S Ndebele: First International Co-operatives Conference

24 February 2009

I am extremely delighted to be part of this important conference, where
representatives from various nations have converged, here in Durban,
KwaZulu-Natal, to celebrate and deliberate on the progress that has been made
in the promotion of co-operatives, as one of the viable drivers in the global
economy. This gathering will also provide an opportunity for all participants
to share their experiences, which could be used universally, to address common
challenges experienced by the co-operative movement in a highly competitive
global economy. With KwaZulu-Natal having become the world in one, I have no
doubt that, at the end of this event, you will be convinced that there couldn't
have been a better venue to deliberate on such a wide range of economic
matters, with a specific focus on co-operatives.

On 8 and 9 December 2008, we led a delegation from KwaZulu-Natal, on a
two-day official visit to Kenya, to share experiences and strengthen
relationships between Kenya and KwaZulu-Natal, particularly in the area of the
co-operative movement. The co-operative movement in Kenya is ranked first in
Africa, and seventh in the world by the International Co-operative
Alliance.

We held meetings with the Deputy Prime Minister and Minister for Local
Government for the Republic of Kenya, Mr Musalia Mudavadi, as well as with the
Minister of Co-operatives, Mr Joseph Nyaga. We visited the Githunguri Dairy
Co-operative and held meetings with senior management of the Co-operative Bank
of Kenya, the Co-operative Insurance Company of Kenya as well as the
Co-operative College of Kenya. We also visited the Ndumberi Coffee Farmers
Co-operative (Coffee Co-op) as well as the Banana Transport Co-operative (Taxi
Co-op).

In partnership with the co-operative
College of Kenya, the KwaZulu-Natal Provincial Government is working towards
developing, promoting, co-ordinating and facilitating a Co-operative Training
programme for the province, which will culminate in the establishment of the
KwaZulu-Natal Co-operative College.

Co-operatives have been identified as a significant driver of development in
the second economy, and to help close the gap between the first and second
economies. Therefore, the role of co-operatives in reducing poverty and
creating employment is extremely significant.

The success of the co-operative movement that we saw in Kenya is amazing,
unbelievable and highly impressive. Although we have achieved political freedom
in South Africa, our real task is to now achieve economic freedom and to ensure
that the majority of our people participate, meaningfully, in the mainstream
economy.

The question that we have always been asking is: where are blacks located in
the economy?

The Kenyan experience of co-operatives is a clear indication of how
co-operatives can contribute to real broad-based black economic empowerment
(BBBEE). Our people must move from being contributors and consumers to being
involved in management, ownership and control of the economy. This Kenyan
experience is very critical for us. We saw how each co-operator merely requires
only about one or two acres of land and between 100 and 1 000 coffee trees to
succeed. These are all small-scale farmers. This was a truly inspiring
experience, particularly because what we saw is do-able and, therefore, we want
to learn.

The co-operative movement in Kenya makes tremendous contributions towards
wealth and employment creation. Over 63 percent of the Kenyan population
depends on co-operative related activities for their livelihood. With a
membership of over seven million in 12 000 registered co-operative societies,
the co-operative movement has mobilised over Kshs 180 billion (Kenyan
shillings) in savings. It contributes about 45 percent of gross domestic
product (GDP) and 31 percent of the national savings. The co-operative movement
is present in every sector of the economy and plays a vital role. Savings and
Credit Co-operative Societies, popularly known as SACCOs, play a pivotal role
in the financial services sub-sector in the country and, have mobilised
resources to the tune of Kshs 170 billion for the benefit of their members. In
turn, the members have invested the funds in small and micro enterprises (SME)
that contribute significantly to the socio-economic growth of the country,
generating employment and enhancing social integration. Areas of involvement
include produce marketing, farm input supply, resource mobilisation, financial
services, value addition and investment, housing and transport.

Broadly speaking, co-operatives are embellished and imbued with a sense of
humanity, which is the equivalent of ubuntu since their founding principles are
succinctly based on the spirit of collectivism – where the contribution of each
member is an indispensable tentacle of the soul of this form of enterprise.
With years of evolution from the cradle of human kind, people have learnt
various ways and skills to survive through unpalatable climatic, social and
economic conditions, which have given them their sense of cultural identity and
common interest. The co-operatives, like any socio-economic pursuit, are a
mirror of our experiences as people. They reflect our gregarious inclination,
which is an epitome of our belief that unity is our strength. In spite of the
rigors of modern market economies, co-operatives have always maintained the
essence of trade. With a human face, they encourage people to pool their
material and mental resources and, to strengthen their chances of
sustainability for the common good.

Coming from a background of separate development under the punitive
apartheid system, our people had developed survival skills, in a rather harsh
economic environment, which was designed to subjugate them in favour of the
minority, who enjoyed an abundance of opportunities. Although the new
democratic dispensation has, since, introduced various interventions to reverse
the socio-economic disparities of the past, it would always be impossible to
succeed with a single option considering the extent of deprivation that had
marred our past. Through the concept of black economic empowerment (BEE),
efforts had been made to support small-scale enterprises, as they were
perceived to be viable entry points for many historically marginalised
communities, whilst creating an environment for them to grow and claim a
tangible share in the economy of their country.

When the government crafted and adopted the Co-operatives Development Policy
in 2004, it was a demonstration of the country's ambition to bring about
genuine transformation in our society – having acknowledged the need to
diversify its actions to empower the citizens. The policy was a product of an
extensive and intense consultation process with various sectors since 1997, as
we wanted a symbiotic approach to economic emancipation. The policy had been
tightly linked to government determination to grow the economy through SMMEs,
whilst accelerating the concept of broad-based black economic empowerment
(BBBEE). BBBEE was designed to broaden black people's participation in the
economy through ownership, management, diversified sectors and location of
business operations. It also has all the vestiges of an instrument to help
reduce the gap between the highly advanced and sustainable first economy and
the risky second economy, in which many of our poor communities are locked. The
mobilisation of co-operatives was, therefore, an attempt to create a
multi-pronged approach to the concept of empowerment, instead of limiting
ourselves to the SMME programme that had its share of challenges.

While progress had been made to transform our economy, it would be foolhardy
to believe that a mere 15 years of liberation could completely cut all the
embedded tendons of inequality, which had characterised the profile of our
society. SMMEs were, and are, still regarded the world-over, as ideal
commercial instruments to stimulate growth, whilst curbing joblessness and
poverty. But the post-1994 experience has taught us that we have to diversify
our strategies – especially when it became clear, in the early 2000s, that
SMMEs had limitations with regard to access to financial support, in spite of
the advent of government development agencies responsible for funding such
small scale enterprises. Their difficulties were also compounded by rigid
funding conditions, placed by high street financial institutions scared of
financing applicants with lower rating of banking finesse. Lack of
sophisticated market skills was another deterrence, which caused banks to
restrict their support to applicants with reasonable collaterals.

The concept of co-operatives has become one of the popular options to help
give meaning to real economic transformation – mainly because the government
was prepared to share the financial risk with aspirant co-operatives
entrepreneurs. Moreover, the adoption of lessons from other nations that had
succeeded to ingrain the co-operatives programme in their respective economies
was paying off.

Speaking in 2001, former Secretary-General of the United Nations (UN), Mr
Kofi Annan said, "…the values of co-operatives, equity, solidarity, self-help
and mutual responsibility are cornerstones of our shared endeavour to build a
fair world." Certainly, the existence and sustenance of co-operative
enterprises hinges on a set of principles that define the character of their
membership which is voluntary, democratic, autonomous, participative,
educational, co-operative and community-based. But more importantly, these
values could only find visible expression in the lives of the citizens if
government and general leadership have a direct interest in co-operatives, by
making appropriate interventions.

The KwaZulu-Natal Provincial Government has correctly demonstrated its
willingness to make co-operatives viable commercial entities as per the vision
of Mr Annan, and other renowned leaders in countries such as India.

Having emerged from a terrible divisive and oppressive system, entities that
would contribute towards consolidating a sense of common identity and
solidarity towards nation building couldn't be ignored. Hence, co-operatives
are more than just commercial undertakings; they add value to the creation and
consolidation of a united and patriotic society, which enjoys equitable access
to socio-economic opportunities.

Although co-operatives have been part of the country's economy for many
years prior to 1994, they were, however, less pronounced as key economic tools
in this country. This, amid their contribution towards the establishment of
some of the country's revered enterprises, such as Sanlam and Old Mutual, that
became the pinnacle of the economic empowerment for the Afrikaans community. As
stated earlier, the desire to fast-track the empowerment process has,
therefore, triggered government investment in the promotion of co-operatives.
We believe that this move would take us to being on par with other nations that
had used co-operatives to spearhead their economic advancements.

India has often been quoted as one of the nations that have successfully
infused co-operatives in their economic lieu – attributed to its government
position on this sector, having been inspired by that country's founding Prime
Minister, Mr Pandit Nehru, who once said, "…my outlook is to convulse India
with the co-operative movement or rather with co-operation – make it broadly
speaking, the basic actuality of India in every village as well as elsewhere
and finally indeed, to make the co-operative approach the common actuality of
India."

It's no surprise that India is one of the fast-growing economies in the
developing world – with its diverse sectors that feature an escalation of an
information technology (IT) industry, which has impressively elevated its
industrial growth. Nehru's and Annan's comments could be borrowed to stimulate
the co-operative movement across the oceans, and I am sure we have already
embraced that spirit. We believe it offers great opportunities for our people
to claim their stake in the economy, and begin to participate competitively in
the world market.

When our MEC for Finance and Economic Development, Dr Zweli Mkhize, made an
announcement, in 2005, that our province was to move 180 degrees in its effort
to mobilise communities towards co-operatives, some sections of our society
might have doubted his resolve. Notwithstanding some challenges and
trepidations that had been experienced in the process of promoting this form of
business, we are grateful that there had been vivid areas of success.
Communities responded with unprecedented interest – especially that government
took it upon itself to provide funding to aspirant entrepreneurs – removing
barriers imposed by banking institutions. But, we have made sure that funding
was preceded by a skills development process of all co-operatives members,
which featured technical and business know-how to improve the prospect of
sustainability.

The Department of Education (DoE) has been at the centre of skills training
for co-operatives in its designated Further Education Training (FET) Colleges.
Ithala Development Finance Corporation serves as the holding centre for
co-operatives funding, due to their experience in developmental financing.
It's, however, critical that we remind ourselves that government funding is
primarily aimed at helping people get a head-start in business. Thereafter, it
becomes each enterprise's cardinal responsibility to get its feet on the
ground, instead of hoping for perennial support from government. The training
offered is directed at capacitating the beneficiaries, with the necessary
tapestry of skills to survive and grow in their chosen line of business.

Those who embraced skills training, I am certain, will reap the benefits and
continue contributing to black economic empowerment, and the entrenchment of
democratic values as part of the co-operatives' founding principles.

With other institutions of learning, such as the University of Zululand, now
beginning to incorporate co-operatives in their curricula, we are on track to
make this economic sector an even more potent venture to accelerate economic
growth.

Our province has centred its co-operatives programme on its Provincial
Industrial Development Strategy, which reflects the sectors with potential for
business growth. Therefore, we have witnessed the emergence of diverse
co-operatives in areas such as manufacturing, services, housing, construction,
tourism, telecommunication, agribusiness and information technology. This is
creating avenues for the designated sections of our society such as black,
women, youth and people living with disabilities. Despite the apartheid
regime's efforts to economically suffocate the majority of our people, the
entrepreneurial culture has since remained intact amongst the masses of our
people. This is demonstrated in various economic practices that had stood the
test of time in our township and rural communities, such as stokvels and
communal burial schemes. Hence, the essence of co-operatives has deep tentacles
in our communities. Peppered with lessons from other countries to make it more
globally oriented, we have every reason to believe that KwaZulu-Natal and the
rest of the country are on track to make co-operatives an effective and
sustainable pillar of our economy, which would impact on our drive to achieve
the Millennium Development Goals (MDGs).

As government, we are also aware of the impediments related to market access
by these budding business operations.

To reduce the prospect of new co-operatives dying pre-maturely, start-up
funding was also accompanied by an assurance that government departments would
be a vital market for co-operatives products and services. In partnership with
various statutory bodies, such as the Small Enterprise Development Agency
(SEDA), uMsobomvu Youth Fund and other allied structures, government is at the
centre of mobilising awareness about the opportunities in this sphere. The
KwaZulu-Natal (KZN) Department of Economic Development has established district
offices, to widen the information net and to support co-operatives in all parts
of the province. Meanwhile, the province is beginning to count on the
multiplier effect of the more than R200 million that has been injected in the
process of promoting co-operatives, since the launch of this noble crusade in
2005. This is the largest amount ever to be invested, by any province, towards
co-operatives development.

But we have to strengthen our networks with countries that have made
co-operatives a significant part of their economies. In the developing world we
have India, Kenya and Bangladesh, as typical pioneers in co-operatives
development. Advanced economies such as Canada and Italy have demonstrated that
co-operatives shouldn't be relegated to some form of primitive and subsistent
economic practice. We are told that there are about 10 000 co-operatives in
Canada, and four out of ten people in that country are members of
co-operatives. In Italy, it is reported that 16 of the top 200 firms are
co-operatives – generating seven percent of the country's gross domestic
product. In some African states, co-operatives are the life-blood of their
economies, and in this province we are determined to propel this sector to
greater heights – using the experiences of other successful regions of the
world and our own continent.

In conclusion, ladies and gentlemen, I want to conclude by stressing the
need for big corporates to join us by supporting co-operatives as part of their
BEE commitment, as has been the case with their contribution to SMME
development.

With more cranes working all over our country, it would make sense if
co-operatives were considered to be part of these contracts, particularly for
the forthcoming 2010 FIFA World Cup. The symbiotic relationship between the
established corporate sector, and their budding counterparts, couldn't be more
emphasised in the promotion of empowerment and reduction of poverty. We
currently have a number of infrastructure projects, worth billions of rands,
taking place across the province.

Finally, I wish to congratulate the organisers of this all important
conference. We are hopeful that your deliberations, and interaction at this
conference, will lead to the growth of the co-operative movement, and the
consolidation of partnerships and co-operation beyond national boarders.
KwaZulu-Natal, and this venue in particular, has become an ideal rendezvous for
global minds, where ideas to conquer common challenges facing the world are
developed.

There could have been no better venue to cross-pollinate your experiences
and strategies on the co-operative sector. This sector promises to be the
answer to spiralling levels of unemployment and grinding poverty, amongst the
lower social strata in many developing economies. Having opted for a
developmental state approach, we are confident that co-operatives will be an
effective tool to advance our empowerment agenda. All government portfolios in
South Africa have integrated this concept into their respective operations, as
per the provisions of the Co-operatives Act (Act 14 of 2005).

The 2010 Fifa World Cup is upon us. This is an African World Cup and the
entire African continent must benefit. We must ensure the normalisation of our
continent and ensure that peace is irreversible.

We need to close the chapter on conflict and open a new chapter on
reconciliation and development, development, development. The co-operative
movement should be used as an instrument for unity and development.

To our friends from the various nations, I wish to urge you to become our
ambassadors when returning to your respective countries - tell your compatriots
that KwaZulu-Natal is the place to be for the 2010 Fifa World Cup.
KwaZulu-Natal boasts exciting cultural diversity and breath taking scenery,
which makes this province a real home away from home for our visitors.

In KwaZulu-Natal, we have the altitude; we have the attitude; we have the
aptitude.

Masisukume Sakhe!

Thank you.

Issued by: KwaZulu-Natal Provincial Government
24 February 2009