Hon Chairperson and hon Deputy President, co-operatives arise from an economic process that is rooted in the values and principles of co-operation and democratic processes. Co-operatives develop as a result of members coming together due to common needs and have the following characteristics if they are to be effective: they have democratic governance; and a one-member, one-vote applies. Therefore, there is no shareholding system that exists in co-operatives.
Ongoing education and training are provided for members regarding democracy and all aspects of co-operation and co-operatives. Co-operatives promote community employment and job retention; and profits are sought to meet the long-term goals and enable strategies that meet the needs of all members, rather than those of state bureaucracy and market forces.
Their business models are viable locally, nationally and internationally and are supposed to be resilient in times of global or national economic crisis. Co-operatives are active in all sectors of the economy, including manufacturing, agriculture and agri-food, retail, financial and social services. This assists with poverty reduction, food security, access to health care and mitigating the impact of crises on vulnerable populations.
Within the South African context, after 1994, the South African government sought to create a positive climate for the development of the co- operatives within the economy. The Co-operative Development Policy for SA and the Co-operatives Act were brought into being. The widening of micro- finance included the SA Micro-Finance Apex Fund and agencies like the Micro- Agricultural Financial Institutions of SA, Mafisa, an agricultural micro credit fund. The Small Enterprise Development Agency was attempted as a national representative body. A youth co-operatives programme was developed and the Communal Land Rights Act was also proposed.
However, there were obstacles, and one of those obstacles was the policy of broad-based black economic empowerment, BBBEE. Unfortunately, it entrenched the racial divide between previously whites-only co-operatives and emerging black co-operatives. This prevented the fostering of collaboration between co-operatives, which is crucial to their economic functioning. There was no cross-pollination and transfer of skills from the old to the new.
The policy pillars, however, were aimed at creating an enabling environment for the development and functioning of co-operatives. Under the Mbeki government, they were seen as a crucial part of the second economy that drove South African development and was introduced in 2007. However, in the Department of Trade and Industry, there was a conflation of co-operatives with small and medium enterprises and they were expected to follow the business practices of the small and medium enterprises. They were expected to participate in the free and open market.
The process of establishing an umbrella body of co-operatives in South Africa failed during this period. A top-down approach was taken both by the international funders, the Canadians in particular, and the Department of Trade and Industry in this regard, which resulted in co-operative organisations withdrawing from the process and the collapse of the National Co-operative Association of SA.
In 2012, there were pillars that were introduced. The first one was the establishment of the Co-operative Development Agency; creation of demand for co-operative products and services through existing bilateral agreements; the enterprise networks programme that promotes vertical and horizontal integration of primary and secondary co-operatives and supports shared services; increased financial support services to co-operatives; and assistance to develop financial systems through the formation of co- operative banks. I thank you. [Time expired.]