Building vibrant and sustainable co-operative enterprises that stimulate the social economy of the province


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Mrs Maud Mabi


  • The Eastern Cape Rural Finance Corporation Limited (ECRFC), established under Act No. 9 of 1999.

  • It is a product of the transformation and the resultant merger of the Agricultural Bank of Transkei (ABT) and the Ciskeian Agricultural Bank (CAB).

  • The ECRFC commenced its operations in July 2000.

  • The ECRFC falls under the Eastern Cape Provincial Department of Rural Development and Agrarian Reform (DRDAR).

  • It is a public entity listed in Schedule 3(c) of the Public Finance Management Act (PFMA) and must comply with the relevant prevailing statutory requirements in conducting its business.

  • It is an authorised credit provider under the National Credit Act and is also registered as a developmental credit provider.

  • The ECRFC continues to strive to maintain a balance between sustainability and the development mandate it has been given in terms of its governing Act.

Saving Co-operatives

  • ECRFC supports the Savings Co-operatives through the project entitled “AN INNOVATION IN RURAL MICRO FINANCE IN THE EASTERN CAPE”.

  • It is a joint partnership among ECRFC, Micro Agricultural Financial Institution of South Africa (MAFISA) and Thina Sinako under the Local Competitiveness Fund Programme.

Defining Co-operatives

Co-operatives/Savings Groups in agriculture

Definition: Voluntary association/groups of people coming from same socio-economic background for the purpose of solving their common problems through self-help and mutual help.

Savings Co-operatives or Associations can be a useful tool for savings mobilisation and enhancing access to credit for the unreached and un-served poor in the sector.

Group formation

  • Community or individuals are mobilised and formed into Co-operatives or groups of about 5 or more members.

  • Co-operatives or Groups will have to democratically elect their leaders and develop constitution.

  • Co-operatives/Groups decide on the amount to be saved, frequency, collection methods and ways of save keeping the money.

  • Co-operatives/Groups are advised to open a bank account on their name with the nearest banking institution.

Project objectives

  • To provide a broad framework for the promotion of Savings Co-operatives to build assets, create wealth for rural working poor for sustainable development.

  • Facilitate the development of sustainable rural micro finance groups/and or Co-operatives that will serve poor communities and promote the culture of savings.

Specific objective

The specific objective is to identify, mobilise and build the capacity of Savings Co-operatives through training, mentorship and other activities aimed at mobilising resources that will enhance their long-term organisational capacity to promote the culture of savings among its members.

The strategy

The strategy is geared at achieving the following objectives:

  • Asset building, income generation, wealth creation and socio-economic development.

  • Encourage savings led credit by SELF HELP GROUPS AND CO-OPERATIVES.

  • Encourage internal lending among Co-operative members where there is a potential to local based financial intermediary.

  • Encourage Co-operative bank linkage model to increase outreach to financial services for the members.

Project activities

  • Identify five (5) suitable pilot sites for implementation of the Co-operative development initiative.

  • Conduct an assessment on the current capacity and operational needs of the identified pilot Co-operatives.

  • Facilitate appropriate mentorship and capacity building programmes for Co-operative Leadership of the identified Co-operatives.

  • Establish close working relations with both MAFISA and the DRDAR as well as other stakeholders in the sector.

  • Liaise with the strategic partners and collaborate on an integrated Co-op development support.

Project target

  • ECRFC is mainly targeting agricultural anchored Co-operatives comprising individuals; land agrarian reform beneficiaries and groups that are involved in agricultural related activities.

  • These are mainly women, youth and people with disability involved in agricultural related activities or commodity based Co-operative initiatives.

Project budget

The Co-operative development budget is as follows:

  • A total Budget of ZAR 2.6 million.

  • (MAFISA/ECRFC = ZAR 1, 7 million).

  • (Thina Sinako = ZAR 900,000).

  • ECRFC further provides office infrastructure, support staff, M&E, etc.

Pilot co-operatives

ECRFC has managed to identify a total of five (5) Co-operatives in 5 District Municipalities namely:

  • Amathole District - Ngcabaza Secondary Co-operative.

  • Chris Hani District - Ntsika Yethu Secondary Co-operative.

  • O.R. Thambo District - Amakhomazi Primary Co-operative.

  • Joe Gqabi - Senqu Secondary Co-operative.

  • Cacadu District – Jansenville Trust Co-operative.

Co-operatives Funding Model

ECRFC does not specifically fund Co-operatives but provides funding for capacity building activities and other related Co-operative development initiatives such as:

  1. Leadership training.

  1. Co-operative governance.

  2. Exposure visits.

  3. Financial literacy, etc.

If any co-operative wants to access funding from ECRFC, it is subjected to the prevailing ECRFC credit policy and repayment terms. The Co-op mobilises its own savings.

Internal Lending/loans

  • Once the group has managed to save a reasonable amount, it would be encouraged to start small loans to its members.

  • Groups should decide the terms and conditions (esp. interest rate) for loaning their members based on agreed and signed constitution.

  • Lending money enhances the knowledge of the group members in setting interest rate deciding upon periodic loan instalment and recovery schedules.

  • This capacitates members how to maintain bookkeeping and cost efficiency.

  • After a minimum period of 6 months or more, the groups become eligible for membership for loans from ECRFC or any other commercial banks.

Underlying reasons for capacity building

  1. Strengthen efficiency and effectiveness.

  2. Achieve sustainability of Co-operatives – both short and long run.

  3. Build confidence, trust and respect for sustainable shared goals among members.

  4. Adaptability to changing environment.

  5. Promote Co-operative interaction with external agents.

  6. Diversification of activities to maximise institutional and individual interest.

  7. Expansion and replication of co-operatives.

Capacity building challenges in co-ops

  • Development of informal primary Co-operative society or groups in Micro Finance.

  • Development of private sector with ample opportunities to assist Co-operatives.

  • Expansion of formal financial services in order to create opportunities for individual borrowing.

  • Limited access of Co-operatives to bank credit.

  • Limited marketing network or inefficient marketing system.

  • Increasing political interventions.

  • No promotional agency for co-operatives (only recently that DEDEA has embarked on the initiative of Co-op development).

  • Linking with Micro Finance Institutions for financial Co-operatives.

Additional support services required

  • Learning from the best practices.

  • Continuous research to identify problems and solutions.

  • Exposure visits.

  • External agency to advice, guide and promote Co-operatives.

  • Promote horizontal linkages among Co-operatives.


  • The success of these Co-operatives is evaluated based on the outreach and financial sustainability in the longer term.

  • However, the success largely depend on member participation and commitment plus support.

  • The financial sustainability is demonstrated when the Co-operative is no longer relying on external financial support subsidisation from ECRFC.

  • Implementation will be closely monitored at the national, provincial and local level and periodically evaluated.

  • Systematic M&E for strategy assessment is a must.


Mr Mbulelo Jolingana
Following presentations, speeches, debates and discussions the Conference made resolutions as presented below;


  1. There is a need for a vibrant co-operative movement that is built from below with active primary co-operatives that are involved in economic activities and are compliant with the provisions of the co-operatives act no. 14 of 2005. The co-operative organizations in the Eastern Cape Province are characterized by poor co-ordination, lack of understanding of the concept of movement building, non-compliance to the values and principles that governs co-operatives, lack of resources and support systems.

  2. In line with the conference resolutions of the dti inaugural national co-operative conference that was held in Pretoria in 2008 there is a need for a strong co-operative movement that must be driven by the co-operatives themselves. Government must assist with providing the enabling environment for the sustainable growth of the co-operative movement.

  3. The drive must be on the building of strong sectoral organizations that will assist with the co-ordination of co-operative enterprises at local municipality level and allow an organic growth of the co-operative movement. It is critical that interaction with national secondary co-operatives is facilitated to allow a more integrated approach both at horizontal and vertical level.

  4. The co-operative movement will be formed by the established secondary co-operatives that are aligned to the sectors provided in the legislation i.e. Co-operatives Act no. 14 of 2005. Thus, there must be clear services that must be provided by this movement to support the co-operatives in the province.

The key areas that were identified for the functions of the co-operative movement were on strategic leadership, advocacy, lobbying on behalf of the co-operative enterprises, marketing and other support services for the affiliated secondary co-operatives.

  1. To achieve the above the conference resolved that there must be a broad consultative process to engage all the co-operative organizations from local municipality level up to a district level on the form and content of such a co-operative movement. The period for such consultation was agreed upon as six weeks from the end of the conference/indaba.

  2. After the consultation process the districts/metro’s will elect two representatives from established secondary co-operatives as per identified sectors in the legislation and in compliance with the regulations as proclaimed by the Minster of the dti in 2007. The elected representatives will form a part of a provincial steering committee that will drive the process of building the co-operative movement in the Eastern Cape Province.

  3. The functions of the steering committee were summarised as the follows:

(i). Develop an organizational framework best suited for Eastern Cape Province within the legal and strategic frameworks that govern co-operative sector in the country.

(ii). Develop a holistic programme with a clear action plan that will indicate the Long term, Medium Term and Short Term objectives of the co-operative movement.

(iii). Submit a resource plan for effective and efficient operation of the co-operative movement.

(iV). Provide the institutionalization mechanism of the co-operative movement within the context of the E.C provincial co-operative development strategy.

(v). Define the roles and responsibilities of the stakeholders for support of the co-operative movement in the Province.

  1. The department of Economic Development, Environmental Affairs and Tourism working with local/districts and Metro’s municipalities will assist in the facilitation of the feedback sessions and establishment of the provincial steering committee.


  1. The conference noted that there is a need to step up the capacity building programme so that it is responsive to the needs of the co-operative enterprises. Thus, it is imperative that government must ensure that there is integration of services at sector department level as well at local government level to minimise duplication of efforts as the beneficiaries are essentially the same.

  2. The IFCD under the University of Fort Hare must roll out its training programmes working closely with other higher learning institutions, FET colleges, SETA’s, and training agencies. The accreditation of the trainers will be done by the Institute and all slearning materials must be moderated.

  3. All efforts must be made to ensure that the training is pitched at a level that is appropriate for co-operative enterprises. An ABET programme for co-operatives must be introduced to ensure an inclusive training programme. The dialogical approach was recommended as the best model suited for training co-operatives. Translation of learning materials into IsiXhosa must be implemented by 2012.

  4. Emphasis on monitoring and evaluation was made of all training programmes as well the quality of the work of service providers appointed to provide training to co-operatives.

  5. The role of the higher learning institutions with regard the IFCD must be clarified as a matter of urgency to ensure uniformity and standardization of the learning materials.

  6. The use of ICT must be explored to ensure broader reach to co-operative enterprises as well as building a knowledge bank that can be shared will all stakeholders in terms of best practices. The IFCD to create a well-resourced information centres that are linked to co-operative development centres for easy access to information and institutional learning.


  1. The conference noted that there is no monitoring and evaluation mechanism to track government support for co-operatives through available procurement opportunities. Thus, it is imperative that the co-operative organizations at local level are empowered on how the supply chain management process work at local municipality level. There must be training provided to co-operatives on legislative frameworks on procurement for purposes of transparency and integrity of the operational systems.

  2. The co-operatives through their established organizations and other institutional support mechanism must build a collective database that can be shared by all stakeholders. All co-operatives are encouraged to register with local municipalities and sector departments for purposes of procurement opportunities.

  3. The conference resolved that 30% from public sector institutions’ total budget for goods and services including capital budget must be biased towards co-operative enterprises. The process must be set in motion to develop a provincial procurement strategy that will cascade down to local government level in support of this resolution. On annual basis the government expenditure analysis must be shared wi9th co-operatives through the annual co-operative conference.

  4. The co-operative development centres must be strengthened to provide training on tender advice, facilitate business linkages, access to markets, and monitoring government spend on co-operative enterprises. They should also serve as contact points for access of tender bulletins for distribution to co-operative enterprises in their respective regions.

  5. It was further emphasized that there is a need to have a coherent organizational structure that represent co-operatives at all level of government to ensure effective lobbying, advocacy and intensive campaigning for the implementation of this resolution.

  1. The conference noted that there are operational challenges to access financial support from existing financial institutions in terms of turnaround time and that it will be ideal to speed up a process of establishing a co-operative bank that will be more flexible for tender processes.


  1. The conference noted that the two schemes currently existing (the dti co-operative incentive scheme: Grant and the DEDEAT IMVABA Fund part grant part loan) as meeting their immediate needs though there are operational issues that will need attention of management to sort out. With regard the CIS the main concern is on the turnaround time for approval process and for IMVABA is the attitudes of the personnel which are not friendly.

  2. Secondly, the application forms for the Imvaba fund are too complicated for the co-operatives so an attempt must be made to simplify them for understanding by co-operatives. The co-operatives strongly moved for retaining a zero% rate on loans from Imvaba and that treasury must be engaged to provide an exception as per the provisions of the legislative frameworks for the fund.

  3. The shared feeling was that the co-operatives must be provided an opportunity to present their business proposal as a way to empower them. The current system is not user friendly as there is third party that present co-operatives to funding approval committees and often these persons are not conversant with the culture and dynamics of the co-operative sector. The arguments advanced indicated that it is a standard practice even by the commercial banks to interact directly with the clients.

  1. The conference noted that the co-operative bank model will be an ideal one however there are challenges with the existing co-operative banking institutions and more institutional support is needed to ensure that they are working effectively and are understood by co-operative enterprises. There must be more information on co-operative banks and it should also start at local level. Co-operatives are encouraged to come together to establish such coop banks and as they grow establish secondary co-operative banks.

  2. The co-operatives resolved to support one another and therefore they will need more information on the co-operative bank model so as to promote a culture of savings amongst co-operatives and circulation of social capital within the sector.

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