D Peters: Women in garment and linen-making co-operative launch

22 August 2006

Programme Director
MECs
Mayors and Councillors
Government officials
Business representatives
Distinguished guests
Media representatives
Ladies and gentlemen

The South African Government has prioritised the development of the Small
Medium and Micro Enterprise (SMME) sector in the country. Globally,
entrepreneurship is considered as the engine of economic development. The SMME
sector has the potential to address socio-economic challenges facing both
developing and developed countries.

Therefore ladies and gentlemen, as Government we have reached an important
milestone in locating co-operative enterprise development in its rightful place
in the economy. We have seen how important co-operatives are in many economies
and the contribution they make to society.

Co-operatives clearly offer a viable form of enterprise that comes
exclusively out of socialist economies. The attraction of co-operatives is the
more democratic approach to owning and managing the enterprise, the sharing of
profits, the sharing of responsibility and the sharing of risk.

For many years, many African intellectuals and leaders have put forward the
notion that African society is ideally suited to working in co-operatives,
therefore in the context of the social structure of our own communities, we
have no doubt that co-operatives could be a very successful form of enterprise
in our country.

While formal co-operatives have predominantly been in the agricultural
sector, we all know of people who are involved in ‘stokvels’, which in their
own way are co-operatives. Our challenge is to grow this concept in our
communities, integrate it into existing mainstream economic activities, and use
co-operatives as a means to tackle some of the challenges that are facing our
country.

Those who are from the townships or rural areas would be aware of how people
are able to mobilise resources, which are put into productive activities as
well as community activities such as burial societies. What is important is how
we can use these resources to develop our communities, to grow these
initiatives ad plug them into the mainstream economic life of our province.

Ladies and gentlemen, the development of co-operatives has consequently
become a critical component of our Provincial Growth and Development Strategy,
to grow our economy and create broader participation by our people, especially
women, the disabled and the youth.

Unfortunately the restructuring of our economy in the past eleven years has
pushed a number of people, particularly the unemployed and unskilled workers,
into what we now call the second economy. The second economy also includes many
people who have never had access to the formal first economy and survive though
a number of informal income generating activities.

It is incumbent upon all of us in our society to ensure that as our economy
grows, and as we develop our province, we do not leave behind those who are in
the second economy, nor can we allow the increasing wealth in our society to
only benefit a few. These issues always come through very strongly during our
Presidential imbizo programmes. Our policies are pro-poor and should be adhered
to.

Government therefore envisages an enhanced role for co-operatives in
addressing the issue of support to the second economy as well as increasing the
participation of poor people in our economy. Democracy has created immense
opportunities and wealth in our country and yet, those who do not have skills
to participate are often left out if the economic benefits. It is therefore a
priority that we address the skills development in our country, and increase
the participation of those in the second economy. Ladies and gentlemen, we have
to do this as our country will never be able to sustain the growth that we
desire without having greater numbers of people participating in our
economy.

The important role of co-operatives and the potential they have in
contributing to our economy cannot be over-emphasised. That is why I am pleased
to be a part of this launch.

As the provincial government we have a commitment to support co-operatives
as they have the potential to create and develop income generating activities
and sustainable, decent employment. Through co-operatives we will be able to
develop human resource capacities, increase savings and investments and improve
the social and economic well being of our people.

It is our aim to ensure that through co-operatives we establish and expand a
viable and dynamic distinctive sector of the economy that responds that
responds to the social and economic conditions of our people.

Much needed support may be sourced from the Department of Trade and Industry
(the dti), which is promoting the development of a greater number of economic
enterprises, and diversifying the ownership, size and geographic location of
these enterprises.

What is of critical is that because of the overlapping needs of small
businesses and co-operatives, we are able to utilise some of the SMME support
mechanisms to provide assistance to co-operatives. We do however; acknowledge
that co-operatives will need additional forms of support. Importantly,
co-operatives were if structured appropriately will also be able to benefit
from our Broad Based Black Economic Empowerment (BBBEE) legislation and
processes, and they will therefore be able to benefit from the enterprise
development activities that come out of the implementation of the sector
charters.

There are also overlaps in the area of access to finance. It is therefore
necessary for us to ensure that there is alignment between SMME support
institutions and co-operative development organisations so that we are able to
optimise our impact and co-operatives receive the necessary support required in
order to flourish.

We are also pleased that the Department of Trade and Industry has
established a Co-operatives Unit which will look at the implementation and
support issues. This unit is already implementing the education campaign,
forming partnerships, lobbying organisations, and is starting to promote the
co-operatives sector as a viable alternative form of enterprise.

The education campaign deals with conducting training in co-operatives
principles and practices at all appropriate levels of the national and training
system. This unit has also been given a mandate to elicit support from
commercial banks and other key private sector service providers, so that they
are supportive of co-operative enterprises ad are prepared to finance and
service them.

I therefore wish to encourage our people who wish to venture into
co-operatives to apply for the existing incentives and support instruments that
the dti has available for businesses, such as the Small Medium Enterprise
Development Programme or the Black Business Supplier Development Programme.

Our approach is to make the business and social environment more conducive
for the development of co-operatives and other enterprises in the second
economy.

The key defining feature of worker co-operatives is that worker-embers in
the co-operative own and control it. In this way, worker co-operatives
potentially provide a radical alternative to the employment relationship found
in conventional enterprises, and many of the difficulties they face relate
precisely to this attempt to redraw the relationship between ‘owners’ and
‘producers’ when co-operative members combine their roles.

To the members of the newly established linen making co-operative, I wish to
congratulate you for the work you have done so far and wish you well in your
future endeavours.

I also wish to extend a word of caution to the members of the co-operative
warning you that, co-operatives face complex challenges and you should not be
discouraged. Assuming a level of business viability is not an easy task, your
success and failure is typically determined by your ability to institutionalise
internally accepted ways of managing the tensions that are at the heart of
co-operatives as a form of business.

One basic example that I can make is that tensions may arise as to the roles
and interests between you all as workers in your capacity as owners, and as
workers in your capacity as producers. The tension between members’ desire to
improve their quality of life while neglecting the interests of others.

May you ground your co-operative on sound business principles and values of
self-help, self-responsibility, democracy, equality, equity and solidarity? As
a collective you should be bound by values of honesty, openness and caring for
others.

In conclusion, Programme Director, it is my belief that self-reliant and
self sustaining co-operative movement can play a major role in the economic and
social and cultural development of our country.

Co-operatives can contribute in the creation of jobs, income generation,
resources mobilisation and broad-based economic empowerment, thereby enhancing
sustainable human development.

Our support to this alternative form of enterprises will also be an
important way to facilitate the integration of the second economy into the
first economy. This integration is a crucial aspect of the government’s vision
2014, which is to create a single economy in our country.

I hope and wish that each and every individual attending this launch this
morning will join hands with us in contributing towards growing our
co-operative sector so that it is able to contribute towards the employment
creation, increasing levels of savings amongst our people and alleviating
poverty in our communities.

Your success will give hope to many other unskilled and unemployed people in
our communities.

I thank you
Ndiyabulela
Baie dankie
Ke a leboga

Issued by: Office of the Premier, Northern Cape Provincial Government
22 August 2006