The Cooperatives Solution

By Fariba Bowen

According to Statistics SA, up to 80% of rural South Africans live below the poverty line, on an average income of less than R 20 per day. With jobs and the economy concentrated in cities, rural citizens stream into urban areas in search of better prospects. While studies have shown that rural-urban migration does result in reduced poverty, in the process families and incomes are divided, urban infrastructure is strained and many settle for low paid work becoming the working poor. The question is ‘Is there an alternative to the rural-urban migration trend?’

Government is working hard to reverse unemployment through the promotion of investment and work readiness programmes, but both have a predominantly urban focus, drawing more people to cities. The solution may lies in rural development and a systematic approach to the creation of jobs through the development of cooperatives. Cooperatives are an internationally recognised form of business structure wherein members collectively own, run and share the profits of an enterprise.

One of the most cited success stories for the cooperative model is the Gujarat Cooperative Milk Marketing Federation in India, which has annual revenue of $5.3 billion and is jointly owned by 3.6 million milk producers in Gujarat State. The cooperative manages the collection of milk from its member farmers at village depots and has associated enterprises for the processing, marketing and distribution of milk products throughout the country. Each member shares in the profits of this massive enterprise.

The South African government supports the cooperative model and provides an incentive scheme which funds cooperative start-ups. In 2018, the Services SETA launched the Enterprise and Cooperatives Development Institute. i-Fundi was involved in the piloting of this programme with five cooperatives (two new and three existing) in Sekhukhune District of Limpopo Province, an area with over 60% youth unemployment.

What set the programme apart was the large amount of onsite coaching that accompanied each training session. Our five modules of accredited training from the New Venture Creation Level 4 qualification focused on Qualities of an Entrepreneur, Working with Teams, Business Planning, Marketing, Financial Management and Administrative Systems. Over the six month project period, five members from each cooperative were trained and systematically supported through the process of identifying their businesses’ needs, creating a marketing strategy and developing financial plans. All of this culminated in the development of fully-fledged business plans, that were presented to the heads of Limpopo Economic Development Agency and SEDA in the District for ongoing support.

One of the cooperatives that was supported was Mashiane Brick Makers Primary Cooperative Limited. Mashiane focuses on supplying bricks to residents who are building houses in the area. The members of the Cooperative are experienced in the building industry and know what is required to satisfy local demand.

They currently produce bricks manually. They also do not have the means to transport the bricks to meet demand and struggle with the shortage of water.

i-Fundi connected Mashiane with their local SEDA office, who will provide ongoing support in marketing and accounting. SEDA will also help Mashiane present their business plan to various funding agencies and banks.

Overall, the programme was an extremely uplifting experience to see the progress and potential of the individuals and their enterprises over the six month period. Where participants initially struggled with their command of English and understanding of business concepts, it was clear that by the end of the programme, they oozed confidence and put forward coherent plans that communicated a firm grasp of business concepts and demonstrated solid potential for investment.

This programme shows that with well-structured programmes and sufficient hands-on support, rural communities can turn their fortunes around, create local prosperity and reduce the need for mass urbanisation.


For more information on our New Venture Creation programme, click here.

Read more on A Short History of Cooperatives here.