By: Anna Majavu
The Department of Small Business Development has asked German experts to help stave off the failure of co-operatives in South Africa, which has been estimated to be as high as 88%. There are roughly 43,000 co-operatives in South Africa. This year, the department’s target is to support 250 of them.
Vukile Nkabinde, director of co-operatives business support in the department, told Parliament’s Small Business Development Portfolio Committee on Wednesday that the German Federation of co-operatives, DGRV, had agreed to train government and municipal officials on how to develop sustainable co-operatives across the country. The DGRV will also provide business and technical training to individual co-operatives and set up a system to monitor the jobs created by co-operatives.
This was seen as key in assessing which co-operatives could be supported to grow and enlarge their local economies, Nkabinde said. The German government-funded DGRV already works in KwaZulu-Natal and the Eastern Cape in agricultural, youth, energy, and forestry co-operatives. However, MPS was skeptical. The DA’s Henro Kruger said the department must first reveal the current rate of government-funded co-operatives that collapsed within their first year, which he believed to be between 75% and 81% since the early 2000s.
“Are we going forward, or do communities just use the grants from the government not to start a business, but just to stay alive?” he asked ANC MP Babalwa Mathulelwa said thriving rural co-operatives should be revived, and the way to do this would be to set up offices in rural areas to channel funds and provide support to the groups. “If there is no plan, what are they going to do to make sure our co-operatives access funds, especially in townships and rural areas? They are dying because there is a lack of assistance from the government,” she said.
Nkabinde did not say exactly what the current cooperative failure rate was, but told the committee that the department had visited beneficiaries of their Co-operative Incentive Scheme sometime after disbursing funds, and found that 80% were still operational. “A lot of them are not doing annual returns which might create the impression that they are not functioning. Yet when we did on-site visits, we found them in operation,” he said.
Some co-operatives were “established for the wrong reasons”, purely because it was “fashionable” and funding was available, said Nkabinde. He said it would be better to strengthen stokvel-type groups that brought people together for a common purpose. Any cooperative that had been in existence for some time would receive support from the department, he said, calling on MPs to provide the department with a list of these groups.