Cooperative Approach to Poverty Reduction

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Cooperative Approach to Poverty Reduction

• Sustainable Co-operation A Conference on Best
  Practices in International Co-operative
  Development
• Château Cartier, Aylmer, Quebec
• October 9, 2003

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Cooperative Approach to Poverty Reduction

• I would like to thank CCA, DDI and Socodevi for
  the opportunity to share reflections.
• Statutory warning the views expressed are
  personal, and should not be taken to reflect an
  official position of the US Agency for
  International Development.

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Cooperative Approach to Poverty Reduction

• Second thoughts
• Mr. Paul Knox is a hard act to follow
• The question posed by the organizers is an
  extremely difficult one.

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Cooperative Approach to Poverty Reduction

• Does the cooperative approach contribute
  efficiently to poverty reduction for grass roots
  populations.

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Cooperative Approach to Poverty Reduction

• A brief look at
• Poverty reduction
• Cooperative approach
• Efficiently

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Cooperative Approach to Poverty Reduction

• Poverty
• Poverty is both complex and often seems
  intractable
• There are no magic wands
• We cannot even claim to fully understand the
  causes of poverty

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Cooperative Approach to Poverty Reduction

• Poverty
• Examples
• 12.5 million poor in the United States, a number
  that is increasing not decreasing
• Throughout the world the numbers slipping back
  into poverty seems equal to those escaping from
  it
• Every day 25,000 die of hunger and 50,000 from
  disease both largely the result of poverty

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Cooperative Approach to Poverty Reduction

• Poverty
• We suspect that solutions to poverty involve
  such diverse elements as
• Policies
• Access to basic services education and health
  and to
• Technology and to
• Information
• Culture and the nature of society and
• Time

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Cooperative Approach to Poverty Reduction

• Cooperative approach
• What is a cooperative approach?
• More often than not, what is called a
  cooperative approach violates the fundamental
  tenets of cooperation
• Rather than people joining together to meet
  their own needs through mutual self help, it is
• Someone elses governments or donors money
  invested to pursue someone elses needs.

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Cooperative Approach to Poverty Reduction

• Cooperative approach
• Have there been successes?
• Indias dairy cooperatives 11 million members,
  transformation of dairy economy
• Indian Farmers Fertilizer Cooperative that
  countrys most successful fertilizer firm
• Credit unions with 20 million members and 27
  billion in member savings
• Bangladesh rural electric 20 million people,
  increased jobs and productivity
• Telecommunications in Poland
• Three million housing units around the world
• Latin American insurance a Socodevi-AAC/MIS
  success

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Cooperative Approach to Poverty Reduction

• Cooperative approach
• These any many other successes are
  satisfying but there are two uncomfortable
  questions
• Can we prove cause and effect?
• Even if we can, is not what has been achieved a
  tiny drop in a vast ocean of need?
• (USAID has invested 1.12 billion in cooperative
  development since 1971)

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Cooperative Approach to Poverty Reduction

• Cooperative approach
• Argument that cooperative approach is linked to
  success
• Ownership is more powerful that a
  participatory approach managers accountable to
  elected leaders who are accountable to owners.
• Contrast with
• NGO patriarchal participation and
• Government bureaucratic non-accountability

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Cooperative Approach to Poverty Reduction

• Cooperative approach
• Lessons Learned
• Essential link between cooperative success and
  cooperative principles
• Success requires cooperative autonomy
• Coops function best when law and regulation
  provide level playing field
• Strong, transparent and honest governance
• Salience cooperatives must be important to
  members, community and sector of the economy
• Support that creates dependencies undermines
  mutual self-reliance that is central to
  cooperation
• Professional management necessary to adapt,
  innovate and take rational risks to ensure
  cooperatives delive4r value to owners
• Institution-building takes time at odds with
  project mentality and expectations.

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Cooperative Approach to Poverty Reduction

• Efficiency
• Efficiency is the wrong standard
• Cooperatives are important both because of what
  they can achieve, and the way in which they
  achieve these results a modern democratic
  enterprise responsive to its owners.

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Cooperative Approach to Poverty Reduction

• Efficiency
• The strength of a society is directly linked to
  the strength of local institutions.
• Modern society is grounded in local institutions
  that are
• inclusive in membership
• democratic in decision-making
• linked regionally, nationally and even
  internationally
• professionally managed
• responsive to the local community

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Cooperative Approach to Poverty Reduction

• Efficiency
• Contrast with traditional institutions that tend
  to be
• exclusive limited to a parochial group
• authoritarian
• locally-centered
• traditionally managed
• protective of traditional interests and
  leadership

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Cooperative Approach to Poverty Reduction

• Efficiency
• Cooperatives if successful provide a lesson
  and reinforcement in the social contract. They
  create a more fertile ground for modern local
  institutions.
• But, they must be cooperatives and they must
  succeed in meeting their owners needs.

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Cooperative Approach to Poverty Reduction

• Thank you.

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Cooperative Approach to Poverty Reduction

• Thomas R. Carter
• Senior Technical Advisor, Cooperative Development
• U.S. Agency for International Development
• DCHA/PVC-ASHA
• Ronald Reagan Building 7.6.70
• 1300 Pennsylvania Avenue, NW
• Washington, DC 20523
• USA
• 001-202-712-5226
• thcarter_at_usaid.gov