in the Southern African region as well as globally, for the benefit of its member organizations. It also encourages and promotes relationships between national and international bodies and institutions involved in the development of co-operatives in order to permit the establishment of commercial relations between co-operatives.

The Government encourages the co-operative movement to establish and – where existing – intensify relationships and co-operation with South Africa’s employers' organisations and organised labour. Should seek together with co-operatives organisations, ways and means of co-operative promotion for the attainment of sustainable development goals.

Employers’ organisations should consider where appropriate the extension of membership to co-operatives wishing to join them and provide appropriate support services on the same terms and conditions applying to other members.

The Government encourages workers’ organizations (organised labour or unions) to:

Co-operatives are subject to South Africa’s Labour Relations Act and other related legislation. They have a legal obligation to ensure that the rights of workers are regulated in accordance with the labour law.

The Government recognizes the need for the formulation and implementation of a comprehensive, longer-termed strategy for the development of co-operatives, in full co-operation with all stakeholders in co-operative development in South Africa.

The strategy will clearly state the steps that need to be taken for a successful implementation of the Government’s co-operative development policy. Part of the implementation strategy will be the amendment of existing laws (current Co-operative Act and others) in line with the new policy.

The progress made regarding the implementation of the new co-operative development policy shall be regularly reviewed and evaluated.

Co-operative development policy will be subject to on-going review and enhancement. To this end, the Co-operative Advisory Board and an inter-departmental committee will be responsible for the monitoring and evaluation of the impact of government policy and strategy on co-operative development.