Does government have a role in reviving cooperatives? (Daily Monitor (Uganda))

The debate to ‘revive’ cooperatives in Uganda is raging again. True, cooperatives are the ideal form of enterprise to transform Uganda, by virtue of our economy and other factors. But is it the role of government to ‘revive’ the cooperatives? We return to this shortly.
First, the basics. The cooperative movement in Uganda at its peak was largely made up of producer cooperatives producing the key cash crops of the day. Coffee, the country’s top foreign exchange earner for decades, has principally been a smallholder cash crop, buttressed along a structured value chain of the cooperative hierarchy, beginning with the farmer at production level.

From my natal village, for example, our primary society, Kyampango Cooperative Society, fed into the cooperative union at regional level, Banyankore Kweteerana Growers Cooperative Union, which covered the entire Ankole sub-region of western Uganda. This hierarchy applied to all regions across Uganda. At national level, the unions merged into their national apex, the Uganda Cooperative Alliance. The parastatal marketing boards (Coffee Marketing Board, Lint Marketing Board, Produce Marketing Board) were charged with buying from the unions and exporting the cash crops.

Conceptually, as a form of business, producer cooperatives are referred to as farmer-controlled enterprises. One distinct feature of this type of business is that the key stages of the value chain are under the control and direction of the members. Banyankore Kweteerana’s principal crop was coffee. The production at the farm level was managed by the primary society. The union added value through processing at its factories, while transportation was managed by Uganda Cooperative Transport Union, besides the Union’s own fleet. Financing, credit and banking services were assured by The Cooperative Bank, with Uganda Cooperative Insurance providing insurance services. The Consumer Shop was a source of essential consumer goods for members. The transformative impact of this planned, structured, predictable, profitable value chain is evidenced in Uganda’s household and national prosperity of the 60s.

Now, hardly a week passes without a call for the revival of cooperatives. From farmers to politicians, development partners to academics, the call is the same. True, the cooperatives need to be revived. And the call is directed to government. Beyond that, nothing is specific. What exactly would be the role of government in reviving cooperatives? What stage of the value chain would require government intervention? Is it production, processing, transportation, financing, or marketing? Where would government specifically come to play a role? It is crucial that this role of government be clearly defined else, the whole thing remains another ‘call-upon’.

Of the surviving old generation cooperatives Wakina Nyakatonzi ( cotton) and Bugisu ( coffee), or the new generation like Bukonzo Joint Cooperative in Kyarumba, Kasese, what role does government play in their business, so that we implore government to replicate this same role in ‘reviving’ other cooperatives?

One misnomer that needs correction is the confusing (deliberate or otherwise) of producer cooperatives with Saccos. The two are neither substitutes nor mutually exclusive. Thus government is wrong to front Saccos as substitutes for producer cooperatives, and equally wrong are the critics rooting for the ‘dethroning’ of Saccos. A Sacco is a saving and credit cooperative. The key words here are saving and credit. Thus a Sacco can be formed by coffee farmers who belong to a producer cooperative, or salary-earning university professors. It is a financial sector cooperative.

Mr Matsiko is a management and development consultant and partner at Peers Consult, Kampala and CET Consulting, Kigali.


IGAD and Partners are Keeping an Eye on La Nina Effects on the Region

The Intergovernmental Authority on Development (IGAD) Climate Prediction & Applications Centre (ICPAC) this morning kick started the 44th Greater Horn of African Climate Outlook Forum (GHACOF) during an opening ceremony presided over by the Minister of Environment of Uganda, Hon. Dr. Mary Goretti Kitutu, in Kampala.   The opening ceremony was also attended by the […]

Car bomb kills 5 soldiers outside Somali president’s palace: police

A car bomb claimed by al Shabaab Islamist militants killed five soldiers outside the president’s palace in the Somali capital of Mogadishu and badly damaged two nearby hotels, police said.     Reuters witnesses said gunfire could be heard after the explosion and a huge cloud of smoke could be seen above the president’s palace, […]