The Role of Cooperatives in Global Poverty Reduction

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The Role of Cooperatives in Global Poverty
Reduction
A presentation by Dr. Mannie Santiaguel Provincia
l Cooperative Development Officer
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POVERTY
Poverty is hunger. Poverty is lack of shelter.
Poverty is being sick and not being able to see a
doctor. Poverty is not being able to go to a
school, not knowing how to read, not being able
to speak properly.
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Poverty is not having a job, is fear for the
future, living one day at a time. Poverty is
losing a child to illness brought about by
unclean water. Poverty is powerlessness, lack of
representation and freedom.
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FACTS
More than three billion people throughout the
world (nearly half the world's population) live
on less than USD2 a day. Nine out of ten people
in poverty live in developing countries the
majority in Africa, Asia and Latin America
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FACTS

• Over one billion people live on less than USD1 a
  day approximately 70 of these people are
  women.
• About 820 million people around the world lack
  access to enough food to lead healthy and
  productive lives.

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FACTS

• In most communities, women and girls are more
  likely to be affected by poverty than men and
  boys, because of their primary care role in the
  family and their unequal access to economic
  opportunities.

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THE MILLENIUM DEVELOPMENT GOAL (MDG)

• In September 2000, at the United Nations
  Millennium Summit, world leaders agreed to a set
  of Millennium Development Goals (MDGs) that aimed
  to make substantial progress in solving the
  problems of poverty, hunger, disease, illiteracy,
  environmental degradation and discrimination
  against women

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THE MILLENIUM DEVELOPMENT GOAL (MDG)
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THE MILLENIUM DEVELOPMENT GOAL (MDG)
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THE MILLENIUM DEVELOPMENT GOAL (MDG)
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What is the role of cooperatives in achieving the
Millennium Development Goals?
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• The UN regularly recognizes the contribution of
  cooperatives to poverty reduction.

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• The UN General Assembly, the Economic and Social
  Council, the Department for Policy Coordination
  and Sustainable Development
• The International Labor Organization (ILO) and
  Food and Agriculture Org (FAO) have been working
  with cooperatives for many years.

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• Cooperative enterprises provide the
  organizational means whereby a significant
  proportion of humanity is able to take into its
  own hands the tasks of creating productive
  employment, overcoming poverty and achieving
  social integration.

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• cooperatives continue to be an important
  means, often the only one available, whereby the
  poor, as well as those better off but at
  perpetual risk of becoming poor, have been able
  to achieve economic security and an acceptable
  standard of living and quality of life

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• The 1995 World Summit for Social Development
  declared itself fully committed to utilizing and
  fully developing the potential and contribution
  of cooperatives to the eradication of poverty.

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• In 1996 a resolution was adopted at the UN
  General Assembly urging that due consideration be
  given to the role, contribution and potential of
  cooperatives in achieving social and economic
  development goals

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• ILO Recommendation No. 193 recognizes the need
  for governments to provide a supportive framework
  for cooperative development, but insists that
  cooperatives are autonomous associations of
  persons that have their own values and
  principles.

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• the promotion of micro-finance as a best
  practice that enables poor people to create
  economic opportunities for themselves, and banks
  owned by the poor are essentially cooperatives

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• development must be community-driven, with
  funds channelled directly to community groups,
  and with capacity building of self-help groups
  being the key to success

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The World Banks Poverty Reduction Strategy
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• The UN puts great emphasis on reports produced
  for each country, as the main way in which the
  goals can be turned into practical activities on
  the ground

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• Reports such as National Human Development
  Reports, Common Country Assessments and the World
  Banks Poverty Reduction Strategy Papers (PRSPs)

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• The World Bank has responsibility for the
  structural, social and human aspects of
  development, while the International Monetary
  Fund is responsible for macro-economic
  stabilization.

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Comprehensive Development Framework

• good government,
• an effective legal system and financial system,

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Comprehensive Development Framework

• human factors such as education and health care,
• physical factors such as water supply, roads, and
  a sustainable environment

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• A rural strategy would include a range of
  market mechanisms such as credit for farmers,
  storage, transport and marketing, all of which
  are usually provided by farmer cooperatives

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• The importance of civil society is emphasized,
  and local nongovernmental organizations and local
  groups organized for implementation of projects
  are regarded as important.
• Again, these are likely to take a cooperative
  form, even if called by other names.

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• At the national level, where there is an
  organized cooperative federation it ought to make
  a contribution to the strategy process, and the
  strengthening of cooperative federations ought to
  be a part of the strategy.

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• At the local level, cooperative forms of
  organization should be used more explicitly so
  that action has greater chance of successfully
  reaching and benefiting the poor.

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• Existing cooperatives should be strengthened,
  expanded or replicated to meet the needs of poor
  people who would like to become members, and new
  cooperatives should be formed to meet needs
  identified by the poor themselves

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The Contribution of Cooperatives

• Opportunity
• Empowerment
• Security

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Opportunity

• Cooperatives open up markets by organizing supply
  of inputs and marketing of outputs
• They provide a means by which credit can be given
  when needed, and a safe form in which poor
  peoples savings can be invested

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• international cooperative trading organizations
  have been created that have significantly
  improved the export potential of producer
  cooperatives, and the importing activity of
  consumer cooperatives

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• The coop can be used in the provision of
  infrastructure such as water supply and
  irrigation, and in environmental schemes

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Empowerment

• Coop relied on the strength that comes from
  acting collectively to empower individuals

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• Unique characteristic member-based organizations
  set up for economic aims, with one person one
  vote and with all surpluses returned either to
  individual members or to the community as a whole
  

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Empowerment

• In rural areas, they will be gaining access to
  markets through supply and marketing
  cooperatives, but also improving the environment
  by afforestation, providing water supply and
  irrigation, and so on.
• They will be supported by micro-credit schemes
  that are also run along cooperative lines

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Security

• Cooperatives can help to reduce the risk to
  individuals through pooling risks at the level of
  the enterprise
• Large coops offer their members insurance
• Agricultural cooperatives in the developed world
  provide a wide range of insurance products to
  their members

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Security

• In Japan and the United States, for instance,
  their insurance arms have become some of the
  biggest insurers in the world
• consumer cooperatives in the UK offer their
  members free life insurance

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Security

• The Mondragón cooperative system offers its
  worker-members a full range of social security
  benefits, including pensions
• Micro-credit enterprises and cooperatives have
  proved to be effective in delivering publicly
  funded health and social insurance to very poor
  people

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Security

• Cooperatives have the capacity to reinsure each
  other.
• The International Co-operative and Mutual
  Insurance Federation has arranged reinsurance for
  the Asian Confederation of Credit Unions, to make
  sure that its micro-insurance programs remain
  sustainable.

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Security

• In Mali, a national health development programme
  is using the existing solidarity of mutuals,
  their member-focus and not-for-profit basis as a
  way to deliver health insurance to the poor.
• Cotton workers contribute to a scheme run by
  their cooperative by providing a proportion of
  their cotton crops.

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The International Labour Organizations Decent
Work framework
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Decent Work framework

• First, there is a fundamental human need for it
  it is the most widespread need, shared by
  people, families and communities in every
  society, and at all levels of development.

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• Second, it is a way of creating a unity of
  purpose among the ILOs three constituents
  governments, employers and workers

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Decent Work framework

• The goal of decent work is economic growth with
  social equity.
• If the institutions are right, economic and
  social efficiency go together.

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The decent work strategy and cooperatives

• ILO four strategic objectives
• promoting rights at work,
• increasing employment and incomes,
• extending social protection, and
• strengthening social dialogue

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• Cooperatives are ethical organizations, and so
  appeals to them to respect human rights as
  employers should be well heeded
• They are meant to be open to anyone who can use
  their services without discrimination, and so
  they ought to respect the idea of
  non-discrimination in other respects as well.

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• They are member-owned, operate on the principle
  that voting is based on people and not capital,
  and so they should guarantee that their workers
  have the right to organize in the same way.

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• Cooperatives, where they help to raise their
  members incomes, are indirectly preventing
  exploitative forms of labour
• Consumers in developed countries seeking to
  exercise some control over the way goods are
  produced can link up with producer cooperatives
  to ensure fair trade.

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Dairy Cooperatives in Bangladesh

• Bangladesh is a country of small farmers, who are
  mostly living on or below the poverty line
• In 1974 the government set up the Bangladesh
  Cooperative Milk Producers Union, as part of its
  Cooperative Dairy Development Programme, with
  financial and technical help from UNDP and FAO

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• The long-term policy objective was to raise the
  subsidiary agricultural income of small and poor
  farmers in relatively remote rural areas, to
  strengthen support services for livestock
  development and to ensure the supply of hygienic
  milk to urban populations

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• Known by its brand name Milk Vita, the
  cooperative provided services for milk
  production, collection, processing and
  distribution, and a comprehensive range of
  technical support services, from institutional
  development of cooperatives and credit schemes at
  community level to organising milk distribution
  in urban centres.

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• Milk Vita broke the buyers monopoly, and
  substantially expanded milk production in North
  East Bangladesh. It became Bangladeshs leading
  supplier of fresh milk and dairy products such as
  butter and yoghurt to the capital city, Dhaka.

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• In 1998, 40,000 farmer members earned a total of
  US9.3m from sale of 30 million litres of milk.68
  In 2000, dividends paid to producers totalled
  US1.5m. Milk Vita is planning to expand into
  four new areas of Bangladesh where traditional
  small-scale milk production still prevails.

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• Farmers earnings have increased ten-fold,
  lifting the household earnings of around 300,000
  people to well above the poverty line.
• In many households the income from milk
  production is managed by the women, and so has a
  direct impact on food security and nutrition.

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• 2,200 employment opportunities have been created
  in the urban areas from milk distribution
• In addition, urban consumers benefit from safe,
  pasteurized milk products

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COOPERATIVE CARE

• Cooperative Care is a worker-owned cooperative
  providing care services to elderly and disabled
  people in their own homes. Its mission is to
  provide high quality care while providing fair
  wages and benefits to those providing the care

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COOPERATIVE CARE

• There are around forty care cooperatives in the
  UK, mainly providing home care but with one large
  consumer cooperative (West Midlands) running a
  group of residential homes.

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• In Japan, the existing consumer and worker
  cooperative sectors provide care for the elderly.
  Over 30,000 care helpers have been trained, and
  thirty agricultural cooperatives have signed
  partnership agreements with local authority
  social care departments.

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• In Canada, Sweden and the United States
  cooperatives providing day care for children are
  important.
• In Italy, around 2,000 health and social care
  cooperatives attract about thirteen per cent of
  the total budget for social welfare. They employ
  around 40,000 people, and mainly take the worker
  cooperative form.

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PHILIPPINE COOPERATIVES

• In 2003, the coop sector contributed Php517B or
  12.5 to the GDP
• Provided direct and indirect employment to more
  than 1.5M individuals

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Region IV

• In 2003, the total product volume sales reached
  Php 83B contributing 0.84 to the GDP
• It employed 107,457 individual
• Provided wages amounting to Php 42.9B

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• These case studies have shown just how widely
  the cooperative form can be applied, and how it
  can succeed in helping the poorest and most
  vulnerable people to become organized.
• They show that, provided the method of
  development is participatory, the cooperative
  form is replicable

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• Where there are alternative, for-profit
  alternatives the cases demonstrate that the
  cooperative form is for the aim of poverty
  reduction superior

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• Thank you!