Cooperatives Dilemma and Shared Growth Impediments in South Africa

Cooperatives development in South Africa continue to be an Achilles’ heel. Cooperatives are faced with various challenges. Chief amongst these, is the lack of a collective vision, commitment, individual interests over collective interests and entrepreneurial cognition. Most co-operatives and group enterprises are started with unemployed people, often with low skills levels, and no prior business experience, in economically marginal areas. The playing field between cooperatives, small businesses and well established businesses is not well levelled, hence it becomes difficult for the former to break the huge barriers of entry into the formal markets. Compounded by the low level of development and adequate support, cooperatives find it difficult to graduate to the higher level of the value chains. On the other hand, firm standards and procedures are also high, hence a special kind of cooperative development with development institutions are required to overcome these hurdles. Most policy interventions tend not to be tailor-made to target different market segments, sector and types of co-operatives, and do not take into consideration the unique nature of the co-operative business model. There is also an absolute lack of support and will from big businesses to adhere to the Enterprise Supplier Development codes. Cooperatives appear to be an add-on sector in South Africa, compared to other emerging economies where they form an integral part of the country’s growth path; and considered as engines of growth and vehicles to address inequalities and the high unemployment levels. There is too much focus on small business development and lesser emphasis on cooperative development and support. Cooperatives have a potential to bring the required economic multipliers and jobs needed to change the current economic landscape in South Africa. Exacerbating this low level of cooperatives development is the vertically integrated markets with complex procedures, standards and inadequate support from the well-established businesses. This is further compounded by the shift from production to logistics, branding and other products. Big businesses in South Africa continue to keep both ‘the driver’s seat and the roadmap’ while state intervention becomes limited. These barriers and economic hurdles constraint cooperatives and small businesses from graduating into the mainstream economy. Similar to enterprise development, cooperatives need to form part of the supplier development chain and be accorded the same status as small businesses.