Developing the cooperative sector

When we were growing up, the cooperatives played a huge part in our lives. It was the shop that we frequented most and our parents had accounts at the co-operative bank. It was the place to go for quality goods - both foodstuffs and other household goods such as soap and kerosene. Most villagers were members of the co-op and the cashier knew everyone by name. It helped everyone in the village. This is not surprising given that the Sinhala word for co-op “Samupakaraya” essentially means “equal help to all”.

However, most people truly realise the value of the cooperative network only in a time of crisis such as the Boxing Day Tsunami of 2004. This is when most private shopkeepers and companies are either inactive or cannot muster the strength to operate.

The co-operatives have the ability to function well in a crisis and attend to the needs of all affected persons in an emergency such as a flood, storm or even a terrorist strike.

This is incidentally the theme for this year’s International Co-operative Day (the 91st since 1923) celebrated yesterday around the world - “Cooperative enterprise remains strong in times of crisis”. The theme selected by the International Cooperative Alliance (ICA) is timely because there are plenty of examples from around the world where other forms of business have failed to deliver amidst current global economic struggles and natural and man-made disasters.

“The International Day of Cooperatives 2013 gives us an opportunity to reflect on all that co-operatives have done in hard times and in good times and to redouble our resolve to ensure that this values based business model continues to draw more attention and support globally. It is a model that works time and again,” says the ICA.

Crisis

As the ICA points out “Privately owned business models currently suffer from a crisis of unsustainability in economic and social and environmental terms while the cooperative model has demonstrated time and again that it is resilient in times of crisis”. We in Sri Lanka have experienced this truism first hand.

“The global financial and economic crisis has also demonstrated the resilience of alternative financial institutions such as cooperatives. I encourage all stakeholders to continue building awareness and pursuing policies to strengthen cooperatives everywhere.

By contributing to human dignity and global solidarity, cooperatives truly do build a better world,” UN Secretary General Ban Ki moon was quoted as saying last year.

Unlike private sector entities, cooperatives do not value short term gains over longer term viability and put financial return ahead of human needs. On the other hand, cooperatives benefit the society through “shared values” by placing human needs at their core operation. Financial performance is not the criterion on which cooperatives run. It is the collective benefit to the society that it is at the heart of the cooperatives movement, which is now well over 100 years old.

Not many people will comprehend the ICA’s official definition - “a co-operative is a collective pursuit of sustainability for it seeks to optimise outcomes for a range of stakeholders without seeking to maximise the benefit for any one stakeholder” - but we all know from experience that all individuals have easy access to the cooperative and benefit from its services from rural banking to retail sales.

Indeed, financial cooperatives have successfully faced the global economic crisis. Savings and credit co-operatives, building societies, co-operative banks and credit unions have grown amidst the crisis. Even as banks went bankrupt, co-operative banks kept credit flowing to small and medium sized enterprises. They have grown to such an extent that financial co-operatives now represent an astonishingly large slice of the global banking market.

Dimension

A recent report distributed by the International Labour Organisation (ILO) and written by Professor Johnston Birchall says ““Stability and the aversion to risk are built into the DNA of financial co-operatives. They make surpluses and they need to, otherwise they wouldn’t be businesses. But what they do with those surpluses is put them into the reserves, which means they are very strong financially”.

The truth is that most co-op banks did not even notice the turmoil experienced by the regular banks.

This brings us to the main point of having cooperatives: the social dimension. A modern supermarket can be quite lifeless and faceless, but a Co-op is often a livelier place and a meeting point for the local community. The ICA notes that as economies shrink and pressure is put on governments to reduce social benefits, cooperatives often provide an invaluable lifeline. A cooperative can be considered as the nerve centre of a given village. The biggest plus point is that they have the ability to offer lower prices for food and other essentials at all times and even for free in an emergency.

It is essential to strengthen the cooperatives movement in this country. It is clear that it has not realised its full potential yet. More members need to be inducted through a membership drive and cooperative societies should be established in more areas, including in the North and the East.

The best way to do this is to contribute to the coop movement by obtaining membership in the local cooperative and patronize co-op outlets whenever you can.

That will make a positive impact on your life and on the economy as well. And as the saying goes, we should catch them young, by educating schoolchildren on the coop system and establishing model co-ops in more schools. That will augur well for the future health of the cooperatives movement.